Assets For Independence:
First Interim Report to Congress FY1999
VI. |
Account Holder Characteristics |
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| A Typical IDA Project, A Typical IDA Participant | |||
The projects reported a broad and diverse representation of the low-income population (see Appendix C.1). A comparison of participant characteristics with the general low-income population[17]. (and, in a few cases, with account holders in the largest private IDA demonstration program[18].) is discussed later (see figures 6.1 and 6.2, and accompanying text). Some of the patterns in participant characteristics naturally result from the participant eligibility requirements (household income, asset test, “earned income” requirement), while other patterns stem from the makeup of the target client base of the grantee agencies.
Gender
Project account holders were overwhelmingly female (84%). It is
important to note here that within an “eligible household,”
any member of the household with earned income to contribute to
an IDA may be selected as a participant. As a consequence, situations
could exist in which an IDA eligible household contains a married
couple in which both spouses have IDAs; only the wife has an IDA;
only the husband has an IDA; etc. One of the most important factors
contributing to the large proportion of females is the fact that
both the legislation and program announcements encouraged applicants
to recruit TANF recipients to the program. In general, better
than 80% of all TANF recipients are female.
Race/Ethnicity
The self-identified racial/ethnic make-up of the project account
holders for the first year was 41.7% African-American, 37.6% Caucasian,
9.7% Hispanic, 6.0% Pacific Islander/Hawaiian, 3.2% Native American,
and 1.3% Asian American. A significant proportion of the African
Americans who were being served came from three grantees that
were targeting predominately African-American populations in the
South Side of Chicago (WSEP), St. Louis (United Way), and Washington,
D.C. (CAAB) (See Appendix C.3). The relatively large representation
of Pacific Islanders arises from the two FY1999 grantees located
in Hawaii. These grantees received approximately 8% of the total
FY1999 competitively-funded grant awards, and represent 6.5% of
the total number of accounts open at the end of the reporting
period (see Appendix C.3).
Age
The age distribution of account holders reflects the program focus
on the working population. The two age brackets that represent
over half of those living in poverty – under 18 and over
55 – comprise only 6% of project account holders in total.
However, it must be noted that these data reflect only the age
of the member of the household who has earned income to contribute
to an IDA – not the ages of all of the household members.
While the “earned income” requirement tends to exclude
many in the lowest and highest age brackets who are either not
old enough to work or have retired, the program is designed to
assist low-income working families in their efforts to improve
the economic status of their entire household.
Figure 6.2. Age distribution of AFI account holders vs. general U.S. low-income population.
Marital Status
Approximately half (51.3%) of the project account holders reported
that they were single. One in five account holders (20.7%) are
married. Another 26.6 percent report that they are divorced (19.0%),
separated (6.1%), or widowed (1.5%)[19].
Household Size
The average household size (see Appendix C.6 for detailed information)
of IDA account holders was 2.63 persons. The median size was slightly
larger at 3.00 persons per household. Approximately 27 percent
of the IDA account holders claimed to live alone. Another 26 percent
of the account holders lived in two person households. About 43
percent lived in households with three or more persons in them.
Data were missing on the household size of 4 percent of the account
holders. The 2,024 individuals who opened accounts, and for whom
household data were gathered, reported that they lived with 3,244
additional persons.
Children Under 18
The most common number of “children under 18” reported
was two (representing 30.2% of participant households); however,
almost an equal percentage of participant households (28.7%) have
only one child under 18. Just over one in eight participant households
(13.6%) had no children under the age of 18 (see Appendix C.7).
Employment Status
Program account holders must make IDA deposits only from earned
income, and deposits are required at least once quarterly. The grantees’
annual reports revealed that nearly 6 in 10 account holders (57%)
were employed full-time, and just over 1 in 5 account holders (22.4%)
were employed part-time. Around 1 in 10 account holders (9.5%) were
students. Rates of reported unemployed individuals, homemakers,
and retired individuals were all very low (2.4%, 1.2%, and 0.3%
respectively).
Income
The grantees reported the income of the household of the account
holders in one of three categories: (1) households having incomes
of 100 percent (for a family of three in FY1999 this was $13,880)
of poverty or less, (2) households having incomes between 101
and 150 percent (for a family of three in FY1999, this was $20,700)
of poverty, and (3) households reporting incomes between 151 and
175 percent (for a family of three in FY1999, this was $24,150)
of poverty. Thirty-nine percent of the account holders fell into
the first category; another 46 percent were in the second category,
and the remaining 15 percent were in the third category (see Appendix
C.9 for the complete data).
Residence
Sixty percent of the current IDA account holders reside in urban
areas, while 40 percent live in rural areas (See Appendix C.10
for the complete data).
Account Holder Banking Relationships
Prior experiences with banks may impact on an individual’s
ability to effectively maintain an IDA savings schedule and account.
Of the 2,153 individuals who opened an IDA account, about 49 percent
had a checking account; 38 percent had a savings account; and
7 percent used direct deposit prior to opening the IDA. On opening
an IDA, three percent initiated an automatic IDA allotment or
savings deposit procedure. The data support the notion that only
a minority of AFI account holders had a relationship with a bank
at the time that they opened their IDA account or used procedures
that made savings more convenient (see Appendix C.11 for more
detail).
Loans
Loans, particularly high interest loans, held by IDA account holders
can represent a significant financial burden, reducing the likelihood
that the account holder will be able to make significant deposits
into the IDA account on a regular basis. However, the data indicate
that with the exception of automobile loans, only a small minority
of IDA account holders had loans. About 29 percent of all account
holders had an automobile loan. Approximately 12 percent had a
personal signature loan, and nearly 9 percent had a home mortgage
loan, and 28 percent had a credit card.
A Typical IDA Project, A Typical IDA Participant
A composite of the most common characteristics of account holders and IDA projects (as discussed above) yields a picture of a “typical IDA project” and a “typical IDA participant.” The following is a hypothetical illustration of an “average” scenario:
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“JANE SMITH,” IDA PARTICIPANT “Jane Smith” is a single mother in her early thirties. Jane works full-time, yet she and her two children still live just on an income slightly above the amount designated by the Federal government as the “poverty threshold.” The family rents an apartment in the city. Jane has a checking account but no savings account and no credit cards. Jane hears about the IDA project through her local Community Action Agency (CAA) where she has been attending a free computer literacy course. The IDA project coordinator explains that she would need to open her IDA with at least $15, and deposit at least $20 a month thereafter. A local bank holds the IDAs, which earn 2% interest and have no service fees. The project will match up to $2,000 in savings at a 2:1 rate – yielding as much as $4,000 in matching funds if Jane is able to save the full $2,000 over the 3-year savings period. Jane enrolls in the project with the hope of saving to
buy her first home. As part of Jane’s saving plan,
she attends a “Money Management” course taught
by an adult financial educator at the CAA. The sessions
are held twice a month over a 5-month period. When she completes
the course, she will then begin periodically meeting with
a certified homebuyer counselor from a partnering local
housing counseling agency. In addition to this asset-specific
counseling, Jane has access to complementary programs and
services – including personal and employment support
and other financial services – that are offered by
the CAA and its partner agencies. In the first few months,
she saves $250 through monthly deposits from her paycheck
earnings. (During tax season, Jane is likely also to deposit
a portion of the Earned Income Tax Credit refund she typically
receives.) |
Notes
17. Figures for 200% of poverty from U.S. Census data published in Current Population Reports Consumer Income: Poverty in the U.S. 1999, Issued September 2000. [Return to Text]
18. Saving and Asset Accumulation in Individual Development Accounts: Downpayments on the American Dream Policy Demonstration, A National Demonstration of Individual Development Accounts, February 2001. [Return to Text]
19. Percentages do not total 100% because grantees either did not report, or reported as “unknown,” the remaining 1.4% of account holders. [Return to Text]
