Alleged improper profits: DA,
Attorney General sue Cars 4 Causes
December 04, 2016
By Peggy Kelly
Santa Paula News
Ventura-based Cars 4 Causes was sued Tuesday by local and state prosecutors, who allege it improperly profited from its charitable status by taking donated vehicles and not channeling millions in profits to nonprofits.
The lawsuit filed by the Ventura County District Attorney’s Office and the state Attorney General’s Office says Cars 4 Causes, which operates in every state but Illinois, used 87 percent or more of its donations to pay for items such as advertising and administrative costs, including staff salaries. That left only 13 percent — or less — for charities.
According to a statement issued by Ventura County District Attorney Greg Totten, Cars 4 Causes’ “last tax return reported that in spite of raising over $5 million in donated vehicles, less than 10 percent of the proceeds were donated to any charity.”
The state also filed a lawsuit Tuesday in conjunction with the Los Angeles County District Attorney’s Office against another car-donation nonprofit group, People’s Choice Charities.
Car donation organizations are 501(c)(3) tax-exempt organizations that solicit car donations (often through extensive advertising), sell the vehicles, deduct all their costs, and then use what is left to fund a charitable program, which they choose or allow the donor to choose. Other charities such as the Ventura Rescue Mission would accept such donations directly; they now partner with Riteway Charity Services on vehicle donations.
According to a statement by Attorney General Kamala Harris, Cars 4 Causes and People’s Choice Charities, “exploited the goodwill of generous donors by misrepresenting their charitable programs, misappropriating donations and accruing excessive administrative costs. These lawsuits hold People’s Choice Charities and Cars 4 Causes accountable for breaking the law and give California consumers greater confidence that their donations go toward the intended charitable cause.”
Of the approximately $2 million prosecutors allege the group owes other charities, $600,000 should have been given to nonprofits serving the sick and providing medical research, $250,000 to children’s and education charities, and $200,000 to groups benefiting the poor.
According to the Attorney General’s press release, “Ventura-based Cars 4 Causes claimed it ‘worked smarter’ to ‘get the most money for charity.’ From 2009-2014, Cars 4 Causes reported that $15.9 million was donated to charity. In reality, C4C only gave $5.4 million to charity — and many of the charities designated by donors received nothing at all.”
In addition, “During this time, Cars 4 Causes denied many requests from individuals in need seeking a car, including single mothers, college students, and seniors, all while paying thousands towards staff salaries and millions to advertisers.”
In order to ensure that charitable donations are spent as intended, Harris urges donors to donate directly to the organization they want to benefit. If a car donation organization is used, noted the Attorney General Office’s statement, “Call the beneficiary organization you designated to confirm that they received your donation. If they did not, call the car donation organization and demand that they forward your donation.”
