One financial service offering that you may not be aware of is an Individual Development Account (IDA), a special savings account offered to low and moderate income households. Consumers deposit money into a savings account each month and the amount is matched by a local non-profit organizations, federal or state grants, or program sponsors, and then connect participants to partner with a local financial institution such as a credit union, bank, or similar business that manages the account.
The savings plan is designated for specific use – consumers can use the savings toward a purchase of a first home, capital to open a small business, or for post-secondary education or vocational training. IDAs also require savers to complete financial education classes, giving them further financial literacy to make informed decisions and provide additional life skills. In addition, consumers participating in the program receive further training depending on how they will use the assets – for example, if the funds are used toward a home purchase, individuals obtain homeownership education and counseling.
IDA programs vary in length, usually as few as six months or up to several years, depending on the goals of the participant. The sponsoring organization works closely with each applicant to ensure goals are met.
A report published in 2016 by the Administration for Children & Families, soon after the federal program was established, revealed that participants in the IDA program were 35 percent more likely to become homeowners, 84 percent more likely to become business owners and nearly twice as likely to pursue post-secondary education or training. The most current report submitted to Congress late last year showed participants saving over 34 million dollars, with matching funds of just over 79 million.
For inspiration on how other individuals have used IDAs to improve their lives, read these success stories.
To find an IDA program in your area, search this directory for a location near you or use this interactive map.