VIII.

IDA Project Characteristics

The Assets for Independence Act permits considerable operational freedom in the design of IDA projects. The FY1999 proposals designed and implemented a variety of project guidelines (stated either as recommendations or actual requirements for project participation) in such areas as match rates, allowable schedules of deposit, minimum opening and periodic deposits, maximum savings matched, and account fees. There are several reasons why the agencies would set internal project participation restrictions in addition to those already imposed statutorily. Grantees often:

1. Established more stringent deposit guidelines in an effort to support, or guide, the participant to practice positive savings behavior;
2. Set strict matching parameters to encourage fiscal responsibility and to limit liability at a sustainable level; and
3. Implemented deposit and withdrawal procedures designed to minimize the risk of grantee and participant non-compliance with program requirements.

Match Rates
The match rate offered to account holders was left up to the grantees, as long as the match rate did not fall below 1:1, or exceed 8:1. Most grantees offer uniform match rates; however, some grantees offer multiple match rates which vary according to such factors as the account holder's asset goal, income level, or status as a TANF recipient. The annual report asked projects to report their match rates by asset goal. Projects offered match rates ranging from 1:1 (the legislatively mandated minimum) to 4:1. No grantee offered a match rate above 4:1. The most common match rate was 2:1, with approximately half of the sites using this rate exclusively.

Table 8.1 summarizes the proportion of reporting agencies providing the specified match rates by qualified asset goal. At this early stage, it is not possible to determine whether the match rates influence either recruitment, saving rates, or asset accumulation.

Table 8.1. Frequency of Various Match Rates Used by Grantees *

Match Rate	Home Purchase	Post-Secondary Education	Small Business	Total
1:1	6	6	6	18
2:1	28	28	27	83
2.5:1	1	1	1	3
3:1	10	7	7	24
4:1	4	2	2	8
Total	49	44	43	136
1:1	12.2%	13.6%	14.0%	13.2%
2:1	57.1%	63.6%	62.8%	61.0%
2.5:1	2.0%	2.3%	2.3%	2.2%
3:1	20.4%	15.9%	16.3%	17.6%
4:1	8.2%	4.5%	4.7%	5.9%
Total	100%	100%	100%	100%

* The information on the match rates was provided by 36 grantees and 11 collaborators.

Maximum Savings Match Levels
The maximum savings amount that is matched varies. Table 8.2 below shows that the median amount of participant savings that were to be matched was just over $1,700 (see Appendix E.2 for a detailed listing). Half of the projects proposed to match $2,000 or more of the account holders’ savings; $2,000 was the most commonly reported maximum (cited by 10 grantees). Only six of the 38 grantees reported matching savings that exceeded $2000. These latter grantees are matching at a rate of less than 2:1, and/or they have raised additional matching funds, beyond the required 100% cash non-federal share.

Table 8.2. Median and Frequency of Minimum Opening and Periodic Deposit Requirements.

Project Guideline	Median	Most Frequently Cited Amts.	Range of Amounts Reported (Lowest and Highest)
Minimum Opening Deposit	$10	$10 (12 grantees) $20 (7 grantees)	$1 - $50
Minimum Periodic Deposit	$20	$10 (12 grantees) $20 (9 grantees)	$8 - $75
Maximum Savings Matched	$1720	$2000 (10 grantees) $1000 (6 grantees)	$800 - $4,800

 

Schedule of Deposits
One goal of the demonstration program as indicated in the AFI legislation is to encourage account holders to develop and reinforce strong saving habits. Subsequently, projects set guidelines encouraging or requiring account holders to make IDA deposits on a regular basis.

Projects identified the periods under which IDA deposits were allowed. Almost all projects reported that account holders can make deposits as they choose; but the projects often established internal programmatic guidelines requiring a minimum frequency of deposits. This generally takes the form of a guideline that the participant must make at least one deposit per a given period. The project chooses whether this period is simply quarterly, as mandated by statute, or is more frequent, e.g. monthly or weekly (see Appendix E.1 for detail).

Table 8.3. Allowed Schedule of Deposits.

Period of Deposits Allowed	% of Projects Allowing
One-Time	26.3%
Weekly	81.6%
Monthly	100%
Quarterly	28.9%

 

Projects generally associated the category of “one-time” deposits with the deposit of a portion of the account holder's tax refund (generally large due to the Earned Income Tax Credit) during tax season. All of the projects reported allowing monthly deposits. Best practices being researched by other IDA programs contend that monthly deposits appear to be the most appropriate and supportive schedule of deposits for account holders. They deposit from their paychecks, which most would be receiving on a monthly, bi-weekly, or weekly basis.

Minimum Opening Deposit
The program does not require the establishment of a minimum opening deposit amount, and yet most projects reported that they did have such a minimum opening deposit level. The existence of such a requirement is attributable to pre-existing financial institution regulations, or to an attempt by the grantee to support positive savings behavior.

The minimum deposit required by grantees to open an IDA varied. The most commonly cited minimum amount was $10, cited by 12 projects. Eleven projects cited either $20 or $25. Five projects cited $1, by which they could be reporting that only a token amount is required – account holders are simply advised to open the account with whatever amount they are able to deposit. An additional 10 grantees reported no minimum opening deposit at all, leaving it to the discretion of the participant. The highest minimum deposit reported was $25 (See Appendix E.2 and Table 8.2). Most financial institutions have minimum opening balance requirements of $100 or more.

Minimum Periodic Deposit
The projects’ reports of minimum opening and periodic deposit amounts are consistent with the average minimum deposit requirements found by researchers of non-federal, national IDA initiatives, such as the privately-funded, 14-site American Dream Demonstration. The American Dream Demonstration reports that the challenge IDA projects face is to encourage account holders to deposit the maximum amount that is affordable to them, while at the same time not setting the bar so high as to intimidate or demoralize the account holders. The larger IDA field believes that opening deposits of between $10 and $25, and subsequent periodic deposits of between $10 and $30, are generally large enough to make the account holders feel a sense of accomplishment and to gain a stake in the project, yet small enough to be achievable for the account holders.

Account Fees
All but one financial institution waived any account fees which might have been assessed on the IDAs, such as quarterly service fees, fee for failure to maintain a minimum average daily balance, etc. The financial institutions holding account holders’ deposits are listed in Appendix B.1.

Deposits
During the reporting period, as summarized in Appendix F.2, program account holders made $528,521.48 in IDA Savings Deposits, an average of over $245 per participant.

Withdrawals
A total of 43 qualified IDA withdrawals were made during the reporting period, totaling $31,726 (detailed in Appendix F.3), at 11 of the 38 project sites. Seventeen of the 43 withdrawals were Home Purchase withdrawals totaling $19,932. Sixteen small business withdrawals were made totaling $5,554. The nine post-secondary education withdrawals totaled $5,235. The one transfer withdrawal was in the amount of $1,004. An additional $14,354 was taken out in a total 52 withdrawals for emergencies or other non-qualified purposes (detailed in Appendix F.4).

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