How to Purchase a Car for Your Nonprofit Organization

Nonprofit groups often buy cars or other vehicles to transport members or to use for other day-to-day purposes. When you buy a car for a nonprofit group, the state records the title under the name of the entity rather than an individual. You must ensure that you have clear association rules in place that detail the purpose of the vehicle and the people entitled to use it. You must have registered your nonprofit with the state where you operate and have a tax identification number for the organization from the Internal Revenue Service before buying the vehicle.

Instructions

1

Amend your organization's operating agreement to specify by job title who can use the car. Do not mention individuals' names because nonprofit members often change. Decide how to fund the car purchase. If you have sufficient funds on deposit, you can make a cash purchase. If you do not have sufficient cash, you can apply for a bank loan.

2

Apply for a business automobile loan. You must provide the loan officer with an association resolution signed by all the required members that authorizes you to apply for the loan. If your nonprofit group belongs to a nationwide nonprofit organization, you must provide a document from the national association enabling your local chapter to apply for credit in the name of the organization. Provide the banker with a cash-flow analysis for the group, two years of business tax returns and the tax identification number. You must provide the banker with your ID. The banker uses the nonprofit's financials to consider the application.

3

Choose a vehicle that meets the group's needs and the criteria described in the association document authorizing its purchase. Ask the dealer to make a sales contract between the seller and the nonprofit group. Take the sales agreement to the bank. Sign the loan documents as the official signer for the nonprofit group. Take the check back to the dealer and exchange it for the car.