Louisa Padilla is a new homeowner. She’s a single mother who recently purchased a manufactured home. Louisa was unfamiliar with manufactured homes, and a skeptic. But seeing the house allayed any of her concerns.
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Below is a list of Frequently Asked Questions about operating IDA programs, in the following categories:
- About IDAs
- Opening an IDA account
- Starting an IDA program
- IDAnetwork listserv
- Funding
- AFI-specific questions
- Program management
Basic questions about IDAs themselves are answered in this 4-page Fact Sheet. (Also available in Spanish)
Please submit other questions about operating IDA programs to the IDAnetwork listserv.
about IDAsIndividual Development Accounts (IDAs) are matched savings accounts that enable low-income American families to save, build assets, and enter the financial mainstream. IDAs reward the monthly savings of working-poor families who are trying to buy their first home, pay for post-secondary education, or start a small business. This reward or incentive is provided through the use of matching funds that typically come from a variety of private and public sources. Similar to 401(k)s, IDAs make it easier for low-income families to build the financial assets they need to achieve the American Dream. More information about participation in an IDA can be found in this 4-page Fact Sheet. (Also available in Spanish)
Can poor people save?
Yes. There is evidence from IDA initiatives that poor people, with proper incentives and supports, will save regularly and acquire productive assets. For example, 2,128 low-income families participating in ADD saved $602,181 as of June 2000, and these savings leveraged another $1,146,919 in matching funds. Monthly deposits typically ranged from $30-$75 per month.
Do assets matter?
Research summarized by the Center for Social Development (CSD) demonstrates many beneficial aspects of assets:
- They promote economic household stability and educational attainment;
- Decrease the risk of intergenerational poverty transmission;
- Increase health and satisfaction among adults; and
- Increase local civic involvement.
Why invest in IDAs?
Significant as current IDA efforts are, they cannot meet the growing demand for IDAs. Many Americans who do not own assets and others who do not have bank accounts are not currently benefiting from IDAs. Greater public and private investment is needed to make IDAs more widely available.
While returns on IDA investments are difficult to calculate, CFED estimates that each federal dollar invested in IDAs would yield a return of approximately five dollars to the national economy in the form of new businesses, additional earnings, new and rehabilitated homes, reduced welfare expenditures, and human capital associated with greater educational attainment.
Is asset building a new idea?
opening an ida accountNo. The Homestead Act, GI Bill, IRAs, 401(k)s, and the home-mortgage interest deduction are good examples of how government has helped millions of American families acquire assets and achieve economic independence. By expanding IDAs, government can also help America's working-poor families save, acquire assets, and participate more fully in the economy.
How can I open an IDA account for myself?
Thank you for your inquiry about Individual Development Accounts. Individual Development Accounts (IDAs) are special matched savings accounts designed to help those of modest means establish a pattern of regular of savings and, ultimately, purchase a productive asset. Savings and match money may be used toward the purchase of a home, to start a small business, or further your education.
Basic questions about IDAs are answered in this 4-page Fact Sheet. (Also available in Spanish)
If you wish to open an IDA account, you will need to locate an IDA program near you. You can search for programs by state using the online IDA Directory.
Starting an IDA ProgramHow can I start an IDA program?
CFED offers resources for starting an IDA program. The first I would recommend is the IDA Program Design Handbook. It covers topics like the feasibility assessment, program management, fundraising, financial education and training, and program financials.
Recently, a new organization has been formed to provide training and technical assistance to IDA programs. To learn about what they offer, contact Inger Giuffrida at the Assets Alliance.
One of the major sources of funding for IDA programs is the federal Department of Health and Human Services Office of Community Service's program called AFI (Assets for Independence). They provide grants and technical support to IDA programs. Of this money, 15% can be used for operating costs, and the remaining 85% must be used as 'matching funds' for the people in the program. In order to receive this money from OCS, you have to raise at least as much money as they give you on your own.
IDAnetwork listservWhat address should I use to post to the IDAnetwork listserv?
Will sending mail to that address ALWAYS get the message posted to the listserv? In what cases will the message be bounced?
The listserv is an email system and accepts messages based on content and listserv permissions. The listserv can be configured to allow anyone to post to it or restrict postings to a small community of users. Right now, the listserv is configured to allow only subscribed members to post. The listserv uses the same server as CFED's regular email, and thus passes through the additional restrictions of our email system (virus filter, etc.)
Where can I go to subscribe, unsubscribe, change my email address, get a password reminder, or change my subscription to digest?
Visit the IDAnetwork listserv page. To subscribe, you have to enter your email address and choose a password. To unsubscribe, change your email address, get a password reminder, or change your subscription to digest, go to the bottom of the page and click the button that says "Unsubscribe or edit options."
What does "digest" mean?
If you turn digest mode on, you'll get posts bundled together (usually one per day but possibly more on busy lists), instead of singly when they're sent.
Should I reply to the individual who asks a question, or to the whole group? How do I do that?
If you think your answer is of interest to the entire listserv, please respond by clicking 'Reply all' or entering idanetwork@ns.cfed.org in the CC: field. Answers that share a tool, cover new territory, or address the larger field will often be of interest to all. Be generous in sharing your knowledge with other members of the listserv, but make your Subject line descriptive of what is in the message so readers can screen emails if they are not interested in that thread of conversation. The very nature of a listserv is an expectation that all subscribers will have access to each other's knowledge. Feedback from subscribers indicates that this is the best approach.
Because the IDAnetwork listserv represents over 500 practitioners at varying levels of experience in the field, the questions posted will range from basic to more advanced. CFED is in the process of writing an FAQ page for the IDAnetwork website that will be an easy reference for all practitioners. (We will send out an announcement when it has been completed.) Beginning practitioners can be directed to the FAQ.
Is there a size limit for attachments?
The limit is 60 KB for all messages sent to the list. If your email is bigger, it will be queued for approval by a CFED staff member. If it does not appear to have posted correctly, please email rwatson@cfed.org.
What is the etiquette on the IDAnetwork listserv?
- Messages should be polite, constructive, and pertinent to practitioners in the IDA field.
- Make the Subject line descriptive of what is in the message so readers can screen emails.
- When replying to a message to the whole listserv, trim down the copied text from the last person's message so your entire email is shorter.
- If you use 'out of office' auto-replies and you know you will be out of the office, please unsubscribe from the list so as to minimize junk mail.
Where can I find past messages posted to the listserv?
Visit the IDAnetwork listserv archives.
Who do I contact if I have questions about the listserv?
You can contact rwatson@cfed.org.
Updated 9/21/08
FundingDoes CFED make grants to IDA programs?
No, CFED is not a grant-making organization. We focus on policy, research, and field building in the assets and entrepreneurship fields. Understandably, the loss of state and federal funding is squeezing many community-based organizations right now. Places to look for funding include the U.S. Department of Health and Human Resources, your state agencies, and local and state foundations for grants that might fund your services.
Does anyone use CDBG funds as match for IDAs?
A few states have chosen to use their CDBG funds for IDAs. While federal law does not specifically authorize the use of CDBG funds for IDAs, the law does not prohibit it either. In North Carolina for example, $250,000 in Small Cities CDBG funds are being used for a four-site, two-year homeownership IDA demonstration project. Alternatively, CDBG funding can be used for microenterprise development projects (to learn more about this, check out our publication Community Development Block Grant Funding for Microenterprise Development).
AFI-specific questionsHow does the Carl D. Perkins Vocational and Applied Technology Education Act define 'an eligible educational institution' (referenced in AFI standards)?
The best way to find the Act on thomas.gov (online source for federal legislation) is to do a search for the specific references listed in the AFI legislation and then through a careful read eventually locate the actual language. We've cut out the searching for you though - here is a document with the relevant sections of the actual text of the Act. (Courtesy of Rita Bowen)
Program ManagementHow can I update my IDA program's listing in the directory?
The only way to get your contact information into our online IDA Directory is to fill out the 2007 IDA Program Survey. Updates to current directory entries can be sent to idainfo@cfed.org.
How can IDA programs help people with unearned income, i.e. disability, SSI, SSDI?
Because SSI is not considered 'earned income', the accountholder needs to have an alternative income source to contribute to the IDA. She or he could do odd jobs (i.e., baby-sit or run errands). Under normal circumstances, an individual can only earn $85 on SSI without affecting his or her benefit level, EXCEPT when enrolled in a federally funded IDA, and then the money contributed does not count towards the $85. This means that people with an IDA can earn more money than those without. This is currently the only way for a person on SSI to save for a home.
Another important consideration is the asset limits of SSI. If your program receives federal funding (either AFIA or TANF) then the asset limits of $2,000 ($3,000 per couple) do not apply. However if you don't receive AFIA or TANF funds, then all money in an IDA (including the match) counts toward the $2,000 limit. While these rules are restrictive, IDAs are an excellent option for people on SSI. However, it is very important - especially if this is the accountholder's only income - that the rules be followed.
- Megan O'Neil, Access to Assets Project Coordinator, World Institute on Disability
Should low-income accountholders report all their income? For example, a program has a client who babysits and receives cash, but doesn't file a tax return. Should the program advise her to report the income and show that it goes into her IDA account so that she might qualify for the earned income tax credit (EITC)?
Yes, the accountholder should definitely report. Unless he or she has children, he or she probably will not receive a very large credit from the EITC, but obviously any money received is 'money in the bank.' Around tax time, Volunteer Income Tax Assistance (VITA) sites, the IRS-sponsored free tax service that targets low-income individuals, can help with filing to make sure everything is done correctly. You can call 1-800-829-1040 to find a VITA site near you.
- Megan O'Neil, Access to Assets Project Coordinator, World Institute on Disability
What is appropriate compensation for IDA program staff?
There is no one-size-fits-all answer to this question. A recent poll on the IDAnetwork listserv reported a New York IDA paying a program manager with a Masters Degree $42,000-45,000, an IDA coordinator with a Bachelors Degree $36,000-38,000, and an administrative assistant with a Bachelors or Associates degree $32,000-34,000. A Minnesota-based IDA program reported paying a program coordinator $21,500-$31,500.
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