Several U.S. charities - such as Volunteers of America - rely on donated vehicles for funding, but vehicle donations have been slipping since the start of the CARS program. Overall vehicle donations have fallen about 12 percent since July 1, and could fall as far as 25 percent. About 175,000 vehicle donations are expected to be lost to the CARS program.
"It varies by market, but there's been an 11 to 12 percent drop compared with last year," Jim Hartman, vice president of vehicle donations at Volunteers of America, told Automotive News.
"The cars I'm seeing cashed in as clunkers, like older SUVs, are absolutely the typical donation to us."
Vehicles like the Ford Explorer and Jeep Cherokee typically top Volunteers of Americ's most donated list, but those vehicles now sit atop the list of most traded under the CARS program. Any vehicle traded in under the clunkers program is required to be destroyed.
Most donated cars are sold at auction - netting millions in funding per year - with the remaining vehicles sold at deep discounts to less fortunate families.
Under current tax laws, donated vehicles are worth up to $500 in tax deductions. Under the CARS program, that same clunker could be worth up to $4,500. Not surprisingly, most consumers are opting to take the extra $4,000.
However, changes may be underway in Washington with many charities lobbying for a $2,500 ceiling on vehicle donations. A bill with the revised tax law is currently in front of the House, but isn't expected to be passed anytime soon.