Dec 19, 2008 12:21 am US/Pacific
Goldstein: Cars For Charity May Not Benefit Needy
LOS ANGELES (CBS) ―
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An investigation by David Goldstein finds some car-for-charity organizations don't give as much to the needy as you might think.
CBS
Now is the time of year that you hear those ads to donate your car to charity. But how do you know if the money is actually going to charity? CBS2 Investigative Reporter David Goldstein went undercover to find out.
If you're thinking about donating your car to charity, you might think twice about one in particular. The ads are all over the radio, asking you to donate your car and get a tax deduction with the proceeds going to the charity of your choice! And even get cash back!
"Cash plus a tax deduction for the balance? That's really smart," the ad states.
But is it?
Gary Stone is president of People's Choice Charities. We went undercover to find out his pitch.
"Twenty percent for us, 80 percent for them," Gary Stone said to our undercover producer.
He told our producer they auction the cars off and keep 20 percent. He claims 80 percent of the net proceeds go the charity of our choice. And that, he says, is a lot of money.
"We send usually an average of $10,000 to $15,000 a month to charity," Stone said.
"Ten- to 15-thousand? That's a lot," our producer responded.
"Yeah, yeah. We try our best," Stone said.
But do they? We got a hold of their
tax return. In 2007, The People's Choice claimed gross receipts of $1.1 million. But they donated a little more than $28,000 to charity!
We wanted to find out why -- and showed Stone the tax return.
David Goldstein: "You claim you gave $28,000 out of $1.1 million you raised. Is that good?"
Gary Stone: "This is our first year."
David Goldstein: "You think that's good?"
Gary Stone: "We just started."
That would be around 3 percent, but he says this year is different.
David Goldstein: "How much have you given this year to charity?"
Gary Stone: "We have sent thousands of dollars a month."
David Goldstein: How much?
Gary Stone: "I don't know right now."
Stone says he could prove this year was different. This year he has giving more money to charity. So, surprisingly, he invited us upstairs to take a look at his books.
But when we got up there...
Gary Stone: "Sorry, I didn't take the key. I didn't take the keys."
He claimed to be locked out of his office.
Gary Stone: "I'll fax you the letters. I'll send you."
David Goldstein: "You don't have the letters?"
Gary Stone: "I can't open the door because I didn't take the keys."
We never received a fax.
David Goldstein: Very little went to charity?
Bill Mitchell: "Very little…"
Bill Mitchell of the Better Business Bureau looked at the return and found most of the money was spent on advertising and fundraising. While there are no federal or state regulations, the BBB recommends at least 65 percent should do toward the charity -- far more than what the People's Choice donated.
Bill Mitchell: "To only wind up with this little amount of money, they would be better off standing on street corners just asking for contributions."
Stone also said we could take a $3,000 tax deduction for our car.
"Let's say it sells for $2,000 and I wrote down $3,000. I don't want to get in trouble," our producer said.
"It doesn't matter what we sell it for. It's what you value the car for," Stone replied.
That's not true. IRS rules say -- in most cases -- you can only deduct the amount the car sells for at auction.
Bill Mitchell: "This guy is just giving your producer a bum steer. This is totally wrong."
David Goldstein: "And illegal, right?"
Bill Mitchell: "And illegal."
If you're thinking about making a donation this holiday season, we have the tax returns for nearly 400 local charities. You can see how much is really going to charity -- plus we have tips on donating your car.
-David Goldstein
Tax Returns Of SoCal Non-Profits
How to Read the IRS Form 990
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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Click Here For Tax Returns Of SoCal Non-Profits
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