Vehicles for Change to open shop in Detroit

By Sherri Welch, Crain News Service

DETROIT (July 6, 2015) — If you're looking for vehicle donations to support your mission, what better place than the Motor City?

The region's car-loving reputation, along with the large number of low-income people in need of affordable transportation, has prompted another vehicle donation program to move into the market.

Baltimore area-based Vehicles for Change Inc. has leased space at a former dealership and automotive repair site on Detroit's northeast side and begun advertising here.

Just weeks into the launch, it's already received a handful of donations, President Martin Schwartz said last week.

He said he believes the six-month/6,000-mile warranty on the vehicles it repairs — and low-interest, 12-month financing and new automotive detailing and mechanics training — set Vehicles for Change apart from other car donation programs.

Until it can set up its own automotive repair operation, Vehicles for Change is working with Belle Tire Distributors Inc. to repair vehicles at reduced cost, Mr. Schwartz said.

“Family is a huge part of our business here at Belle Tire,” said Don Barnes III, president of retail operations. “When we found out Vehicles for Change was coming to Detroit, we jumped at the opportunity to assist them with their mission to give back to low-income families in our area with our tires and services.”

Since its launch in 1999, Vehicles for Change has expanded across Maryland and into most of Virginia and Washington, D.C. Now, it's set a goal to expand nationally wherever there's a need to get affordable cars to low-income people, Mr. Schwartz said.

"The opportunity to be in the backyard of the (vehicle) manufacturers and maybe get their attention to the point where they might be interested in working with us on a larger scale was a huge lure, as well," he said.

Detroit connections

A cousin of Jim Schwartz, the former Detroit Lions head coach, Martin Schwartz decided to expand to Detroit after his friend Luis Perez, who joined the team's head office in 2011, encouraged it.

"I had known Marty for 10 years in Baltimore...(and) knew he was looking to expand," Mr. Perez said, adding that Mr. Schwartz had said for years that the greatest challenge to his operating model was the ability to get cars donated.

"I just assumed, right or wrong,...if there was anywhere you could get cars donated, it would be in Detroit."

Like other vehicle donation programs, Vehicles for Change repairs donated vehicles before selling them to low-income people referred by area nonprofits at below-market costs of, on average, $800-$900.

It auctions off those vehicles that are too costly to repair or that have extensive body damage. Those that would be too costly for the owner to repair in the future, such as luxury vehicles, or that would command a higher retail price are sold through its Freedom Wheels public used car lot. The proceeds go back to support the mission.

About 90 cents of every dollar taken in goes directly to fund its programs, Schwartz said.

Financials

To give his program a running start in Detroit, Detroit Lions Charities made a $100,000 grant to fund about half of the initial costs for the local operation, Schwartz said.

The nonprofit has leased 700 square feet in a 22,000-sq.-ft. facility and lot space owned by Tamou's Electrical Services Inc. on Gratiot Avenue, just north of Seven Mile Road. Teresa McFadden from its home office is leading the local site as director of operations.

The Detroit affiliate will operate on a $650,000 budget the first year and plans to sell 80 cars to low-income individuals and families referred by one of three local charities: Matrix Human Services, Southwest Solutions Inc. or Wayne Metropolitan Community Action Agency.

In Baltimore, Vehicles for Change has secured low-interest financing for its low-income customers through Hamilton Federal Bank and Sandy Spring Bank. In Michigan, it is still looking for a bank to provide those loans, Mr. Schwartz said.

Though the loans are small, and Vehicle for Change guarantees 100 percent of them to eliminate risk for a bank, "the harder part is the reporting side," Schwartz said.

"We ask the banks to let us know how the payments are going," to link them with support services to find a job or solve other issues that led to missed payments, he said.

Other programs

Within the next six to 12 months, Mr. Schwartz said he hopes to secure the balance of the new facility and raise the $600,000 needed to start the training. The program, which will largely be offered to ex-offenders, should be able to serve 35-45 people a year.

Those entering the training program will also be referred by the three social service nonprofits, Mr. Schwartz said.

Vehicles for Change joins a number of other car donation programs operating in Detroit, including Mother Waddles Car Donation Program, Charity Motors Inc., Purple Heart and Volunteers of America Michigan.

Its arrival isn't a positive, according to one of the other programs.

"There's a limited amount of donated cars (here)," said Alex Brodrick, president and CEO of Southfield-based Volunteers of America.

A new car donation program in the market will only pull vehicles from existing programs, reducing the revenue they have for their charitable programs, he said.

In operation in Michigan for 119 years, Volunteers has operated a vehicle donation program for over 30 years, producing revenue to support social services, housing and veterans services in Southeast Michigan and the greater Lansing area, Brodrick said.

Last year, it took in just over 2,000 donated cars, which generated about $2.5 million — or 16 percent of its $15.6 million in total revenue — during fiscal 2015 ended June 30, he said. About 88-89 cents of every dollar generated goes to services.

If Vehicles for Change is active in this market, "that will impact our car donations, which will impact our funding for social support," Mr. Brodrick said.

"If we were to lose 10-15 percent, that affects everything we do."

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Ms. Welch is a reporter for Crain's Detroit Business, a sister publication of Tire Business.