Assets CAN
 (The California Action Network)
for Individual Development Accounts

* What are IDAs?
* Assets CAN
* A Place to Start
       IDA Resource List
        Financial Literacy Curriculum Resources
       Basic Program Standards for Effective Practices
* The California IDA Q&A

What are IDAs?  

Individual Development Accounts (IDAs) are an asset building strategy for individuals and families. IDAs are matched savings accounts designed to help low to moderate-income people save money to pay for job training or education, buy a home or start their own business. Savings held in IDAs are matched by funding from financial institutions, foundations, religious congregations, and state and local governments.

By matching the money saved at ratios of 1:1 to 3:1, families and individuals increase their money, giving them not only an incentive to save but also an opportunity to purchase assets otherwise inaccessible to them. Thus, IDAs give program participants a structured mechanism by which to save for long-term wealth and asset accumulation.

IDA programs provide financial education as a requirement of the program. This training includes family budgeting and topics related to credit issues and comparison shopping. By pairing financial education with an incentive to save, IDAs are an effective way to begin a lifelong habit of saving and provide a long-term solution for low to moderate-income families and individuals to break poverty cycles.

Growth of IDA programs: As of August 2000, twenty-nine states have passed IDA legislation, and several other states have introduced, or plan to introduce, IDA legislation. On the Federal level, the Assets For Independence Act was passed in 1999 initiating an opportunity to expand IDAs even further.

For more information on IDAs, please click here.

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Assets CAN

    The founding groups decided that with the rapid expansion of the field of IDAs and other asset building concerns for the working poor, it is critical for California to coordinate efforts to avoid unnecessary duplication and intrastate competition. Assets CAN supports a self regulating set of guidelines that will ensure quality services are being offered whether the provider be a non-profit, financial institution or public entity.

    Participating organizations involved in the conceptualization and design of Assets CAN includes: CCEDA, Bay Area IDA Collaborative, Oakland and the Bay Area; the Assets for All Alliance, San Jose; Rural California Housing Corporation, Sacramento; Riverside County; CHARO and CD Tech in Los Angeles.  

  Priorities of the Network

*    Promote practitioner development, efficient uses of resources and the dissemination of information on effective practices for groups operating, developing, or partnering with organizations offering IDA services. This includes technical assistance and staff building for IDA programs in early planning or development, and convening regional partnerships of micro-enterprise programs, housing developers, and educators to begin coalition building across disciplines. This will be accomplished by building the Network and ongoing attention to the topics that participating groups identify. 
    Included in this concept is the sharing of financial education curricula and asset specific training materials that have already been developed by leaders in the field. Examples include creating a library and point for dissemination of local effective practices, curriculum and material sharing, evaluations, legal advisory opinions, promotional information, and future standard setting.

*    Develop public education and public policy strategies. This includes work in Sacramento and at the local level designed to leverage federal and private resources; and activities to educate the media, the public, and policy makers. IDA staff and program participants throughout the State will be supported in communicating with funders, the media, and policy makers about IDA practice and policy. Assets CAN issued the E-Bulletin and policy alerts to inform interested organizations and individuals about local innovation and policy breakthroughs.  

*    Encourage member organizations and others throughout the State to grow community leadership from participant constituencies, reduce consumer fraud, provide low wealth account holders with new skills to challenge media images, become decision-makers in other arenas, and to have their voices heard. This outreach to the low-income community will take place through our partner organizations and will overlay with the public education objective.  

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A Place to Start:  IDA Resource List

Growth of IDA programs:  
    As of August 2000, twenty-nine states have passed IDA legislation, and several other states have introduced, or plan to introduce, IDA legislation. On the Federal level, the Assets For Independence Act was passed in 1999 initiating an opportunity to expand IDAs even further.

 Assets CAN (California Action Network) for IDAs  

California Community Economic Development Association (CCEDA): www.cceda.com

 Publications:

·         Assets and the Poor: A new American Welfare Policy, by Michael Sherraden, Armonk, NY: M. E. Sharpe, Inc., c1991.

·         Black Wealth/White Wealth: A new Perspective on Racial Inequality, by Melvin Oliver and Thomas M. Shapiro, New York: Routledge, c1995.

·         IDA Program Design Handbook: A Step-by-Step Guide to Designing an IDA Program - Fourth Edition, Washington, DC: CFED, c2000.   Available from: CFED 202-408-9788  
777 N. Capitol Street NE, Suite 800  
Washington, DC 20002

 Web Pages:

	Corporation for Enterprise Development (CFED): www.cfed.org
	IDA Learning Network: www.idanetwork.org
	Center for Social Development (CSD): http://gwbweb.wustl.edu/Users/csd/

   
CFED IDA Network and Listserve:

	To subscribe, email: idanetwork-subscribe@cfed.org.  Do not type anything in the subject line or body of the message.  You will receive notification by e-mail once you have been successfully subscribed.
	To request list messages in digest format, email: idanetwork-digest-subscribe@cfed.org
	Bulletin Board: In order to post and share information with other IDA programs in California, go to www.idanetwork.org, then go to state pages, select state, then click on Bulletin Board.

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A Place to Start: Financial Literacy Curriculum Resources

CFED: There have been delays in design and printing, but is expected to be available in early 2002. There is a possibility that electronic copies may be made available sooner. To pre-order email financial@cfed.org.

National Endowment for financial education (NEFE): www.nefe.org 
    From their home page, click on Multimedia Access; click on Financial Clearinghouse and Materials List. You will find a significant collection of resources for financial education in English and other languages; for youth and adults.

Consumer Credit Counseling Services: Contact a local office.

Central Vermont Community Action Council: Contact Linda Macris, 802-479-1053

FDIC’s Money Smart curriculum: The Federal Deposit Insurance Corporation (FDIC) created the Money Smart curriculum to help adults outside the financial mainstream, enhance their money skills and create positive banking relationships.  www.fdic.gov/new/publications/moneysmart/index.html 

The resources listed above are presented without evaluation or priority. Each program is encouraged to review each source of curriculum and take into consideration cultural and ethnic priorities, age and education of your program participants.

When planning workshop content consider such details as the number of sessions and total hours of instruction. For example one of the objectives is for participants to prepare a household budget. Since the first step in the budgeting process is to track all spending by week for a full month, at least 5 weeks are needed to complete the training.

Be sure that your curriculum includes the following (from CFED’s Program Design Handbook)

    1.      Orientation to assets, asset building and personal finance training.
    2.      Gathering information needed to prepare a household budget.
    3.      Financial Decision-Making
    4.      Implementing a budget (reduce spending, managing credit and other adjustments)
    5.      Banking services
    6.      Consumer rights and responsibilities
    7.      Insurance
    8.      Taxes
    9.      Life events and their impacts on personal finances

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A Place to Start:  Basic Program Standards for Effective Practices

1. Full disclosure and agreement with participant -- a savings agreement

2. Match Adequacy -- match offered should be sufficient to leverage savings to purchase the assets or to make a significant contribution towards the asset goal

3. Match approval process should allow for prompt release of funds

4. All funds held in an IDA-eligible institution, principal guaranteed

5. Account holders receive a statement on savings, interest and matches each month

6. At 100% of match funds on hand or committed before savings agreement is signed

7. Program funding -- sufficient for term of participant commitment

8. Staffing: depending on program design -- 1 FTE for first 50 accounts, 2 FTE for up to 100.  Note differences for a collaborative design

9. Organizational stability

10. Staff/organizational experience

11. Written Partnership/collaborative agreements

12. Written IDA Program Plan

13. Written Policies and Procedures

14. Basic personal Financial Management Training (Economic Literacy)

15. Asset Specific Training

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The California IDA Q&A

Q: What are IDAs?

A: Individual Development accounts are an asset building strategy for Individuals and families. IDAs are matched savings accounts for low-income working families. IDAs can be used by low to moderate-income people to pay for job training or education, buy a first home or start their own business.

 By matching the money saved at ratios of 1:1 to 3:1, individuals and families increase their money, giving them not only an incentive to save, but also an opportunity to purchase assets otherwise inaccessible to them. IDAs give program participants a structured mechanism by which to save for long-term wealth and asset accumulation.

 Q:   Why IDAs?

A:   IDAs are necessary because low-income families need productive assets to achieve economic self-sufficiency.  The federal government successfully helps the non-poor acquire assets (through, for example, the home mortgage interest deduction and tax breaks for college savings) but doesn’t have a way to help the non-wealthy access those assets.  IDAs, through the use of matched deposits and supportive non-profit organizations, help low-income families acquire both the capital and skills they need to set goals for their future, and acquire their first significant asset.  IDAs are not handouts; they are investments in working families who are willing to save and invest in themselves.

 Q: What is happening with IDAs throughout the United States?

A: To date, 29 states have passed IDA legislation, and several other states have introduced, or plan to introduce, IDA legislation. On the Federal level, the Assets for Independence Act was passed in 1999 initiating an opportunity to expand IDAs even further. The American Dream Demonstration (ADD) is a 14 site, 2000 account, 6-year commitment by the Corporation for Enterprise Development to guide the national demonstration. The evaluation of ADD, now in its 4^th year, was designed by the Center for Social Development at Washington University in St. Louis.

 Q: What is the experience with IDAs in California?

A: California has one of 14 sites in the country selected for the American Dream Demonstration; the Bay Area IDA Collaborative has been operating since May of 1998. Since then 6 other programs are documented as implementing IDAs and 7 additional programs have recently been selected as new sites for the Assets for Independence Act, bringing a total of 14 AFIA funded programs in California. There are a number of very small IDA programs with less than 30 participants for which we have less documentation. Based on initial data collection by Assets CAN, there may be 24 programs operating in the state at this time.

The smallest programs tend to stand alone and serve the clients of an existing program, such as a home ownership program or a micro-enterprise program. Large programs are collaboratives that serve a number of member organizations who refer their clients to the IDA program. The collaborative model was born in California and is now seen as the next step in effective IDA program design.

 Q: Is this just another government giveaway?

A: No, IDA program participants must contribute their own earnings to qualify to receive match money.  In addition, participants must attend financial education classes, complete asset-specific training to support their savings goal, build new habits of saving, and begin planning for their futures.  

 Q: How do IDA programs ensure that participants have sources of income that can be used for saving?

A: Participants complete intake forms to describe their financial situation and provide documentation of their income sources (e.g, paycheck stubs, tax forms).

 Q: How do IDA programs prevent people from borrowing money from family or friends to quickly access the matching funds?

A: Participants cannot simply deposit a sum of money, have it matched, and withdraw the funds.  First, IDA participants must complete financial education classes and sign savings agreements based on their personal budgets and savings goals.  Second, IDA participants must use their own savings to cover their portion of purchasing their goal.  The matching portion is remitted directly to the vendor or escrow account.  Finally, in the California Savings and Asset Project (AB 692), participants are required to save for a minimum of 6 months before match funds can be withdrawn.

 Q: Can a participant deposit their EITC or tax refund into an IDA?

A: Some local programs allow for these large deposits, but the goal of IDAs is to foster long-term saving habits and increase knowledge about personal finances.  Even if a participant deposits tax refunds into their savings account, they are still required to save for at least 6 months before match funds may be withdrawn. Programs encourage participants to save the EITC separately since some assets require more money than the IDA program will provide.

 Q: How does an IDA program ensure that the asset purchase is used as intended and by whom it is intended?

A: Programmatic policy recommendations, based on prior best practice in the field, include that before the match funds may be used, an estimate of costs and a plan for use of the asset must be submitted to the local IDA program for approval. Then the local IDA program writes a check for the asset directly to the specified and approved vendor.  Once the purchase is complete, the original receipt is submitted to the local IDA program.

For more information about IDAs and/or Assets CAN,  visit www.idanetwork.org.

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This page was last edited 12/23/2004