Individual Development Accounts (IDAs)

Sounds too good to be true: an IDA is savings program helping people to buy a home, start a business or, go back to school. Savings by individuals can be matched up to eight to one by a variety of government and private sector sources. Throw in financial literacy training, support from a community-based organization, and peer support, and you have an IDA program. Financial literacy training includes owning and managing a bank account or a credit card; credit counseling and repair; guidance in accessing refundable tax credits, including the Earned Income Tax Credit and the Child Tax Credit; and specialized training in owning particular assets for the long term. Money saved in an IDA is an excludable resource and does not affect eligibility for programs such as Medicaid or SSI.

There is no catch. Not only do IDAs help people become self-sufficient; they also build optimism. According to the Center for Social Development at Washington University in St. Louis, as many as 93 percent of current IDA participants reported they feel more confident about their futures and 85 percent said they felt more in control of their lives. With self-empowerment as its cornerstone, it is easy to see the marriage between IDAs and the independent living philosophy. The program is a natural fit with the disability community.

Organizations offering the IDAs get grants from the Administration on Children and Families' Assets for Independence (AFI) that enable them to implement this assets-based approach that gives participants a hand up out of poverty. Participants use their IDA savings, including the matching funds, to achieve any of three objectives: acquiring a first home; capitalizing a small business; or enrolling in postsecondary education or training.

Target Population
Included are those eligible for Temporary Assistance for Needy Families (TANF), or those whose household assets do not exceed $10,000 in value (excluding a residence and one car) and who are either eligible for the Earned Income Tax Credit, or have total household income of less than two times the Federal poverty line.

Coming to Rhode Island?
There are no AFI funded projects in Rhode Island, the only state without this important resource but the Council is working to establish one. For more information contact Sue Babin at 737-1238 or Email her.

The number and variety of asset-building approaches, including Individual Development Accounts, is expanding at a rapid pace. Also expanding is the research in the field, leading to burgeoning development of information on effective practices. The Administration on Children and Families lists many sources for research, program models, and other strategies related to asset building in this pdf document. IDAresources.org is another website that has extensive information on asset building for people with disabilities.

    Eligible AFI grant Applicants:
  • Nonprofit organizations, including faith-based and community groups
  • State, local, and tribal government agencies applying jointly with a nonprofit
  • Community development financial institutions that partner with a community-based antipoverty group
  • Low-income credit unions that partner with an antipoverty group
  • Consortia of organizations and agencies that target multiple service areas

How Michelle Durham got herself out of poverty with the help of an IDA:


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