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Asset Development Statewide Network

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Asset.Development.Id As

  1. 1. Rural California Asset Development Network IDA Program (The Network)
  2. 2. <ul><li>The California Coalition for Rural Housing (CCRH) launched the Rural California Asset Development Network IDA Program in 2006 with an Assets for Independence Grant from the U.S. Department of Health and Human Services (HHS), Administration for Children and Families. </li></ul>
  3. 3. The Network <ul><li>The California Coalition for Rural Housing (CCRH) hosts the Rural California Asset Development Network IDA Program, a state-wide &quot;Network ” of six current partners committed to promoting asset building opportunities through Individual Development Accounts for low-income, rural, and immigrant communities in California. </li></ul><ul><li>Current Partners: </li></ul><ul><ul><li>California Rural Legal Assistance (CRLA) </li></ul></ul><ul><ul><li>Community HousingWorks (CHW) </li></ul></ul><ul><ul><li>Community Housing Corporation Opportunities (CHOC) </li></ul></ul><ul><ul><li>South County Housing (SCH) </li></ul></ul><ul><ul><li>Self-Help Enterprises (SHE) </li></ul></ul><ul><ul><li>Scotts Valley Housing Authority (SVHA) </li></ul></ul>
  4. 4. The Network Objective <ul><li>The objective of the Network is to assist client families save earned income in Individual Developments Accounts . </li></ul><ul><li>Every dollar in savings deposited into an IDA - by a participant is matched from 2:1, 3:1, or 4:1 by the Network. Clients use their IDA savings, including the match funds to acquire any of the following assets: </li></ul><ul><ul><li>A first home </li></ul></ul><ul><ul><li>Capitalization of a small business </li></ul></ul><ul><ul><li>Post-secondary education or training </li></ul></ul>
  5. 5. WHAT ARE INDIVIDUAL DEVELOPMENT ACCOUNTS? <ul><li>Functioning as an asset building tool, Individual Development Accounts , or IDAs, are dedicated matched savings accounts designed to help families and individuals of modest means establish a pattern of regular savings and, ultimately, purchase a “productive asset.” </li></ul><ul><li>A “productive asset” is something of value that is likely to return substantial long-term benefits to its owner-- benefits like security, stability and opportunities for more income. IDA Network participants may use their savings and match money toward any of three productive assets: a home , a small business or a post-secondary education . </li></ul>
  6. 6. IDAs as an Assets Building Tool: The Importance <ul><li>The IDA mechanism promotes savings and enables participants to acquire a lasting asset after saving for a period of time. </li></ul><ul><li>Savings leads to asset attainment which leads to Self-Sufficiency !!” </li></ul><ul><li>Owning assets opens up economic opportunities such as purchase of a home and equity from that home may in turn finance a small business start up or college tuition for a child. ((Assets begets Assets!!)) </li></ul><ul><li>In addition to the purchase of an asset, participants learn essential skills and information that will help them throughout their lives. </li></ul><ul><li>Assts enable families to: </li></ul><ul><li>Make Choices </li></ul><ul><li>Weather economic crisis </li></ul><ul><li>Make future investments </li></ul><ul><li>Plan for retirement </li></ul><ul><li>Transfer wealth to future generation </li></ul><ul><li>“ Bottom Line: Income helps people get by, assets help people to get ahead”! </li></ul>
  7. 7. The Network Model Funders IDA Account Holders Main-Grantee Intermediary CCRH Project Reserve Accounts Sub-Grantee IDA Providers Funders Project Reserve Accounts
  8. 8. Network Partners Roles & Responsibilities <ul><li>*CCRH* </li></ul><ul><li>Fulfills federal grant reporting requirements </li></ul><ul><li>Provides technical assistance </li></ul><ul><li>Provides fundraising support </li></ul><ul><li>Follows and distributes asset building national and state policy. </li></ul><ul><li>Maintains the rural IDA resource clearinghouse: </li></ul><ul><ul><li>Outreach and recruitment materials </li></ul></ul><ul><ul><li>Program forms and templates </li></ul></ul><ul><ul><li>Evaluation tools </li></ul></ul><ul><li>Identifies and facilitates training resources </li></ul><ul><ul><li>Financial education </li></ul></ul><ul><ul><li>Earned Income Tax Credit/Child Tax Credit </li></ul></ul><ul><ul><li>Asset building </li></ul></ul><ul><ul><li>Case management </li></ul></ul><ul><ul><li>Evaluations for Subgrantees </li></ul></ul><ul><li>*Partners * </li></ul><ul><li>Run the IDA program </li></ul><ul><li>Recruit participants </li></ul><ul><li>Individual case management </li></ul><ul><li>Monitor participant’s savings activities </li></ul><ul><li>Provide Workshops: </li></ul><ul><ul><li>Financial Educational </li></ul></ul><ul><ul><li>Homebuyer Education </li></ul></ul><ul><ul><li>Asset Building </li></ul></ul><ul><li>Fundraise for matching funds & operating costs </li></ul><ul><li>Monitor Program Compliance </li></ul><ul><li>Participate in evaluation of program </li></ul><ul><li>Use federal match solely for IDAs </li></ul><ul><li>Fulfills partnership reporting requirements </li></ul><ul><li>Provide referrals to participants </li></ul><ul><ul><li>Home Loan Counseling </li></ul></ul><ul><ul><li>Community College Programs </li></ul></ul><ul><ul><li>Small Business Training </li></ul></ul>
  9. 9. The Network’s Asset Building Approach Individual Development Accounts Financial Literacy Home Ownership Counseling Resident Support Services
  10. 10. Example of IDA Work <ul><li>Family needs a home </li></ul><ul><li>Housing program requires $6,000 for down payment and closing costs </li></ul><ul><li>Family opens IDA and receives financial education, debt counseling and home ownership information </li></ul><ul><li>Receives savings match at a rate of $2 for every $1 saved in their IDA </li></ul><ul><li>Family saves $2,000 - $83 per month over 2 years </li></ul><ul><li>Federal Match $2,000 – Non- Fed $ 2,000 </li></ul><ul><li>Leaving Family with $6000 </li></ul><ul><li>IDA participants may use their Earned Income Tax Credit (EITC) refunds from the federal government to seed their IDA savings accounts. </li></ul>
  11. 11. Participant Eligibility <ul><li>Individuals and families within either of the following two groups are eligible to participate: </li></ul><ul><li>Members of households eligible for the Temporary Assistance for Needy Families (TANF) program when they apply for enrollment in and AFI Project; or </li></ul><ul><li>Persons who meet both of the following criteria: </li></ul><ul><ul><li>Their household adjusted gross income is either less than twice the Federal poverty line or within Federal Earned Income Tax Credit (EITC) limits when they apply for enrollment in an AFI Project; and </li></ul></ul><ul><ul><li>Their household net worth is less than $10,000 at the end of the calendar year (that proceeded the day they applied for enrollment in an AFI Project). </li></ul></ul><ul><li>Administrating agencies may apply additional eligibility rules. </li></ul>
  12. 12. Possible IDA Matches <ul><li>IDA Savings Match Rates can range from $1 match for $1 earned income saved to $4 match for $1 earned income saved. </li></ul><ul><li>Maximum Federal Contribution </li></ul><ul><ul><li>$2000 per individual </li></ul></ul><ul><ul><li>$4000 per household </li></ul></ul>Home Purchase $2,000 = non-federal $2,000 = federal $1,000 :$4000 4:1 Business Home Purchase $1,500 = non-federal $1,500 = federal $1,000:$3,000 3:1 Education Business Start - up $1,000 = non-federal $1,000 = federal $1,000:$2,000 2:1 Post – Secondary Education $500 = non-federal $500 = federal $500:$1,000 2:1
  13. 13. Partnership Highlights <ul><li>Community HousingWorks </li></ul><ul><li>IDA Participants: 12 </li></ul><ul><ul><li>11 participants saving towards first home purchase! </li></ul></ul><ul><ul><li>1 participant saving towards college education! </li></ul></ul><ul><li>All IDA Participants completed the CHW Financial Fitness 8 hour program. </li></ul><ul><li>All IDA participants saving to buy a home completed an 8 hour HUD Certified Homebuyer Education Workshop. </li></ul>
  14. 14. Community HousingWorks IDA Participants: Working towards a Brighter Future! !!!Success!!! Community HousingWork’s IDA participant Hormisdas Albino reached and exceeded her savings goal! She used the 2:1 match ($1,750 in total) to pay for her son’s first quarter at Arizona State University. He is the first in the family to attend college!
  15. 15. PROS AND CONS of Asset Building through IDAs <ul><li>PROS </li></ul><ul><li>Asset building is a bi-partisan emerging field. </li></ul><ul><li>Sustainable economic development model. </li></ul><ul><li>Helps reduce the poverty rate. </li></ul><ul><li>Makes dreams of homeownership, entrepreneurship, education possible to achieve! </li></ul><ul><li>CONS </li></ul><ul><li>Current challenges of the economy and housing market. </li></ul><ul><li>Lack of funding and administrative capacity may jeopardize the success of an IDA Program. </li></ul><ul><li>Underestimating the labor force and time required to effectively administer the program. </li></ul>
  16. 16. Successful IDA Practitioners <ul><li>EARN </li></ul><ul><ul><li>San Francisco </li></ul></ul><ul><ul><li> </li></ul></ul><ul><li>Opportunity Fund </li></ul><ul><ul><li>The Bay Area </li></ul></ul><ul><ul><li> </li></ul></ul>
  17. 17. Promoting Savings at Tax Time <ul><li>During Tax Season CCRH delivers Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) presentations to IDA Network Partners’ affordable housing residents. </li></ul><ul><ul><li>The Earned Income Tax Credit (EITC) is a refundable credit for people who work but do not earn high incomes. The EITC is a valuable tool helping eligible taxpayers lower their taxes or receive refunds. The IRS wants all eligible taxpayers to take the credit they deserve. </li></ul></ul><ul><li>Marketing the EITC and other credits, and providing tax preparation assistance to low-income families is an important component of an effective IDA program. </li></ul><ul><ul><li>Raise awareness of available tax credits </li></ul></ul><ul><ul><li>Link tax refunds with year-round savings </li></ul></ul><ul><ul><ul><li>Promote IDAs!!! </li></ul></ul></ul>
  18. 18. Key Considerations <ul><li>Are IDAs compatible with your core organization’s services? </li></ul><ul><li>Can your organization provide capacity and meet costs? </li></ul><ul><li>Do you have community resources to leverage? </li></ul><ul><li>Do you have the capacity to provide an effective IDA Program? </li></ul>
  19. 19. <ul><li>Interested in joining an Individual Development Account Network? </li></ul>The California Coalition for Rural Housing Invites you to join the Rural California Asset Development Network IDA Program! CCRH has federal funds to match with non-federal funds that go directly to matching the savings of low-wage workers and helping them invest in assets that build wealth! Please contact: IDA Network Director Cristina Trujillo At: 916-443-4448 (office) / 415-577-9262 (mobile)