How to Donate a Car to a Volunteer Organization
Written by Anatoliy Pashynskyi, Counsel, Vasil Kisil & Partners
For the time being, one of the most wished-for gifts for any volunteer organization is a car. That is why, over the past two and a half months, domestic businesses and the Ukrainians have handed over thousands of vehicles to volunteers to meet their needs. However, not all such transfers were formalized correctly. This article provides a step-by-step instruction on how to properly donate a car registered in Ukraine to a non-profit organization.
Step 1: Preparing for the donation
If a car is donated by a married individual, he or she should first remember when the car was bought. If it was purchased using spouses’ joint funds during the marriage, a consent of the other spouse should be obtained to donate the car. Such consent may be given in writing in any form.
If a car is donated by a legal entity, an order mandating the donation must be issued. One should also remember that a director may need an approval of the general participants’ meeting to sign such a donation agreement. The donor should check the company’s articles of association to understand whether the minutes of the general meeting should be prepared. If the meeting minutes are required, they can be done in writing without engaging a notary or a state registrar.
The recipient non-profit organization should also consult its articles of association. Charitable foundations and NGOs often limit the director’s sole signing authority with respect to significant transactions. If the articles of association say a director has no sole signing authority with respect to a major donation agreement, minutes of the general meeting will have to be prepared.
It should be separately noted that, before the execution of the donation agreement, accountants of donor companies often ask a non-profit organization to send an official donation request letter to them. This practice is completely normal and is widely used in charitable activities.
Step 2: Drafting the agreement
We recommend donating property to a charitable foundation or an NGO by means of a donation agreement. Donation is a directed gift, i.e., a transfer of a thing free of charge to achieve a certain goal.
The donation agreement must specify the parties, the subject matter of the agreement (e.g., free transfer of ownership to a car to achieve the organization’s statutory purpose), the characteristics of the car (its model, color, year of manufacture, engine capacity, license plates, VIN code) and other provisions that are important for the parties. Although the law does not require a professional appraisal of the car before entering into the donation agreement, it is worth specifying at least a book value of the car (if the car is transferred by a legal entity) or including the phrase “the parties appraise the donation at (amount)____” (if the car is transferred by an individual) in the donation agreement. For convenience, individuals can use a car value calculator available on the website of the Ministry of Economy of Ukraine to calculate the average market value of the car.
It is mandatory that a donation agreement is made in writing and, if the parties so request, notarized. Thanks to the volunteers fighting on the legal front lines, many donation agreement templates are now available on the Internet. You can also draft one on your own, taking into consideration the requirements set out in Articles 718 to 730 of the Civil Code of Ukraine and Article 6 of the Law on Charities and Charitable Organizations. Such an agreement must be accompanied with a vehicle transfer and acceptance act.
Step 3: Entering into the agreement and re-registering the vehicle with MIA authorities
In peacetime, a new owner had to re-register the vehicle in his or her name at a Ministry of Internal Affairs (MIA) service center within 10 days after the agreement was concluded. Now, the registration deadline has been extended due to martial law, so that the owner may re-register the vehicle within 90 days after martial law is over (clause 7 of the Procedure for State Registration of Motor Vehicles approved by CMU Resolution No. 1388 of 7/9/1998).
Meanwhile, the Ministry of Internal Affairs still applies the same standard requirements to the procedure for concluding the agreement. Like before the war, both parties to a used car donation agreement must personally appear at a MIA service center or administrative services center to sign the agreement. An exception is a notarized agreement – if the parties have their donation agreement certified by a notary, it may be delivered to the service center later on (clause 8 of the Procedure). Thus, such a deadline extension due to martial law is relevant only for notarized agreements only because any other agreements may only be made before the MIA / administrative services center.
The good news is that most of the MIA service centers are operating on a regular basis throughout Ukraine, even during martial law. An up-to-date list of the operating centers can be found at the official website of the MIA Main Service Center.
Step 4: Responsible use
Volunteers can start using the vehicle once title has been registered. We should keep in mind that non-profit organizations are entitled to use motor vehicles exclusively for their statutory purposes and activities (clause 133.4.2 of the Tax Code of Ukraine). Moreover, the donation agreement itself may set out additional requirements to the use of the donated vehicle.
If the vehicle is not used for the intended purpose, the violating organization may be deprived of its non-profit status, and the donor may demand termination of the donation agreement (Article 730 (3) of the Civil Code of Ukraine).
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In times of war, volunteer cars are used to perform many important tasks throughout Ukraine: they transport humanitarian aid, evacuate civilians, rescue the sick and wounded. We hope that this article will help responsible businesses and citizens to donate their cars properly (preferably with a full tank ☺️).