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2.2 ASSETS FOR INDEPENDENCE (Individual Development Accounts)

Program Description, Context, Legislative Intent and Broad Program Goals

The Assets for Independence Demonstration Program was established by the Assets for Independence Act (AFI Act), under title IV of the Community Opportunities, Accountability and Training and Educational Services Human Services Reauthorization Act of 1998, P.L. 105-285 (also known as Individual Development Accounts or IDA).

The Assets for Independence Demonstration Program is a directed, matched savings/investment program for lower-income individuals and families. Participants enter into a Savings Plan Agreement with the project grantee which establishes a schedule and goal of savings from earned income, to be matched at an agreed rate which can be from one dollar to eight dollars for each dollar saved. Matching contributions are made by the grantee at least quarterly from equal parts of Federal grant funds and non-Federal share contributions to the project. Matched savings may be expended for either (1) the purchase of a principal residence by a first-time homebuyer, (2) the capitalization of a business, or (3) expenses of post-secondary education.

The major goals of the program are to design demonstration projects that will determine: (1) the social, civic, psychological, and economic effects of providing to individuals and families with limited means an incentive to accumulate assets by saving a portion of their earned income; (2) the extent to which an asset-based policy that promotes saving for post-secondary education, homeownership and small business capitalization may be used to enable individuals and families with limited means to increase their economic self-sufficiency; and (3) the extent to which an asset-based policy stabilizes and improves families and the community in which the families live.

Eligible applicants are private, not-for-profit 501(c)(3) organizations, or State and local governmental agencies or Tribal governments applying jointly with eligible not-for-profit organizations, Credit Unions that have been designated as Low Income Credit Unions by the National Credit Union Administration, and Community Development Financial Institutions (CDFI), so designated by the Treasury Department or the CDFI Fund. Grantees are selected competitively on the basis of applications using the following criteria: the background and capabilities of the applicant; the description of the target population; project theory, design, and plan; the plan for providing information needed for program evaluation; additional resources available to support project participants; and the description of the results and benefits expected to result from the project. Applications must include a commitment for a cash non-Federal share equal to the amount of the Federal grant.

The Program Announcement encourages all applicants to agree to use MIS IDA software or a comparable Asset Development Information System that OCS expects to provide to grantees to track participant and account characteristics and experience. Section 412 of the AFIA requires annual reporting by grantees on the basis of this data. The statute requires that at least 2 percent of grant funds be used for data collection. Section 414 requires an annual report to the Congress based on these grantee reports, and calls for an overall evaluation of the program over the five-year duration of the AFIA and its impact on a variety of factors listed in that section, including potential financial returns to the Federal Government and other investors in IDA over a 5-year and 10-year period. Pursuant to these provisions, ACF awarded a contract to Abt Associates, Inc. of Cambridge, MA to evaluate the funded IDA projects and the overall program; the evaluation plan they developed has been approved by the agency.

Program Activities, Strategies and Resources

This program is entering its third year. A first round of forty (40) demonstration grants was funded in August and September 1999 for 5-year demonstration programs. In FY 2000, OCS received another $10 million appropriation with which it made twenty-five (25) new competitive grants to new applicants and seventeen (17) supplementary grants to FY 1999 grantees. These supplementary grants were made to grantees that demonstrated their ability to raise additional non-Federal share dollars, to document successful operation of their project so far, and identify unmet need that could only be met with supplemental funding.

Each of these grantees will produce yearly progress reports within 60 days of completion of the program year. The Secretary will submit an interim progress report to Congress using the information in these reports.

A process for developing impact measures based on the three overall goals for the program is part of the evaluation plan developed under a one-year Task Order issued by DHHS. In August 2000, the evaluation contractor submitted the evaluation plan that includes a conceptual framework along with an evaluation design. The research data collection strategies for the impact measures include an interview questionnaire for use with professional staff during on-site visits with selected grantees for the process study. A participant questionnaire for telephone interviews with randomly selected IDA holders will be used as a comparison with non-treatment respondents to the "Assets and Liabilities" module of the Survey of Income and Program Participant instrument administered by the U.S. Bureau of the Census in the non-experimental impact analysis component of the evaluation.

Amendments to the AFIA, which took effect December 21, 2000 have made a number of changes to the original program, including:

• "Qualified Entities" which can apply for grants have been expanded to include Community Development Financial Institutions (CDFI) so designated by the Treasury Department or the CDFI Fund, and Credit Unions designated "low-income" by the National Credit Union Administration, provided they can demonstrate a collaborative relationship with a community-based organization whose activities address poverty in the community;
• Eligibility for participation in the program has been expanded to include households whose income falls below 200% of the poverty income guidelines;
• The percentage of grant funds available for data collection, program administration and support has been increased from 9.5% to 15%; and
• The IDA's, including participant savings, matching contributions, and any income earned thereon, are to be disregarded in determining eligibility to receive, or the amount of, any assistance or benefit authorized under any Federal program requiring financial circumstances of an individual to be considered in determining such eligibility.

Under special "transitional" provisions in the 2000 amendments to the AFIA, each of the FY 1999 grantees will produce initial progress reports within 90 days of the effective date of the amendments, or by March 21, 2001, and thereafter within 60 days of the end of each program year. The Secretary will submit a first interim progress report to Congress using the information in these progress reports. Under the 2000 IDA Amendments, the reporting date for first the Interim Report to Congress has also been extended to March 21, 2001.

Section 412 of the AFIA requires that the following information be reported annually by all program grantees:

• The number and characteristics of individuals making a deposit into an individual development account;
• The amounts in the Reserve Fund established with respect to the project;
• The amounts deposited in the individual development accounts;
• The amounts withdrawn from the individual development accounts and the purposes for which such amounts were withdrawn;
• The balances remaining in the individual development accounts;
• The savings account characteristics (such as threshold amounts and match rates) required to stimulate participation in the demonstration project, and how such characteristics vary among different populations or communities;
• Which service configurations of the qualified entity (such as configurations relating to peer support, structured planning exercises, mentoring and case management) increased the rate and consistency of participation in the demonstration project and how such configurations varied among different populations or communities; and
• Such other information as the Secretary may require in the evaluation of the demonstration project.

The annual reports will provide ACF with information critical to the development of performance measures and targets. The matched savings/investment program requires lengthy start-up time for the grantees to establish the program, identify prospective participants, establish matched savings plan accounts and then at least two years are required for investments to mature.

Currently ACF is considering the following areas for performance measures:

• The number of participants that have accrued savings/investment in IDA accounts and have acquired an appreciable asset as a result of the program.
• Improvement in the family’s economic stability as a result of the increased savings and outcomes resulting from the savings/investment in IDA accounts, e.g. educational attainment, owning a profitable business, and improvement in employment (increased income and health benefits).

Section 414 of the AFIA requires that the Secretary enter into a contract with an independent research organization to evaluate the demonstration projects conducted pursuant to the act, individually and as a group, and lists the following factors to be addressed:

• The effects of incentives and organizational or institutional support on savings behavior in the demonstration project.
• The savings rates of individuals in the demonstration project based on demographic characteristics including gender, age, family size, race or ethnic background, and income.
• The economic, civic, psychological, and social effects of asset accumulation, and how such effects vary among different populations or communities.
• The effects of individual development accounts on savings rates, homeownership, level of post-secondary education attained, and self-employment, and how such effects vary among different populations or communities.
• The potential financial returns to the Federal Government and to other public sector and private sector investors in individual development accounts over a 5-year and 10-year period of time.
• The lessons to be learned from the demonstration projects conducted under this title and if a permanent program of individual development accounts should be established.
• Such other factors as may be prescribed by the Secretary.

Total Funding, Assets for Independence (dollars in millions) See detailed Budget Linkage Table in Appendix 6 for line items included in funding totals.	FY 02: $25.0 FY 01: $25.0 FY 00: $10.0 FY 99: $10.0	Bx: budget just. section H

 

The AFIA authorizes annual appropriations of $25 million for the program. $10 million was appropriated for each of the first two years, FY 1999 and FY 2000. For FY 2001 the Congress appropriated $25 million on the basis of growing support for the program among practitioners, States, and the financial community which felt that as the program gained experience and momentum in the field, the demand for funding would increase. At the same time, OCS has devoted increased resources to technical assistance, both to existing grantees and to prospective applicants. We also believe that this added assistance, along with the increased funding will enlarge the scope of the evaluation and result in a larger and deeper source of data that will yield more valuable findings.

Program Coordination, Partnerships and Crosscutting Issues

ACF continues to work in partnership with selected States and local grantees toward achieving the goals of this program. We have found that a key to successful project implementation is the development of effective, mutually supportive relationships between grantees and their partnering Financial Institutions, and OCS technical assistance efforts are focusing on strengthening these relationships. Some of the other external variables that will continue to influence the achievement of program goals include the health of the local economy and the availability of jobs; systemic barriers to low income employment such as availability of transportation and affordable day care; support of the banking, business, and foundation communities in providing non-Federal matching contributions; and the availability of support structures that will enhance job retention and advancement of IDA program participants.

Data Issues

Each grantee must provide a plan for collecting, validating and providing relevant, accurate and complete data for internal management information, statutory reporting and project evaluation purposes; and clear expression of a commitment to cooperation with the statutorily mandated evaluation of the national Assets for Independence Demonstration Program. Under the AFI Act as amended project grantees are required to use at least 2%, but not more than 15%, of grant funds to provide the research organization evaluating the demonstration project with such information as may be required for the evaluation of the demonstration project.

The Assets for Independence Act allocates a portion of the appropriated funds to support an evaluation of the overall demonstration program in addition to the funds grantees are required to expend on data collection. The agency requires the grantee to provide a well thought-out plan for collecting, validating and reporting the necessary data in a timely fashion. The grantee is also encouraged to identify the kinds of data it believes would facilitate the management information, reporting, and evaluation purposes. The grantee also agrees to cooperate with the evaluation of the national program. Grantees are urged to carry out an ongoing assessment of the data and information collected as an effective management/feedback tool in implementing their project. OCS, through its technical assistance contractor, expects shortly to provide all AFIA grantees with a new Asset Development Information System that will greatly facilitate maintenance, collection, validation, and transmission of project data essential to the program evaluation.

 

 

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