"IDA programs can be an important way for survivors to leverage their earned income and save for important assets that will contribute to their long-term financial security and safety."
Establishing Individual Development Accounts for Domestic Violence Survivors
What is an Individual Development Account (IDA)?
IDAs are matched savings accounts that can be used for a specific asset purchase. The match rate is the amount that the IDA program contributes for each dollar that a participant saves. This rate varies greatly across IDA programs and can range anywhere from $1 to $8 of match for every $1 dollar saved. For example, if a program has a $4 match rate for every $1 dollar saved, each time a participant deposits $25 in an IDA account, an additional $100 in matching funds would be allocated for savings. When the accountholder is ready, both the savings and the match are used to purchase the asset. By leveraging saved dollars against matched dollars, individuals are able to grow their savings more quickly and purchase an asset with long-term return potential.
Federally funded Assets for Independence (AFI) IDAs can be used to save toward first-time homeownership, starting up a small business, or postsecondary education. For more information about AFI IDAs, see “What are AFI IDAs and who is Eligible to Participate?” at http://idaresources.org/page?pageid=a047000000ArRP6. In addition, IDAs funded by states and private sources may be more flexible, allowing saving for assistive technology, vehicles, etc. For more information about state-level policy regarding IDAs, see http://csd.wustl.edu/AssetBuilding/SAP/Pages/Map.aspx.
Participants who are eligible for their state’s Temporary Assistance for Needy Families (TANF) program are automatically eligible for AFI IDAs. Otherwise, potential participants must have adjusted gross income less than or equal to 200 percent of the poverty line or be eligible for the Federal Earned Income Tax Credit (EITC). In addition, participants cannot have more than $10,000 in net asset wealth, not including the assets represented by up to one home and one automobile. Again, state and privately funded programs may have different eligibility requirements.
How domestic violence survivors benefit from IDAs?
IDA programs can be an important way for survivors to leverage their earned income and save for important assets that will contribute to their long-term financial security and safety. Money saved within a federally funded IDA does not count against the asset limits for TANF eligibility (though IDAs funded through other sources may affect eligibility), so participation in an AFI IDA program will not disqualify participants from accessing other federal benefits.
A key eligibility requirement for IDA participants is that participants have some form of earned income. It is important to note that most forms of federal benefits cannot count as contributions to an IDA (The Earned Income Tax Credit, and other refunds that are associated with earned income, are exceptions). Because of the earned income requirement, survivors who are unemployed will need to access other services before being able to enroll in an IDA. One Stop Career Centers provide assistance with resume development and job search. For more information, see http://www.servicelocator.org/onestopcenters.asp.
How can domestic violence agencies and AFI partner to provide IDA services?
Domestic violence programs can promote the availability of IDAs to survivors by providing information about IDAs as a part of advocacy services. In turn, AFI grantees can ask IDA candidates whether they are in need of safety planning, and form relationships with their local Domestic violence service providers to help develop these plans.
To find an organization that offers AFI IDAs, search for a program by state here: http://idaresources.org/Map.
An Innovative Approach to Providing IDAs to Survivors
The Kentucky Domestic Violence Association (KDVA) offers AFI-funded Individual Development Accounts to survivors receiving services at its fifteen member programs and to clients of other local agencies that serve low-income families. KDVA matches participants’ savings at a rate of 2:1 for a total of $6000 to be used toward the purchase of a first home, post-secondary education expenses, or small business expenses. To date, 164 participants have made asset purchases – 85 purchased homes, 72 pursued post-secondary education, and 7 started small businesses. 169 individuals are currently saving for purchases. KDVA also offers a privately-funded IDA, matched at a rate of 1:1 for a total of $4000, so that survivors of domestic violence can save to purchase a vehicle. This program was developed in response to advocates’ concerns that transportation was a major obstacle for survivors when it came to employment, housing, and access to services, and that for many survivors, the purchase of a car was a more manageable goal than a home, education, or a small business. The Car-IDA is considered a stepping stone to the AFI IDA. There are currently 69 participants in the Car-IDA program, and eight survivors have completed the program and purchased a car.
This is one in a series of fact sheets on asset-building and Domestic Violence Survivors produced by the Assets for Independence Resource Center. For more information about AFI services, visit the resource center website at www.IDAresources.org or contact the center at 1-866-778-6037 or via email at info@IDAresources.org To find an AFI grantee near you, go to http://www.idaresources.org/Map. To search for domestic violence programs by state go to: http://www.nnedv.org/resources/coalitions.html.
For more information about the safety challenges of survivors or for guidance on developing safety protocols contact the National Resource Center on Domestic Violence at 1-800-537-2238. For information about how to partner with local or state domestic violence programs contact the National Network to End Domestic Violence at 202-543-5566. Survivors in need of assistance can also call the National Domestic Violence hotline at 1-800-799-7233.