A home. A degree or certification. The start-up costs for a small business. For families living paycheck to paycheck, these kinds of high-priced assets can feel completely unattainable, yet research suggests that these essential resources serve as buffers from economic volatility and pathways to the middle class. How do we help families secure them? For decades, matched savings accounts like Individual Development Accounts (IDAs) have been helping families make the acquisition of these assets a reality.
A number of organizations in Indiana administer Individual Development Accounts (the Indiana Housing and Community Development Authority maintains a list), which often include financial counseling and a 3-to-1 match on every dollar a low-income family saves. The Indiana General Assembly even voted unanimously in 2016 to expand the program’s eligibility and available uses. However, programs like these run the risk of disappearing unless program administrators can demonstrate their value. In fact, earlier this year the U.S. Senate Appropriations Committee voted to eliminate funding for the Assets for Independence (AFI) program, which supports Individual Development Accounts. Shortly thereafter, the House’s Appropriations Committee voted to fund AFI at the same level as last year. Congress will have to reconcile these differences before the end of the year.
Program administrators and other advocates need to continue to build the case for Individual Development Accounts. While researchers have conducted some larger-scale, nationwide studies of the program, demonstrating some significant and some inconclusive results for participants, local program administrators have also jumped into the evaluation game. Community Action Agency of Southern New Mexico partnered with New Mexico State University to conduct an economic impact study of their IDA program. As a result, CAASNM not only tracked the 50 home purchases, 33 post-secondary enrollments, and 43 business start-ups, and expansions it achieved through the IDA program, but was also able to estimate the direct and induced revenues to the county and state.
These kinds of local studies are important. If advocates feel that Individual Development Accounts and other programs are truly benefitting the families and communities they serve, they must find ways to demonstrate these effects. Building evaluation into new programs and finding ways to capture the statistics and stories behind existing programs may help to keep valuable funding streams off the chopping block and, ultimately, help low-income families continue to have access to the tools they need to acquire those seemingly unattainable assets.