Interim Report to Congress
Assets for Independence Demonstration Program
Status at the Conclusion of the Third and Fourth Years
1. |
Assets For Independence Demonstration Program |
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| Program Overview | |||
| Scope of Report | |||
| Data Sources | |||
Program Overview
The Assets for Independence Program – established by the Assets for Independence Act under Title IV of the Community Opportunities, Accountability, and Training and Educational Services Act of 1998 (Public Law 105–285) – is a multi-site national program administered by the Office of Community Services (OCS) within the Administration for Children and Families, U.S. Department of Health and Human Services. The program is funded by annual federal appropriations and a substantial amount of support from nonfederal sources.
The Act provides for grants to qualified nonprofit organizations (or state, local, or Native American agencies or organizations that partner with a nonprofit organization) to conduct five-year asset-building projects as part of a national demonstration. The Act authorized $25 million for each of five fiscal years (FY 1999 through 2003). The annual appropriation was $10 million in each of FYs 1999 and 2000, and $25 million for each of FYs 2001, 2002 and 2003. Between the start of the program in Federal FY 1999 and September 2003, OCS awarded more than $52,171,681 to nonprofit organizations and state and local government agencies to establish and manage more than 211 local-level AFI projects. Each of these projects is supported by nonfederal funds in an amount equal to or greater than the federal grant.
The overarching goal of the AFI program is to develop knowledge about the extent to which asset-building projects that feature Individual Development Accounts (IDAs), intensive financial education, and related asset-based strategies make a positive difference in helping low-income families and individuals move from dependency to economic self-sufficiency. IDAs are matched savings accounts for low-income working persons to: first, save a portion of their earnings; and second, use their savings along with matching public and private funds to acquire a substantial economic asset such as a first home, higher education or training, equity in a new or existing small business, or to support an IDA owned by a dependent.
The program is on-going. As authorized and in keeping with annual appropriations, OCS awarded the initial project grants in 1999. It awards new grants for additional demonstration projects annually. Because each AFI project has a five-year grant period, the projects that were initiated in FY 1999 will be active through the end of FY 2004. Those that were initially funded in FY 2000 will be active through FY 2005, and so forth. HHS may grant no-cost extensions of project periods to enable FY 1999 grantees to continue their AFI Projects beyond the original five-year project period. A number of grantee organizations are administering multiple AFI projects simultaneously. (See the Data Sources section for more details.)
In addition to supporting and administering the AFI Projects and providing training and technical assistance for them, OCS has contracted with a social science research organization to implement a multi-year national evaluation of the program. The evaluation design is focused on process and outcome perspectives.
The authorizing legislation includes a number of requirements directed at project participants. It also includes several requirements about project administration specifically for grantee organizations. These are listed below:
- Participant Eligibility – Individuals are eligible to participate in an AFI demonstration project if they are eligible for assistance under a state’s Temporary Assistance for Needy Families program, or if they meet the following requirements: the net worth of their household is less than $10,000 (excluding the value of a primary dwelling and one motor vehicle); and either they are eligible for the federal Earned Income Tax Credit or they have an annual household income below 200 percent of the federal poverty level.[1]
- Regular Deposits – Project participants must regularly deposit earned income into their IDA.
- Uses of IDA Balances – Project participants may use their IDA balance only for the purchase of a first home, business capitalization, postsecondary education or training, or to transfer the IDA to an eligible dependent. If they use the account balance for another purpose, they forfeit the federal and nonfederal matching funds.
- Nonfederal Funds – Grantee organizations must use nonfederal cash resources to support at least half of the overall project.
- Project Reserve Account – Grantee organizations must maintain a project reserve account to hold the federal grant and the required nonfederal funds. Grantees disperse the federal and nonfederal funds to match participants’ IDA savings from the project reserve account when the participants use their IDA savings to make a qualified purchase.
- Participant IDA Matching Rate – Grantee organizations may establish match rates for participant IDAs ranging from $1 to $8 per each dollar saved by the participant.
- Uses of Federal Grant Funds – Grantee organizations must use at least 85 percent of the federal grant funds and nonfederal cash contributions to match participant IDA savings. Grantees must budget for at least 2 percent for data collection and expenses related to the national program evaluation. They may use no more than 13 percent of the federal grant funds for all other activities including, for example, program administration, participant outreach, financial literacy training and credit counseling, and other services for participants.
OCS encourages Project Grantees to customize their projects in keeping with local needs and opportunities. Typical project components are listed below, in the order in which they are most often conducted. Individual projects may devote different levels of effort to these components, and the sequence may vary slightly, but virtually all AFI projects contain these programmatic components:
- An eligibility check to determine that potential participants meet the federal eligibility requirements and any additional criteria established by other funding organizations and the grantee.
- An orientation session where participants learn about project rules and policies.
- Development of a savings plan agreement between the participant and the grantee organization that specifies important factors such as the participant’s savings goal(s), savings schedule, intended use(s), and the savings match rate, training requirements, and so forth.
- Financial education training, also referred to as financial literacy or money management training.
- Asset-specific training related to the type of asset that the participant intends to purchase, such as homeownership training, entrepreneurial assistance or training, or career counseling for those pursuing postsecondary education.
- Case management support, which may or may not include credit counseling.
Scope of Report
The Act requires grantees to submit progress reports to HHS with information about seven topics. It calls for the grantees to submit these reports annually, “not later than 60 days after the end of the project year.” The project year is regarded as ending on September 30 (coinciding with the end of the federal fiscal year). This report is a compilation of information from program progress reports for the third and fourth years of the AFI program.
The required topic areas are as follows:
- The number and characteristics of individuals making a deposit into an IDA.
- The amounts in the grantee’s Project Reserve Accounts.
- The amounts deposited in participants’ IDAs.
- The amounts withdrawn from participants’ IDAs and the purposes for the withdrawals.
- The current balances in participants’ IDAs.
- The savings account characteristics (such as threshold amounts and match rates) used to encourage people to participate in an AFI project, and how such characteristics vary among different populations or communities.
- Details of support services offered by Project Grantees (such as configurations relating to peer support, structured planning exercises, mentoring, and case management) that increase the rate and consistency of participation in a project, and how such services varied among different populations or communities.
Data Sources
Beginning in late September 2003, OCS launched an intensive effort to gather required information and develop update reports to Congress for the third year (ending in September 2002) and the fourth year (ending in September 2003) of the program. At that time, OCS instructed all Project Grantees to complete annual reports for the third and fourth year periods. The reports were due December 1, 2003. Because of the complexity of the reporting requirements, many grantees requested additional time. They were given until February 4, 2004 to submit their reports.
Grantees used the OCS Annual AFI Reporting Form to provide the requested data about their activities. The form, included in the appendix of this report, requests information about the Project Grantee organization, participant IDA account holder characteristics, and support services offered. Many grantees were familiar with the form as it was used to collect data for the two earlier updates to Congress about the AFI program.
This report includes information on grantees that received awards in 1999, 2000, 2001, or 2002. Unless otherwise noted, the data provided are cumulative. That is, they cover project activities from the time the grantee received an AFI project grant through the end of the reporting period(s), for FY 2003 and FY 2004.
Given that the data collection was for both the third and fourth project years, grantees that received funds in 1999, 2000 or 2001 were asked to submit one report on project activity for the period ending September 30, 2002. Grantees that received AFI funding in 2002 were asked to submit only one report, that is, for the period ending September 2003. Grantees that are managing more than one AFI project (i.e., they have received more than one grant) were asked to provide separate reports about each of their AFI projects.
Table 1.1 shows the number of grants awarded in each Fiscal Year and the number of reports received from each group of grantees.
| Fiscal Year when Project Grant was Awarded | Third Year Reports (through Sep. 30, 2002) |
Fourth Year Reports (through Sep. 30, 2003) |
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|---|---|---|---|---|---|---|
| Reports Received | Grants Awarded | Response Rate | Reports Received | Grants Awarded | Response Rate | |
1999 |
32 |
38 |
84% |
32 |
38 |
84% |
2000 |
23 |
25 |
92% |
23 |
25 |
92% |
2001 |
71 |
81 |
88% |
71 |
81 |
88% |
2002 |
N/A |
N/A |
N/A |
59 |
67 |
88% |
Total |
126 |
144 |
88% |
185 |
211 |
88% |
Note: Reports were also received from the two statewide grantees, Indiana and Pennsylvania, for the periods ending September 30, 2002 and September 30, 2003.
As can be seen from table 1.1, the overall response rate was 88 percent for both the third and fourth years. To ensure that the cumulative numbers reported are accurate and consistent, cases where only one report was received for a pre-2002 grant were excluded from the data set. (The only difference between the response rates for the third year reporting period and the fourth year period is the information provided by organizations that received AFI grants in FY 2002.)
Nine grantees reported that their projects were inactive; that is, they had been awarded an AFI grant but have indicated to HHS that they will not be participating in the program or using the funding available through the grant. Because these nine grants returned reports but have no account activity, they are included only in table 1.1. These nine inactive projects are not included in any other tables describing project activity.
For the 2002 reporting period, 120 reports were received describing active projects (a total of 126 reports were received, but 6 were for inactive projects); for the 2003 reporting period, 176 reports on active projects were received (185 reports were received, but 9 were for inactive projects). Not every report contained all the requested information. Thus, in each table in this report, we show the number of grantees that provided usable responses for the particular analysis.
Notes
[1] The 2000 technical amendments to the Act revised the income eligibility threshold from the Earned Income Tax Credit income limit to 200 percent of the federal poverty level. In 2001 the EITC annual income limits were $27,413 for a taxpayer with one child and $31,152 for a taxpayer with two or more children. The annual income amounts corresponding to 200 percent of the poverty level (in the contiguous 48 states and the District of Columbia ) were $23,220 for a two-person family, $29,260 for a three-person family, and $35,300 for a family of four. [Return to Text]