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If you run a nonprofit organization, you may need a company vehicle. Buying a car for a nonprofit is not as simple as taking the organizations checkbook down to a local car dealership and writing out a check for a new car. Nonprofit organizations have a board of directors who have to approve large expenditures, such as buying a new car for the organization. This is due to the fact that IRS tightly regulates the business practices of nonprofit organizations. If your organization really needs to buy a car, it can be done.
Step 1
Let supporters know that you are looking for a car for the organization. Be specific with that you are looking for and what you need. People can donate vehicles to nonprofits and get a tax write-off. You may get lucky and have just the car that you need donated to the organization. If not, you must be able to show the board of directors that you at least attempted to get the car as a donation.
Step 2
Create a solid proposal for the reason why you need the car and the type of car that is needed for the board of directors. Your proposal should show a real need for the car. Include details on how much you expect to spend to buy the car, how much you expect annual maintenance to be and other related costs. Look for the most low-maintenance vehicle you can so you can minimize costs.
Step 3
Include the cost for buying the car in the annual budget. When you present the budget to the board of directors, show them your proposal to demonstrate the need for the car. You can only buy a car for the organization if the board approves it as part of the budget. They may only approve an amount lower than what you are asking for. If that is the case, you will have to buy a car that meets the budgeted amount.
Take your proof of tax exempt status with you when you buy the car. This will prevent you from having to pay sales tax on the purchase of the vehicle. If you are buying the car directly from an individual, then you will show this proof when you go to register the car. If you are buying from a dealer, you will show the salesperson the proof before you sign any paperwork. Remember to bring the tax ID number for the organization and proof of your authority to act on behalf of the nonprofit organization, such as something on letterhead stating your authority.
