The accounts are held at local financial institutions and managed
by community-based organizations. Contributions from low-income
participants are matched using private and public dollars. IDA
participants are recruited and counseled by the sponsoring organizations
and receive training on budgeting, credit repair and money management.
A few IDA programs got their start in 1993, and today there are
over 500 community-based IDA programs estimated to be currently
operational or in the planning stages, according to the Corporation
for Enterprise Development (CFED). The IDA concept got a boost
in 1996 with the enactment of Section 404(h) of the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996. The act authorized
states to create community-based IDA programs with Temporary Assistance
for Needy Families (TANF) block grant funds. As of 2003, thirty states
now offer some form of IDAs in their state TANF plans (as allowed
by the 1996 welfare reform law); and 34 states have passed some
form of IDA legislation.
The Downpayments on the American Dream Policy Demonstration (ADD) was the first test of the effectiveness of IDAs.
Thirteen
community-based
organizations operated programs as part of the demonstration.
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Individual
Development Accounts (IDAs) are matched savings accounts designed
to help low-income families and individuals save money to
purchase a home, continue their education, receive job training
or start a small business. IDA programs are implemented by
community-based organizations and funded by public and private
sources.