Saving for a Better Tomorrow Individual Development Account (IDA) Program
The National Capital Region has the least affordable home prices, comparative to wages, in the country, contributing to the lowest homeownership rate in the nation. This, added to the quickly disappearing supply of affordable rental options leaves residents with few choices. Nearly two out of five local residents spend well over 30% of their income on rental housing. One in five spends half of their income on housing.
On a limited income, saving for future goals beyond meeting immediate needs is challenging and often times next to impossible. But a 1997-2002 national demonstration project showed that, with the right support and incentives, low-income individuals can and do save for long-term goals and accumulate wealth. The American Dream Demonstration found that asset building programs provided this support and motivation, in the form of financial education, credit counseling, and matching funds.
Community Partners, the Housing Opportunities Commission (HOC) and the Capital Area Asset Builders (CAAB) partner to coordinate theSaving for a Better Tomorrow IDA program. This financial literacy and assets building program equips low-income households to pursue homeownership opportunities, to create small businesses and to increase their post-secondary education.
Low-income residents of subsidized housing who actively participant in HOC’s Family Self-Sufficiency Program attend financial literacy classes to help them improve their credit and propel them to greater self-sufficiency. With improved financial literacy, participants also establish savings accounts and have their deposits matched with funds from federal and non-federal grant sources, for the purpose of purchasing a home, starting a business or attending school.
Clients can save up to $1,000 and earn up to $3,000 of matching funds on those savings. Participants make monthly deposits between $20 - $50, and must complete ten hours of financial literacy education and four hours of training relevant to the asset they want to invest in.
Community Partners and HOC partner with the non-profit Capital Area Asset Builders (CAAB), which, in support of the Saving for a Better Tomorrow program, has secured the federal funds from the Assets for Independence Program (AFI) under the U.S. Department of Health and Human Services.