a

GAO

United States Government Accountability Office

Report to the Ranking Minority Member, 

Subcommittee on Financial Institutions 

and Consumer Credit, Committee on 

Financial Services, House of 

Representatives

December 2006 GSA FLEET

Information on the 

Effect of Donating 

Cars to YouthBuild 

USA and Potential 

Benefits to Rural 

Youthbuild 

Participants

GAO-07-153
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

December 2006

GSA FLEET

Information on the Effect of Donating 

Cars to YouthBuild USA and Potential 

Benefits to Rural Youthbuild Participants 

Highlights of GAO-07-153, a report to the 

Ranking Minority Member, Subcommittee 

on Financial Institutions and Consumer 

Credit, Committee on Financial Services, 

House of Representatives

To assist youth who live in high

poverty rural areas obtain and 

retain jobs, YouthBuild USA, a 

national nonprofit organization, has 

proposed providing donated used 

cars to selected low-income youth 

in rural communities. YouthBuild 

USA’s proposed program hinges on

receiving donations of used cars

from the federal government’s 

General Services Administration

(GSA). This report discusses (1) 

the effect of donating 1 to 5 percent 

of selected GSA used cars on GSA’s 

fleet vehicle sales operations, (2) 

what studies have shown with 

respect to the benefits that car 

ownership or access may hold for 

low-income individuals, and (3) 

what studies of selected low 

income car ownership programs 

and experiences of these programs 

have shown with respect to the 

benefits of participant car

ownership. 

In conducting this study, GAO 

examined auction data from GSA, 

reviewed academic studies on the

benefits of car access in gaining

employment, and interviewed

officials of six existing low income 

car ownership programs. 

What GAO Recommends

GAO is making no

recommendations in this report. 

GAO provided a draft of this report 

to GSA for its review and comment. 

GSA stated that our report is

accurate but expressed concerns

with the use of its Fleet vehicles for 

car donations. 

If GSA annually donated 1 to 5 percent of the compact sedans available for 

auction from its Fleet program (112 to 559 cars), its annual sales revenue 

would be reduced by $600,000 to $3 million (see fig.). To donate cars 

directly to YouthBuild USA, GSA would need new statutory authority to 

deviate from the existing process for disposing of surplus federal property. 

If it were given this authority, GSA would likely first seek appropriations to 

recover the loss in sales revenue from the donations but would also consider 

increasing its leasing rates for compact sedans. However, GSA would also 

require new legislative authority to increase its rates for this purpose 

because the current statute governing its Fleet program does not allow it to 

pass on these costs to the agencies that lease vehicles from it. 

The seven studies GAO reviewed consistently found that owning a car or 

having access to one increases the likelihood that low-income individuals 

(such as rural Youthbuild participants) find a job. One reason for this is that 

a car allows a person to search for a job over a wider geographic area. 

Differences between the populations in these studies and rural Youthbuild 

participants did not allow GAO to use this research to identify the degree to 

which participants in YouthBuild USA’s proposed program would benefit 

from having a car. 

Six studies of low income car ownership programs and the experiences of 

those operating the programs indicated that participants got and retained 

jobs, earned higher wages, and spent more time with their families as a 

result of owning a car. However, it is difficult to project the results of these 

studies to rural Youthbuild participants because of limitations in the 

methodologies of the studies, differences between individuals served by the 

programs and YouthBuild USA, and differences in the designs of the existing

programs and the YouthBuild USA proposal. 

Estimated Average Annual Reduction in Sales Revenue to GSA Fleet from Donating 

Compact Sedans Normally Sold at Auction 

$0.6

Dollars in millions Number of compact sedans

Source: GAO analysis of GSA data.

GSA compact sedans donated

$1.2

$0.6

$1.8

$2.5

$3.1

223

112

559

447

335

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

0

100

200

300

400

500

600

1% 2% 3% 4% 5%

www.gao.gov/cgi-bin/getrpt?GAO-07-153.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact William B. 

Shear at (202) 512-8678 or shearw@gao.gov. 
Page i GAO-07-153 GSA Vehicle Donations

Contents

Letter 1

Results in Brief 2

Background 4

GSA Fleet Would Face Reduced Revenues and Need Legislative 

Authority to Donate Cars 8

Available Research Suggests That Car Access Leads to Jobs and 

Other Benefits 12

LICO Programs Report Positive Results, but Limitations Restrict 

Projecting Results to YouthBuild USA’s Program 15

Agency Comments and Our Evaluation 19

Appendixes

Appendix I: Objectives, Scope, and Methodology 21

Appendix II: Summary of Studies on the Effect of Car Access on 

Employment 26

Appendix III: Comments from the General Services Administration 40

Appendix IV: GAO Contact and Staff Acknowledgments 41

Figures Figure 1: GSA Leasing and Auction Process 5

Figure 2: YouthBuild USA’s Proposed Rural Initiative LICO 

Program 7

Figure 3: Estimated Average Annual Reduction in Sales Revenue to 

GSA Fleet from Donating Compact Sedans Normally Sold 

at Auction 9
Contents

Page ii GAO-07-153 GSA Vehicle Donations

Abbreviations

GSA General Services Administration

HUD Department of Housing and Urban Development 

LICO Low Income Car Ownership

NEDLC National Economic Development and Law Center

TANF Temporary Assistance to Needy Families 

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately.
Page 1 GAO-07-153 GSA Vehicle Donations

United States Government Accountability Office

Washington, D.C. 20548

A

December 8, 2006 Letr

The Honorable Bernard Sanders

Ranking Minority Member

Subcommittee on Financial Institutions

and Consumer Credit

Committee on Financial Services

House of Representatives

Dear Mr. Sanders:

Youth between the ages of 16 and 24 who live in high poverty areas can face 

significant obstacles to finding employment and receiving job training, 

including low levels of academic achievement, limited work experience, 

and a scarcity of jobs in their communities. In rural communities, these 

youth may face the additional challenge of a lack of transportation to get to 

available job opportunities because of scarce public transportation and, 

according to job training and other social service providers, having a car is 

often a necessity for obtaining and keeping a good job. To address this 

challenge, YouthBuild USA, a national nonprofit organization working to 

increase the number of youth transitioning out of poverty, has proposed 

providing donated vehicles to selected low-income youth in rural 

communities to travel to job training sites and to work. YouthBuild USA’s 

proposed Rural Initiative Low Income Car Ownership (LICO) program 

hinges on receiving donations of used cars from the federal government’s 

General Services Administration (GSA). 

GSA purchases new vehicles and then leases them to federal agencies 

through its Fleet program. Each year, GSA sells at auction approximately 

40,000 of these vehicles, most of which are 3 to 4 years old. The proceeds 

from these auctions help fund purchases of new vehicles for the Fleet 

program. Under its proposed LICO program, YouthBuild USA is seeking 

donations of 1 to 5 percent of the vehicles GSA auctions off annually, which 

it would then provide to participants in selected rural Youthbuild programs. 

Because GSA’s Fleet program is currently self-sustaining and YouthBuild 

USA does not yet have experience operating a LICO program, you asked us 

to report on the implications of YouthBuild USA’s proposal. Specifically, 

this report (1) assesses the effect of donating 1 to 5 percent of selected GSA 

used cars on GSA’s fleet vehicle sales operations, (2) describes what 

studies have shown with respect to the benefits that car ownership or 

access may hold for low-income individuals, and (3) describes what studies 
Page 2 GAO-07-153 GSA Vehicle Donations

of selected LICO programs and experiences of these programs have shown 

with respect to the benefits of participant car ownership. 

To assess the effect on GSA’s fleet vehicle sales operations from donating 

vehicles, we focused our analysis on GSA compact sedans to determine the 

average opportunity cost—the reduction in revenue for each compact 

sedan GSA would donate—and the total reduction in sales revenue GSA 

would face by donating 1 to 5 percent of its used compact sedans (112 to 

559 cars) to YouthBuild USA’s proposed Rural Initiative LICO program. To 

describe the results studies have shown with respect to benefits of car 

access (that is, owning a car or having access to one), we identified and 

reviewed academic studies that had been subject to a peer review and 

spoke with experts. To describe what some LICO programs have shown 

with respect to the benefits of participant car ownership, we identified six 

LICO programs that had been the subjects of external reviews of their 

programs’ outcomes. We also met with officials from these LICO programs 

to learn about how their programs operated and how they reported 

outcomes. Appendix I provides additional details on our objectives, scope, 

and methodology. We conducted our work from May 2006 to November 

2006 in San Francisco, California, and Washington, D.C., in accordance 

with generally accepted government auditing standards. 

Results in Brief GSA’s annual sales revenue would be reduced by an estimated $600,000 to 

$3 million by donating 1 to 5 percent of the compact sedans from its Fleet 

program (112 to 559 cars) to YouthBuild USA each year. GSA receives no 

direct appropriations to operate the Fleet and sustains the program 

through the fees it charges to federal agencies for leasing vehicles and the 

proceeds from selling its used vehicles. GSA currently does not donate 

vehicles from its Fleet program. For GSA Fleet to donate cars directly to 

YouthBuild USA, GSA would need new statutory authority because such 

direct donations would deviate from the existing process for disposing of 

surplus federal property. To recover the reduction in revenues it would face 

from donating vehicles to YouthBuild USA, GSA officials indicated that the 

agency would seek appropriations and consider increasing the leasing rates 

it charges the federal agencies that lease vehicles from it. However, GSA 

would need additional statutory authority to increase its leasing rates to 

recover the costs of a donation program because presently its rates may 

only reflect the costs of operating and replacing its fleet. GSA officials also 

indicated they would consider keeping vehicles longer than the 3 to 5 years 

they currently do, which would result in an older fleet with higher 

maintenance costs. 
Page 3 GAO-07-153 GSA Vehicle Donations

Taken as a whole, available studies consistently reported that car access 

increases the likelihood that individuals with low incomes (such as rural 

Youthbuild participants) obtained jobs. The research lists several reasons 

as to why having access to a car leads to better chances of finding a job, 

such as the possibility that a car allows an individual to search for a job 

over a wider geographic area. Differences between the individuals who 

were part of these studies and rural Youthbuild participants did not allow 

us to use the studies’ results to identify the degree to which participants in 

YouthBuild USA’s proposed LICO program would benefit from having a car. 

For example, the individuals in four of the studies analyzed were mainly 

urban welfare recipients who tended to be older, more educated, and more 

likely to be employed than the average participant in YouthBuild USA’s 

proposed LICO program. 

Similar to the studies on car access generally, six studies of LICO programs 

and the experiences of officials of these programs indicate that participants 

reaped benefits from owning a car, such as getting and retaining jobs, 

earning higher wages, and spending more time with their families. 

However, the studies themselves also had methodological constraints 

(such as low response rates in surveys of participants) that make it difficult 

to project from their results. For example, a study of one program reported 

that 75 percent of respondents said that they got a job that paid higher 

wages, and 55 percent reported obtaining better quality day care for their 

children as a result of securing a car through the program. The officials 

operating this LICO program noted that participants found jobs (and kept 

them longer) and improved their quality of life. However, researchers 

obtained responses from 38 percent of participants in the program, which 

is too low of a response rate to apply the results to all of the program’s 

participants. LICO program officials also noted that their programs’ designs 

were different than the YouthBuild USA proposal, which could also limit 

the applicability of the studies’ outcomes. For example, most LICO 

programs we reviewed require participants to obtain a loan to purchase the 

car, while YouthBuild USA proposes to give cars to participants for a onetime fee of $450. LICO program officials believe that the loan aspect of their 

programs requires participants to devote more resources and effort toward 

obtaining a car and, as a consequence, participants become more invested 

in achieving the goals of the programs. LICO program officials also noted 

that their programs provided participants additional support, such as 

financial literacy training and arrangements for covering car repair costs, 

that is not available under YouthBuild’s proposed LICO program. 
Page 4 GAO-07-153 GSA Vehicle Donations

We make no recommendations in this report. We provided a draft of this 

report to GSA for its review and comment. GSA found the report to be 

accurate as it pertained to the description of the GSA Fleet program but 

expressed concerns with the potential use of its Fleet for a car donation 

program. 

Background GSA purchases about 35,000 to 40,000 vehicles annually for its Fleet 

program and manages an inventory of almost 200,000 vehicles, including 

sedans, passenger vans, trucks (light, medium, and heavy), buses, 

ambulances, alternative fuel vehicles, and limited special purpose vehicles. 

GSA then leases these vehicles to 75 participating federal agencies1

 in the 

United States, Europe, and Puerto Rico.2 As part of its leasing arrangement 

with these agencies, GSA provides maintenance, repairs, fuel, and 

management of accident claims and gets reimbursed for these costs by the 

participating agencies.3

 As part of a regular replacement schedule, GSA 

sells older vehicles in its fleet. The agency uses a nationwide network of 

commercial auction firms to dispose of and sell about 35,000 to 40,000 of its 

used vehicles annually. Federal agencies may dispose of property, such as 

GSA’s vehicles, only in the manner authorized by statute. Specifically, GSA 

auctions vehicles from the Fleet program under the “exchange/sale” 

authority contained in the Federal Property and Administrative Services 

Act (Federal Property Act).4

 Under this authority, an executive agency may 

acquire personal property by exchanging or selling similar items and 

applying the exchange allowance or proceeds of sale, in whole or in part

1

GSA refers to these agencies as “participating” because they are not required to lease 

vehicles from GSA but choose to do so (rather than, for example, leasing from the private 

sector).

2

GSA’s current authority to operate its Fleet program is specified under the Federal Property 

Act, 40 U.S.C. § 602. Under this act, GSA has broad authority to establish, maintain, and 

operate (including servicing and storage) a fleet of motor vehicles for executive agencies to 

use for the transportation of property and passengers. 

3

The Federal Property Act specifies how GSA is to set prices to recover the costs of 

operating the fleet. GSA is to set prices “for furnishing motor vehicles and related services

. . . to recover, as far as practicable, all costs of carrying out” the administration of the fleet 

program. GSA also may include an increment for estimated replacement costs of motor 

vehicles and related equipment and supplies.

4

40 U.S.C. § 503. 
Page 5 GAO-07-153 GSA Vehicle Donations

payment, for the property acquired.5 GSA uses the sales proceeds from 

these auctions to help purchase new vehicles.6 Figure 1 illustrates GSA’s 

process for leasing and subsequently auctioning vehicles. 

Figure 1: GSA Leasing and Auction Process

5

If a federal agency’s personal property is not disposed of under the exchange/sale authority, 

then the agency may dispose of the property only in accordance with other statutory 

requirements. The general process for disposing of personal property is set forth in the 

Federal Property Act. Under the act, federal agencies may dispose of personal property only 

if (a) the property is not required to meet an agency’s needs or responsibilities (“excess 

property”) and (b) GSA determines the property is not required to meet the needs or 

responsibilities of all federal agencies (i.e., “surplus property”). See 40 U.S.C. §§ 102, 541–

549. Surplus property may be donated, but only to state agencies pursuant to requirements 

in the act. 40 U.S.C. § 549. 

6

GSA has another internal organization, Property Management, which operates the Federal 

Surplus Personal Property Donation Program. According to GSA officials, because GSA 

Fleet’s program is self-sustaining and needs to auction its used cars to remain so, it does not 

participate in this program. Under the surplus donation program, certain nonfederal 

organizations, including selected nonprofit educational and public health organizations, can 

obtain property from the federal government, through state agencies, including vehicles that 

GSA and many other federal agencies no longer need. The vehicles that are donated as part 

of this program tend to be older than Fleet’s usual 3 to 4 years. 

SOLD

Vehicle

replacement

criteria: age,

mileage, condition/

history

GSA

regional office

GSA sales

representative

Federal

agency

Sources: GAO; Art Explosion (images).

$

Request for vehicle(s)

Auction

house

1

3 5 

2

Vehicles ready

for auction:

A

B

C

4

$ 6 

GSA leases the vehicle to the requesting federal agency.

The agency pays a monthly fee to cover vehicle depreciation 

and fleet management costs, and it pays a per mile fee to cover

fuel, maintenance, repair, and auction costs.

GSA Fleet service representative monitors fleet and determines when

to replace leased vehicle(s); sales representative notifies auction houses, which

pick up vehicles, preps, stores, and auctions them; auction house pays

proceeds to GSA and sends a separate invoice for the sale costs (prepping,

shipping, and storing vehicle); and GSA uses funds to purchase new vehicles.

Leasing fee

Auction proceeds
Page 6 GAO-07-153 GSA Vehicle Donations

Welfare reform experts contend that transportation is an important 

element in assisting former welfare recipients with finding employment.7

 

However, they also contend that public transportation is not always 

convenient or accessible and, for some families receiving assistance, 

driving is the best option. To address this issue, several communities 

started LICO programs as highly individualized initiatives designed to meet 

local transportation needs. In 2002, the National Economic Development 

and Law Center documented at least 60 LICO programs across the country 

serving welfare recipients and the working poor by helping with the high 

costs associated with car ownership, including maintenance, repairs, and 

insurance.8

 Typically, these programs rely on older cars received through 

donations from individuals. They employ a number of strategies that 

include making affordable and reliable used vehicles directly available to 

customers or providing low-cost loans to enable individuals to buy 

vehicles. Today, there are over 160 documented programs across the 

country serving the car ownership needs of low-income individuals.

YouthBuild USA, which to date has not operated its own LICO program, has 

proposed a Rural Initiative LICO program that would rely on 3- to 4-year-old 

vehicles donated by GSA to provide affordable and reliable transportation 

for rural youth. YouthBuild USA is a national nonprofit organization that 

provides staff training and technical assistance to the nationwide network 

of almost 200 local Youthbuild programs.9

 The local programs serve youth 

between the ages of 16 and 24 and focus primarily on providing training in 

7

The 1996 welfare reform law, the Personal Responsibility and Work Opportunity 

Reconciliation Act of 1996 Pub. L. No. 104-193 (1996), established the Temporary Assistance 

to Needy Families (TANF) block grant program, which, among other things, requires aid 

recipients to participate in work or work-related programs. 

8

According to the National Economic Development and Law Center, it facilitates and 

supports legal services and private lawyers to provide legal assistance to the hundreds of 

organizations working at the local level on community and economic development projects.

9

Congress authorized the Youthbuild as the "Hope for Youth" program on October 28, 1992, 

under the Housing and Community Development Act of 1992. The Department of Housing 

and Urban Development (HUD) manages the federal Youthbuild program and awards funds 

as competitive grants to nonprofit organizations to assist economically disadvantaged youth 

between the ages of 16 to 24 to learn housing construction job skills and to complete their 

high school education. One of the purposes of the federal Youthbuild program is to “enable 

economically disadvantaged young adults to obtain the education and employment skills 

necessary to achieve self sufficiency.” According to HUD officials, if a vehicle donation 

program were properly managed and had appropriate controls in place, providing a donated 

vehicle to these youth would likely be consistent with the purposes of the Housing and 

Community Development Act of 1992. 
Page 7 GAO-07-153 GSA Vehicle Donations

the building trades. YouthBuild USA is proposing to obtain donated 

vehicles directly from GSA Fleet and provide these vehicles to eligible 

youth so that they can continue in the job training program or have reliable 

transportation to work sites or college after they have graduated from the 

program. Under the proposal, YouthBuild USA will identify eligible rural 

Youthbuild programs and youth at these sites who would benefit from a 

donated vehicle. The program would have several requirements for 

participants, including possession of a valid driver’s license, eligibility for 

insurance, good attendance in the Youthbuild program, and successful 

completion of a 6-week car ownership course. According to program 

officials, YouthBuild USA would hold the title of the car for 3 years, during 

which the participant would have to demonstrate a good track record for 

preventative maintenance in order to fully own the vehicle. Rural 

Youthbuild sites participating in the program would have to demonstrate 

financial stability and the capacity to administer and provide project 

oversight on the local level. Figure 2 presents a diagram of the proposed 

YouthBuild USA Rural Initiative LICO program. 

Figure 2: YouthBuild USA’s Proposed Rural Initiative LICO Program

List of eligible

participants:

• Person 1

• Person 2

• Person 3

• Person 4

List of eligible

participants:

• Person 1

• Person 2

• Person 3

• Person 4

List of eligible

participants:

• Person 1

• Person 2

• Person 3

• Person 4

List of sites

where vehicles

are available

for pickup

Youthbuild

site approved

to obtain

vehicles

Number

of vehicles

needed

Sources: GAO; YouthBuild U.S.A. (logo); Art Explosion (images).

Participant

application

Rural Youthbuild sites

GSA regional offices

Third party contractor picks up vehicles and delivers to a

YouthBuild USA partner garage for inspection and prep.

Participant application requires the following:

• proof of job, job in offing, college/apprenticeship program acceptance,

 or show a demonstrated need if still in the program;

• proof of insurance;

• signature of limited liability waiver for YouthBuild USA;

• auto registration documents; and

• agreement to show maintenance receipts, etc.

1 2

4 3

6 

7 

5 
Page 8 GAO-07-153 GSA Vehicle Donations

GSA Fleet Would Face 

Reduced Revenues and 

Need Legislative 

Authority to Donate 

Cars 

If GSA were required to donate 1 to 5 percent of its compact sedans to 

YouthBuild USA (112 to 559 cars), its annual sales revenue would be 

reduced by an estimated $600,000 to $3 million. GSA Fleet, which manages 

the agency’s program, receives no direct appropriations and depends on 

the sale of these vehicles to sustain its operations. GSA does not currently 

donate Fleet vehicles. Furthermore, it would need new statutory authority 

to be able to donate them directly to YouthBuild USA because this would 

deviate from the existing process for disposing of excess federal property. 

If GSA were required to donate cars directly to YouthBuild USA, it would 

seek an appropriation to recover the reduction in revenues this would 

cause and consider increasing its leasing rates to federal agencies. 

However, GSA would need additional new statutory authority to allow it to 

increase its leasing rates for the purpose of recovering costs associated 

with donating cars. 

GSA Faces Reductions in 

Revenues from Donating 

Cars It Would Normally 

Auction 

GSA would face reduced sales revenues of an estimated $600,000 to $3 

million per year if it donated 1 to 5 percent of its used compact sedans from 

its Fleet program (112 to 559 cars) to YouthBuild USA’s proposed Rural 

Initiative LICO program rather than sell these cars through selected auction 

houses around the country. From fiscal year 2002 through fiscal year 2006 

(as of August 2006), GSA, on average, auctioned 11,171 compact sedans 

each year, with a mean sales price of $5,511. GSA officials indicated that 

they base their decision to sell their used cars on a combination of factors 

intended to maximize their revenues. For example, they look at the 

expected sales proceeds of the vehicle based on its age and mileage to 

determine at what point they will get the maximum value for selling their 

used cars. They currently use the following age and mileage guidelines for 

selling their used cars: 

• 3 years old and 36,000 or more miles, or 

• 4 years old and any miles, or 

• any age and 60,000 or more miles. 

In addition, GSA tracks the resale market to determine the high and low 

points of the market to help decide when to sell and what types of vehicles 

to sell. Finally, they look at events that could affect the used car market. 

For example, Hurricane Katrina increased the demand for used vehicles in 

parts of the country that were not affected by the hurricane.
Page 9 GAO-07-153 GSA Vehicle Donations

If GSA donated to YouthBuild USA 1 percent of the compact sedans it 

normally sells at auctions, this would be about 112 cars with a total 

reduction in estimated sales revenues of about $600,000. If GSA donated 5 

percent of the compact sedans it normally auctions, this would be about 

559 cars with a total reduction in estimated sales revenues of about $3 

million. Figure 3 shows the range of reduction in sales revenue from GSA 

donating 1 to 5 percent of its compact sedans to YouthBuild USA (112 to 

559 cars).

Figure 3: Estimated Average Annual Reduction in Sales Revenue to GSA Fleet from 

Donating Compact Sedans Normally Sold at Auction

GSA Fleet, which manages the agency’s program, does not receive direct 

appropriations from Congress; therefore, GSA officials indicated that GSA 

Fleet would need to replace the reduction in sales revenues from donating 

cars in order to continue to sustain its operations. Currently, to support its 

Fleet operations, GSA relies on the proceeds of its auction of used vehicles 

and the income it receives from the rates it charges agencies that lease 

vehicles from it. According to GSA officials, in setting its leasing rates, it is 

allowed to include an increment to these rates to cover inflation on its 

current inventory of vehicles, as well as to cover the estimated replacement 

$0.6

Dollars in millions Number of compact sedans

Source: GAO analysis of GSA data.

GSA compact sedans donated

$1.2

$0.6

$1.8

$2.5

$3.1

223

112

559

447

335

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

0

100

200

300

400

500

600

1% 2% 3% 4% 5%
Page 10 GAO-07-153 GSA Vehicle Donations

cost of these vehicles to meet the demand of agencies that lease from the 

Fleet program. This increment is known as replacement cost pricing. GSA 

officials indicated that a revolving fund sustains the Fleet program, with 

the revenues it receives from auctioning and from leasing vehicles, 

offsetting the expenditures for operating the entire fleet of vehicles. 

GSA Would Need Statutory 

Authority to Donate 

Vehicles Directly to 

YouthBuild USA

In order for GSA to donate cars from its Fleet program directly to 

YouthBuild USA, it would need new statutory authority to deviate from the 

existing process for disposing of surplus federal property.10 GSA Fleet does 

not participate in this process. Specifically, under the process for disposing 

of surplus federal property, federal agencies must determine if any property 

under their control is excess, or no longer needed, within the agency. If this 

is the case, they must then report this to GSA, which first determines if any 

other federal agency needs the property. If no other agency needs it, GSA 

declares the property to be “surplus” and can dispose of it in a number of 

ways, such as by selling it or destroying it. GSA also has authority to donate 

this property but may not do so directly to specific private organizations, 

such as YouthBuild USA. Instead, it must donate the property through state 

agencies, which, in turn, donate it to public agencies or certain nonprofit 

educational or public health institutions or organizations. 

According to GSA officials, if they were given the statutory authority 

explicitly allowing them to donate vehicles from their Fleet program to 

YouthBuild USA, they would likely first seek appropriations to the General 

Supply Fund to make up for the reductions in revenues associated with 

donating the vehicles.11 In addition, they would consider increasing the 

rates they charge federal agencies to lease vehicles, in order to recover this 

reduction in revenues. However, GSA currently lacks authority to pass on 

the costs of donations to its client agencies. Specifically, the Federal 

Property Act specifies how GSA is to set prices to recover the costs of 

10The process for disposing of surplus federal property is set forth in the Federal Property 

and Administrative Services Act of 1949. See 40 U.S.C. §§ 541-549. 

11GSA’s Fleet program is financed through GSA’s revolving General Supply Fund. The 

General Supply Fund is an intergovernmental revolving fund used to finance the acquisition 

of goods and services for federal agencies. It is managed by GSA’s Federal Supply Service. 

The General Services Administration Modernization Act, Pub. L. No. 109-313, abolishes the 

General Supply Fund and the Information Technology Fund. Effective December 5, 2006, 

capital assets and balances remaining in the two funds are to be transferred to the new 

Acquisition Services Fund. The legislation also provides for a new Federal Acquisition 

Service to carry out functions related to the new Acquisition Services Fund. 
Page 11 GAO-07-153 GSA Vehicle Donations

operating the fleet. The pricing formula (through which GSA sets its leasing 

rates) specifies that prices should cover the costs of operating the fleet and 

may include an increment for the cost of replacing fleet vehicles and 

related equipment.12 Because the costs associated with donations of fleet 

vehicles would not be costs of operating or replacing the fleet and related 

equipment, statutory authority would be needed in order to increase the 

rates GSA charges its client agencies to recover the costs of donating cars 

to YouthBuild USA. 

GSA officials indicated there are different ways they might consider raising 

leasing rates if given authority to do so but also expressed concerns about 

the effect such an increase might ultimately have on the viability of the 

Fleet program. For example, GSA could raise its rates only for those 

agencies that lease compact sedans; this would result in a 1 percent 

increase in order to recover the reduction of $600,000 in sales revenue. To 

recover the reductions from donating 5 percent of its compact sedans ($3 

million in sales revenue), GSA might raise its leasing rates by about 5 

percent. Another option GSA could pursue would be to raise its rates 

across all agencies that lease vehicles from it, regardless of car type. In this 

case, all agencies that lease vehicles from GSA Fleet (not just those leasing 

compact sedans) would subsidize the vehicle donations. 

GSA officials indicated that if the agency raised its rates too high, this could 

affect the economic viability of the Fleet program. Nothing requires federal 

agencies to lease vehicles from GSA; they can lease from private 

companies if they choose to do so. GSA officials told us that the agency is 

currently less expensive than the private sector in terms of leasing rates. 

GSA officials indicated that, while raising the rate GSA charges to lease 

vehicles in order to recover the reduced sales revenue from donating 1 to 5 

percent of its compact sedans to YouthBuild USA would probably not 

cause the federal agencies to stop leasing from GSA, the officials are more 

concerned that donating vehicles would inspire other nonprofit 

organizations to seek donations from GSA Fleet. According to GSA 

officials, they have received such requests in the past. If GSA were required 

to donate a greater percentage of its Fleet vehicles to nonprofit 

organizations, then GSA’s leasing rates could eventually become higher 

than its competitors in the private sector and eventually drive GSA out of 

the leasing business. 

1240 U.S.C. § 605(b). 
Page 12 GAO-07-153 GSA Vehicle Donations

Another option GSA officials cited does not require a legislative change. 

Specifically, GSA officials indicated that it could decrease the amount of 

funds it uses to buy new cars each year. Because GSA would have less sales 

revenue due to donating some of the cars it normally would sell, GSA 

would have less funds to buy new cars. According to GSA officials, to 

compensate for the purchase of fewer new cars, GSA would keep its cars in 

the Fleet program longer than the current 3- to 5-year time period. 

Furthermore, because these cars would be older than GSA’s current fleet, 

they would require more maintenance, which would result in higher 

maintenance costs. Due to the prospective nature of a donation program, 

GSA officials indicated that they did not have sufficient information to give 

a precise estimate of the increased maintenance costs GSA would incur. 

Finally, GSA officials indicated that keeping cars longer might mean more 

downtime for some of these cars, which might also result in a reduction of 

revenues from leasing. 

Available Research 

Suggests That Car 

Access Leads to Jobs 

and Other Benefits

Taken as a whole, the seven studies we reviewed consistently indicated 

that owning a car or having access to one increases the likelihood that lowincome individuals (such as rural Youthbuild participants) get a job (see 

app. II for more information on each of the studies we reviewed).13 

According to recent research, this is because a car likely allows a person to 

search for a job over a wider geographic area and to work during hours 

when public transit is not available. While each of the studies had some 

methodological limitations, they all produced fairly consistent results on 

the effects of car access on employment and hours worked. Differences 

between the populations in these studies and rural Youthbuild participants 

did not allow us to use the studies’ results to identify the degree to which 

participants in YouthBuild USA’s LICO program would benefit from having 

a car. 

13We identified a large body of work on car access and employment that had produced 

similar results as our seven studies. We narrowed our scope to the seven we reviewed 

because these studies used more sophisticated statistical modeling techniques to control for 

the effects of other factors that could affect the likelihood that an individual found a job, 

such as education, age, and gender. We excluded studies that were based largely on 

anecdotes, quantitative research that did not control for other explanatory factors, and 

summaries of existing research. See appendix II for a more detailed summary of the studies 

we considered.
Page 13 GAO-07-153 GSA Vehicle Donations

Studies Reported 

Employment Benefits from 

Car Access

Taken as a whole, the seven studies we examined consistently indicated 

that owning a car or having access to one increased the likelihood that 

someone would get a job. For example, a 2005 study surveyed about 2,000 

urban and rural welfare recipients in Tennessee starting in January 2001.14 

Researchers interviewed the same people every 6 months and asked 

questions about car access and employment. The study indicated that 

individuals with access to a car increased their chance of finding a job and 

leaving welfare by about 59 percent. Another study obtained data from a 

survey of a random sample of Alameda County, California, residents who 

received welfare benefits in fiscal years 1992 to 1993.15 Researchers 

surveyed these same individuals again in fiscal years 1994 and 1995 and 

reported that private automobiles were more effective than increased 

public transit in moving participants from welfare to work. Another study 

estimated that owning a car increased the likelihood of being employed by 

about 20 percent.16 

Three of the seven studies reported that car access led to more work hours 

(the other four studies did not address this issue). For example, one study 

examined the effects of car access on weekly hours worked and estimated 

that access to a car increased the number of hours worked by nearly 9 

hours per week.17 Two other studies, focusing on car ownership, estimated 

increases of 5 to 11 hours per week in the number of hours those they 

studied worked.18

The literature gives several explanations for these results. For example, a 

car likely allows a person to search for a job over a wider geographic area, 

expanding the number of employment opportunities and the chances he or 

she will find a job. Also, a car likely allows a person to work hours that are 

14Gurley and Bruce, “The Effects of Car Access on Employment Outcomes for Welfare 

Recipients,” Journal of Urban Economics 58: 250-272 (2005).

15Cervero et al., “Transportation As a Stimulus of Welfare-to-Work-Private Versus Public 

Mobility,” Journal of Planning Education and Research 22: 50-63 (2002).

16 Raphael and Rice, “Car Ownership, Employment and Earnings,” Journal of Urban 

Economics 52: 109-130 (2002). 

17Gurley and Bruce, 250-272.

18Ong, Paul, “Work and Car Ownership Among Welfare Recipients,” Social Work Research 2 

(4): 255-262 (1996) and Raphael and Rice, 109-130.
Page 14 GAO-07-153 GSA Vehicle Donations

not traditionally supported by public transit, increasing not only the hours 

he or she can work, but the job openings that may be considered.19 

Studies Could Not Be Used 

to Estimate How Much 

Youthbuild Participants 

Would Benefit from Having 

a Car 

Because there are several major differences between the individuals that 

the researchers studied and those in the rural Youthbuild population, we 

could not extrapolate from this research to identify the degree to which the 

rural YouthBuild USA population would benefit from having a car. For 

example, the studies generally reviewed welfare recipients who tended to 

be older and better educated than the rural Youthbuild population. 

Research has shown that older, more educated individuals are more likely 

to find employment (with or without a car) than younger and less educated 

individuals. 

In addition, four of the studies we reviewed were based on data from 

mainly urban populations, while two others used national data without 

controlling for urban/rural locations. Controlling for differences such as 

urban and rural populations would be necessary to extrapolate from these 

studies for the Youthbuild population because of various differences 

between the two groups. For example, we have reported in the past that 

rural residents generally have fewer public transportation options and live 

in less densely populated areas than urban residents, making them more 

dependent on car access or ownership.20 Consequently, the effect of car 

access in rural areas may be more difficult to discern and different than in 

urban areas because rural residents have fewer transportation options 

from which to choose. Also, rural unemployment rates are higher on 

average than urban areas; as a result, the effect of increasing car access on 

new employment may be substantially different than in urban areas. 

Consequently, the research that did not distinguish rural and urban 

populations did not allow us to gauge whether the rural YouthBuild USA 

population would experience greater, equal, or lesser benefits than the 

studies reported. 

19Each of the seven studies we reviewed had methodological limitations. However, 

collectively the studies have used varying methodologies to address each of these 

limitations, leading to our assessment that, taken as a whole, they indicate specific benefits 

from car access. For more details on the limitations, see appendix II.

20GAO, Welfare Reform: Rural TANF Programs Have Developed Many Strategies to 

Address Rural Challenges, GAO-04-921 (Washington, D.C.: Sept. 10, 2004). This report found 

that many rural TANF recipients cannot afford to own or operate a reliable private vehicle, 

and public transportation is often not available.
Page 15 GAO-07-153 GSA Vehicle Donations

LICO Programs Report 

Positive Results, but 

Limitations Restrict 

Projecting Results to 

YouthBuild USA’s 

Program

Six studies of LICO programs, as well as the managers of these programs, 

reported that participants were able to get a job or retain their current jobs, 

received higher wages, and spent more time with their families as a result 

of getting a car through the LICO programs. However, determining the 

extent that Youthbuild participants would benefit from such a program is 

not possible because of limitations in the methodologies of these studies, 

differences between individuals served by these programs compared with 

YouthBuild USA, and differences in the designs of the existing programs 

and the YouthBuild USA proposal. For example, most of the studies had 

low response rates from the participants, which prevented us from 

projecting their results to all participants. In addition, in terms of program 

design, the LICO programs studied are largely loan programs that provide 

additional tools to aid participants, such as financial literacy training, 

whereas YouthBuild USA proposes to donate cars and does not envision 

additional support services. As a result, managers of the existing LICO 

programs believed their participants’ outcomes may be different than 

YouthBuild USA’s because the loan commitment, the financial literacy 

training, and the low-risk profile of their participants altogether increase 

the likelihood of success.

Studies and Experiences of 

Six LICO Programs Report 

Positive Results for 

Participants

Six LICO programs that had been subject to an external formal evaluation 

study and officials of these programs reported that participants found jobs, 

retained their current ones, or increased their income as a result of 

obtaining a car through the program. For example, one of the studies 

reported that 60 percent of the participants found a job after getting the car, 

and another study reported that 97 percent of the participants surveyed 

attributed their ability to find a job or retain their current one to the car 

they obtained through the program. With respect to increasing participant 

income, all six of the studies reported gains in earnings, and four of the six 

studies reported that from 72 to 80 percent of the LICO program 

participants secured or reported receiving higher wages. These studies 

reported that participants believed that their increased wages were 

attributable to the vehicle they received from the LICO program. Another 

study reported that the participants experienced annual average income 

increases from nearly $5,500 to $7,900 after getting a car. Additionally, 

officials of the LICO programs told us their participants reported that 

having a dependable and affordable car helped them find or retain their 

jobs, helped them receive higher wages and work more hours, or find 

better jobs.
Page 16 GAO-07-153 GSA Vehicle Donations

The LICO program studies and the LICO officials reported that the program 

participants benefited from an improved quality of life as a result of 

obtaining a car through the LICO programs. According to the studies, 

participants reported that having a car enabled them to improve their 

education and training, find better quality day care for their children, and 

spend more time with their families. One official of a LICO program added 

that participants stated that having a car was a life transforming event, 

increasing their financial stability and allowing them to obtain better 

housing or become homeowners. Other LICO program officials stated that 

participants reported that the car had a positive effect on their self-esteem 

or gave them hope for the future. LICO program studies and officials stated 

that their participants reported that the car they got through the program 

allowed them to shop at discount centers rather than nearby more 

expensive convenience stores. 

Limitations in Studies Do 

Not Allow for Outcomes to 

Be Projected to YouthBuild 

USA’s Proposed LICO 

Program 

Limitations in the methodologies in the six studies, such as low survey 

response rates, restrict applying their employment outcomes to the entire 

populations of the LICO programs studied or to participants in YouthBuild 

USA’s proposed LICO program. For example, three studies reported 

positive outcomes for participants, but these outcomes were based on low 

response rates from LICO program participants.21 Specifically, these 

studies reported the following: 

• A study of one LICO program that helps its participants obtain lowinterest loans to purchase a used car reported that, among the 

participants surveyed, 75 percent said that they found a job that paid 

higher wages, and 55 percent reported obtaining better quality day care 

for their children as a result of obtaining a car through the program. 

Officials of this LICO program noted that participants found jobs (and 

kept them longer) and improved their quality of life as a result of 

obtaining a car from the LICO program. However, while the study of this 

program attempted to contact the 90 participants, it only received 

responses from 34 participants (38 percent). This raises the possibility 

21Low response rates in surveys may lead to estimates that cannot be projected if survey 

respondents have different characteristics than nonrespondents on the variables being 

studied. No one figure is an acceptable minimum response rate for all surveys, but rates 

below 70-80 percent are normally considered problematic. See GAO Applied Research and 

Methods Guidance: Sample Size Estimates for Attribute Sampling and also Calculating 

and Reporting Response Rates and Addressing Nonresponse Issues, December 10, 2003. 
Page 17 GAO-07-153 GSA Vehicle Donations

that the 56 nonrespondents, nearly two-thirds of those in the program, 

may have had different experiences from the 34 who responded. 

• Another study of a LICO program that relied on data on participants’ 

earnings and employment reported that 63 percent retained their jobs 

for 12 months after obtaining a car loan. However, data were not 

available for all participants for the time periods of interest to the 

researchers, and the study had to rely on samples of the 511 for whom 

data were available. For example, there were only data on 131 program 

participants that went back a full year before their loans were issued, 

which raises the possibility that those for whom data was not available 

had different outcomes from those for whom data was available. 

• Another study of a LICO loan program reported that 339 out of 353 

participants surveyed experienced an improved quality of life in that 

they were able to spend more time with their families. However, these 

353 respondents were drawn from a pool of 2,200 that the study authors 

created because they anticipated very high nonresponse rates, which 

raises the possibility that the participants surveyed experienced very 

different outcomes from those that were not surveyed. 

Differences in Design and 

Participants the Programs 

Serve Also Limit Application 

of Study Results to 

YouthBuild USA’s Proposed 

Program 

Officials of the LICO programs studied also told us that differences in 

program design and population served to restrict the extent to which their 

outcomes could be applied to YouthBuild USA’s proposed LICO program. 

One of the major differences between the design of the LICO programs 

studied and YouthBuild USA’s proposal is that most LICO programs we 

consulted require participants to obtain a loan to purchase the car, while 

YouthBuild USA proposes to give cars to participants for a one-time fee of 

$450. Four of these six programs require participants to obtain a lowinterest loan to purchase a car, while YouthBuild USA proposes donating 

cars to participants. The other two programs obtain used cars, repair them 

(if necessary), and then sell them to the participants at the cost of repairs 

or at a very low cost. One of these two programs may also assist the 

participants in obtaining a loan,22 and the other requires the participants to 

make payments for the purchase of the car. In order to qualify for the loans, 

the programs require participants to have adequate income to support car 

22One of the LICO programs that obtains, repairs, and sells cars to participants at low cost 

also donates cars to recipients of public assistance and receives a small fee from the state 

for doing so. 
Page 18 GAO-07-153 GSA Vehicle Donations

payments and meet creditworthiness standards. Once they obtain the car, 

participants must make the loan payments for the term of the loan. 

Because of these requirements, as well as participants’ greater reliance on 

their own resources, officials of these LICO programs told us that they 

believe that their participants have greater incentives toward ensuring that 

they realize the benefits of car ownership than do individuals who receive a 

donated vehicle. Additionally, they believe that their participants become 

more invested in getting jobs and achieving other results that are consistent 

with the programs’ goals than would participants in a car donation program 

such as what YouthBuild USA proposes. 

These LICO programs provide additional support to their participants, such 

as financial literacy training and car repair assistance, which might also 

limit the application of the studies’ results because YouthBuild USA’s 

proposal does not presently envision providing such services. Officials of 

these LICO programs stated that, before allowing participants to obtain a 

loan, it was important for them to understand how to budget their money 

and deal with credit responsibly. They indicated that the financial literacy 

training and subsequent counseling was an essential component of their 

programs and tied to the success of participants fulfilling their obligations 

on their loans, as well as getting or keeping their jobs. 

Furthermore, most of the LICO programs implemented various 

arrangements for costs of repairs as part of their programs. For example, 

two programs developed plans to enable participants to cover the costs of 

minor repairs by establishing accounts to which participants make small 

monthly deposits, which they later may use for repair costs. Also, one of 

these programs required participants to contribute a one-time fee of $250 to 

a pool that could later be used to cover the costs of major repairs above 

$700. Additionally, an official of one LICO program told us that it addressed 

the issue of budgeting for repair costs by securing favorable rates in 

advance at specific auto shops and requiring participants to go to these 

specific vendors for repairs. 

Finally, similar to the studies we reviewed related to car access in general, 

the differences between the populations served by these LICO programs 

and those YouthBuild USA proposes to serve also might limit the extent to 

which the outcomes of these LICO programs could be applied to 

YouthBuild USA’s proposal. Our reviews of the participants’ profiles of the 

LICO programs studied found that more than half of the participants were 

single women in their mid-20s to 30s, with children, and with some 

education beyond high school. In contrast, participants in YouthBuild USA’s 
Page 19 GAO-07-153 GSA Vehicle Donations

LICO program would primarily be men between the ages of 16 and 24 who 

would have not completed high school upon entering the Youthbuild 

program. Officials of the LICO programs believed that the demographics of 

a LICO program can influence the programs’ outcomes. For example, these 

officials indicated that participants who have responsibilities, such as 

those with children, are more likely to have a lower risk profile and be 

motivated toward getting a job and reaching other goals consistent with 

those of the LICO programs. 

Agency Comments and 

Our Evaluation

We provided GSA a draft of this report for its review and comment. In a 

letter from the Assistant Commissioner for the Office of Vehicle Acquisition 

and Leasing Services (see app. III), GSA described our report as accurate as 

it pertains to our description of the GSA Fleet program. GSA expressed 

concerns with the potential use of its Fleet for a car donation program—

namely, that the revenue lost would require direct appropriations from the 

Congress or cost increases to its customer agencies in the form of higher 

lease rates, potentially affecting the viability of the GSA Fleet program. 

Additionally, GSA stated a concern that creating a donation program to 

YouthBuild USA could lead other organizations to seek donated vehicles as 

well. 

GSA also stated that the report does not clearly address the question as to 

why YouthBuild USA should receive donated GSA vehicles over other 

worthy charitable organizations. In our review, we focused on the effect of 

donating 1 to 5 percent of selected GSA cars on GSA’s fleet vehicle sales 

operations and the potential benefits to rural Youthbuild participants from 

such donations. We did not, however, evaluate the merits of providing 

vehicles to other charitable organizations. 

GSA officials also provided a number of technical clarifications to our 

report, which we have incorporated, as appropriate. 

We are sending copies of this report to the Chairman of the Subcommittee 

on Financial Institutions and Consumer Credit of the House Committee on 

Financial Services and other interested congressional committees. We also 

are sending copies to the Administrator of GSA. We also will make copies 

available to others upon request. In addition, the report will be available at 

no charge on the GAO Web site at http://www.gao.gov.
Page 20 GAO-07-153 GSA Vehicle Donations

If you or your staff have any questions regarding this report, please contact 

me at (202) 512-8678 or shearw@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. GAO staff who made major contributions to the report are 

listed in appendix IV. 

Sincerely yours,

William B. Shear

Director, Financial Markets

and Community Investment
Page 21 GAO-07-153 GSA Vehicle Donations

Appendix I

Objectives, Scope, and Methodology AAppenednxidexiIs

The objectives of this report were to (1) assess the effect of donating 1 to 5 

percent of selected General Services Administration (GSA) used cars on 

GSA’s fleet vehicle sales operations, (2) describe what studies have shown 

with respect to the benefits that car ownership or access may hold for lowincome individuals, and (3) describe what studies of selected Low Income 

Car Ownership (LICO) programs and experiences of these programs have 

shown with respect to the benefits of participant car ownership. 

To assess the effect on GSA’s fleet vehicle sales operations from donating 

vehicles, we obtained data from GSA on the total number of compact 

sedans its Fleet program sold and the average sales proceeds for these 

vehicles for fiscal years 2001 through 2005 and for 2006 (up to August 

2006). We focused our analysis on GSA compact sedans sales because this 

is the type of vehicle YouthBuild USA officials told us that they would 

primarily need for their proposed Rural Initiative LICO program. We used 

GSA’s data from fiscal years 2002 through 2006 to calculate the average 

opportunity cost—the reduction in revenue for each compact sedan GSA 

would donate—and the total reduction in sales revenue GSA would face by 

donating 1 to 5 percent of its compact sedans.1

 To determine how much 

GSA might increase the rate it charges federal agencies that lease compact 

sedans from it (in order to recover the reduction in sales revenues from 

donating 1 to 5 percent of its compact sedans), we obtained data from GSA 

on the number of compact sedans it currently leases and revenues it 

receives from leasing these vehicles. This data allowed us to calculate the 

amount (percentages) GSA would need to increase the rate it charges 

federal agencies to make up the reduction in sales revenues from donating 

1 to 5 percent of its compact sedans. We obtained written descriptions on 

GSA’s computer systems and procedures for ensuring that the agency has 

verified Fleet transactions. In addition, the agency provided us with a 

written description of how GSA Fleet handles any discrepancies found in 

the data in its system. Based on this information, we determined that the 

data that GSA provided to us were sufficiently reliable for the purposes of 

this report. In addition, we obtained information on the options the agency 

might pursue to make up for the reduction in revenues from interviews 

with GSA officials. To determine the legal issues that would be involved in 

a car donation program, we reviewed the legislation that establishes GSA’s 

authority to operate the Fleet program and for it to set prices to recover its 

1

We decided not to use the data from fiscal year 2001 because the number of compact 

sedans sold that year was smaller than the average number of compact sedans sold from 

fiscal years 2002 through 2006 (up to August 2006).
Appendix I

Objectives, Scope, and Methodology

Page 22 GAO-07-153 GSA Vehicle Donations

program costs. We also reviewed the legislation that established the 

General Supply Fund and the purposes for which the fund can be used and 

discussed these and related legal issues with officials from GSA’s General 

Counsel. 

To describe what studies have shown with respect to the benefits that car 

ownership or access may hold for low-income individuals, we conducted a 

literature search of relevant studies, reviewed a list of studies from the Web 

site of the National Economic Development and Law Center (NEDLC), and 

interviewed two individuals who had conducted research on this issue. 

Based on these efforts, we identified a large body of research on car access 

and employment. We limited our review to seven studies that used more 

sophisticated economic models that distinguished between car access and 

several other factors that could affect the likelihood that an individual 

found a job, such as education, age, and gender.2 Our review of these seven 

studies included an analysis of study methodologies, the individuals that 

were studied, study results with respect to car access and employment, and 

study limitations. In order to address the issue of the extent to which the 

results of these studies could be applied to YouthBuild USA’s proposed 

LICO program, we compared the individuals reviewed in these studies with 

rural Youthbuild participants. For a more detailed summary of our review 

of these seven studies, see appendix II. 

To determine what studies of selected LICO programs have shown with 

respect to the benefits of participants’ car ownership, we spoke with 

experts in the field of LICO programs about the nature and extent of 

existing studies of LICO programs. These experts identified several LICO 

programs that had been subject to an independent evaluation of their 

outcomes. Additionally, to identify other LICO programs that had been 

subject to an independent evaluation and were located in rural areas, we 

reviewed about 140 LICO programs listed on the NEDLC Internet Web site3

and contacted those LICO programs on the NEDLC listing that appeared to 

2

Subsequent to the publication of one of the studies, one of its authors became a GAO 

employee. She participated in our review of the other car access studies but not in the 

review of, or any analysis of, our report on her research (“The Effects of Car Access on 

Employment Outcomes for Welfare Recipients,” Journal of Urban Economics 58: 250-272 

(2005). Rather, a GAO Economist and Senior Methodologist reviewed this study 

independently and developed the information we present on it. We chose to retain this study 

in our review because, according to experts in LICO programs and car access research, its 

results are current and relevant to addressing our objectives. 

3

See http://www.nedlc.org/. 
Appendix I

Objectives, Scope, and Methodology

Page 23 GAO-07-153 GSA Vehicle Donations

be located in rural and mixed rural-urban areas.4 From our discussions with 

the experts and contacts with the LICO programs, we identified and 

selected the following six LICO programs that had been subject to an 

independent evaluation: 

• Good Wheels, Augusta, Maine

• Good News Garage, Burlington, Vermont

• West CAP JumpStart, Glenwood City, Wisconsin

• New Leaf Services, Inc., Decatur, Georgia5

• Ways to Work, Inc., Milwaukee, Wisconsin

• Working Wheels, Seattle, Washington

Three of these programs were located in rural areas, two in urban areas, 

and one in a mixed rural-urban area. Four of the six LICO programs were 

loan programs, one was a car-donation and car-sales program, and the 

other was a car sales program. We obtained and analyzed copies of the 

studies for the six LICO programs in order to identify the reported 

outcomes and potential limitations with these studies. Where possible, we 

reviewed information from the LICO program Web sites to obtain 

information on how these programs operate, what types of individuals they 

serve, and how many cars they provide to their participants. We also 

interviewed LICO program officials about their studies to gain a better 

understanding of the reported outcomes and limitations with the studies. 

During these interviews, we also obtained more background information 

about the LICO programs’ designs, populations served, and challenges the 

officials faced in running these LICO programs. We also obtained the views 

of LICO program officials on the extent to which they believe their 

programs’ reported outcomes could be applied to participants in 

YouthBuild USA’s proposed LICO program. 

4

Among the 172 LICO programs listed on the NEDLC Web site, we excluded 32 Individual 

Development Account LICO programs because these programs were substantially dissimilar 

to YouthBuild USA’s proposed LICO program and the loan and car ownership programs 

listed on the NEDLC Web site. Individual Development Account programs assist 

participants in establishing accounts for the purpose of purchasing cars.

5

New Leaf Services, Inc., no longer operates as a LICO program.
Appendix I

Objectives, Scope, and Methodology

Page 24 GAO-07-153 GSA Vehicle Donations

We conducted our work from May 2006 to November 2006 in San 

Francisco, California, and Washington, D.C., in accordance with generally 

accepted government auditing standards. 
Appendix I

Objectives, Scope, and Methodology

Page 25 GAO-07-153 GSA Vehicle Donations

[This page is intentionally left blank]
Page 26 GAO-07-153 GSA Vehicle Donations

Appendix II

Summary of Studies on the Effect of Car 

Access on Employment ApendxiI

Author/title Purpose and scope Data

Gurley, Tami and Donald Bruce.

“The Effects of Car Access on Employment 

Outcomes for Welfare Recipients.”

Journal of Urban Economics 58: 250-272 

(2005). 

To assess how car access affects 

employment outcomes (e.g., employment, 

weekly hours worked, and hourly wages). 

Urban and rural welfare recipients, as of 

January 2001, from Tennessee.

Researchers from the state of Tennessee 

and the University of Tennessee surveyed a 

random sample of welfare recipients (as of 

January 2001) in two waves. During the first 

wave, they sampled 1,935 welfare 

recipients, and during the fourth wave they 

sampled 1,919 of these individuals. The 

researchers achieved a response rate of 

over 70 percent. 

The first wave respondents had the following 

characteristics: they were, on average, 29 

years old; had a high school education; and 

had, on average, 2.28 children under 18

living in household. In addition, 34 percent 

lived in rural counties, and 10 percent were 

married.
Appendix II

Summary of Studies on the Effect of Car 

Access on Employment

Page 27 GAO-07-153 GSA Vehicle Donations

a

Logit analysis is a regression technique used to address outcomes where there are two possible 

categories, such as employed or not employed. The multinomial logit is an extension of the logit 

method to cases where there are more than two outcomes. 

b

“Heckman selection” models are a regression technique used to address concerns about obtaining 

biased estimates in cases where an outcome is not observed unless a given event occurs. For 

example, hours and wages are not observed unless someone is employed. Therefore, nonworkers 

given greater access to jobs may not have the same outcome as someone who is already employed. 

Principal findings Limitations Empirical method(s) used

Car access generally increases the 

probability of welfare recipients getting a job, 

working more hours, getting a higher paying 

job, and leaving welfare. 

Car access was measured by whether 

anyone in the household had a car, which 

could somewhat overstate a person's ability 

to use the car for work. 

There may be some bias in the results 

because the study was based on surveys 

done over two time periods, and some of the 

welfare recipients who were part of the initial 

survey did not participate in the second 

survey. 

Data only from one state—Tennessee— 

which could have different demographics 

and welfare systems than other states.

The researchers used multinomial logitsa

and “Heckman selection” regressionsb

 for 

employment and program participation 

models. 

Selection models were used to estimate the 

effect of car access on hours and wages.

Panel data were used to mitigate 

simultaneity concerns— that is, the 

possibility that car access and employment 

outcomes might be determined at the same 

time and depend on each other. 

The study accounted for differences 

between urban and rural welfare recipients 

and areas. 
Appendix II

Summary of Studies on the Effect of Car 

Access on Employment

Page 28 GAO-07-153 GSA Vehicle Donations

Author/title Purpose and scope Data

Raphael, Steven and Lorien Rice.

“Car Ownership, Employment, and 

Earnings.”

Journal of Urban Economics 52: 109-130 

(2002). 

To assess whether the positive relationship 

of car ownership on employment outcomes 

(e.g., employment, weekly hours worked, 

and hourly wages) observed in past 

research are causal—that is, whether 

owning a car was the reason for the positive 

employment benefits. 

Nationally representative sample of the U.S. 

population from ages 16 to 65 with no workpreventing disabilities.

Data on employment, car ownership, and 

basic demographics were from the 1992 and 

1993 “Surveys of Income and Program 

Participation,” Wave 4, which is a U.S. 

Bureau of the Census survey. Authors 

restricted sample to civilians 16-65 years of 

age with no work-preventing disabilities. 

The wage sample was restricted to those 

with complete information. 

As a proxy for car ownership, data on state 

gasoline taxes were obtained from the 

American Petroleum Institute and data on 

state-level auto insurance premiums were 

obtained from the National Association of 

Insurance Commissioners. 

The study was based on a maximum sample 

size of 47,244. The respondents had the 

following characteristics: 52 percent were 

female; they were, on average, 36 years old; 

55 percent were married; and they averaged 

more than a high school education.
Appendix II

Summary of Studies on the Effect of Car 

Access on Employment

Page 29 GAO-07-153 GSA Vehicle Donations

a

The two-stage least squares model is a regression technique used to address concerns about 

simultaneity bias. For example, the concern that car access may result from having a job rather than 

the job resulting from car access. 

Principal findings Limitations Empirical method(s) used

Owning a car increases the likelihood that 

someone finds a job and works more hours. 

However, owning a car leads to lower 

wages. 

Researchers found similar results for 

individuals with access to a car. 

The study only observed the employment 

outcomes for those individuals who work, 

which could introduce some bias because 

the characteristics of those who work could 

be different from that of those who do not. 

The study was based on a national sample 

but did not control for individuals in urban 

and rural areas. This could partially explain 

the negative wage results. 

The researchers used data from the early 

1990s, prior to when welfare reform was 

implemented, which has stricter 

requirements for participants to find a job 

than under the old welfare system. Thus, the 

effect of owning a car on current welfare 

participants may be greater because they 

have stricter requirements (and greater 

incentives) to find a job. 

The researchers used a two-stage least 

squares modela to estimate car ownership in 

the first stage and employment outcomes 

estimated in the second stage. 
Appendix II

Summary of Studies on the Effect of Car 

Access on Employment

Page 30 GAO-07-153 GSA Vehicle Donations

Author/title Purpose and scope Data

Blumenburg, Evelyn.

“On the Way to Work: Welfare Participants 

and Barriers to Employment.”

Economic Development Quarterly 16 (4): 

314-325 (2002).

To assess the effects of employment 

barriers, including transportation, on the 

employment levels of welfare participants. 

Welfare recipients, as of 1996, from 

California.

Data are from a 1996 job-readiness survey 

of California welfare participants conducted 

by the California Department of Social 

Services in May, June, and July 1996. 

The sample size of 1,319 represents a 68

percent response rate (total sample of 

1,622). 

The respondents had the following 

characteristics: 80 percent were female; 50 

percent had less than a high school 

diploma; 27 percent relied on public 

transportation, and 48 percent had two or 

more young children.
Appendix II

Summary of Studies on the Effect of Car 

Access on Employment

Page 31 GAO-07-153 GSA Vehicle Donations

a

Although “car access” is not specifically mentioned in this study, the public transportation “barrier” 

would be removed by “car access.” 

b

Logit analysis is a regression technique used to address outcomes where there are two possible 

categories, such as employed or not employed. The multinomial logit is an extension of the logit 

method to cases where there are more than two outcomes. 

Principal findings Limitations Empirical method(s) used

Reliance on public transportation (rather 

than car accessa) is one of the barriers 

welfare recipients face in finding a job. In 

addition, the more barriers present in the 

lives of welfare participants, the harder it is 

to find a job. 

The study did not control for factors such as 

age, which is a factor in whether someone is 

employed. 

The study did not attempt to address the 

potential simultaneity of employment and 

car decisions. That is, the possibility that the 

car and employment decisions might be 

made at the same time. 

As in the prior study (Raphael and Rice), 

researchers used data from the early 1990s 

prior to welfare reform.

Data only from one state—California— 

which could have different demographics 

and welfare systems than other states.

The researcher used a logit modelb

 to 

assess the probability of employment, 

controlling for barriers to employment, such 

as transportation and child care. 

A transportation barrier to employment was 

defined as typically traveling by public 

transit. 
Appendix II

Summary of Studies on the Effect of Car 

Access on Employment

Page 32 GAO-07-153 GSA Vehicle Donations

Author/title Purpose and scope Data

Cervero, Robert, Onésimo Sandoval, and 

John Landis.

“Transportation as a Stimulus of Welfare-toWork-Private Versus Public Mobility.”

Journal of Planning Education and 

Research 22: 50-63 (2002).

To assess the relative importance of private 

and public transportation in obtaining 

employment. 

Alameda County, California, residents who 

received welfare benefits in fiscal years 

1992 and 1993.

Data are from a survey of a random sample 

of Alameda County, California, residents 

who received welfare benefits in fiscal years 

1992 and 1993. Survey data were compiled 

again for the same individuals in 1994-95. 

The study had 466 respondents with 

complete information (response rates not 

reported based on initial random sample). 

Respondents’characteristics included: 99 

percent were women; they were 36 years 

old, on average; 48 percent were married; 

the average highest grade completed was 

9.5; 54 percent spoke English; and, they had 

an average of 2.6 children younger than age 

20 living at home.
Appendix II

Summary of Studies on the Effect of Car 

Access on Employment

Page 33 GAO-07-153 GSA Vehicle Donations

a

Logit analysis is a regression technique used to address outcomes where there are two possible 

categories, such as employed or not employed. The multinomial logit is an extension of the logit 

method to cases where there are more than two outcomes. 

Principal findings Limitations Empirical method(s) used

Car ownership and educational attainment 

significantly increased the probability that 

the individual moved from welfare to work. 

Public transportation (compared with car 

access) did not have a significant effect on 

helping individuals move from welfare to 

work.

The study was based on a small number of 

individuals (66) who found employment. The 

study further separated individuals into 

employed on welfare, and employed off 

welfare categories; thus, the sample sizes in 

the most relevant categories were quite 

small. 

As in the prior two studies, researchers used 

data from the early 1990s prior to welfare 

reform.

Data only from one state—California— 

which could have different demographics 

and welfare systems than other states.

The researchers used a multinomial logit 

modela

 to predict the probability that 

someone found a job and left welfare as a 

function of car ownership, transit service 

quality, regional job accessibility by different 

transportation modes, human-capital 

factors, and various control variables, such 

as age and education.
Appendix II

Summary of Studies on the Effect of Car 

Access on Employment

Page 34 GAO-07-153 GSA Vehicle Donations

Author/title Purpose and scope Data

Ong, Paul.

“Work and Car Ownership Among Welfare 

Recipients.”

Social Work Research 2 (4) : 255-262 

(1996).

To assess the role of car ownership in 

facilitating employment. 

Recipients of public assistance in urban 

California.

The data are from a survey sponsored by 

California’s Department of Social Services. 

A total of 2,214 interviews were completed, 

but only 1,112 met the criteria of healthy, 

adult aged, female-headed households 

(White, Latino, or African-American), that 

were receiving welfare at the time of the 

study.

Information on car ownership is based on 

the following question: "Do you own a 

reliable car?" Over a quarter (27 percent) of 

the sample responded positively to

this question.
Appendix II

Summary of Studies on the Effect of Car 

Access on Employment

Page 35 GAO-07-153 GSA Vehicle Donations

a

Logit analysis is a regression technique used to address outcomes where there are two possible 

categories, such as employed or not employed. The multinomial logit is an extension of the logit 

method to cases where there are more than two outcomes. 

Principal findings Limitations Empirical method(s) used

The probability of finding a job and working 

more hours was higher for those individuals 

with a car. 

There was no effect on wages after 

controlling for demographic variables such 

as age and education. 

Both age and education had positive effects 

on employment outcomes.

The survey was administered under the Aid 

to Families with Dependent Children 

program, which did not have as many 

employment incentives as the current 

Temporary Assistance for Needy Families 

program.

 

Selection models were not used for hour 

and wage regressions to account for the fact 

that these outcomes are only observed for 

those gaining employment. 

The study did not address the potential 

simultaneity of employment and car 

decisions. That is, the car and employment 

decisions might be made at the same time.

Data only from one state—California— 

which could have different demographics 

and welfare systems than other states.

The researcher used a multinomial logit 

modela

 to assess the effect of employment 

and welfare participation, based on car 

ownership and other variables. 
Appendix II

Summary of Studies on the Effect of Car 

Access on Employment

Page 36 GAO-07-153 GSA Vehicle Donations

Author/title Purpose and scope Data

Raphael, Steven and Michael Stoll.

"Can Boosting Minority Car-Ownership 

Rates Narrow Inter-Racial Employment 

Gaps?"

Brookings-Wharton Papers on Urban Affairs 

99-145 (2001). 

To assess whether boosting minority carownership rates would narrow inter-racial 

employment rate differentials. The analysis 

first addresses whether car effects are 

greater for more segregated groups and 

then addresses whether these differences 

are more pronounced in more decentralized 

locations. 

Nationally representative sample of the U.S. 

population from ages 16 to 65 with no workpreventing disabilities.

The data to address whether the car effect 

differs by race or ethnicity are from 1992 and 

1993 “Surveys of Income and Program 

Participation,” Wave 4, which is a U.S. 

Bureau of the Census survey. Authors 

restricted sample to civilians 16-65 years of 

age, with no work-preventing disabilities. 

Data for 242 U.S. Primary Metropolitan 

Statistical Areas were from the 1990 5 

percent Public Use Microdata Sample. This 

data was used to address whether the car 

effects are greater in more decentralized 

areas.
Appendix II

Summary of Studies on the Effect of Car 

Access on Employment

Page 37 GAO-07-153 GSA Vehicle Donations

a

A linear probability model is a regression technique that is used to estimate the probability that 

someone is in one of two categories—for example, employed or not employed. This approach is less 

desirable for categorical outcomes than logit analysis because the latter has more desirable statistical 

characteristics that increase the precision of regression estimates. 

Principal findings Limitations Empirical method(s) used

Owning a car has a positive effect on 

employment. 

The effects of car ownership on 

unemployment are largest when individuals 

are more isolated from job opportunities.

The study did not control for urban and rural 

areas. 

As in some of the prior studies, this one 

used data from the early 1990s prior to 

welfare reform and did not attempt to 

address the potential simultaneity of 

employment and car decisions. 

Households with four or more cars were 

eliminated from the sample because 

ownership was not observable for the fourth 

or more car. This represents 6 percent of the 

observations, and it is likely that these 

households are disproportionately rural.

The researchers used a linear probability 

modela to test whether car ownership 

accounted for the observed differences in 

employment between races and ethnicities.
Appendix II

Summary of Studies on the Effect of Car 

Access on Employment

Page 38 GAO-07-153 GSA Vehicle Donations

Author/title Purpose and scope Data

Holzer, Harry, Keith Ihlandfedlt, and David 

Sjoquist.

“Work, Search, and Travel Among White and 

Black Youth.”

Journal of Urban Economics, 35: 320-345 

(1994).

To assess the effects of the use of a car on 

employment, periods of unemployment, and 

wages.

Black and White youth.

The data are from the National Longitudinal 

Survey Youth Cohort for 1981 and 1982 and 

the 1980 census of population.
Appendix II

Summary of Studies on the Effect of Car 

Access on Employment

Page 39 GAO-07-153 GSA Vehicle Donations

Principal findings Limitations Empirical method(s) used

Use of own car reduced periods of 

unemployment by about 11 percent.

Use of own car raised wages by about 12 

percent.

As in some of the prior studies, this research 

did not address simultaneity concerns. 

The authors assumed that the unobserved 

factors that influence travel cost, 

unemployment, and wages are not related. 

A selection model (that would account for 

the fact that wages are only observed for 

those who are employed) was not used to 

estimate wages. 

Regression equations were used to examine 

the determinants of travel costs and the 

effects of travel costs on job search, 

commute distance, the duration of 

unemployment spells, and wages.
Page 40 GAO-07-153 GSA Vehicle Donations

Appendix III

Comments from the General Services 

Administration ApendxiI
Page 41 GAO-07-153 GSA Vehicle Donations

Appendix IV

GAO Contact and Staff Acknowledgments ApendxiIV

GAO Contact William B. Shear, (202) 512-8678, or shearw@gao.gov

Staff 

Acknowledgments

In addition to the individual named above, Bill MacBlane, Assistant 

Director; Harold J. Brumm Jr.; Martin H. De Alteriis; Tami Gurley; Marc M. 

Molino; Elizabeth A. Olivarez; José R. Peña; Diana Pietrowiak; David M. 

Pittman; Paul G. Thompson; and James D. Vitarello made key contributions 

to this report. 

(250294)
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