The boat donation scam was not based on a tax deduction of fair market value, but on deducting the equivalent of the blue book value. The fair market value would reflect what someone would pay for that particluar boat, reflecting its condition - generally speaking if the fair market value was more than 50% of the blue book, the owner have a financial inventive to sell the boat, as other owners do. Let's be frank - most boats were donated because the tax savings from claiming the blue book value as a charitable deduction was greater than what the boat could be sold for.
A charity can no more find a profit from upgrading a distressed boat than you or I can - the cost of professional repairs is such that a seller can't get it back in a sale. The one exception to this rule is can be if the owner does his/herr own work and ignores or discounts the value of their time. My guideline (and expectation) is anticipate about 50% return at best on upgrades. This is just the way it works, unfortunately.
If you have a distressed boat, my advice is to list it on eBay. Ebay seems to pull the bargain hunters who think a below market price equals opportunity, rather than a big red flag.