Low-income homes helped by IDAWith new federal funding, North Dakota’s Individual Development Account program is planning expansion across the state. Administered by North Dakota Community Action Partnership, a nonprofit agency that serves low-income families in all 53 counties across the state, the IDA program is a matched savings program that offers an opportunity for low to moderate-income individuals to accumulate lasting assets.
With new federal funding, North Dakota’s Individual Development Account program is planning expansion across the state.
Administered by North Dakota Community Action Partnership, a nonprofit agency that serves low-income families in all 53 counties across the state, the IDA program is a matched savings program that offers an opportunity for low to moderate-income individuals to accumulate lasting assets.
On Sept. 1 Assets for Independence, a division of the U.S. Department of Health and Human Services, awarded federal funds to the IDA program in the amount of $143,750. These funds will be matched by North Dakota state dollars appropriated to Community Action.
“Each dollar the state has committed will be matched by a federal dollar and together will match the savings of the participant,” said Andrea Olson, NDCAP statewide asset development coordinator. “The state funds were crucial in leveraging federal funds for our state.”
Although IDAs were piloted in North Dakota in 2002, they are not a new concept in the United States. NDCAP estimates more than 500 IDA initiatives exist in communities across the United States, and at least 10,000 people currently hold an IDA. The federal government supports IDAs through the Assets for Independence Act, passed in 1998. More than 35 states, including North Dakota, have passed IDA legislation.
Ultimately, the IDA enables participants to acquire a lasting asset after saving for an extended period of time. Participants are required to save for at least six months, although most save money over the course of a few years. At the end of the program every dollar deposited into the IDA by the participant is matched by a combination of federal and nonfederal funds at a rate of 2:1. In North Dakota participants are able to save up to $2,000 for a match of $4,000. This means if the maximum amount is saved, the participant earns $6,000 to use for purchase of an asset.
“IDAs come with parameters and high expectations of participants,” Olson said. “All participants must have earned income, good credit, and a willingness to follow a slow and realistic savings plan. The IDA is applicable toward one of three approved assets which include college tuition, small business capitalization or first-time home ownership.”
Throughout the savings period participants are also required to make a monthly deposit into their IDA and the contribution must come from money they have earned while working. The IDA is also a custodial account managed by Community Action and the participant does not have access to the funds, Olson said.
Participants are required to complete financial literacy training, which is a critical component as it teaches skills such as: creating and following a budget, owning and managing a bank account or credit card, credit counseling and credit repair, and guidance on refundable tax credits such as the Earned Income Tax Credit. Additionally, participants are required to attend asset-specific training. This training is focused on participants’ assets that they intend to purchase upon the completion of their IDA savings.
“The IDA program has celebrated numerous successes since its inception in 2002,” Olson said. “We are confident this new federal funding will allow many more hard-working North Dakotans an opportunity to earn lasting assets.”
Contact Andrea Olson at NDCAP for more information at 701-232-2452, ext. 119.