About Assets for Independence

Assets for Independence (AFI) is a Federal program that provides grants to enable community-based nonprofits and State, local, and Tribal government agencies to implement and demonstrate an asset-based approach for offering low-income families help out of poverty. Individuals interested in building assets through participation in an AFI program can browse our AFI Project Locator to find opportunities in their communities. In addition to the information provided here, the AFI Program Fact Sheet provides a high level overview of key program information.

Asset building is an anti-poverty strategy that helps low-income people move toward greater self-sufficiency by accumulating savings and purchasing long-term assets. The asset building concept forms the foundation for the AFI Program and is stimulating positive change in the lives of program participants nationwide.

The AFI Program is administered by the Office of Community Services (OCS), within the U.S. Department of Health and Human Services, Administration for Children and Families. AFI Program operations are conducted under the supervision of Program Manager Jim Gatz.

Participating Organizations. AFI is administered by the Office of Community Services (OCS), within the U.S. Department of Health and Human Services, Administration for Children and Families. OCS offers five-year AFI Project grants to several categories of organizations and agencies:

• Nonprofit organizations, including faith-based, and community organizations
• State, local, or Tribal government agencies applying jointly with a nonprofit
• Community Development Financial Institutions that partner with a community-based anti-poverty group
• Low Income Credit Unions that partner with a community-based anti-poverty group
• Consortia of organizations and agencies that target multiple service areas

The AFI Project Locator provides information on past and current grantees nationwide.

Project Activities. AFI Projects assist client families in a number of ways. First and foremost, they help participants save earned income in special matched savings accounts called Individual Development Accounts (IDAs). Every dollar in savings deposited into an IDA by a participant is matched from $1 to $8 by the AFI Project. The IDA mechanism promotes savings and enables participants to acquire a lasting asset after saving for a few years. Clients use their IDA savings, including the match funds, to acquire any of the following assets:

• A first home
• Capitalization of a small business
• Post-secondary education or training

To help clients with their IDA savings, all AFI Projects provide training and supportive services related to family finances and financial management. Services include:

• Financial education on issues such as owning and managing a bank account or a credit card
• Credit counseling and credit repair
• Guidance in accessing refundable tax credits including the Federal and State Earned Income Tax Credit (EITC), child tax credit, and others
• Specialized training about owning a home, starting a business or attending post-secondary school.

All AFI Projects participate in a national program evaluation to help determine the effectiveness of this asset-based approach to addressing poverty.

Clients Served. Generally, AFI Projects serve individuals and families with limited income and assets. Eligible clients include:

• Those who are eligible for Temporary Assistance for Needy Families (TANF)
• Those who are eligible for the Federal Earned Income Tax Credit (EITC)
• Those whose income is less than two times the Federal poverty line (approximately $40,000 for a family of four in 2007)

Clients may have no more than $10,000 in net asset wealth when they enroll in an AFI Project (not including one automobile and a home). See Success Stories for real life stories of individuals who have participated in the AFI Program and succeeded in securing their families' economic futures.

Size of Project Grants. Up to $1,000,000 for five-year awards. The average AFI project grant is approximately $350,000 for the five-year grant period. Applicants must secure non-Federal funds in an amount equal to or greater than their AFI project grant.

Grant Opportunities. OCS issues AFI Project grants annually, in keeping with legislative authority and appropriations. See For Prospective Grantees to learn how to apply for funding for an AFI Project grant.

AFI Legislation

AFI was established by the Assets for Independence Act (AFI Act) (PDF 117k) in title IV of the Community Opportunities, Accountability, and Training and Educational Services Human Services Reauthorization Act of 1998, P.L. 105-285. It was subsequently amended in December 2000.

Funding Announcement

The Office of Community Services has administered funding for the Assets for Independence Demonstration Program since 1999. See For Prospective Grantees to learn how to apply for funding for an AFI Project grant.

About Asset Building

Background

Asset building is an anti-poverty strategy that helps low-income people move toward greater self-sufficiency by accumulating savings and purchasing long-term assets. The theory behind this approach is that helping people purchase an asset, as opposed to simply increasing their income, provides stability that may allow them to escape the cycle of poverty permanently. Examples of long-term assets include a home, higher education and training, and a business.

According to recent research, a quarter of American households are "asset poor," meaning the individuals and families have insufficient financial resources to support them at the poverty level for three months (during a suspension of income). Even more troubling, asset poverty affects children at a disproportionately greater rate. Forty-seven percent of all American children live in households with no net financial assets. Rates for racial and ethnic minorities and minority children in the United States are even more severe.

Research conducted throughout the last decade on the effects of asset building on low-income, low-asset families indicates that positive results extend beyond tangible assets accumulated. Families with assets demonstrate an orientation toward the future, a decrease in marriage dissolution, and improved housing stability. Families engaging in asset building also tend to experience improved health and well-being, increased civic and community involvement, and decreased rates of transfer of poverty to the next generation.

Tools for Asset Building

Asset-building strategies incorporate many different approaches and use a variety of tools to help achieve the goal of creating asset wealth for low-income people. Government, private philanthropy, research institutions, and community-based groups are all involved in asset building. Some of the most common tools for asset building include the following:

• Individual Development Accounts (IDAs) – Matched savings accounts designed to help low-income and low-wealth families accumulate savings for high return investments in long-term assets such as a home, higher education and training or a business.
• Earned Income Tax Credit (EITC) – Refundable Federal income tax credit for low-income workers. Many States also offer EITCs for working families. EITCs enable many low-income tax filers to receive a cash payment from the government regardless of whether they pay income taxes.
• Financial Literacy – Skills and knowledge that successfully enable low and moderate income individuals to manage their finances, save for their IDA asset goals, and engage the economy in a more proactive manner.
• Children's Savings Accounts – Special savings accounts that enable children to accumulate savings, and eventually long-term assets, for their future.
• College Savings Accounts – Special savings accounts that enable families to save for the costs of college at an accelerated rate.