The Charity Must Register as a 501(c)(3)
Before any solicitation for donations is conducted, the charity hoping to receive donated cars must be officially registered with the Internal Revenue Service (IRS). By registering as a 501c3 nonprofit charity, the organization not only exempts itself from taxes on donated goods, it creates a legal method for donors to make tax-deductible contributions. Donors may only deduct charitable contributions from their own taxes if the receiving charity is registered as a 501c3 organization with the IRS. In addition, some states may require additional registration with state tax authorities before a charity may begin operation.
The Charity Should Advertise
Once it is properly registered with the appropriate agencies, it may advertise or solicit donations. Advertising may be carried out through a number of channels--ranging from direct requests to commercial slots on broadcast television--and is generally necessary to reach the broadest market of potential donors. Depending on state and company policies, some advertising venues may provide discounted advertising space to properly registered charities, and some generous organizations may provide free ad slots.
The Charity Must Provide a Receipt
When the charity receives a donation, whether of a car or of some other support, it must provide a receipt to the donor. Receipts are critical instruments for bookkeeping and accounting purposes, and the donor must have a receipt in order to legally deduct the donation from his own taxes. While official receipts on letterhead from the designated charity are preferable to handwritten, generic statements, receipt books are readily available (and relatively inexpensive) from office supply stores.
