Turning Cars into Cash

2011

Audience: Executive Leadership, Foster Caregivers, Public, Shelter/Rescue Staff & Volunteers

Bake sales, dog walks, and coin canisters are a few of the supplementary ways animal welfare organizations raise cash. But groups often put a lot of time and energy into fundraisers like these for very few dollars in return.

In recent years, a new fundraising strategy has gained popularity: used car donations. Donors like the program because they can support their favorite charity and get a tax deduction. Non-profits like it because used cars can bring in big bucks.

For example, one charity sold 32 cars in a month and grossed $11,000 in revenue. The next month, it sold 63 cars and received $38,000 in gross revenue. But before you embark on a scheme that seems too good to be true, read on. There's more to it than meets the eye.

Be Transparent. A few years back, a big car donation scandal hit the San Francisco Bay Area. A charity routinely promoted its car donation program on one of the most listened to local radio stations. Commercials told the poignant stories of how used cars were changing the lives of the charity's struggling clients. Then it came to light that of the $8.5 million dollars the charity received in merchandise, only a small percentage actually went to clients. Lawsuits were filed alleging fraud, false advertising and diversion of funds and, ultimately, the courts ordered the charity to close its doors and liquidate its assets. The scandal not only shut down that particular charity but put all local car donation programs under a cloud of suspicion.

If you decide to run a car donation program, be prepared to publicly explain how much money you spend on outside services (advertising, commercial fundraisers etc), how much money you actually take in, and how much money goes directly to help the animals.

Determine How Much Responsibility (and Money) You Want. There are a variety of ways to incorporate used car programs, depending on how much staff time you want to invest.

A few charities run programs totally in-house - they do their own advertising, handle all the paperwork, bring the cars to their facility, and sell them from their own used car lots. These programs are very labor intensive, but the organizations reap 100% of the income they receive.

Some charities do their own advertising (write the ads and determine their placement), handle all the transaction paperwork and then turn the cars over to an auction house to do the actual selling. In these situations, the auction house gets a cut of the car sale (10% seems to be common) and also charges ancillary fees for things like detailing, smog certificates, repairs and bill of sale transactions. The charity will also have to pay a fee to get the car to the auction house and this will vary, depending on distance.

Some organizations choose to turn the whole program over to commercial fundraisers who contract with charities to solicit on their behalf. Here, the charity may actually receive only 5% to 50% of the car sales. There is no investment in staff time but you don't have much control over how the program is marketed and run, either.

There are other mix and match options. For example, one charity turns the program over to an auction house to handle the paperwork and sell the cars, but the charity does its own advertising and sends out its own thank you notes to the donors.

What's Involved In Do-It-Yourself? Let's assume you want to do everything in-house except actually auction off the cars. What's involved?

First, you'll need to find an outlet for your cars. Look in the Yellow Pages under Auctioneers. Interview a few companies, go to their auctions, ask for references (satisfied customers) and carefully review and compare terms.

Next, you'll want to get some paperwork from the Department of Motor Vehicles. In California, this includes a Transfer Form and a Bill of Sale, but call your local agency.
Paperwork may vary from state to state.

Then, assign a staff person to take car donation inquiries over the phone (to best capture interest in the program, offer a direct line so the potential donor doesn't have to wade through endless voice mail or wait for a return phone call). You'll want to ask the donor a variety of questions such as the make, model, year and mileage of the car. You want to know if it's running and if not, why not (sometimes this could be for something as simple as a dead battery). You want to know when the car was serviced last, if the donor has service records and if he's the original owner. You want to know if there's collision damage, if the car is registered in your state, if the registration is up to date. You want to know if the car needs repair and, if so, what kind of repair it needs. You ask all of these questions because if the car is a total lemon, you might want to turn it down. You can go in the red if you start paying to send all your cars to the junkyard.

Assuming you go forward with the transaction, send the donor the DMV paperwork and have him fill it out. The car owner will need to provide the Certificate of Title and Registration when the car is turned over. You can ask the donor to bring the car to your facility, or you can have the car picked up and taken to the auction site.

At the end of each month, the auction house will send you a check along with a statement, showing all of the cars that were auctioned, what they sold for, and the cost of any repairs or ancillary fees.

Getting the Goods. So how do you get the cars, anyway? The first place to start is with your own membership. Ask for used cars in an ad in your next newsletter (and every newsletter thereafter). You might want to only do this much advertising for awhile. It's free and it enables you to test the waters and get the kinks out of the program.

When things are running smoothly, place a small ad in the Classified section of your local newspaper and try running it seven days a week for a month to determine its impact. These ads are generally quite affordable and some newspapers even have non-profit rates. Look at other ads soliciting cars and try to make yours catchier, bigger, or more compelling.

Once the program is humming, you may want to branch out with your advertising. Consider placing your ads when new car models come out and people are thinking about buying new cars, or at tax time when tax deductions are on people's mind.
Try to determine which magazines, radio stations, newspapers or tabloids appeal to animal lovers in your community. Ask your staff and volunteers what they listen to and read. Talk to ad salespeople at the various media outlets to get ad rates and a demographic profile of their audience. Talk to media buyers at advertising agencies for advice. Then experiment and see if your ad placements bring in results (this can be easily tested if you take the inquiries in house and ask the callers how they heard about the program).

As you'll quickly discover, advertising can be very expensive. Start slowly. Don't over commit your resources and carefully monitor your results. You'll want to pull your ads in a timely fashion if they're not working for you.

Consider the Side Benefits of a Car Donation Program. A car donation program can be a good way to attract first-time givers. It can also be a good way to enhance public relations. "I really like visiting with the donors when they call about the program," says one animal welfare staff person. "I always encourage them to bring the car here and then I offer to give them a tour so they can see first hand what their money will be used for. To me, this is a chance not just to get a car but to make the donor feel good about what we're doing - and to encourage more support. You never know when that contact will lead to a big donation in the future."

An Executive Director at another agency really appreciates the ability to use car donation advertising to sell the organization's mission to the community. "In our radio ads, we talk about the individual animals whose lives we save as a result of this program. We wouldn't be able to afford this kind of advertising if the cars weren't bringing in the revenue."

The Bottom Line in Dollars. Clearly, the money you make on car donations will be dependent on several variables: the number of cars you acquire, the quality of the cars, and the amount of money you spend on outside services like commercial fundraisers, advertising, auction houses, towing or paperwork/processing. One large animal welfare organization nets a couple hundred thousand dollars per year on car donations. It's not uncommon for smaller organizations to annually net $40,000-$60,000 after paying for advertising and other outside expenses. That's a whole lot of cupcakes!

A Case In Point. Pets In Need (PIN) is a no-kill animal shelter serving the Penninsula/Silicon Valley region of the San Francisco Bay Area. The staff of fifteen full-time employees finds homes for approximately 750 cats and dogs per year and operates on a one million dollar budget.

Says Marketing and Development Director Marguerite Judson, "Our car donation program combines a visibility campaign with fundraising. Since the inception of the PIN Car Donation Program, adoptable PIN animals have been the focus of newspaper and radio advertisements. In the second year of the program, not only have $81,000 in car preparation and auctioneer fees and $36,000 in advertising expenses been covered, but $40,073 net profit was realized. PIN also gained 72 first-time donors through the Car Donation Program.

In April 1999 we assumed responsibility for the advertising - to more accurately convey our own message and to test advertising venues - and increased the percentage of sales proceeds that we receive from the auctioneer from 50% to 70%. This is probably a higher percentage than usual for the volume of cars (115 in 2000) that are donated to Pets In Need.

The advertising strategy we have developed is to always have newspaper ads running and periodically do radio ads. The timing of the auctions means that we see the results of changes in our advertising strategy at least one month later.

Print: In addition to our newsletter ad, we get excellent results from the San Francisco Chronicle. When we advertised in the San Jose Mercury News, we noticed an increase in low value cars and no longer advertise there.

Radio: We chose KCBS as our only radio station because it has the most responsive, affluent listening audience. We invest in KCBS ads in the fall, when new car models are being sold, and in the spring, when people are doing their taxes and want to improve their taxes for the next year. In 2000 KCBS offered a special promotion for the last week of the year and we added an extra week of advertising. The corresponding increase in auction proceeds was evident in the January, 2001 auctions. The ads are usually recorded by our Executive Director, which has increased visibility of the agency's leadership. In 2000, Rich Aurilia, the San Francisco Giant's popular infielder, recorded one of our KCBS radio ads. This year, Giants first baseman J.T. Snow did a spot for us. "

**Before implementing a car donation program, be sure to consult with an attorney as differing local, state or federal regulations may apply.**

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