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Strategies to Build Individual Assets: IDAs, EITC, and CSAs
Building Financial Assets Conference
Sponsored by the Jessie Ball duPont FundAirlie Conference Center □ October 25-27, 2006
Carl Rist, Director, SEED InitiativeCFED
www.cfed.org
Establishing the need for asset building:The 2005 Assets and Opportunity Scorecard
Most comprehensive tool yet to measure ownership and financial security at the state level.
Provides comparable, state-by-state data on asset accumulation and protection.
www.cfed.org
A look at Florida
Overall grade on asset performance: COverall policy rating: Standard
Index Grade Rating
Financial security C Substandard
Business Development
B Substandard
Homeownership B Favorable
Health care F Standard
Education C Favorable
Tax policy and accountability
Substandard
www.cfed.org
Noteworthy data on asset building for Florida
29th in net worth of households 28th in asset poverty 35th in homeownership rate No state-funded IDA program No state EITC TANF asset limit = $2,000
(average)
www.cfed.org
A look at Delaware
Overall grade on asset performance: AOverall policy rating: Favorable
Index Grade Rating
Financial security A Substandard
Business Development
C Favorable
Homeownership A Substandard
Health care A Favorable
Education C Favorable
Tax policy and accountability
Favorable
www.cfed.org
Noteworthy data on asset building for Delaware
12th in net worth of households 4th in asset poverty 2nd in homeownership rate No state-funded IDA program No state EITC TANF asset limit = $1,000 (below
avg.)
www.cfed.org
A look at Virginia
Overall grade on asset performance: COverall policy rating: Substandard
Index Grade Rating
Financial security C Substandard
Business Development
F Favorable
Homeownership A Substandard
Health care C Substandard
Education B Favorable
Tax policy and accountability
Substandard
www.cfed.org
Noteworthy data on asset building for Virginia
21st in net worth of households 26th in asset poverty 6th in homeownership rate State-funded IDA program No state EITC TANF asset limit = no limit (one of
only two states)
www.cfed.org
A Proven Asset-Building Tool: Individual Development Accounts
Individual Development Accounts (IDAs) are: Centerpiece of a new asset-building strategy Restricted savings account, used for:
Homeownership Business start-up Post-secondary education and training
Designed to increase savings of poor, working poor and welfare recipients.
Incentive? Match from public or private sources, PLUS economic literacy training.
www.cfed.org
How IDAs Work
Individual
Home Ownership
Education
OPEN
Small BusinessDevelopment
Incentive Dollars
IndividualAccount
MasterAccount
IndividualDevelopment Account
INDIVIDUAL DEVELOPMENT ACCOUNTOVERVIEW
www.cfed.org
IDAs: Precedents and models
Over 300 programs and 15,000 savers across the U.S.
Delaware: Delawareans Save
Florida (Jacksonville area): NE FL CAA, Real Sense Prosperity
Campaign/IDA Partnership Virginia (Richmond area):
New Visions, New Ventures, Inc.
www.cfed.org
IDAs: Impact
ADD evaluation (large-scale IDA demonstration with over 2,000 participants). On average, ADD participants: Had family income at 116% of the family-size-
adjusted poverty line, Saved $19.07 per month in average net
deposits (1.6% of monthly income), Made a deposit in about 6 of every 12 months, With an average match rate of 2:1,
accumulated $700 per year in IDAs.
www.cfed.org
A New Idea: Children’s Savings Accounts
What difference would it make if every child started with an account at birth?
What are CSAs? A vision: $1,000 at birth for every child, Accounts used for asset building, Universal system (“opt-out” model) Progressive matches Appropriate financial education delivered at
scale
www.cfed.org
CSAs: Precedents and Models
International precedents: U.K. Child Trust Fund Canada Learning Bond Singapore (Child Development Accounts)
SEED Demonstration in U.S. Multi-year, multi-site experiment with SEED
(children’s savings) accounts 1,250 accounts with children in 12 sites,
including 500 in Michigan.
www.cfed.org
CSAs: Precedents and Models (more)
Y.E.S. (Youth Experiencing Savings) at Boys and Girls Clubs of DE 71 middle-school aged children Models delivery of SEED accounts via
Boys and Girls Clubs. Accounts held at Artisans Bank and
Smith, Barney.
www.cfed.org
CSAs: Impact
SEED Progress
SEED Initiative, as of December 2005:
1,089 accounts open Avg. accumulation varies across sites and age cohorts
0
200
400
600
800
1000
1200
Avg. Total SEED balance
Beyond Housing
Cherokee Nation
Foundation Communities
Fundacion
Harlem Children's Zone
Juma Ventures
OLHSA
People for People
Shriver Center
Southern Good Faith Fund
www.cfed.org
Resources:
IDAs: www.cfed.org - clearinghouse www.assetsalliance.org - training http://gwbweb.wustl.edu (Center for Social
Development) – research CSAs:
www.cfed.org (SEED Initiative) – clearinghouse
www.assetbuilding.org (New America Foundation) – federal policy
http://gwbweb.wustl.edu - research
www.cfed.org
Contact:
Carl RistCFED123 W. Main St., Suite 210Durham, NC 27701919.688.6444919.688.6580 (fax)[email protected]/go/scorecard