Once you've given your car over to a charity, they will probably either auction it off, or actually give it to someone in need. Under the new tax laws, you definitely want them to be giving the car to a person, because if the charity just auctions the car off, you'll only be able to deduct the sale value of the car at auction, which is usually $500 or less.

The only time you'd want to donate your car to a charity that's going to auction it off is if the car no longer runs. Then, if they can still make money after the towing fees are paid, a charity might accept your inoperable vehicle.

Be sure to check the charity evaluation websites so whatever you do donate goes to actually helping people - not just to keep the charities overhead in the black. Depending on the charity, anywhere from 10% to 95% of your donation may actually end up in hands (or the driveway) of someone who needs help. You can also check IRS Publication 78, or the local Better Business Bureau to see how the charity rates. Make absolutely sure that the charity is a 501 (c) (3) organization, or the IRS will not honor your deduction.

Find out if the car donation program is operated in-house by the charity or by an outside, for-profit third party. If a third party is running the car donation program, ask what poprtion of the profit made by selling the cars actually goes to the charity. Frequently, third-party car donation programs produce only small amounts of money for the charity - sometimes as little as twenty or forty dollars for each car donated.

Why do the small charities accept such terrible returns for donated cars from the third-party operators? Smaller charities simply can not afford the expense of transportation and storage for the donated vehicles, much less the costs involved in charity auctions. At the end of the process, it makes better management sense for a small charity to just hand over the car, keep what they can of the donation, and continue to focus on the real work of their vocation.