III.	FY1999 AFI Demonstration
		Grants Making
		Grant Awards
		Overview of Program Requirements

Grants Making

Congress enacted the legislation launching the new IDA program on October 27, 1998. The statute established a precise timeframe for implementation:

• Publication of the Program Announcement within 90 days (January 27, 1999);
• Submission of applications within 6 months (April 27, 1999);
• Review and decision on applications within 10 months of enactment (July 27, 1999); and,
• Obligation of grants (August 27, 1999).

All of these deadlines were met. This section details the process by which all of these deadlines were met.

To facilitate the process of developing the program announcement, the Office of Community Service (OCS) brought together an ACF-wide Work Group that also included representatives from the Assistant Secretary for Planning and Evaluation (ASPE), the Office of Grants and Contracts (OGC), and the US Treasury Department. The group met weekly starting in November 1998 to review the new statute and discuss the policy issues around the development and initiation of the new program[2]. The result was a comprehensive program announcement published in the Federal Register on January 27, 1999. OCS then took the additional step of publishing a “Notice of Clarification” in the Federal Register of March 27,1999, along with more than 50 “Questions and Answers” responding to inquiries from the field, in order to clarify certain ambiguities in the statute and address previously unforeseen project implementation issues.

The Demonstration Division pre-screened all applications to determine whether they met certain key threshold requirements, including:

1. For every dollar requested by the applicant, a firm commitment of at least an equal amount of cash from non-federal sources, as evidenced by a “Non-Federal Share Agreement.”
2. A written agreement with a Qualified Financial Institution (as specified in the Statute) for holding the accounts and the establishment of a Reserve Fund.

The applications that met the threshold requirements were eligible for review. Because of the limited timeframe in which to implement and make awards the first year, 18 otherwise competitive proposals had to be returned because they had not fully secured the required 100 percent non-Federal share[3].

Consequently, the Division had to prepare and publish a second program announcement in June, which incorporated the "clarifications" published in March and solicited a second round of applications.

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Grant Awards

After the two proposal review sessions and subsequent final review by Demonstration Division staff, OCS funded 38 competitive proposals plus two State "grandfathered" programs in Indiana and Pennsylvania. The 38 competitively-funded applicants are located in 25 states and the District of Columbia, and received grant awards ranging from $6,000 to $500,000 for a total of some $7.55 million. In addition, the two "grandfathered" programs received one-year grants of $930,000 each. The table below provides basic information on the 38 competitively funded grantees for FY1999.

Table 3.1. FY1999 AFIA Grantees (Listed Alphabetically by State)

Grantee	City	ST	Cong. Dist.	Grant Amount	Proposed # of Accounts
CHARO Community Development Corp.	Los Angeles	CA	31	$100,000	75
East Bay Asian Local Development Corp.	Oakland	CA	9	$260,773	160
Enterprise Plus Economic Development	Fresno	CA	19	$86,879	90
Mercy Housing California	West Sacramento	CA	3	$79,500	90
Peninsula Community Foundation	Menlo Park	CA	12, 16	$250,000	114
Riverside County Department of Community Action	Riverside	CA	43	$57,500	50
Mile High United Way	Denver	CO	1	$150,000	91
CTE Incorporated	Stamford	CT	4, 2	$215,000	97
Capitol Area Asset Building Corporation	Washington	DC	1	$164,250	87
ALU Like, Inc.	Honolulu	HI	1	$500,000	380
Hawaii Alliance for Community Based Economic Development	Honolulu	HI	2	$116,022	179
Institute for Social and Economic Development	Iowa City	IA	8	$500,000	1,025
Women's Self-Employment Project	Chicago	IL	31	$315,000	400
Heart of America Family Services	Kansas City	KS	3	$298,344	250
Kentucky River Foothills Development Council, Inc.	Richmond	KY	6	$39,950	60
The Center for Women & Families	Louisville	KY	3	$82,873	50
Allston Brighton Community Development Corporation	Boston	MA	8	$90,050	62
Southern Maryland Tri-County Community Action	Hughesville	MD	5	$175,000	250
Coastal Enterprises, Inc.	Wiscasset	ME	1	$109,500	50
Penquis Community Action Program	Bangor	ME	2	$117,000	250
Five Cap Inc.	Scottville	MI	2	$270,000	120
Michigan Neighborhood Partnership	Detroit	MI	15	$114,915	52
Ramsey Action Programs, Inc.	St. Paul	MN	4	$500,000	1,184
United Way of Greater of St. Louis, Inc.	St. Louis	MO	1	$325,270	327
North Carolina Department of Labor	Raleigh	NC	2	$331,785	269
Community Service Agency Development Corporation	Reno	NV	2	$70,719	32
Economic Opportunity Board of Clark County	North Las Vegas	NV	1	$90,000	70
Affordable Housing Partnership of Albany County, Inc.	Albany	NY	21	$52,500	100
Mount Hope Housing Company Inc.	Bronx	NY	16	$137,569	83
Ohio Community Development Corp	Columbus	OH	12	$500,000	451
Little Dixie Community Action Agency, Inc.	Hugo	OK	3	$6,000	6
Human Solutions, Inc.	Portland	OR	3	$273,363	260
YWCA of Greater Pittsburgh	Pittsburgh	PA	14	$300,000	140
Central Texas Mutual Housing Association	Austin	TX	10	$99,450	50
People Incorporated of Southwest Virginia	Abingdon	VA	9	$133,000	60
Central Vermont Community Action Council, Inc.	Barre	VT	1	$71,825	65
Wisconsin Community Action Program Assoc., Inc.	Madison	WI	All	$500,000	455
Wisconsin Women's Business Initiative Corporation	Milwaukee	WI	5	$70,000	50
Pennsylvania Dept. of Comm. and Econ. Develop.	Harrisburg	PA	All	$930,000	1,400
Indiana Dept. of Commerce- Comm. Develop. Div.	Indianapolis	IN	All	$930,000	800
TOTALS				$9,414,037	9,784

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Overview of Program Requrements

Qualified Entities
The following types of agencies may apply for an Assets for Independence Demonstration grant award: (1) One or more not-for-profit 501(c)(3) tax-exempt organizations[4]; or (2) A state or local government agency or tribal government submitting an application jointly with any such not-for-profit organization[5].

Reserve Fund
All federal funds and non-federal funds must be deposited into a Reserve Fund held by an insured financial institution. Projects must have a Central Reserve Fund and may also have Local Sub-Reserve Funds in the case of a multiple-site project. A grantee may draw down federal funds only after a non-federal match of equal amount has been deposited into the Reserve Fund.

Matching the Client’s Savings
Every dollar provided by the federal grant must be matched by a dollar of non-federal match cash. In total, the match rate offered to the account holders may range from 1:1 to 8:1[6]. A 1:1 match would indicate 50 cents federal and 50 cents in non-federal match; an 8:1 would indicate $4 federal and $4 non-federal. If the grantee is able to raise additional matching funds beyond the required 100% non-federal match, the grantee may also deposit such funds as match to participant savings. The maximum federal match allowed per account is $2000[7]; the maximum federal match allowed per household is $4000[8].

Use of AFI funds
All funds, federal and non-federal, must be deposited in the Reserve Fund and used in the following manner:

Table 3.2. Use of Federal Grant and Required 100% Non-Federal Match[9].

Use of Funds	% of Funds Available
Matching deposits in account holders' IDAs	At least 90.5%
Project Administration and Participant Skills-Building (e.g. Money Management Education, Asset-Specific Training).	Not more than 7.5%
Collect and Provide Data to Evaluator	Not less than 2.0%

 

Eligible Individuals
An eligible participant for the project is any individual who is a member of a household that either: (1) is eligible for TANF assistance[10]; or (2) has adjusted gross income within the EITC guidelines[11] and has a net worth of less than $10,000[12].

Qualified Expenses
The participant savings and match earned can only be used for the following qualified expenses[13]:

• Post-secondary educational expenses. This category includes tuition, fees, books, supplies, and equipment.
• First-home purchase. This includes the costs of acquiring, constructing, or reconstructing a principal residence for a qualified first-time home-buyer.
• Business capitalization. This includes capital, plant, equipment, working capital, and inventory expenses to capitalize a legal business with an approved business plan.
• Transfer to an IDA of a account holder's spouse or dependent.

Emergency Withdrawals
Account holders may withdraw all or a portion of their own funds deposited, but not the match funds, for emergency use[14]. Emergency uses are limited to: (1) Medical care expenses for the participant, account holder's spouse or other dependent; (2) Payments necessary to prevent eviction or mortgage foreclosure from the account holder's principal residence; or (3) Necessary living expenses following participant employment loss[15]. Federal and non-federal matching funds will be forfeited if the participant does not redeposit the withdrawn amount within 12 months[16].

Voluntary and Unauthorized Withdrawal
Account holders may voluntarily withdraw from the program. If they do so, they are entitled to withdraw their savings without penalty. However, they do not receive any matching funds. Unauthorized withdrawals, including using funds for unauthorized purposes, will result in the expulsion of the individual from the program.

Savings Plan Agreements
The Program requires grantees to develop “Savings Plan Agreements” with all project account holders that must include basic information such as:

• Targeted savings deposit amounts;
• Schedule of deposits and amount to be deposited;
• Asset goal;
• Match rate;
• Economic/Financial Literacy plan; and
• Asset-specific training plan

At any given time, individual account holders either may have started, completed, or be working on an amendment to the Savings Plan Agreement (SPA). The speed with which a participant completes an SPA will depend on both individual and project level characteristics. Some projects allow account holders considerable time to design and submit their SPA. Others use cut-and-dried formulas that limit participant deposits.

Financial Literacy and Asset Training
In surveying widely accepted “best practices” emerging in the IDA field nationally, it was clear that the availability of asset-specific training (e.g., homebuyer counseling), as well as basic economic and financial literacy training (often termed “Money Management” training), is believed to be important to the success of most IDA projects. The program requires grantees to provide the educational services to project account holders, including both asset-specific training and general personal financial management education.

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Notes

2. In addition, Division staff participated in lengthy discussions with USDA, SSA, HCFA, and OFA around promulgation of policies to have participant savings disregarded in determination of eligibility or level of support in other Federal programs. (The matching contributions are already disregarded under the terms of the AFI Act.) [Return to Text]

3. For example, one proposal contained a letter from a foundation president saying that he was recommending to his Board of Directors that they approve a grant of $200,000 to the applicant; but the Board was not to meet to take action until June. [Return to Text]

4. Sec. 404.7)(A)(i) of the AFI statute. [Return to Text]

5. Ibid., Sec. 404.7(A)(ii). [Return to Text]

6. Ibid., Sec. 410(a)(1). [Return to Text]

7. Ibid., Sec. 410(b). [Return to Text]

8. Ibid., Sec. 410(c). [Return to Text]

9. Ibid., Sec. 407(c)(3). [Return to Text]

10. Ibid., Sec. 408(a). [Return to Text]

11. See to Sec. 32 of the Internal Revenue Code of 1986. [Return to Text]

12. Excluding the primary dwelling unit and one automobile. Sec. 408(a)(2)(A) of the AFI statute. [Return to Text]

13. Ibid., Sec. 404.8. [Return to Text]

14. Ibid., Sec. 404.3(A). [Return to Text]

15. Ibid., Sec. 404.3(C). [Return to Text]

16. Ibid., Sec. 410(e). [Return to Text]