1. Individual Development Accounts
Introduction
Community Action Partnership of North Dakota

2. Community Action Agencies
CAPND encompasses 7 agencies (plus one satellite agency) that serve all 53 counties in ND.

3. IDA History and Theory
Individual Development Accounts (IDA’s) have existed across the United States since 1998
Founded by Michael Sherraden, wrote “Assets and the Poor”
People are trapped in a cycle of consumption of assistance programs
Need long-term solutions to poverty rather than maintenance efforts
Spearheaded the American Dream Demonstration
Showed people with low incomes can and do save
In 1992, Dr. Michael Sherraden wrote a book titled “Assets and the Poor” highlighting the struggle that people living in poverty experience, being trapped in a cycle of consumption and dependence within the current welfare system, a cycle common even for non-welfare individuals. The current system is focused on income rather than assets even though assets have been shown to connect people to the economy, positively change the way people think, raise their economic expectations, and to allow them to shape their future. Sherraden acknowledges that asset acquisition for low-income people and families is difficult without assistance. In response, he proposed the notion of IDAs as a way for low-income people to accumulate a lasting asset as a means to remedy the problem.
In an effort to further explore the effectiveness and impact of IDAs, Dr. Sherraden spearheaded the American Dream Demonstration in This was a national five-year program in which 2,300 individuals opened an IDA at 13 different organizations. The demonstration ultimately concluded that low-income people can and will save.

4. History of IDAs Assets for Independence Act of 1998
Had bi-partisan support
Established Federal support of IDAs
Defined program guidelines
40 states have passed IDA legislation (including ND!)
548 AFI IDA initiatives nationwide at end of FY2009
More than ½ of AFI projects are administered by CAAs, human service organizations, and community development corporations
Match rates and match funds vary from $160-$4,500; average is $1,631
The Assets for Independence Act of 1998 was therefore passed, providing federal support to the Individual Development Account program. North Dakota was included in the 40 states that passed IDA legislation to receive state funding. The findings from the American Dream Demonstration supported North Dakota’s move to initiate our very own IDA program, starting with just 3 of our agencies. The Collaborative then expanded in 2004 to include the remaining CAAs.

5. Overview of North Dakota IDA Program

6. IDA Overview
Savings accounts matched 2:1 can be used towards the purchase of one of three lasting assets:
College
First Home
Small Business
These three assets; college, first home, and small business, are federally mandated. We are interested in expanding this to include asset purchases such as student loans and vehicle purchases, but that is still in the works.

7. 4:1 Match for first-time home buyers
$5,000 for first home purchase!
$4,000 Match Funds
$1,000 Participant Funds
The 2:1 match provided for IDAs comes from equal parts participant funds to federal and state funds.

8. 8:1 Match for college students and small business owners
$4,500 for tuition, books, or small business costs!
$4,000 Match Funds
$500 Participant Funds
The 2:1 match provided for IDAs comes from equal parts participant funds to federal and state funds.

9. Who Qualifies for an IDA?
North Dakota Resident
Employed
Meet Income Guidelines (200%)
Net worth less than $10,000
Complete Financial Literacy trainings
Must be 18 years old, or 17 with parental consent
In order to qualify for an IDA… participants must be able to provide a North Dakota state-issued ID, they must be able to provide two months worth of paystubs, be at or below 200% of the federal income guidelines, have a net worth of less than $10,000 (excluding primary residence and one vehicle), be 18 years of age or older, and be willing to participate in general financial literacy and asset-specific trainings. Total of 10 hours of financial literacy required.

10. For each additional household member add
Income Guidelines
Poverty Income Guidelines 2016
Number in Household
200% of Poverty
200% Hourly Wage 1
$24,311
$11.69 2
$32,480
$15.62 3
$40,840
$19.63 4
$49,200
$23.65 5
$57,560
$27.67 6
$65,920
$31.69 7
$74,280
$35.71 8
$82,640
$39.73
For each additional household member add
$8,320
$4.00
The income guidelines listed here are for It is also important to keep in mind that the majority of our participants are actually well below these guidelines. As you may be aware, in order to receive TANF an individual is already within these income requirements.
*Note: If a participant is claimed on a person’s taxes, the household income of the family claiming the person must be used

11. Application Process START SAVING! Meet with IDA case manager
Submit all required materials
Complete Application
Credit report does not disqualify someone from the program. It simply provides a base point for us to start with and if necessary, we can work on raising that credit throughout their savings period.
*Required materials include:
Completed Application
Income Verification
Copy of State-Issued ID
Credit Report

12. Once a person is enrolled….
Open a custodial account at Bremer Bank
Immediately begin making monthly deposits from earned income
Complete 10 hours of financial literacy training
Work with an IDA Case Manager throughout the duration of their time in the program
Are eligible for match dollars after a minimum of six months of savings and completed trainings
Two IDA accounts are allowed per household: Meaning two family members can participate at one time, or one household member can participate twice. They can save for the same asset.

13. IDA Savings Requirements
Monthly deposits from earned income
Two-year program
Six months of regular savings AND completion of trainings before any withdrawals can be made

14. Financial Literacy Training
Four Cornerstones
Four Directions
Budgeting to Create Savings
Debt Reduction and Asset Building
Consumer Protection and Financial Institutions
Building a Good Credit Rating
Thrifty Living to Build Your Savings
Investing to Grow Your Savings
Protecting to Secure your Savings
Building a Future with your Savings
Some of the topics that are discussed in the financial literacy trainings are listed below. Our main focus is on the four cornerstones of financial literacy; budgeting, debt reduction and asset building, building good credit, and consumer protection. Depending on where the participant is at and what sort of things they have stated they want to work on, we can expand to other trainings.

15. Asset-Specific Training
8 hours offered, with the potential for more if interested
Offered by community partners
General Topics Covered:
Affordability of homeownership
Free Application for Federal Student Aid (FAFSA)
Career and education exploration
Developing a business plan
Determining marketing strategies
Asset-specific training depends on which asset the participant plans to save for. If they are saving to buy their first home, we focus on homeownership finances and affordability. If they are saving for their small business, we focus more on business strategies and working to develop a solid business plan for when they are ready to take out their match funds.

16. Asset Purchase Process
Allowable after completion of trainings and at least 6 months of regular savings
Participant notifies IDA Case Manager to initiate process
Participant savings in IDA are matched 4:1 for first-time home buyers or 8:1 for college students and small business owners
Check is issued directly to the vendor
Under no circumstances does the participant have access to the match funds
Multiple withdrawals allowed, maximum of 3
Assets must be purchased in North Dakota

17. IDA Participants in ND The average age is 20-27
The average income was $14,112.88
Most common asset saved for is education
90% indicated they had more control over household finances after completing the program
94% learned new financial management skills
81% said they were more likely to use bank services and products
Taking a look at our IDA participants to date, we see that the majority of them are around years of age, living at 125% of poverty, with over half saving for post-secondary education.

18. Results: What we learned from the survey and the interviews
In 2013, we contracted with Dr. Andrew Quinn of the University of North Dakota’s Social Work Department to conduct a return on investment study on the North Dakota IDA program. This study was aimed at understanding stakeholder’s views of the IDA, as well as what the program has done for our participants and the community.
IDA RETURN ON INVESTMENT STUDY

19. Clients

20. IDA Program 2002-2016 North Dakota Graduates Savers Total Home 62 1577
Education
109 18
127
Small Business 36 4 40
207 37
244
Since the IDA program started in 2002, we have seen a total of 207 individuals graduate.

21. Asset Goal

22. Education Asset N=38

23. Current Enrollment Status
18 of the 38 IDA holders are currently in college
19 of 20 IDA holders graduated
While the majority of IDA holders (33, 87%) said they would have gone to school without IDA support, 5 IDA holders (13%) said they WOULD NOT HAVE
All colleges in North Dakota were represented including Tribal Colleges

24. How the IDA Helped: Paying for College

25. How has the IDA Helped: Changes in Employment Status Since Attending College

26. How the IDA Helped: The Benefits of Attending College
Sense of Accomplishment
Education/More Knowledge
Personal Growth
Career
Ability to Plan for the Future
Feeling of Self Worth
Increased Wages
Skills
The Dream Job I Always Wanted
Improved Chances of Finding Employment

27. The Homeowner n=23

28. Home Ownership
Property Taxes spread from $42 to $2,800 with the mode being about $1,500

29. How has Life Changed Since Purchasing Home
13 out of the 23 stated that their life has improved since purchasing a house

30. Small Business Ownership/Improvement n=6

31. Why the IDA?
All but 1 IDA holder still owned the business that was started/improved on with IDA funds
The one person has not started the business at the time of survey

32. Type of Business Day Spa Remodeling Business Event Planning/Decorating
Photography
Chiropractor

33. What was done with the Extra Revenue Generated

34. How the IDA helped: Small Business

35. Small Business-The IDA Holder
I would not have been able to purchase the tools that I did, had not this program been available. I have used these tools to do many activities, which range from my small business, personal use, and helping others.
It gave me the opportunity to bring in new services to the area which in return helped grow my business.

36. Overall Changes attributed to IDA N=82

37. Since Participating in the IDA Program: Financial Situation

38. Since Participating in the IDA Program: What has happened?
Behavior
Managing Money Better
44 (54%)
Spending Habits Improved
36 (44%)
Saving Habits Improved
Confidence in Managing Finances and Planning for Financial Future Improved
38 (46%)
Increased Knowledge about Budgeting and Financial Planning
37 (45%)
Better Understanding of how Credit and Credit Cards
31 (38%)
Better Understanding of MY Ability to Save on a Limited Outcome
30 (37%)
Confidence Interacting with Financial Services and Organizations
Paid Off Debt
28 (34%)

39. Public Assistance
23 IDA Holders were on Public Assistance prior to IDA
11 out of 23 were on Public Assistance at the time of the survey (Spring 2014)

40. Improvements Behavior No Prior to Yes Since IDA Pay Bills on Time 30+8
Pay Rent/Mortgage on Time 28 +2
Pay for Medicine and Health Care Needs 44
+12
Make Regular Deposits into Savings Accounts 49
+21
Reduce my Overall Household Debt 61
+29
Keep an Emergency Fund 58
+26
Know my Credit Score 53
+27
Make Deposit into Child College Savings 79
+11
Make Deposit into an IRA or Tax Sheltered Annuity
+23
Use a Budget to Monitor Your Spending 51

41. Improvements Continued
Behavior
Yes Prior
No Since the IDA
Make Deposit into College Savings for Self 74
+11
Use a Pawn Broker 3
-3/0
Claim the Earned Income Tax Credit 53 +9
Used Rapid Tax Refund/ Tax Refund Anticipation Loan 4 -3

42. Power of the IDA Program: The clients in their own words
The IDA program has impacted me and my family in a positive way. I have been able to learn how to save money by watching my spending habits, and by noticing that it is possible to put even a small amount of money aside.
It was a positive experience so help me get through graduate school so that I can better my living situation and obtain a career that I always wanted to help support my family.

43. Power of the IDA Program: The clients in their own words
It helped us save when we didn't think we could. It gave us the feeling that we could do better and be home owners.
I got used to putting money away each month, and it's a habit I've kept up to this day. I now have a savings account that I use for extraordinary circumstances (like a car repair) where I would have used a credit card previously.
It helped me buy my first home for my daughter and I to live in. I never would have been able to do that without the IDA program.

44. Frequently Asked Questions
I’m currently in High School, can I participate?
Yes, but you have to be at least a Junior and have parental consent. You must also be able to make deposits from earned income.
Even though I qualify now, what happens if my income increases?
- Once you have been proven eligible and accepted into the program, eligibility is “locked in.” Participants need only be income-eligible at time of enrollment and acceptance.

45. Frequently Asked Questions
Do I have to currently be employed to qualify for an IDA?
Yes, federal regulations clearly state that deposits into an IDA must come from earned income.
Where are savings into the IDA deposited?
- Accounts are held at Bremer Bank all over North Dakota. Accounts do not incur any service fees and do accrue interest.

46. Frequently Asked Questions
I attend a two-year college, can I participate?
Absolutely! The IDA program can be utilized at any accredited post-secondary institution in North Dakota towards an Associate, Bachelor, Master, or Post-Doctorate degree.
The IDA program sounds too good to be true. What is the catch? Is it a loan?
It’s not too good to be true! The program is an excellent opportunity to accumulate a lasting asset. There really is no catch and nothing has to be paid back.
The purpose of the program is to teach people how to save and invest their money rather than borrow and spend.

47. Program Recap
Potential participants must income-qualify and be able to make deposits from earned income
IDA is opened upon acceptance at Bremer Bank and monthly deposits begin immediately
Participants work with IDA Case Manager to complete required trainings
Upon completion of trainings and demonstration of 6 months consecutive savings, participants are eligible to receive a match to their savings towards the purchase of their approved asset (4:1 for home purchase, 8:1 for college and small business)
July 12, 2013

48. Save and Invest Instead of Borrow and Spend!
Motto of IDA Program
Save and Invest Instead of Borrow and Spend!

49. Who do I call with questions?
Martha Moe Program Coordinator WEBSITE: