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Can charity give away a car?

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Can charity give away a car?

Can a church or other charity give away a car that was given to it? I was told no, but the church wants to give it away. Can the church legally do it? 

This question raises interesting tax and fiduciary duty questions. It all depends on the person to whom the car is given. 
 
If the church or other charity gives the car to an appropriate member of a charitable class within the program of the charity, it should be OK. A job training program that gives a used car to a graduating trainee to commute to a job where there is no public transportation would be a good example. If the church or charity gives it to a member of the board or other insider who is considered a “disqualified person,” it would be an automatic excess benefit if not treated as compensation to that person when the car is given. (See Ready Reference Page; Charities Must Avoid Excess Benefit Transactions.”) If it is given to someone else, one would have to question why, and whether it would be a breach of fiduciary to duty to the organization for members of the board to give away a valuable asset without receiving anything in return.
 
The charity also has obligations to the original donor if the donor wants to claim a contribution deduction, and must provide an acknowledgment of receipt, including a statement of intended use if the car is not to be sold right away. If the car is sold without substantial improvement, the charity has to give an acknowledgment of the sale price to the original donor. The original donor’s deduction may not exceed the gross proceeds of the sale, even if the fair market value is higher. (See Nonprofit Issues®, October 16, 2004.)
Sunday, January 23, 2011
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Comments

The other aspect of this potential transaction is: Who has title to the car and what are those implications? Did the church or charity actually take title and then, in turn, the title moved to the recipient? Does the church or charity need to be licensed by the state to handle transactions of this nature? It seems to me that this matter can effect both the proper handling of the transaction of a titled asset as well as tax deductibility. That is, if the title actually passes from one individual to another, I don't believe the "donation" is tax deductible.

I agree that if the original donor gave the car directly to an individual, the donor would not be eligible for a charitable contribution deduction. I had assumed from the way the question was phrased that the church had taken title to the car, but that may not be the case.

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