Many states and counties offer programs to help public assistance recipients, the majority of whom are single parents, purchase or lease automobiles. In some cases, states and counties work with organizations that accept donations of old cars for tax deductions. Studies show that these programs have the potential to help recipients move from welfare to the world of work.
Lack of reliable transportation is one of the biggest barriers that recipients of public assistance under the Temporary Aid to Needy Families (TANF) face in moving from welfare to work. In rural areas, where public transportation is almost nonexistent, the challenge is even greater. The overwhelming majority of TANF recipients are single mothers. Some surveys of TANF recipients found that many of them had little or no access to a car. Cars are such an integral part of American culture that often they are the only viable means of transportation that enable people to commute to multiple jobs, thus moving from welfare to work. State limits on the length of time a recipient may receive TANF benefits create an additional incentive for people to find work (limits vary by state), but the lack of transportation often creates a "Catch-22" for people trying to get off of public assistance: it's much more difficult to get to and from a job without a car, but it is impossible to afford a car without a job.
Since the early 1990s, donating cars to charity has become an increasingly popular way for many Americans to dispose of older cars. IRS rules that allow donors to claim a tax deduction fueled the popularity of car donations. Proceeds from donated cars sold at auction have benefited all types of charities and nonprofit organizations. Beginning in the mid-1990s, several states implemented car donation programs as a means of improving TANF recipients' access to transportation. These programs match donated vehicles with welfare recipients. Some of the programs give the donated cars outright to eligible recipients, while others offer loans with little or no interest for a vehicle purchase. Still others operate leasing programs. Although people in all 50 states can donate cars to charity for a tax deduction, not every state has programs that match donated cars with single parents receiving TANF, and there is no federal program that matches welfare recipients with donated cars.
Car donation programs exist statewide or in certain counties in many states, including Alabama, Alaska, Arizona, California, Colorado, Florida, Georgia, Illinois, Kansas, Kentucky, New York, North Carolina, Tennessee, Vermont and Virginia. The size of the programs, the eligibility standards and other rules vary across states. In general, TANF recipients can contact the agencies that administer the program to inquire about the availability of car donation programs. In general, eligibility for a donated car requires referral from a welfare caseworker.
In DuPage County, Illinois, there is a car donation program in which residents donate vehicles that are then given to an eligible TANF recipient, who must be referred by a state welfare caseworker. Recipients must pay for the vehicle's registration and title. They also are responsible for taxes and insurance. A private foundation covers the cost of vehicle repairs. A Kansas program, operated by a community agency, uses TANF funds to buy cars for recipients. Other states require recipients to make lease or loan payments. North Carolina's Wheels-to-Work program places donated cars with eligible recipients for two years. At the end of the two-year period, they own the cars outright. An Arizona program allows vehicle donations to a state contractor, which then leases the cars to eligible recipients. After completing a one-year lease, the recipient can keep the vehicle. Colorado law allows each county in the state to decide on its own program. Some counties in Colorado use TANF funds to buy vehicles or pay for car repairs, while other counties provide money for TANF recipients to purchase donated vehicles. Many programs have waiting lists for cars, as the number of interested recipients outweighs the number of available vehicles.
Little research exists on the efficacy of these programs, but past studies have demonstrated that welfare recipients who have access to cars are far more likely to find and hold jobs. The Center for Budget and Policy Priorities, a Washington, D.C.-based think tank, contended that car donation programs are a valuable way to move single parents and other TANF recipients from welfare to work in part because of what it termed a "spatial mismatch" between many low-income people and the location of jobs they work. Most entry-level jobs, the center reported, are not located in areas with high concentrations of low-income residents.