Cars 4 Causes Puts Local Charities in Driver’s Seat With Donations

You get the tax write-off and they get the beat-up old car.

It sounds like the perfect arrangement: Forget the hassle of finding a buyer, donate to the needy and shelter some taxable income.

Cars 4 Causes, along with a few other Ventura County charities, sends thousands of dollars to local charities each year by exchanging someone’s rust bucket for a check to their charity of choice.

The organization takes care of the details--smogging, transferring the title and making the car roadworthy. If the vehicle is so far gone it doesn’t run, no problem: Cars 4 Causes will tow it to an Oxnard, Santa Paula or Van Nuys car lot where it will be rehabilitated and sold.

Government regulators say the way Cars 4 Causes works is perfectly legal, but some competitors and salvage yards have raised an eyebrow at the charity and its relationship with an independent contractor who opened a used car-parts lot after joining with Cars 4 Causes. So far, customers are happy, and so are the charities.

“It’s a wonderful program, because it’s free money,” said Sherry Hilton, the bookkeeper for Project Understanding, a local charity that provides assistance for the county’s homeless. “There is no way we could take the cars ourselves, because what would we do with them? How would we sell them?”

Project Understanding has received between $5,000 and $10,000 from Cars 4 Causes since it started in late 1997.

Although there have been some high-profile fraud cases in the car donation business in recent years, vehicle donations have also created an invaluable income stream for charities. According to the Attorney General’s Report on Charitable Solicitation, commercial car fund-raisers in the state gave $10.4 million, or 34%, of a total $31 million back to charity in 1998, the last year for which numbers were available.

The industry grows exponentially each year, according to Deputy Dist. Atty. Belinda Johns, “because it’s easy to set up operations and everyone wants to get rid of their old cars.”

In the Greater Los Angeles area, a number of charities accept donated cars, including Make-A-Wish Foundation, American Red Cross and Salvation Army. In Ventura County, the Rescue Mission, which sells about 100 cars a month, and Cars 4 Causes, which sells about 500 cars a month, are the largest and most visible operations.

In 1998, the only year for which records were available, Cars 4 Causes donated $307,000 or 22% of the total collected back to charity. The rest of the money went to operating costs--salaries, towing, repairs, advertising and smogging.

The Rescue Mission funnels the proceeds from the sale of the cars back to the charity as soon as the car sells. Recovering alcohol and drug addicts can learn a trade by rehabilitating about 60% of the cars brought in. The mission sells the rest to auto-dismantling shops.

Both organizations and state regulators said people often underestimate how much it costs to run a car donation program, because of the significant expense of fixing a car, especially the low-end ones.

“Sometimes we lose money, because the cost of the [car] is more than we sell it for at auction,” said Rose Lee, executive director of Cars 4 Causes. “Or the replacement parts cost more than it sells for on the lot.”

An average car at Cars 4 Causes sells for $3,000. An average auction car sells for $600. Although the tax records to document this haven’t been filed yet, Lee said the organization gave $600,000 to charity in the first six months of this year.

Although most car donation programs work the same way--cars are accepted, checked over, fixed up and a percentage of the proceeds donated to charity--Cars 4 Causes is unusual in that the money can be donated to the charity of the donor’s choice.

“They could donate to the KKK; we don’t get involved in the politics of their donation,” said Tim Finnigan, the charity’s automotive consultant.

Because they let donors decide, the organization sometimes faces squeamish buyers.

“We’ve had buyers say, ‘If it’s going to that charity, I don’t want to buy it,’ ” Lee said. “But that’s OK, because someone else will.”

Lee said about half the cars are designated by donors for specific charities, and the organization’s board of directors decides on the other half at the end of the year.

Bennett Weiner, a vice president at the Council of Better Business Bureaus in Virginia, said donors should know how much of their vehicle price goes to expenses and how much to charity. In car donation situations, between 20% and 30% going to charity would be a significant amount, he said. “The most important thing is that there is appropriate disclosure to inform donors of the anticipated portion that will be going to charity.”

Many charities in other counties hire for-profit companies, such as Onne Corp., which sells 10,000 cars a year, to handle car donations. Luis Barthel, the company’s general manager, said Onne Corp. gives 15% back to the 10 charities with which it contracts.

Although Onne Corp. has been criticized for paying a low percentage, “charities will always take a small amount of money, because it’s better than getting nothing,” Johns said. “It comes back to donors deciding if they want to give their car to a commercial fund-raiser, which only gives 10%, or if they want to find a charity that gets a larger percentage.”

Kim Watson, associate director of the Camarillo Boys & Girls Club, said she appreciates the high percentage that Cars 4 Causes sends to the club. She tells potential donors to route their cars through Cars 4 Causes. “We get checks from them, but we haven’t figured out any rhyme or reason for the checks that we get,” she said. “The smallest one we got was for $15. Maybe it was a real junker.”

Some of the cars ARE real junkers. They don’t run. The transmission is shot. Or they are so old and beat-up it’s hard to imagine someone wanting to buy them.

But many people still do. Some buyers are looking for “project cars”--something a father and son can tinker with on weekends. Others want a second or third family car but can’t afford something expensive. And others are like John Lynn and George Gebhart. They came from Santa Barbara to the Santa Paula car lot to buy a motor home so Lynn could drive to Indiana “to give my mom a kiss and tell her I love her.” He found a 1965 Nissan Patrol for $2,200 that started. It’s white paint was peeling and the inside was chock full of old maps, trash and magazines.

The vehicle was exactly what Lynn was looking for. “I don’t mind scrubbing it a little, but I’m a poor man on Social Security. I can’t afford to pay too much.”

He said he would offer $1,200 and see what kind of deal he could cut.

Most people donate to charity for the tax write-off and buy cars from charity for the cheap deal.

For those willing to do the research, cheap, under-valued cars are a dime a dozen at the auction. Bob Stephens, 54, and his 17-year-old son Brian of Reseda researched several cars under $1,000 at the Van Nuys auction one recent Sunday. The pair competed against other men, rapidly firing off bids for the cars that rolled slowly by. To prepare for the fast pace and many details they watched from the sidelines in the hot sun on the dusty lot the week before. The day before the auction they spent several hours picking out a handful of cars they would be willing to buy.

“I don’t want to pay any more than $500,” Stephens said. “I know the blue book on these cars,” he said, running his finger down a list, “and I’ll get the good deal.”

The good deal came close to the end, after the two had almost given up hope. Smiling and relieved, Brian walked away with a 1988 Ford Escort that the blue book put at $900. His father got it for $375.

For all the families who scored big at the auction, there were twice as many junk yard dealers and auto dismantling shops gobbling up the leftovers. Of the 150 or so nonworking cars at the auction one recent Sunday, about a third were sold without one bidder for $50 to a pick-your-part junkyard.

While Cars 4 Causes is praised by charities, some competitors and salvage yards question the role of Finnigan, the automotive consultant, and his handling of the car-related side of the operation.

Finnigan takes care of the car questions, including making decisions about which cars are rehabilitated and which go to auction. But he also owns a separate auto-dismantling business, Ventura Truck Only, which sits next to the Cars 4 Causes retail lot in Santa Paula. Finnigan’s company buys several trucks a month from the organization’s auction.

That arrangement, critics say, means Finnigan could profit at the charities’ expense by undervaluing the cars he wants to buy, routing them to the auction and not the retail lot.

While officials from the district attorney’s office, state attorney general’s office and the Internal Revenue Service say there is nothing illegal about the setup, it creates the potential for backdoor deals that could reduce the amount of money the charities receive.

“It’s important that there is no self-dealing going on, and that the charity is getting the best deal on the cars that they can,” Johns said.

Joe Thomas, director of operations for the Oxnard Rescue Mission Alliance, said he believes it was improper to have an employee making a profit from parts that were donated to the charity. “Cars 4 Causes does good things and a lot of the money goes to worthwhile causes, but someone is still making money on it.”

Executive Director Lee said she is confident that Finnigan is not doing anything untoward. “What he does on the outside is his business. There has never been a backdoor policy and there never will be. He has to bid at the auction like anyone else.”

Besides, she said, additional bidders only raise the price of vehicles sold at auction, bringing more money to charities.

“If there was something that looked funny, he would be getting all the trucks and he’s not,” she said. “I don’t feel there is anything wrong with it at all.”