Welcome!Asset Building & AFI Program Overview

AFI Resource Center

1-866-778-6037info@IDAresources.org

Presenter: Rita Bowen

The ASSET Initiative

• Collaboration across ACF Programs to bring asset building tools & practice to ACF grantees and families they serve

• Incorporates lessons learned from Assets for Independence Demonstration Program and related research

• Families move past paycheck to paycheck existence, toward financial stability

What are Assets?• Savings (3-6 month nest egg) to protect against

loss of income• Matched Savings (AFI Individual Development

Accounts)– Higher education and training– Develop or expand small business– First home

• Property, equipment, land• Good credit report and score, access to credit• Human capital (who you know)

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Financial Assets Matter• Enhanced Self-Esteem• Long-term Thinking and

Planning• Hope for the Future • Move Past Paycheck-to-

Paycheck Toward Long-term Financial

Stability

• Stronger, Healthier Families• More Community Involvement

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Asset Building Tools

• Financial education • Savings and Individual Development Accounts • Getting banked • Managing credit and debt • Tax credits and filing assistance • Accessing Federal and State benefits

For Youth…

• Asset building services provide much-needed financial skill building for youth transitioning to adulthood

• IDAs provide cash to secure essential things for a young adult, esp. those without a permanent adult connection

• Establishes connections to critical community resources– Financial Institutions– Community Organizations

For Parents/Adults

• Find that budgeting and credit counseling improve overall household financial management

• Build new habits for family to share and to model for children

• Use savings and match to purchase an asset that has potential wealth building effects for generations

• Financial stability yields positive social-psychological benefits for the whole family

The Promise of Financial Ed

• Financial literacy has been positively related to self-beneficial financial behavior.– 2001 survey—HS based financial education

led to increased rate of savings in middle age.

– HS seniors who never bounced a check showed substantially greater financial literacy scores than others with checking accounts. (Jumpstart, 2009).

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Financial Education…

• Can be an efficient and effective support for a young person’s financial well being:– Decision making/problem solving– Effective use of skills and tools/products– Improved financial conditions

• Is made more effective when connected with a concrete financial activity (Mandell, 2006)

• IDAs are such a concrete activity

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IDAs: Assets for Independence

Special federally funded 5-year grants to organizations that enable accountholders to ...

• Learn about financial and consumer issues

• Save in Individual Development Accounts to– Become more self-sufficient and plan for the future– Access higher education or training– Start or support a small business– Acquire a first home– Save to transfer to an eligible dependent

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Does it work?

• Low-income people can and do save• Nearly 80,000 people have saved $66.4

million • More than 29,000 have purchased assets• Many single parent households• IDA is first savings account for about half• On-going research on long-term

impact

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AFI Projects

• More than 350 organizations throughout the nation

• Target youth, adults, urban, rural, and other diverse populations

• Multi-purpose non-profits• State, local, or Tribal governments • Multi-site networks of organizations • Locate a project near you:

http://IDAresources.org/Map

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AFI IDAs Targeting Youth

• Penquis Community Action, Maine

• District 7 Human Resources Council, Montana

• Mile High United Way, Colorado

• Others?

How AFI Works

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Education Example: “Serena” • Serena wants to get certified as a Medical Assistant to get a job.

• She takes courses in Financial Education, debt counseling and training and works with a financial aid counselor

• Match rate of $4 for every $1 saved in her IDA

• Serena saves $500 -- $21/month over 2 years

$500 Savings

$2,000 Matching

$2,500 forEducation

$500 Serena Saves

$1,000 Federal*

$1,000 Non-Fed

*Maximum Federal Contribution is $2,000 per

individual/$4,000 per household

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Small Business Example: “Vicky”• Vicky dreams of owning her

own business and loves fashion design.

• Agency partners with youth entrepreneurship program

• Match rate is $2 for every $1 saved in her IDA

• Vicky saves $1,000: $42/month over 2 years

• Program partners provide small business training, one-on-one coaching and financial education.

• Vicky uses IDA and match to start a small business that provides cash to supplement her part-time job.

$1000 Savings

$1,000 Vicky Saves

$2000 Matching

$3000IDA + Match

$1,000 Federal

$1,000 Non-Fed

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Tailoring to RHY…

• Likely best targeted for Basic Center and transitional living programs

• IDAs for parents reuniting with youth supports goals that contribute to stabilization

• Young parents (in transitional living) often have greatest rates of participation

• Minimum of 6 months for saving• Savings targets must be within realistic range for

youth—can be low

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Two Sides of AFI Operations

Management/Administration

• Project budgets (5 yrs)• Financial oversight• Account management • Policies and Procedures

– Eligibility– Withdrawal activity

• Partnerships• Staffing• Grant administration/ reporting

Program Activities/Services

• Outreach & recruitment• Financial education• Asset training• Credit counseling• Deposit monitoring• Other participant services

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Funding• Five-year project grants• Must have firm commitments of cash support from

nonfederal sources. • The commitments must be equal to or greater than the

Federal grant amount requested.

Sources of Non-Federal Funds

• Financial institutions and their foundations

• State and local governments• Tribal governments• United Way• Foundations (local, regional)• State/Local tax credits• Special needs funding

opportunities (Mental Health, Youth Programs, Disability Programs, and other nonfederal funding streams that target specific populations)

• Locally-based corporations/employers

• Places of worship

• Individuals/online donations• Sponsoring organization

funds

• Federal Home Loan Banks

• Community Development Block Grants*

• Native American Funds**Specified allowable in their rules

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Making the Business Case: http://www.idaresources.org/IDA_Fundraising

Uses of AFI Project Funds • All AFI Project funds are held in a Project Reserve Fund.• At least 85% set aside to match participant IDA savings• A total of 15% can be spent on program operation costs.

– 7.5% for overall administration and program specific activities.– 5.5% to cover costs of case management and trainings.– Another 2% set aside for costs associated with data collection and

reporting.

Select Next to continue.

85.0%

2.0%

5.5%

7.5%15.0%

Savings Match

Data Collection

Econ Education

Other Admin

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IDA Matching Structure

• IDA Savings Match Rates can range from –$1 match for $1 earned income saved to –$8 match for $1 earned income saved

• Maximum amount participant can save and be matched may vary by asset goal

• Maximum Federal Contribution–$2,000 per individual–$4,000 per household

Reporting Requirements• Every 6 months:

– Narrative report on progress– Financial report (one page)

• Annual data report on program:– Free database provided with technical

support by AFI– Available immediately and provides

reporting data at the click of a button– Includes all needed program forms and

input options for full operation

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Participant Eligibility• TANF eligible

OR• EITC eligible or annual household income

less than twice poverty (about $44,700 for family of four)

AND

• Net worth less than $10,000, excluding value of a residence and one motor vehicle per household.

• Administering agencies may have additional requirements.

• Need earned income for savings deposits

Earned Income means…

• Any form of wages, tips or salaries the youth receive as a result of work they do for someone else– Full-time or part-time– Informal employment – Formal employment

*This could include internships or allowances.*Jobs as Peer Outreach workers would count.

• Reasonable forms of documentation are acceptable

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Partner Roles: Beyond Funding

• Partnerships are critical beyond project funding

• Partners can provide critical support for:– Recruitment– Financial education & asset training

• Microenterprise business plans, cash flow analysis• Credit counseling• Housing counseling

– Holding IDAs and Project Reserve Fund – Other services

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Upcoming Webinars

AFI Program Overview and Grant Application Process

• Thursday, December 1st, 2 p.m. EST• Thursday, December 15th 2 p.m. EST

For more information and to register:http://IDAresources.org/Calendar

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AFI Resource Center

Phone: 1-866-778-6037

Email: info@IDAresources.org

Web: AFI Resource Center (http://IDAresources.org)

• How to Apply • Project Planning Tools

AFI Program

(http://www.acf.hhs.gov/assetbuilding)

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