IDAs and CAAs: A Natural Partnership

A Technical Assistance Document for Community Action Agencies Operating Individual Development Account Programs

2.	CAAs And IDA Programs
		CAAs And IDAs: A Natural Partnership
		Profile Of CAAs Operating IDA Programs
		Staffing
		IDA Program Service Areas
		Participant Demographics
		Outcomes

 

Community Action Agencies (CAAs) were among the first agencies to operate IDA Programs, and the growth of IDA Programs in Community Action Agencies closely mirrors the growth of the IDA field in general. In 1992 there were 6 CAAs operating IDA Programs. From then until 1996 few new IDA Programs were started in CAA agencies. A small number were begun in 1996, 1997 and 1998. However, from 1999 on, over 120 CAAs have begun operating IDA Programs, reflecting the impact that the Assets for Independence Program (AFI) has had on the proliferation of IDA programs. The Office of Community Services, the oversight agency for CAAs, also administers the AFI Program, signifying the fact that the mission of CAAs and the mission of IDAs are similar. You can find more information on the AFI Program Web site.

CAAs And IDAs: A Natural Partnership

While many non-profit organizations operate successful IDA Programs, Community Action Agencies and IDAs seem to be a natural fit. There are several reasons for this:

• CAAs have long-standing relationships with and experience serving the target population;
• " CAAs operate a multitude of services that can be linked with IDA Programs;
• CAAs have long-standing partnerships in the community and so are able to provide needed services to IDA Program Participants either in-house, through partners or referrals.
• CAAs are able to be creative and flexible, mainly due to the availability of CSBG funding;
• CAAs have already earned the trust of their customers. This is especially important for IDA Programs. People are normally wary when dealing with anything that pertains to their finances. With CAAs, a level of trust is already there, due to the fact that many IDA Program Participants are already familiar and comfortable with their local CAA.

Why CAAs Operate IDA Programs

We asked the following question in our survey: "What was the reason that your CAA started an IDA Program." We wanted to know what needs of their clients CAAs felt would be addressed by IDA Programs.

The most common answer was "Lack of Housing Options." (57 of the 110 who responded to this question gave this answer.) Other responses were:

• To help low-income families acquire assets
• To provide economic opportunity for low-income families
• To counter the inability of our clients to secure small
  business loans
• To provide Financial Education
• To counter the lack of transportation
• To help with credit repair
• To increase savings and foster savings habits
• To help refugees build assets
• As a response to community interest
• To meet the need to familiarize low-income families with mainstream financial institutions

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Profile Of CAAs Operating IDA Programs

All size CAAs operate IDA Programs—from agencies with total budgets under $500,000 to those over $100,000,000.

IDA Programs' Operating Budgets

When we look at the operating budgets of the individual IDA Programs, we see that most programs are run with a very lean budget:

Number of IDA Programs Per Agency

Some CAAs operate more than one IDA Program track. The programs may
differ in terms of funding source, match rate, maximum match, target population, allowable assets, geographic area or income eligibility. For example, an agency might operate several AFI Programs as well as a program funded solely by a private source that allows Participants to save for an automobile. Our survey gathered information on 184 individual programs operated by CAAs.

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Staffing

IDA Programs are labor-intensive. We are asking our IDA Participants to learn new concepts, change behavior and venture into territory where many have never been before. They need our assistance along their journey toward self-discovery and self-sufficiency.

Staffing of IDA Programs is an issue that is problematic for many CAAs. Many funding sources (including AFI) allow only a small percentage of the total grant to be used for operating and administrative costs - not enough to provide for the staff support needed for successful programs. Fortunately, CAAs run a multitude of programs, making it possible to integrate IDA Programs into the CAAs' array of services.

Staffing to Client Ratio

115 agencies responded to questions about the number of active accounts currently being administered and the number of FTEs (Full Time Equivalent employees) who work in their IDA Program. "Active Accounts" include Participants who are currently saving in an open account as well as Participants who have finished saving, but have not yet purchased their asset. We did not consider those programs that are just starting up and therefore have few or no active accounts at this time, even though staff might be in place.

According to results from the survey:

• Programs with less than 1 FTE serve an average of
  21 Account Holders.
• Programs with 1 FTE serve an average of 61 Account Holders.
• Programs with between 1 and 2 FTEs serve an average of
  69 Account Holders.
• Programs with between 2 and 5 FTEs serve an average of
  101 Account Holders.

How CAAs Staff IDA Programs

In our survey, we asked the question: "Given the fact that there is often limited funding for IDA Program operation and administration, how has your agency staffed your IDA Program?" 92 agencies responded. Here is how they do it.

Volunteers

Many IDA Programs use volunteers to supplement their paid staff. As you can see by the responses below, using volunteers to help teach the Financial Education and Asset-Specific Training classes is a very popular thing to do. It makes sense to tap into the expertise that exists in the community and it builds good will by connecting people in the community to your program. This is an excellent way for your financial institution partner to be involved in the program.

We asked the following question: "If you use volunteers for your IDA Program, which of the following areas do they work in?" 56 agencies responded to this question - some gave multiple answers.

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IDA Program Service Areas

CAAs are, for the most part, serving large geographic areas through their IDA Programs, usually corresponding to the area that the entire agency covers. The majority of IDA Programs serve rural areas.

Geographic Areas Served

The following responses were to the survey question: "What geographic area does your IDA Program serve?" (Some respondents gave multiple answers.)

Urban or Rural

In response to the survey question: "Which of the following best describes this program's service area?" respondents gave the following answers. (Some respondents gave multiple answers.)

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Participant Demographics

Total Number of Participants

There are currently 4,666 Account Holders in CAA IDA Programs; 78% are female and 22% are male. Current Account Holders are defined as Participants who are currently saving in an open account or Participants who have finished saving, but have not yet purchased their asset.

Racial/Ethnic Makeup

60% of Participants in CAA IDA Programs identify themselves as White, 22% as African-American/Black, 9% as Hispanic, 5% as Asian and 4% as Other.
In the "Other" category:

• 1.37% are Native Hawaiian or Other Pacific Islander
• 0.60% are American Indian or Alaskan Native
• 1.75% are either Haitian, Russian, Mixed Race,
  African, Slavic, Polish, Eastern European Refugee, Cape
  Verdian, Bosnian, Sudanese, Middle Eastern or Somalian

This breakdown is depicted visually in the following chart:

Chart 1 - IDA Participant Race/Ethnicity

Languages

To serve this diverse client base, CAAs provide Financial Education training in 11 languages in addition to English: Arabic, Bosnian, Chinese, French, Haitian-Creole, Hmong, Portuguese, Russian, Somali, Spanish, and Vietnamese. Some agencies do not provide the training in another language but do provide interpretation to Participants upon request.

Participants' Income

CAA IDA Programs currently serve Account Holders with annual household incomes within the following ranges:

Age of Participants

Most IDA Participants are in their 20s or 30s; 1.25% are under the age of 18. (This number will surely increase in the future, due to the rising interest in Youth IDA Programs.) The age groups of current IDA Participants are as follows:

Chart 2 - IDA Participant Age Groups

Target Populations

The following table shows the responses to the survey question: "What target population does your IDA Program aim to serve?" Keep in mind that many programs gave multiple answers and that a single family can fall into several of these categories. (For example, a household identified as TANF-eligible might also include a single parent, a Head Start parent and someone of Hispanic ethnicity.) Often IDA Program Participants are individuals and families that were formerly served or are currently being served by the Community Action Agency.

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Outcomes

IDA Programs are proving successful in all parts of the country. CAAs have developed outcome measurements to demonstrate this programmatic success. Some of these outcome measures are:

• % of Program Participants who no longer rely on public assistance
• % of Program Participants who adhered to their Savings Plan agreement
• % of Program Participants who purchased assets
• % of Participants who received a raise or a promotion and/or moved to a better paying job
• Return on Investment - How many taxes are now being paid, public benefits no longer being received, and other contributions now being made by families who previously owned no assets.

(For more discussion on Outcome Measures, please see the section on ROMA.)

We asked several survey questions to determine some outcomes of CAA IDA Programs. The results are very conservative, since each succeeding day more money is being saved and more assets are being purchased by low-income individuals and families.

Assets Purchased

The total number of assets purchased to date by Participants in CAA IDA Programs has been 2,274. 118 respondents answered the survey question: "During your IDA Program's entire history, indicate the number of assets that have been successfully purchased." Of the 118 who responded, 76 indicated that some of their Participants had made an asset purchase. 42 respondents said, "Our program is new and Account Holders have not made any purchases yet." One program indicated that several people had made dual asset purchases.

Total Personal Savings Used for Asset Purchases

We asked the question: "During your entire IDA Program history, estimate the combined personal savings of all Account Holders for allowable asset purchases." The total was $4,534,567, which averages $1,994 per asset purchase.

Total Match Used for Asset Purchases

The total dollar amount of matching funds that have been distributed for allowable asset purchases, to date, is $8,471,426. This averages $3,725 per asset purchase.

Savings Plus Match

To date, Participant savings plus match, used for asset purchases, have totaled $13,005,993.

Loans Leveraged

The combined total value of mortgages and other loans leveraged by IDA Account Holders for allowable asset purchases has been $52,584,007.

Accounts Closed without Asset Purchase

In answer to the question "During your entire IDA Program history, how many accounts have been closed when Account Holders have NOT successfully purchased assets?" the answer is 1,286.

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