Individual Development Accounts (IDA's)
Increasingly, Community Development Corporations (CDCs) across Massachusetts are designing and deploying asset development strategies which serve low income populations through a variety of programs. These efforts include first time homebuyer programs, job training and adult education programs, and small business development programs that help people to start and grow successful businesses. One relatively new tool that many CDCs have recently begun to use are Individual Development Accounts (IDAs). IDAs are income-eligible savings accounts that are matched anywhere from a 1:1 to 4:1 ratio from a combination of private and public sources. The funds are then used for one of three purposes; education for themselves or their children, business capital, or the purchase or repair of a home.
Most Americans working in low-wage jobs do not have access to the investment opportunities that middle- and upper-middle class people take for granted. Homeownership and the resulting equity generated by this investment and the savings offered by the mortgage interest tax deduction, are often out of reach due to high down payments and strict credit requirements; a college education or job training that will lead to higher wages and greater mobility in the workforce is priced out of reach of the working poor - despite the recent attempts to make it more affordable. Small business start-up, a traditional path to economic prosperity, requires both capital and capacity to for the owner to succeed. The IDA program puts all these within reach. In addition to matched savings accounts, participants also attend workshops on financial management.
The Massachusetts IDA Solutions (MIDAS) is a collaborative of community-based organizations across the state that are currently operating IDA programs in any of the three mentioned areas. For more information, visit the MIDAS website at: www.massassets.org.
Policy_Memo_v9lowres.pdf