Rather than remarketing vehicles, Francis X. Smith, president of Century Engineering, decided to donate his 100-unit fleet to Vehicles for Change, Inc. (VFC), as a worthwhile gesture to his community and a personally rewarding method of retiring his aging fleet.
VFC, a non-profit organization based in Halthorpe, Md., assists less-fortunate families in Maryland, Virginia, and Washington, D.C., by selling them a reliable automobile at less than market value, providing a 15-month loan and six-month warranty, and identifying resources to pay for insurance, title, tags, and taxes.
A Win-Win Situation
In addition to helping families gain employment by providing them affordable vehicles, under the tax law enacted in January 2005, donations to non-profit organizations, such as VFC, expand the local tax base by increasing the number of taxpaying individuals, making donors eligible for tax deductions.
“Donating my fleet made good moral and financial sense. In the past, we simply disposed of the cars in the easiest way possible, realizing little or no value. By donating them to Vehicles for Change, we increase our net gain by as much as 100 percent and help someone improve their lifestyle,” said Smith, whose Hunt Valley, Md.-based firm provides design and construction engineering services to government agencies and private industries.
How VFC Works
A business or individual calls in to donate a vehicle. VFC picks it up, issues a receipt to the donor, and tows the vehicle free of charge. The car or truck is taken to the VFC garage, where it is reviewed, repaired, and sold to a low-income family. All proceeds are used to continuously prepare additional vehicles for similar families.
Auctions typically administer $200 auction and towing fees. On the other hand, VFC meets all state and federal requirements to assure donations are tax-deducible per IRS guidelines, thereby closing the differential price gap between donating and remarketing.
“Fleets get back a percentage, usually 36 percent, on which they pay taxes. Instead of getting $1,800 back at tradein, they may get $1,200 back in taxes for the donation, so there is just a $600 difference,” said Marty Schwartz, VFC executive director.
Since October 1999, Vehicles for Change has awarded more than 2,000 automobiles to underprivileged families, resulting in a $4,800 average annual salary increase per family within the first 12 months of receiving the vehicle, according to Schwartz. For more information, visit: www.vehiclesforchange.org.
