Individual Development Accounts are savings accounts that can
be used only for purchasing a first home, capitalizing a small business,
or for educational or job training expenses. Accounts are held at local
financial institutions. Contributions by lower income participants are
matched using both private and public sources. All participants receive
economic literacy training that includes workshops for cleaning up one's
credit, setting up a budgeting and savings schedule, and other basics
of money management.
The program is designed to help North Carolinians
work to develop
financial independence.
How do IDAs work?
IDAs represent a powerful tool
used by community organizations throughout the United States to stimulate
participants' savings
rates, build
their assets, and connect these individuals to the economic mainstream. Private
foundations and the public sector fund most of the programs. The
following four-step process documents how an IDA participant moves through
a typical IDA program.
STEP 1 - Introduction and Orientation
The orientation sessions provide participants with information about
the program, asset-building options, importance of savings and the lifetime
development of assets.
STEP 2 - Opening Accounts
Program participants open IDA savings accounts with the cooperating financial
partners (bank or credit union). Participants sign a contract expressing
a commitment to save. The program tracks how much participants have saved,
how much they have received in matching funds and the accumulated interest.
Participants receive this information.
STEP 3 - Economic Literacy and Training
Participants meet with staff to develop a savings plan.
Staff also discusses income and consumer patterns. Participants attend
mandatory training on banking, investing and money management.
STEP 4 - Withdrawal, Purchasing Assets, and Beyond
In Step 4, participants, with staff assistance, are ready to make bank
withdrawals from their savings. Participants
can use funds to
purchase a home, continue their education or start a business and continue
to save for the future.
Where are IDA Programs?
North Carolina has one of the leading statewide networks of IDA programs
with 32 local IDA sites in 55 North Carolina counties. These 32 programs
provide matching funds and support to more than 500 low-income account
holders.
