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For some investors, short-term and long-term savings goals not only require discipline but an encouraging incentive. Enter the individual development account (IDA) program. Around since the early 1990s, IDA programs are basically all structured the same way – qualified low income individuals save for a minimum of six months, receive financial and asset-specific education, and request matched withdrawals when they are ready. Through matched savings, financial education and a connection to community resources, people are able to reach their goals of home ownership, microenterprise or education with the necessary capital, information and support. The IDA department at Alternatives now manages six different IDA programs with a total of 105 account holders. Alternatives Federal Credit Union has offered IDAs since 1998, and they are considered a sound asset-building investment strategy for low income people. Like many IDA programs across the county, Alternatives has had to creatively market IDAs because most people think they are just too good to be true. To surmount this obstacle, community organizations have provided information about the IDA program directly to their consumers. For example, people in the homebuyers class at our neighborhood housing agency learn about IDAs as part of a larger talk about funding a home purchase. We’ve also spread the word about IDAs with personal success stories from IDA graduates. Of course word of mouth is still the most effective marketing tool, but we’ve also published articles in local papers and in credit union publications, made presentations and tabled at community events and made appearances on a cable access show. Recently we devised a new IDA brochure that included a tear-away, mini application. This outreach strategy allows someone to determine IDA eligibility and begin the application process quickly and easily. While the slumping economy has not noticeably affected participants’ ability to save, community organizations have taken quite a hit. A vocational rehabilitation center saw funding cuts which affected the Challenge IDA program for entrepreneurial people with disabilities. Our partner will be not be able to match the continued savings of six account holders and this program is slated to close early. The ERA IDA program, funded by a Welfare to Work grant, did not receive continued funding support as we had hoped. While Alternatives continues to provide account management for this program our partner, Career Resources, could not continue to fund the ERA coordinator’s position. Fortunately, supportive services are still available through Career Resources and case management has been picked up by a different agency. For many participants, the IDA is their first savings vehicle. Participants have said that having money put away increases their sense of financial security and self worth. When asked how the IDA changed her life, one participant said, “I almost never had any money in the bank-it was in my pocket until I spent it-now I have a savings habit.” Some participants feel so proud of their accumulated IDA savings that they are reluctant to make an asset purchase. To help people get over the fear of spending, participants learn about other ways to save and invest. A socially responsible investment advisor leads one of our money management classes. This is usually the most popular class in the course. Many participants go on to save in IRAs, mutual funds and CDs. Variances can occur from program to program in target population, asset goals, match rates and program duration. Our Assets IDA program represents a typical program design: open to people with income not exceeding $17,720 (add $6,160 for each additional household member), participants can save up to $1,000 over three years and have their savings matched 2:1. Allowable asset goals for this program are home purchase, post-secondary education (for the participant or their dependent) and business capitalization. We also offer IDA programs specifically for micro-entrepreneurs with disabilities, people saving to purchase energy efficient appliances and people in the local Welfare to Work program. IDA participants have saved a total of $118,595.66 since February 1998. With savings and matching funds totaling $231,597, 18 people have started or expanded their small businesses, 20 people (6 of whom are youth) are attending college, 16 people have made essential home repairs, 24 people have purchased homes and 1 person opened a Roth IRA. Matching funds have been provided by individuals, foundations, religious and civic organizations and by federal and state agencies. IDAs help people invest in their future. According to one participant, “I started the IDA because of the match, it’s hard to believe that anyone who had the opportunity would turn it down. Now my life is richer because of the IDA, I feel better about myself and I know what I can afford.”

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