Qualifications

• Income cannot exceed 200% of the federal poverty threshold at the time of application ($21,660 for an individual in 2009) or it must fall within the federal earned income tax credit limits or the person must qualify for Temporary Assistance to Needy Families (TANF)
• Household net worth cannot exceed $10,000, not including a primary residence and one vehicle
• Must be willing to complete 6 or more hours of financial education
• Must be able to save at least $25 per month
• Savings must be used for down payment or closing costs on a house, for post-secondary education or job training, to start a micro-enterprise, or for purchase or down payment on a car

Terms

• Dollar for dollar match or 1:1 from the Iowa Credit Union Foundation
• An additional 1:1 match has been provided by Iowa Department of Human Rights
• An additional .50:1 match from Employees Credit Union
• Maximum savings amount is $2,000 per individual ($7,000 total with matches); $4,000 per family ($14,000 total with matches)

No special technology is needed. Many community partners are involved in offering asset-specific education to participants.

Low-income individuals and families that are able/willing to save and participate in financial education to acquire an economic asset to help them achieve long-term financial stability

• Word-of-mouth from participants
• Community Action Agencies provide referrals
• Credit union employees market the program to individuals/families that appear to be good candidates
• Website and newsletter promotion
• Letters from employers or member groups
• Credit union provided information to be included in report cards to area high schools

• Statewide results:
  • 20 credit unions involved in program
  • 50 active participants
  • 6 have completed the program and purchased assets: 3 home purchases, 3 post-secondary education
  • $36,628 in savings that remain unmatched
• Employees CU results:
  • 5 active participants
  • 1 has completed the program and purchased a home
  • 4 new enrollees are ready to start

• Significant matches in savings that result in the purchase of an asset that otherwise would be out of reach for most participants
• Improved financial management skills that come with the financial education classes
• An established relationship with the credit union that can facilitate progress towards financial goals and independence

In 2006 the Iowa Credit Union Foundation along with the league’s subsidiary partner, Coopera Consulting, decided to make financial stability and the elimination of poverty part of its strategic plan. It fit in with the foundation’s mission of building wealth and helping families achieve independence. Individual Development Accounts (IDAs) were selected as the means toward financial independence. The foundation received private foundation funds to put the program in place. Marybeth Foster, executive director of the foundation, says credit unions were acknowledged as “the best place for low-income families to access financial services.” The goal of the program was to get low-income households into a credit union where their financial needs could be met. Initially, nine credit unions offered the program; today there are 20 credit unions offering IDAs.

Employees Credit Union in northwestern Iowa was one of the original nine. Cathy Beaver, operations manager, says her credit union became involved because she knew in her small rural community of Estherville, there would be many people who would meet the income guidelines and could benefit from the program.

Her credit union can also boast of having the first successful graduate IDA saver. That person was a 28-year-old single woman who worked as a pre-school aide at a local school. That meant no employment during summer months. Part of the program included building and maintaining a budget. From that experience, the woman decided she needed a second job, says Beaver. She got a job as a waitress at a nearby resort and made good money during the summer. As a result, she was able to save $2,000, the maximum for an individual, in about six months and with her additional matched funds of $5,000, was able to purchase a home in July 2009. Beaver was delighted when the woman told her that the most important thing she learned from her financial literacy sessions was the importance of having an “emergency fund,” particularly now that she is a homeowner. The woman will qualify for a first-time homebuyer tax credit and plans to use some of the money for new flooring, but the rest will go toward her emergency fund.

Another participant that Beaver expects will be successful is a young single male who is earning $10 or $11 an hour working at a retail store. His goal was to save $50 a month for a down payment on a house. He was frustrated with how long it was taking to save for the car, but tuned in when Beaver started talking about “spending leaks.” His spending leak was Internet shopping, particularly e-bay. He scaled that back and has gone from $500 in his IDA in July 2009 to $1,500 in February 2010. He is looking at condos and townhouses priced over $100,000, but Beaver is also advising him to “not be married to a mortgage” and to purchase something he can afford.

Participants must save at least $25 per month, but not more than $400 per month. The cap is to prevent people who for example, receive a large tax refund and use that as a one-time deposit to receive the matched funds, says Beaver. “The value to the program is to learn to save regularly, to become smarter money managers, and to build a long-term relationship with the credit union.” Beaver is a firm believer in the program. “I remember our financial struggles to buy our first home. I am so excited about helping these young adults achieve their goals and attain financial independence.” The Iowa Credit Union Foundation provides much of the support behind the program, including train-the-trainer and additional training sessions for participating credit unions. Beaver recalls there were lots of questions initially about how the program would work. There are quarterly conference calls among participating credit unions to share experiences and discuss ongoing matters. Foster says the IDA program has become the foundation’s flagship initiative. There are now credit unions with IDA programs in 91 of the 99 Iowa counties.