Nellie becomes a charity car donation

Charity car donation riddle

Nellie became a $2,000 donationPatty’s 15-year-old Jeep Cherokee Laredo, affectionately called “Nellie,” has triggered a new riddle.

Question: When is a car not a car? Answer: When it turns into a charity donation.

In this case, Nellie turned into a $2,000 charity donation. Here’s the story.

Background

A while back I wrote about Nellie in a post titled Getting Smarter About Charity Car Donations.

And then I shared my Is making a charity car donation smart or foolish? podcast. The podcast introduced CarDonationCalculator.org, a unique website created by SeriousGivers to help you figure out the best approach when thinking about donating your car to charity.

I also created a short Charity Sherlock video called How to Value Your Used Car at Edmunds.com — in 3 Minutes.

Back then, Nellie was still a member of the family.

Should Nellie become a charity car donation?

Last week we bought a new car for Patty. We didn’t want to mess up the purchase discussions with the trading in of an old car, so we kept Nellie. But it was time to figure out what to do with Nellie, and we wanted Nellie’s departure to help the charities we support.

The main thing Nellie had going for her was very low mileage: about 108,000 (or 7,200 miles per year). However, Nellie had a bunch of nicks and scrapes, her turn signals acted up, and her transmission dripped a bit.

We used both Kelley Blue Book and Edmunds to come up with sale values for Nellie. The toughest part was trying to figure out how Nellie’s condition would rank. Would it be “Fair” or “Good” in Kelley terms? Or “Rough” or “Average” in Edmunds terms? I hoped Nellie would fit the Good and Average categories, which meant

  • a private sale value ranging from $2,302 to $2,904 and
  • a trade-in value ranging from $1,763 to $1,890.

We’ve thought a lot about making a charity car donation. Trying to decide what was best for us and charity (and accordingly make the best use of Nellie), I went to CarDonationCalculator.org. It took me through these quick steps,

  • Step 1: Entered a private sale value of $2,904 (the higher one I found).
  • Step 2: Entered a trade-in value of $1,890 (again the higher value).
  • Step 3: Entered that we do itemize deductions and entered a marginal tax rate of 20%.
  • Step 4: Entered $300 as the “hassle cost” — the cost of selling Nellie by ourselves.
  • Step 5: Chose a dealer percentage of 50% (the portion of the car sales proceeds a commercial dealer would take before a charity gets the benefit of the car donation).
  • Step 6: Entered that if we sold Nellie ourselves we’d donate 100% of the proceeds to charity.
  • Step 7: Entered “NellieGo” as my identifying information, and ran the calculator.

The result shown in the calculations summary was

  1. If we donated Nellie to a charity that would use Nellie directly in its programs, an overall net benefit of $581 (charity benefit minus our cost) and an “A” grade.
  2. If we donated Nellie to a charity that would turn around and sell her, an overall net loss of $1,581 and an “F” grade.
  3. If we sold Nellie and donated the proceeds to charity, an overall net benefit of $281 and a “B” grade.

The best choice became clear

  • No charity we support would use Nellie directly in its programs, so option #1 would not be a good choice for us.
  • Donating Nellie to a charity that would sell her (option #2) would produce a substantial loss.
  • Selling Nellie ourselves and donating proceeds would produce a positive overall benefit.
  • We decided to sell Nellie and donate the proceeds.

Goodbye Nellie

When I ran the CarDonationCalculator I valued the inconvenience or “hassle” of selling Nellie at $300. As it turned out, selling Nellie was less painful.

When we got done buying Patty’s new car, we asked the people at the dealership about how to sell a used car worth $2,500 or less. They suggested we go to the local CarMax® dealership. CarMax buys and sells used cars.

I took Nellie to CarMax, and put myself into negotiate mode.

  • Patty didn’t go with me, but was on call if I could arrive at an acceptable price.
  • The CarMax folks checked Nellie and took her on a short test drive. Then they gave me their price. No negotiation. Take it or not, either then or within a few days.
  • I called Patty, and the CarMax price was OK with her ($2,000). It was OK with me too.

In about two hours (including travel time), with little hassle, we had sold Nellie. The $2,000 paid on the spot was less than the $2,904 top private sale value and more than the $1,890 top trade-in value.

We said goodbye to Nellie. And received $2,000 to donate to our favorite charities. If we’d donated Nellie to a typical car donation program, the charity would have received $945 or less.

Thank you CarDonationCalculator.org. And thank you CarMax — we hope you find a good home for Nellie.