The federal government's "Cash for Clunkers" program has given a badly needed boost to the ailing auto industry at the expense of charities that rely on car donations to raise funds.

"People who would normally donate their car are now turning them in to dealerships," said Kevin O'Donnell, president of Donate for Charity, a for-profit nationwide car donation program based in San Ramon, Calif.

He said the phenomenon boils down to numbers. While those who donate vehicles to charity receive a tax deduction for the price the car sells for at auction -- typically $500 to $900 -- the Car Allowance Rebate System (the program's official name) offers a $3,500 or $4,500 rebate for trading in a used vehicle.

"You're looking at $800 versus $4,500. It's not a hard answer what to do," said Mr. O'Donnell.

Most charities depend on a third-party organization, such as Donate for Charity, to handle donation logistics, such as calling towing companies and auction houses. The organization receives a commission from the auction and gives the rest to the charity.

Donate for Charity -- which gives 80 percent of auction proceeds to charity -- typically processes 500 cars each week. Last week, that number dropped to 400.

Locally, Goodwill of Southwestern Pennsylvania hasn't calculated the numbers yet, but, "We expect it might have some impact," said David Tobicyzk, vice president of marketing and development.

The nonprofit collects 4,000 vehicles annually in this region and holds an auction every week in Westmoreland County. The proceeds are used to support Goodwill's programs.

"We appreciate the efforts by our legislature to develop a program that is both environmentally friendly and encourages auto sales, but we are concerned about the unintended consequences on nonprofit organizations like Goodwill," said Mr. Tobicyzk.

An organization called Vehicle Donation to Any Charity has already seen the impact from Cash for Clunkers. The third-party organization based in Richmond, Calif., has experienced a 20 percent drop in car donations since the program began, said CEO Mark Jones.

July and August are typically the peak period for the organization, with about 1,200 cars processed each month. This year, though, numbers are down, Mr. Jones said.

The Cash for Clunkers program directly affects the kind of vehicles that ordinarily would be donated.

"These are $1,000 cars that people don't bother selling, that might have been donated before," Mr. Jones said. "Now, they can get $3,500 or $4,500. Might as well go with that route."

As for the Senate's decision last Thursday to give the program $2 billion more in funding, he said he was "definitely not pleased that they're throwing more money at it."

Prior to Cash for Clunkers, car donations during the recession remained relatively steady. Mr. Jones said Vehicle Donation to Any Charity did not experience a drop in volume, but the auction prices for used vehicles fell dramatically beginning last September, matching the fall in scrap metal prices.

Donate for Charity reported that donations were down 10 percent last year. Mr. O'Donnell said the recession may have delayed donations. "Some people are just going to the mechanics, hoping to extend the life of their car a little longer. But the car's still going to die in a year or two, so we'll just get them then."

The last time car donations were hurt by federal measures was in 2005, when tax law was changed so the amount a taxpayer could claim for donated cars was limited to the amount it sold for at auction. Previously, taxpayers could deduct the "fair market value," which in most cases exceeded the auction price.

Even then, car donations "weren't decimated," said Mr. O'Donnell. "You still had to get rid of your old car."

That's part of the reason why charities are hopeful donations will be resilient this time around, too. Donations might have dropped even further, said Mr. O'Donnell, except that Cash for Clunkers only accepts trade-ins that meet certain criteria. For instance, the vehicle must have a new combined city/highway fuel economy of 18 miles per gallon or less, be in drivable condition and be continuously insured and registered to the same owner for the full year preceding the trade-in. Part of the goal of the program is to get low-mileage vehicles off the road entirely.

In contrast, charities are grateful for any vehicle they can get.

"A lot of the cars we get have mechanical issues like a blown head gasket. They wouldn't be eligible under Cash for Clunkers," said Mr. O'Donnell. "If they had taken cars with mechanical issues, we would've been devastated."

University of Pittsburgh economics professor David Dejong, who said it was a "no-brainer" that people would turn away from donating vehicles while the program was in place, said Cash for Clunkers might be hurting other industries, as well.

Suppose a person needed both a new car and washing machine, he said. "The program breaks the tie, so I do the car instead. So it influences which durable good I move away from and a possible side effect is that it's hurting other industries."

Looking at the bigger picture, though, Dr. Dejong had a more forgiving view of the program: "I think it's probably the lesser of two evils: doing nothing or getting a fairly effective and timely fiscal stimulus in place."