Charities Wary of 'Cash for Clunkers'

Charities that accept cars as donations could be taking a bigger hit soon, now that the Senate has approved and sent to the White House legislation that will pump an additional $2 billion for the "cash for clunkers" rebate program.

The Senate approved the infusion of new cash for the Car Allowance Rebate System (CARS) on a 60-37 vote after administration officials said an initial $1 billion had run out in only 10 days.

The economy-boosting program, which the House voted last week to keep alive, gives consumers up to $4,500 in federal subsidies if they trade in their cars for new, more energy-efficient models.

"Cash for clunkers has been a proven success," Obama said in a written statement issued shortly after the vote Thursday. "The initial transactions are generating a more than 50 percent increase in fuel economy; they are generating $700 to $1000 in annual savings for consumers in reduced gas costs alone, and they are getting the oldest, dirtiest and most air polluting trucks and SUVs off the road for good."

While CARS may benefit the economy and car buyers, the program may deal a blow to a number of charities and the people they help.

 "One man's clunker is another man's coat" said Ron Marlette, executive director of Mission Solano that operates a charitable car lot in Fairfield, Calif.

For years, people within the northern California community have been dropping off their old cars at the Mission Solano in exchange for tax benefits. There, the cars are sold to provide much needed funding for the Mission's work with the homeless.

Now, Marlette reported Wednesday, the cash offered by the government threatens to dry up donations of cars to the Mission.

"It is too early to know how much we will be hurt by the Cash for Clunkers program, but we know we can't compete with the government's checkbook," he said. "Our donations were already down due to the economy as people are driving their old cars longer or brokering a sale themselves. The Cash for Clunkers program could shut us down."

Lt. Jay Ward, the administrator of the Salvation Army Adult Rehabilitation Center in Miami, similarly expressed concerns over how the "Cash for Clunkers" program could affect his organization's operations, which includes funding drug and alcohol treatment centers for 108 patients.

"If the Cash for Clunkers program continued and our car donations stayed down, and if we could not find a way to restore income, we'd have to cut beds,'' Ward told The Miami Herald.

Some, however, have pointed out that it might be too early to jump to conclusions on how "Cash for Clunkers" will affect charities, noting that only a few vehicles qualify for the program.

Under the program, passenger car owners are eligible for a voucher worth $3,500 if they trade in a vehicle getting 18 miles per gallon or less for a new car getting at least 22 mpg. Vouchers of $4,500 are available for owners who trade in a passenger car getting 18 mpg or less for a model that gets at least 28 mpg.

There are similar guidelines for SUVs and pickup trucks.

"The Cash For Clunkers Program has very specific restrictions on what types of vehicles they will take and what type of vehicles you can buy to replace your old vehicle," Amy Capistran with The National Kidney Foundation told a local NBC affiliate in Richmond, Va.

Most charities, on the other hand, "will take anything pretty much."

 "It just has to have all of its parts and you have to have a clean title to it," added Capistran, whose organization for 25 years has run the Kidney Car Program – reportedly the oldest car donation program in the country.

As donations frequently hit a low point in late summer, many charities will have to wait for the coming weeks to pass before finding how the latest "Cash for Clunkers" refill will affect them.

Senate supporters of the program, meanwhile, have hailed its effect on the auto industry - which had its best month in nearly a year in July - as well as its claimed environmental benefits.