Monday, June 1, 2009

Individual Development Accounts in Minnesota

Individual Development Accounts (IDAs) are special savings accounts designed to encourage low-wage workers to build assets through matched savings, financial education, and financial coaching. Dr. Michael Sherraden, author of Assets and the Poor and the Director of the Center for Social Development at the Washington University in St. Louis, developed the concept of IDAs in the early 1990s as a vehicle to help people in poverty to accumulate assets.

Family Assets for Independence in Minnesota (FAIM): Statewide IDA Program
Launched in 1999, Minnesota’s statewide IDA program, Family Assets for Independence in Minnesota (FAIM) is made possible through federal, state, and private funding. IDA accounts can be used towards acquisition of one of three assets.
  • Home Ownership
  • Launching a Small Business
  • Higher Education
FAIM is delivered by a 28-site collaborative comprised of 23 Community Action Agencies, WomenVenture, City-County Federal Credit Union, Emerge Community Development, and the Leech Lake and Mille Lacs Bands of Ojibwe Tribal Governments.

Participants must have incomes below 200% of poverty and commit to saving up to $480 per year, which is matched at a 3:1 rate for up to two years. They also complete 28 hours of financial management classes and 10-14 hours of specific asset training classes, such as first time homebuyer, business development or career development.

From 2000-2007 $1.6 million was deposited into IDA matched savings accounts, over 1000 assets purchased, and 1500 people completed financial education classes. In addition to helping participants to acquire assets, IDAs also promote savings behavior and provide social support that contributes to sustainable economic self-reliance and asset-building. This is achieved by providing participants with no-fee bank accounts, which encourages regular savings, and providing financial literacy education and coaching. Frequently, the community organizations offering IDAs also offer other supportive services maximize long-term success.
  • Learn more about Family Assets for Independence in Minnesota (FAIM)
  • Locate a local FAIM agency in your county
  • Minnesota Statute 256E.35 Family Assets for Independence
Family Savings Accounts in Minneapolis
Sponsored by Faith in the City, the Personal Finance Center offers Family Savings Accounts, matched savings accounts to help low-to-moderate income families develop assets.

Payne-Phalen: Saves 3:1 program in St. Paul
Opened in 2007, the Center for Working Families in St. Paul is a coalition of 6 organizations. The Center offers this IDA program and is located in the Old Swedish Bank Building, 965 Payne Ave., St. Paul. For more info, contact May Xiong.

For more information, check out Help MN Save and the Assets for Independence Act.

Thank you to Pam Johnson of the Minnesota Community Action Partnership for contributing this post.

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