The time of radio ads for car donations to Jewish charities may be gone forever.
Jewish nonprofits are reporting a substantial decrease in those donations since the American Jobs Creation Act took effect Jan. 1 — a measure many say further weakens this form of charity, in decline since the high-tech bubble burst.
Provisions in the measure, aimed to discourage donors from inflating vehicle value and claiming a higher tax deduction, changed the amount donors could write off when donating their cars.
Few Jewish nonprofits in the Bay Area rely heavily on donated vehicles. But for smaller organizations that already operate on tight budgets, the decline is a concern.
“We’re getting maybe 10 or 15 percent of what we got before,” said Jerry Schwartzman of the organizations he volunteers for, both Hatikva, a Jewish home for developmentally disabled adults in Menlo Park, and Gideon Hausner Day School in Palo Alto.
“The [car donation] program is practically dead in the water right now,” he added.
Schwartzman said Hatikva, which would receive 20 to 30 cars a year, received only five in the first half of this year. Gideon Hausner Day School used to collect about 100 cars, raising $100,000 to $125,000 a year, but so far this year only nine have come in, and at this rate they will be lucky to raise $15,000 this year. And advertising is becoming too costly to justify.
Car donations have also dropped drastically this year for Congregation B’nai Shalom in Walnut Creek, said Efi Lubliner, head of the congregation’s vehicle donation program.
For example, last year between April and June they successfully collected 45 vehicles, but in the same period this year they received only 26 potential leads.
One of the larger Bay Area Jewish car donation programs, the S.F.-based Jewish Family and Children’s Services, has seen a 30 percent decrease in donations. However, car donations are a small part of JFCS’ development efforts. In the last fiscal year, the JFCS car donation brought in $80,000 of a $3.2 million development effort.
“We are monitoring [the program], but mostly because this is a piece of a much larger and diversified development program and fundraising program we’re not overly concerned right now. We’ll be trying to make up the difference in other ways,” said Ellen McCaslin, the JFCS assistant director of development.
The reputation of Jewish car donation programs was tarnished in the late 1990s, when Rabbi Bentzion Pil of the now-defunct Jewish Education Center was convicted of felony charges, of evading reporting laws on bank deposits — to the tune of $1.7 million.
New legislation targets potential abuses by all nonprofits. Instead of writing off “fair market value,” determined by sources like the Kelley Blue Book, donors can now only deduct the amount a charity receives after actually selling the car.
Schwartzman said the new legislation reduced car donations for Hatikva and Gideon Hausner Day School even more drastically than when the high-tech bubble burst.
“In late 2003 it started going down. [But] it wasn’t as precipitous as it was in January ’05, that was like falling down into the cliff,” he said.
The effect on nonprofits depends on how diverse their fundraising sources are.
Schwartzman said unlike the Gideon Hausner Day School, with its diversified fund-raising program and large community of about 400 families of students to reach out to, Hatikva caters to a small community, and is especially concerned about making up the difference.
For Congregation B’nai Shalom, car donations make up a relatively small percentage of the synagogue’s total budget, but Lubliner said they are a desirable source of revenue because they require relatively little work and donors are often not members of the synagogue.
Still, the decline means the synagogue may have to find other ways to supplement the $12,000 they expected car donations to raise this year, already drastically lower than the $36,000 they typically raised a few years ago, he said.
Lubliner said new legislation is not entirely to blame for the donation drop.
“How charitable are the charitable people is really question in my mind. When they were able to deduct probably more than the value of the car they were willing to do so. But when they cannot deduct what they were hoping to deduct the charity is no longer there,” said Lubliner.
But Schwartzman believed new legislation was the result of the government’s laziness in terms of dealing with fraud, penalizing the charity. He said the groups he worked with were never fraudulent with their vehicle donations.
“They were as legitimate as we can get, they were squeaky clean. The few bad apples [who overly deducted] spoiled it for us,” he said. “People are charitable, but they want you to get the bang for their buck.”
The Bay Area was hit even harder by the drop in donations than the rest of the nation, said Pete Palmer, the Vice President of the Vehicle Donation Processing Center, Inc. Palmer manages the car donation programs of over 300 nonprofits in the nation, including Yavneh Day School in San Jose. He said car donations in the Bay Area had been the highest per capita, and dropped over 40 percent, compared to 30 percent nationally.
Just before the new measure went into effect, at the end of last year, Palmer said car donation levels were up 40 percent nationally. “We knew it was the party before the disaster,” he said.
Rick Watkins, the president of Charitable Auto Resources, said one reason for the decrease might be that people are unaware that the donation programs still exist.
CARS, which handles vehicle donations for 85 national charities, including the S.F.-based JFCS and Jewish Family Services of Silicon Valley, experienced similar drops in donations; 30 percent nationally and 40 to 50 percent in the bay area.
Watkins said at the end of last year, organizations were unsure what would happen to car donation programs, so they poured money into advertising to entice donations before the legislation went into effect.