Assets for Independence Act Evaluation:
Second Annual Site Review Report
December 16, 2002

5.	Tulane University
	5.1	Project Design And Background
	5.2	Project Administration
	5.3	Participant Recruitment And Screening
	5.4	Financial Education And Training
	5.5	Case Management And Support Services
	5.6	Future Plans
	5.7	Lessons Learned

 

The AFIA project administered by Tulane University focuses on low-income residents of the city of New Orleans. According to the 2000 Census, the population of the central city was 485,000. Approximately 20,000 people live in public housing. In 1999 the central city of New Orleans had a poverty rate of 28 percent. The median family income in 1999 was $32,300. Approximately 55 percent of families with children were headed by a single parent. Blacks make up approximately two-thirds of the population (67 percent), with whites accounting for about one-quarter (27 percent).[28] Hispanics and members of other races comprise only 7 percent of the city's population. With respect to housing, approximately 12 percent of housing units were vacant in 2000.

Tulane's AFIA project targets New Orleans' poorest neighborhoods citywide: those with average household incomes of 80 percent or less of the area median income.[29] At the time the project was designed, according to the project proposal, these neighborhoods were characterized by a poverty rate of 46 percent and a child poverty rate of 61 percent. They also had fewer owner-occupied homes and more vacant units than other parts of the city. Many of the target population (approximately 34,000 residents) live in public housing operated by the Housing Authority of the City of New Orleans.

New Orleans is also characterized by relatively low levels of educational attainment and by high unemployment. According to the 2000 Census, fully 25 percent of adults in the central city have not completed high school. These problems are even more severe in the target neighborhoods. For example, unemployment was 13 percent city-wide at the time the AFIA proposal was written, but 19 percent in the target areas. A combination of systemic barriers (such as a low-wage economy and a distressed public educational system) and personal barriers (such as low levels of educational attainment) make self-sufficiency difficult for many residents, particularly those in the city's poorest neighborhoods.

5.1 Project Design And Background

Project Design

The key features of this IDA project are as follows:

• The project offers a 4:1 total match rate (funded by both federal and non-federal sources) for homeownership (up to a $4,000 maximum match), and a 2:1 total match rate for education or entrepreneurship (up to $2,000 maximum match).[30] By far the most popular authorized use is homeownership.
• The target population originally consisted of public housing residents, although strong word of mouth has resulted in other (AFIA-eligible) participants joining.
• The IDA project has a decentralized structure. The project relies on a large number of partner agencies for recruitment, referral, and case management. Of these, two organizations have become the "core partners," while many of the others have turned out to have much smaller roles than originally envisioned.

A total of 72 IDA accounts are supported by the initial AFIA grant of $155,000.[31] The AFIA sponsored project operates in parallel with one funded by the Federal Home Loan Bank of Dallas (FHLB-Dallas) that supports an additional 50 IDA accounts.[32] The two projects are programmatically identical, and respondents do not distinguish between the two projects when discussing operational issues or the number of accounts. Indeed, these are seen as simply two different funding sources for what they term "the IDA program." The accounting systems for the two projects are entirely distinct and keep each source of funds separate, however.

At the time of our site visit in May 2002, all of the funded IDA accounts were opened, and there was a waiting list of approximately 100 people across the AFIA and FHLB projects. Seventeen participants had completed the AFIA project, all of them using the funds for homeownership. There had been about ten terminations in the AFIA project, some of them voluntary. Below is an illustration of the accounts opened, as reported by the AFIA grantee at the time of our visit.

IDA Project History

The project was initially developed by Tulane University (specifically the individual who is now the IDA project director) and Hibernia Bank, which is one of the project's financial partners (specifically, a former employee of the bank, now working for the Federal Reserve in New Orleans). Since 1998, Tulane had operated a small, 10-account IDA project at a local public housing development. This experience convinced the project director that IDAs could be a powerful tool to help low-income households. She was eager to develop a larger project, informed by the lessons learned from the smaller one.[33]

For her part, the Hibernia Bank staff member became aware of IDAs in the late 1990s and also realized their potential, not only to transform individuals' lives but also to help her bank and the business community more generally. Anticipating that her bank would likely be solicited to support many small-scale IDA projects, she looked for a way to have a larger impact. The Hibernia staff person and the Tulane project-manager-to-be knew each other, and they decided that a larger-scale IDA project housed at Tulane would provide the opportunity that both were looking for. They worked to develop the IDA project for nearly a year before the AFIA proposal was actually submitted. In short, this project was characterized by a long development period and by close collaboration between its two committed founders.

One noteworthy feature of this IDA project is its decentralized structure. Neither of the founding organizations, Tulane University and Hibernia Bank, had the staff available to conduct recruitment, referral, and case management in-house—nor was there administrative funding to hire additional staff for these activities. Therefore, out of necessity, the project relied heavily on a large number of social service partners for these services.

In order to enlist other organizations to participate, the two principals spent much time and effort personally calling on local banks and social service agencies to join the IDA effort. They hosted "training days" for potential social service partners, financial partners, and funders. The purpose was to educate them about the potential of IDAs for their constituencies and also to enlist them to participate as funders and referral sources. These sessions proved to be effective in bringing a large number of organizations to the table. The AFIA proposal lists upwards of 30 partner organizations that were to take the lead responsibility for recruitment, referral, and case management. This group is called the IDA Collaborative. Two other banks joined as account-holding financial partners: United Bank and Trust (which joined in the project development stage), and Whitney Bank (which joined one year after grant award). They joined for much the same reason as Hibernia Bank: IDAs made good business sense and were good for the community; additionally, they also knew and trusted the project's principals. The IDA project received FHLB funding in January 2000 and AFIA funding in October 2000.

The collaborative nature of the relationship between the grantee and the financial partners that characterized the development phase continues to this day. In fact, every principal respondent considered the collaborative nature of the relationship as one of the project's major strengths.

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5.2 Project Administration

Organizational Partnerships and Roles

The grantee is Tulane University's National Center for the Urban Community (NCUC). Formed in 1998 by Tulane and Xavier Universities, NCUC is the project manager and fiduciary. Its major activities are in the areas of education, employment and economic development, health, housing, and race and culture. The NCUC serves as a direct service provider in some respects (for example, in providing training) and as a community facilitator and program coordinator in other respects. For the Housing Authority of New Orleans, NCUC operates self-sufficiency programs for 27,000 residents of public housing. It also administers a welfare-to-work demonstration program for the City of New Orleans. With respect to the IDA project, Tulane University's role consists of grant management, account set-up, account monitoring, and the provision of guidance and oversight to project operations. As described in the section on case management, Tulane has also by default ended up providing case management to a large share of participants because many of its original partners have failed to do so.

Three banks are involved in the project: Hibernia Bank, Whitney Bank, and United Bank and Trust. The banks played an important role since the beginning and continue to do so. In fact, Hibernia Bank essentially "co-founded" the project with Tulane University. The banks continue to dedicate significant amounts of staff time on a regular basis to the leadership and oversight of the IDA project. Hibernia Bank is a prominent regional bank and holds approximately 68 percent of the IDA accounts (across the two projects). Whitney Bank holds 18 percent of IDA accounts. United Bank and Trust, in contrast to the other two, is a smaller minority-owned bank that works primarily with the low-income population. It prides itself on its personalized service and routinely provides "case management" to all its clients. It holds 14 percent of IDA accounts.

Although competition does exist among the banks, relationships among them are collaborative, thanks to the longstanding personal relationships among the principals and the conviction that there is enough business to go around for everyone.

The banks were attracted to the IDA project for a number of reasons. Obtaining Community Reinvestment Act credit was certainly a consideration, but also important was obtaining access to a pool of potential mortgage customers—all the more so because banks view mortgage loans as a "gateway" product that often leads to further business with that bank. For example, one bank respondent cited a study that showed that a mortgage customer also uses an average of five other bank services. One bank remarked that an additional attraction of IDA participation was that, because the IDA project provides access a pre-screened pool of potential mortgage applicants, it represents a more efficient way to reach creditworthy members of the low-income population than through mass outreach. Another bank noted that participation in the IDA project helped it satisfy FDIC regulators, who tend to more closely scrutinize banks that focus on low-income minority populations.

The interviewed representatives at all three banks also emphasized the benefits of IDAs to the local business community, as well as the immediate benefits to participants and banks. Insofar as homeownership generates positive multiplier effects in the local economy—greater spending on homes, for example—it helps create a healthier local business community, which in turn helps local banks. Thus, IDAs were seen as a "win/win" proposition for everyone involved— for participants, businesses, communities, and the banks themselves. The banks are active in recruitment, account monitoring, and the provision of policy guidance to the project through the IDA Collaborative. The Collaborative's Advisory Board (described in more detail later), composed of Tulane project staff and the three bank representatives, makes the policy and procedural decisions.

There are two core social service partners: Consumer Credit Counseling Services (CCCS) and Neighborhood Housing Services (NHS). These two developed and deliver financial literacy training under contract to the IDA project. Unlike other partners, they actually receive funding for their services. However, they also provide other services that are not reimbursed, such as referrals, credit counseling, case management, and asset-specific training. A loose network of other social service organizations also provides referrals to the project and, less frequently, provides IDA case management for their clients. Non-federal funding sources include Booth Bricker Fund, Hibernia Bank, United Bank and Trust, and two corporations. These organizations have provided funding for the IDA match, rather than for administration.

Differences in organizational philosophies have played a role in the evolution of this project. The most notable differences are those between the "social service" philosophy of the grantee and that of the financial partners. For the most part, however, the partners have succeeded in finding common ground on issues affecting the IDA project. All the parties noted the importance of educating each other on the other's perspective. They all recognized that IDA projects cannot succeed unless each side obtains something in its interest. Important in this regard are cordial personal relationships among the principals, and a common "big-picture" vision of IDAs' potential not only to transform individuals' lives but also to benefit the larger business and social communities.

An illustrative example of how differences in perspective have played out is the question of the banks' "right of first review" of mortgage applications. This was among the most difficult issues faced by the project. Originally the IDA procedures were silent on the question of where participants could obtain their mortgages. However, the two larger banks in particular were concerned about investing resources (maintaining and monitoring accounts as well as participating in the time-consuming meetings) in the IDA project without obtaining the "payback" of the mortgage application. Interestingly, this issue was of less concern to the smallest bank. In its experience the high level of personalized customer service it provides engenders great customer loyalty.[34] Tulane, for its part, felt strongly that IDA participants should have the right to comparison shop for the best mortgage deal—and indeed, that this was an important part of the learning process.

Ultimately the negotiated compromise was that the bank that holds the IDA account has the "right of first review." That bank is thus the first to review the mortgage application and offer a mortgage deal. If the IDA participant finds a better package elsewhere, the bank has the right to try to match it. The participant is not obliged to obtain a mortgage through the "home" bank, but the expectation is that he or she will. This change to the participant agreement was made mid-course in the project, but appears to be working to everyone's satisfaction.

Staffing

The staff members associated with the IDA project and their responsibilities are as follows.

At Tulane, there are three full-time and one part-time staff members: an IDA project director, a project coordinator, an IDA VISTA volunteer, and a part-time student-worker case manager. These staff members work on the FHLB IDA project as well as the AFIA project. (That is, their time is not dedicated entirely to the AFI project. In all, they attend to over 200 IDA participants.) The project director co-founded the project and oversees all aspects of the project. The project coordinator is responsible for reviewing applications, setting up IDA accounts, account monitoring, and substantial amounts of case management in cases where participants lack a social service agency "home" that provides it. The IDA VISTA volunteer performs case management and follow-up, does file research, helps with the newsletter, and conducts presentations about the project. The student worker primarily helps with case management. The NCUC Deputy Director is not formally part of the IDA project staff, but she does confer with other NCUC programs, helps develop resources and partnerships, and advises the project staff on compliance.

Each of the three banks allocates a key staff member (part-time) to the IDA project. All the banks are active in providing referrals, monitoring accounts, and working with Tulane to oversee the project and provide guidance as it develops. By all accounts the financial partners have provided substantial amounts of staff time and effort to the IDA project. Even now that the project appears to have attained "steady state," the level of effort for the bank representatives associated with the IDA project ranges from one day a week to one day per month.

Financial literacy training, as noted previously, is provided by two organizations under contract to the project.

An important feature of this project is the IDA Collaborative Advisory Board, composed of bank representatives and Tulane project staff. At lengthy meetings (2-4 hours) twice monthly, the Advisory Board reviews project developments, discusses emerging issues, and sets new policies and procedures. Although time-consuming, these meetings result in "everyone being on the same page" about key IDA developments and in everyone having a voice in shaping its direction. At the time of our site visit, the Advisory Board had just conducted a well-received strategic planning session. It was also beginning to systematically review and formalize some IDA policies. Among the issues under discussion, but not yet resolved, were how to handle low-activity accounts,[35] whether to institute a probationary period of IDA enrollment, and whether to offer some form of post-purchase support.[36]

IDA administrative procedures are described briefly below. As we have noted, referrals may come from a number of sources—the banks, social service agencies, or self-referrals (that is, individuals "referring themselves," as a result of word of mouth). However, it bears mentioning that two of the most active referral sources are, perhaps not coincidentally, the two organizations that receive funding from the project: CCCS and NHS (clearly, a strong incentive for referrals is created by the fact that they are reimbursed for financial literacy training on a per-participant basis). It is the referring agency that typically helps the participant complete the IDA application. Applications are reviewed, and IDA accounts are set up centrally by the Tulane project coordinator. Both the Tulane project coordinator and the bank holding the account monitor the account balance and activity. Banks typically refer clients that require follow-up, and this is implemented by the Tulane project coordinator.

Respondents note that the project has benefited from internal subsidies from Tulane University, most notably in the area of accounting and fiduciary support. NCUC administers approximately $9 million in programming, not including the university's direct funding of projects. The university's organizational capacity in cost accounting, grant accounting, audit and other financial services was cited as a significant benefit of Tulane's participation.

In other respects, the project demonstrates some of the implications of low levels of administrative support from AFIA and other funding sources. Respondents noted that the project would have greatly benefited from resources to permit centralizing case management and dedicating a staff person to financial reporting to improve the flow of information between project entities. Low levels of administrative funding support were characterized as a "structural fault" that compromises program quality.

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5.3 Participant Recruitment and Screening

The original target population for this project was public housing residents and others earning less than 80 percent of the area median income or are eligible for the Earned Income Tax Credit. Preference would be given to TANF and welfare-to-work participants and those making less than 60 percent of area median income.[37] In fact, word of mouth has been so powerful that the grantee estimates only about 25 percent of participants are public housing residents; the rest are drawn from the general low-income population who meet AFIA eligibility guidelines.

Recruitment has not been a problem for this project. The AFIA project quickly filled its available accounts, although recruitment continued for the FHLB project. In April 2002, outreach was suspended. At the time of our site visit in May 2002, there was a waiting list of approximately 100 people.

That recruitment was a non-issue appears to stem from several factors. First, the project principals invested substantial effort in the development and startup phases of the project to enlist social service agencies into the project. The project was also helped by mention in local talk shows and newspapers. Staff members were pleasantly surprised by the resulting number of referrals. Tulane attributes this to the fact that the project's founders chose the "right" social service providers to work through. The second factor is the powerful effect of word of mouth after the first few success stories. Helping in this regard is a newsletter, produced irregularly, that publicizes individual success stories.

With respect to participant screening, some degree of informal selection appears to occur in this project. Some referring agencies, such as CCCS, work extensively with interested individuals to get them "IDA-ready" before submitting their application. Others may not. The fact that CCCS and NHS are reimbursed by the project for the number of participants who attend their IDA financial literacy class certainly creates an incentive to minimize dropout from the project by referring people who are most likely to actually enroll. In some cases this may occur by selecting the most IDA-ready. In other cases, it may occur by the agencies working with clients to get them IDA-ready.

Among the questions under consideration at the time of our site visit was whether to be more selective. Initially the IDA project was open to anyone who met the eligibility guidelines. But some project principals, particularly the banks, favor a more restrictive approach. The existence of a waiting list creates pressure to free up accounts to those who are most committed.

Another idea being considered is a probationary period as a way of identifying those who are truly motivated. Consistent with experience elsewhere, this project is finding that motivation is perhaps the most important factor in IDA success. Respondents note that it is difficult, and perhaps unfair, to pre-screen for motivation, but after about six months it is clear who is truly committed to the project. Thus, the IDA Collaborative Advisory Board is considering whether to adopt a three- to six-month probationary period. In this period individuals would be required to demonstrate their commitment to the project (e.g. by making some savings and attending financial classes, and working on credit repair). The banks tend to favor this approach. Some Tulane principals oppose it because they feel that everyone should be given a chance, and that a better approach is to help the person overcome obstacles—after all, there are five years to repair credit, they note— rather than to start over with someone new. The IDA Collaborative was also beginning to consider the question of how to deal with low-activity accounts. The project has not been strict about this, but was feeling the pressure to free up accounts, given the waiting list.

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5.4 Financial Education and Training

Twelve hours of financial education is required. The "Financial Fitness" course was developed specifically for the IDA project. It was developed and is delivered by two organizations: Consumer Credit Counseling Services and Neighborhood Housing Services.

These organizations were selected through an RFP process because the IDA Collaborative Advisory Board realized it lacked the staff to develop or deliver the curriculum in-house. The Advisory Board issued an RFP that outlined general curriculum content and deliverables. Because CCCS and NHS were felt to have equally strong proposals, they were both selected from the approximately half a dozen proposals received. Fortunately, these two organizations had a good working relationship and collaborated in developing the curriculum and coordinating the schedule for delivery. This procurement for development and delivery of the financial literacy curriculum is funded from the 5.5 percent of the AFIA grant that must be expended on the provision of financial literacy. NCUC negotiated a compensation rate of $100 per family for the 12-hour course.[38]

Participants may choose which provider's classes to attend. The two organizations deliberately offer classes on complementary schedules; CCCS offers two six-hour Saturday classes while NHS offers four three-hour classes on successive Tuesday evenings. Classes are offered on a set cycle.

The "Financial Fitness" curriculum covers the following topics: setting financial goals, net worth, developing a financial plan (e.g. budgeting and tracking expenses), making wise financial decisions, an overview of financial services, identifying and managing risk, credit (e.g. credit pitfalls, working with creditors, debt collection rights), overview of taxes, overview of investing, and legal matters (e.g. disposal of assets and wills and succession).

Although the curriculum is the same, there are some differences in the way it is delivered. For example, CCCS' classes are for IDA participants only. The organization feels that the classes may too basic for its other clients, and that the unique nature of IDA programs makes peer support an important elements of the class dynamic. NHS classes are available to all NHS program participants. Typical class size is about 15 at CCCS and 20-25 at NHS. CCCS notes that its classes are taken anytime during the period of IDA participation, but participants are encouraged to take them upon reaching the $600-$700 mark of their $1,000 savings goal. NHS encourages participants to take them at the beginning of their participation. Perhaps because the project's reimbursement structure to the two contractors creates an incentive to minimize dropout, both CCCS and NHS report very little attrition.

With respect to asset-specific training, participants can select homeownership training from providers that are locally accredited, usually with the guidance from Tulane's project coordinator.[39] As noted earlier, homeownership is by far the most popular savings goal. Principals estimate that more than 95 percent of IDA participants are saving for homeownership. Indeed, the match rate (4:1) is much more favorable than for the other uses. But in addition, respondents noted that the relative abundance of homeownership programs and financial incentives in New Orleans makes it an attractive option.

Fortunately the two "core" financial education providers, CCCS and NHS, also offer well-received homeownership classes. However, the IDA Collaborative Advisory Board is concerned that some other local providers fail to prepare participants adequately. One issue that it was considering at the time of our site visit was whether to institute some sort of local certification for homeownership training providers—a potentially controversial move in the local housing community.

Asset-specific training for entrepreneurship and education was less clearly defined because so few participants are interested in these uses compared to homeownership. At the time of our site visit, the project had had only one "education and training" graduate and no "entrepreneurship" graduates. In principle, two partner organizations provide asset-specific training for entrepreneurship: Eagle's Nest (part of a citywide faith-based initiative) and the Small Business Development Center. At the time of our site visit, about three individuals had taken such training. Training for those with educational savings goals consists of an interview with a career development counselor at the target school or with the IDA project coordinator, who has personal experience in this field.

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5.5 Case Management and Support Services

Case management is one of the most significant challenges of this project. In designing the project, its founders considered various ways of configuring the case management component. Providing case management in-house, at Tulane, or at one of the banks was impossible because they each lacked the capacity, and there was no administrative funding to support hiring case managers. At one point the team considered assigning responsibility for case management to existing NCUC self-sufficiency caseworkers (similar to the arrangement at the Pittsburgh YWCA), but this option was rejected because of concerns that existing staff capacity was insufficient to support the additional responsibility. The team also briefly used university undergraduate service learning students for case management, but concluded that high student turnover would be detrimental to clients. Thus, largely for lack of other options, they chose to depend heavily on a large number of social service partners to provide case management to the clients that they referred to the project.

There is general consensus that relying on social service partners has not worked well. For most organizations (with the exception of CCCS and NHS, which are paid as financial education providers), case management proved to be essentially an unfunded mandate they could not sustain. Additionally, many social service agencies, even if their "hearts were in the right place," turned out to lack the expertise for IDA-related case management. A bank respondent noted that providing financial case management is fundamentally different from other types of case management; "just because they're good at substance abuse [case management] doesn't mean they know what it takes to make someone mortgage-ready."

As a result, case management is a patchwork arrangement, with the bulk of it falling, de facto, to the IDA project coordinator. Sometimes it is provided by social service agencies as originally intended, or by CCCS or NHS for participants who are their clients. The smallest bank, United Bank and Trust, provides unusually personalized service to all its clients because that is its customer service style. But much of the case management burden comes about because there have been unexpectedly many self-referred cases that came to the project from positive word of mouth, which have no social service agency "home." Tulane's project coordinator finds that her involvement is particularly intense at the end of IDA participation as participants prepare mortgage applications. Some have argued that assisting with mortgage applications is a role that the banks should assume.

Tulane's project coordinator is by all accounts overburdened. This makes it difficult to attend to other administrative details such as the flow of information between organizations. An IDA project newsletter that is well regarded for its effectiveness in "spreading the news" about success stories can be issued only irregularly. There may be a less tangible effect as well in terms of participants' progress. By many accounts, the one-on-one support that case management provides is crucial for marginal cases.

Virtually all principals emphasized the need for sufficient administrative funding to permit adequate case management. They felt that centralized IDA case management would be best: better to fund one IDA case manager at Tulane rather than to expect dozens of social service agencies to each somehow dedicate resources for an IDA case manager. Respondents also identified a need for greater clarity about all aspects of case management: what it actually means (an occasional phone call, versus more intensive "hand-holding") as well as who is responsible for it. In a decentralized arrangement, the absence of clearly defined expectations means that case management either occurs inconsistently or falls through the cracks entirely.

The principal component of financial case management is the credit counseling. This consists of at least an initial assessment session conducted before the IDA application is submitted. The credit report and financial situation (spending patterns and income) are reviewed, and an action plan is developed. CCCS and NHS work according to a common protocol but the action plan can be developed at another social service agency if a participant's "home" is there. By default, credit counseling has become part of the case management process, which is acknowledged to be one of the weaker elements of the project because of its decentralized nature.

At CCCS, the initial session is typically all the credit counseling that is provided, although more sessions can be provided if needed. At NHS, credit counseling occurs in tandem with the classes. At the time of our site visit, there was some concern at the IDA Collaborative that the credit repair should receive more attention and be better calibrated to participants' savings progress.

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5.6 Future Plans

At the time of our site visit, NCUC was developing a proposal for state funding to establish a statewide IDA network, with NCUC as the central coordinator. There are about half a dozen other IDA programs in Louisiana and many small, low-capacity agencies throughout the state. NCUC is positioning itself as a program facilitator and capacity-builder (rather than a direct service provider, although it recognizes that it may have to provide some case management in some cases). It hopes to help develop a statewide "IDA infrastructure" in this way. Among the features of the proposed plan is electronic online enrollment.

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5.7 Lessons Learned

The Tulane project contains a number useful lessons learned that would be applicable to other IDA projects. Among the features most significant for other projects are the following, all of them inter-related:

• Collaborative relationship between key partners. Many of the strengths of this project lie in the collaborative relationship between the grantee and the financial partners. In fact, when asked to name the strengths of the project, all respondents emphasized its collaborative nature. A contributing factor is the fact that the individuals involved all knew and trusted each other from before the IDA project.
• Successful bridging of differing organizational philosophies. The grantee and its partner banks, although coming from different perspectives, have a common vision of IDAs. This has helped them find common ground on most IDA-related issues, even potentially divisive ones such as the right of first review of mortgage applications. Even where they differ, there is a mutual respect for the validity of the other's perspective, and a willingness to act on the recognition that each side must obtain something valuable for the partnership to continue.
• Significant time and effort invested in project development and maintenance. This project was a year in the planning. The principals also invested significant amounts of time in lining up partners (for example, the "training days"). Although some of these partners did not turn out to be as involved in case management as originally intended, recruitment still benefited from the exposure that the project obtained early on. Even after the development phase was over, project principals continue to invest time in serving on the Advisory Board.

Among the most important lessons noted by the project principals themselves are:

• Organizations interested in starting IDA projects should be required to attend Corporation for Enterprise Development (CFED) training in advance of launching it. Federal support for this type of technical assistance could be very useful to help projects avoid common mistakes.
• Case management should be centralized and defined clearly. As discussed previously, case management may not be attended to, if it turns out to be an unfunded mandate for the organizations charged with performing it. It is essential to clarify in advance of the project the expectations about what case management entails and who is to provide it.
• One should not assume that social service agencies have the expertise to provide financial case management. Credit counseling and credit repair requires technical expertise that lies outside the purview of many social service agencies.
• One should not rely on potential partners' "self-certification." Examine prospective partnering organizations closely, as not all of them may have the capacity to fulfill their proposed role. Despite initial enthusiasm that organizations may express for the project, their successful performance is less likely for tasks that represent unfunded mandates.
• Adequate administrative funding is crucial for program quality. The inability to hire staff members to perform certain project functions, such as case management, has led this project to resort to other arrangements that it feels worked less well. It has also led existing staff to become overburdened and the project to become dangerously reliant on the skills of one or two people.
  

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Notes

[28] These figures are for non-Hispanic blacks and whites. [Return to Text]

[29] For the New Orleans Metropolitan Statistical Area median income for a family of four is $44,000. [Return to Text]

[30] The project designers set these match rates based on an analysis of the amount of startup capital required for each authorized use. Project principals estimated that purchasing an "affordable" home in New Orleans in the range of $60,000- $90,000 would require a down payment of $5,000; hence a match rate of 4:1 was needed. On the other hand, for small business startup or an associates' degree, a $3,000 investment would be adequate to get one's foot in the door; hence a lower match rate for those uses. [Return to Text]

[31] The full requested amount had been $345,000 but this was reduced because funds from one listed match source, the Federal Home Loan Bank, had not been received yet (as required by the early AFIA rules). The number of accounts was accordingly reduced from 170 to 72. Subsequently a second AFIA grant of $800,000 was awarded; at the time of our site visit, the grantee was still raising match funds for this second AFI grant. [Return to Text]

[32] These are not IDA accounts in the strictest sense because the funds are delivered only at closing, but the FHLB project requirements—e.g. for financial literacy and asset-specific training—are much the same. [Return to Text]

[33] Among the lessons learned were the importance of requiring dual signatures to prevent unauthorized withdrawals and of targeting a population that was not too poor. The earlier project targeted households making about 30 to 40 percent of area median income. These households proved to have credit problems too severe, and income too low, to permit regular savings and make homeownership a realistic possibility. The two households remaining in this program were grandfathered into the FHLB-Dallas sponsored IDA project in 2000. [Return to Text]

[34] The significance of this issue for the banks is underscored by the fact that at the time of our site visit, the share of IDA mortgages underwritten by each bank was not proportionate to the share of IDA accounts each one held. Hibernia Bank held 68 percent of the IDA accounts but had underwritten only 28 percent of the mortgages so far. Whitney Bank held 18 percent of the accounts and had underwritten 34 percent of the mortgages, and United Bank and Trust held 14 percent of accounts and had underwritten 38 percent of mortgages. [Return to Text]

[35] There were an estimated 50 low-activity accounts among the 200+ accounts funded by AFIA and FHLB-Dallas. [Return to Text]

[36] One suggestion was to create an escrow account with any funds not needed for home purchase, to be used for home maintenance. [Return to Text]

[37] At the time the proposal was written, this was estimated to consist of approximately 68,000 very low-income families and 17,000 individuals receiving food stamps. [Return to Text]

[38] Typically only one individual per family attends the course, but the providers agreed to allow other family members to attend free of charge. [Return to Text]

[39] The training selected must be recognized by local financial institutions that handle federal HOME funds so that participants can be eligible for those funds as part of their mortgage packages. [Return to Text]