A strong partnership with a Qualified Financial Institution is essential to AFI projects. The basic partnership begins when the grantee enters into an agreement with one or more financial institutions to hold the IDA accounts and the Reserve Funds. The non-profit administering agency will generally try to negotiate special account features that both benefit the project account holders and make project administration easier for the non-profit agency and the financial institution. These specifications could include the waiver of service fees, minimum opening deposit requirements, and minimum average balance requirements, among other features. In addition to mutually agreeing on the design and structure of the IDAs, the agreements include the financial institution’s agreement to transmit account statements electronically on a monthly basis to the grantee, reduce fees, or an agreement to send financial institution staff to IDA orientation meetings to develop a good rapport with new account holders. All of these facilitate a mutually beneficial, productive relationship between the financial institution, the grantee, and the program participant.

Grantees reported a total of 98 qualified financial institution partners holding IDAs as part of their AFI Demonstration projects. All but one of the financial institutions had waived service charges and/or other fees normally assessed on this type of account. The average interest rate offered on the IDAs was 1.9% - likely reflecting the low market interest rate offered on basic savings products nationally at the end of the reporting period. The total participant savings held in the IDAs by all 98 financial institutions was $415,646, an average of $4,422 held per financial institution (see Appendix B.1).

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