While the annoying Kars4Kids radio jingle asking consumers to donate their unwanted cars for needy children seems straightforward enough, it may actually be steering donors down a road they didn't expect.
All of the money raised by Joy for Our Youth (a.k.a. Kars4Kids) -- $16.2 million in 2007, according to their tax returns -- gets funneled to another charity called Oorah, which is never mentioned in the radio jingles or the billboards plastered along many major highways. Oorah is a Jewish religious organization whose stated mission is to heighten Jewish childrens' awareness of their heritage.
Among other things, the group provides scholarships for religious education and hosts a summer camp.
Not only do the radio commercials neglect to mention that's where the money goes, but the charity also dangles a free vacation offer as a sweetener -- not divulging, of course, that it's stocked with its own hidden agenda, including a required upfront payment from the donor and "the opportunity" to go to a timeshare sales presentation.
The '"free vacation" offers and lack of clarity regarding where funds actually go caught the attention of the states' attorneys general offices in Oregon and Pennsylvania this year. Both have taken action against the charity for deceiving donors and failing to register the organization in their states.
The Oregon Attorney General's Office charged that Kars4Kids "misled Oregon consumers about 'free' vacation offers and the charity's religious purposes."
"Kars4Kids also failed to disclose that its 'free vacation' offer was designed to recruit people to attend timeshare presentations. This is significant because deposits, cancellation fees and other conditions can end up costing consumers more than a "free vacation" is worth. In addition, receiving goods or services in exchange for a donation can eliminate the tax deductibility of the donation," the office said.
In its promotions, Kars4Kids makes the vacation offer seem like the donor is receiving something in exchange for their donation. Yet, in its dealings with the Oregon's attorney general's office, it argued that the voucher had virtually no value, according to documents obtained by WalletPop.
Oregon also charged that the organization claimed to be a "top-rated" charity, despite having no substantiation, and it failed to disclose that the donations were for religious purposes. Kars4Kids settled with the state in April, agreeing to stop offering "free vacations," to properly explain its religious affiliations and to pay $65,000.
Pennsylvania Attorney General Tom Corbett also reached a $65,000 settlement with Kars4Kids after accusing the group of misleading potential donors. Corbett's office took issue with the ad campaign's failure to note that only people of certain religious affiliation would benefit from the donation.
"Like so many other organizations that engage in national campaigns, Kars-4-Kids discovered that, while we were in compliance in other states, Pennsylvania and Oregon had certain, specific advertising policies that we arguably did not meet," wrote Yehuda Meth, the director of communications for Kars4Kids in an email. "We are now fully compliant in every state that we operate in."
"No one complains about the good work we do, nor the programs we fund," wrote Meth. "We are very proud of our work and have never attempted to hide that our programs have Jewish family values at their core."
And, he said there is no issue with the vouchers. "The vacation vouchers are provided by a third-party, but considering how many vouchers we have delivered, the percentage of dissatisfied customers is very low."
One more piece of information missing from the charity's promotional material is the diminished tax value of the cars donated to the group. Their claim that donors can get the maximum tax deduction allowed by law is true. But the catch is that the amount won't be very much, since the deductible value of the car is the typically very, very low salvage price.
Bennett Weiner, chief operating officer of the Better Business Bureau's Wise Giving Alliance, said potential donors need to pay close attention to where their donated money will be going.
"I would encourage people to know what the charity is doing with collected funds from these kinds of donations," he told WalletPop. "You're not always going to get a clear picture ...you cant base it on the name alone."
Weiner said donating an old car is a "gift of convenience" and the donor should ask how much of the resale goes to the charity since a third party has to be paid for its removal and other expenses. Also, he said, you cannot deduct the market value of the car, but how much the charity sells it for. Only if you find a group that intends to use the vehicle, could you claim a donation of the vehicle's fair market value, he said.
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