Cash for Clunkers is good news for people looking to trade in their old cars for new ones. It's good news for America's troubled car dealers. It's good news for automakers. And it's good news for auto workers, some of whom have been called back to work on assembly lines ramping up to meet demand generated by the initiative.

But with every upside, there are downsides, both predictable and otherwise. That appears to be the case for America's needy citizens according to a new report by Reuters. Not because the poor, elderly and disabled war veterans are driving around in old cars, but because the charitable organizations that once relied on the donation of old cars to sustain their activities have seen a marked drop in the number of old clunkers being donated, as their owners are apparently opting for government-sponsored trade-ins instead.

One veteran's aid organization, the Military Order of the Purple Heart, estimates that the $3 billion allocated overall by the federal government towards the C4C program – known officials as the Car Allowance Rebate System (CARS) – amounts to some 700,000 vehicles, which could cost charities like theirs some $105 million in donated vehicles. The lost income will mean that charities will have to cut services and perhaps even employees.

The organizations in question have yet to substantially change their approach to soliciting donations, however, a bill being proposed in Congress could allow patrons donating their cars to charitable organizations to declare tax deductions of $2500 or the car's appraised value – a significant jump over the current $500 (or auction price if the organization sells the car), but still a far cry from the $4500 many are receiving on trade-in under the Cash for Clunkers program.

[Source: Reuters]