IDA Savings Programs: Salt Lake Neighborhood
|Homeownership, savings, and small business ownership are the primary means for families to build wealth. Yet U.S. Treasury estimates indicate that approximately 35 million American households are without checking or savings accounts, the starting points for asset accumulation. During 2002 Senior Community Affairs Specialist Craig Nolte played an instrumental role in bringing Individual Development Account (IDA) savings programs to Utah and Idaho for the first time. “IDA programs financially empower and build wealth for individuals and families by providing them with often first-time opportunities to open savings accounts tied to financial goals,” says Nolte. Nolte and Community Affairs Specialist John Olson held meetings in Utah and Idaho bringing lenders and nonprofits together to learn about the benefits of IDAs. Salt Lake Neighborhood Housing Services, a workshop attendee, is the first organization in Utah to offer IDAs.
In 2002 Salt Lake Neighborhood Housing Services (NHS) launched Utah’s
first Individual Development Account (IDA) program when four participants
made initial deposits into their savings accounts at a local bank.
Established in 1977, Salt Lake NHS is a nonprofit, community-based organization with a primary mission of revitalizing neighborhoods and creating affordable housing and homeownership opportunities for the community it serves in Salt Lake City, Utah. “IDAs are an important component of our asset-building strategy to promote economic independence for low- and moderate-income families and individuals in our community,” says Maria Garciaz, the nonprofit’s executive director. “By fostering self-sufficiency, IDAs contribute to long-term financial solutions to empower these groups and revitalize our neighborhoods.”
Like IDA programs around the country, Salt Lake NHS offers participants
who meet enrollment criteria a matched-savings account to fund higher
education, purchase a home, or establish a small business. Typically
nonprofits such as Salt Lake NHS administer IDA programs with matching
funds obtained through contributions, grants, or foundations. Local financial
institutions provide the savings accounts. For the Salt Lake program,
participants’ monthly deposits of $35 are matched at a four-to-one
ratio for a year. Matched funds are withdrawn if participants do not
meet their financial commitments.
Creating homeownership opportunities is a direct outcome of the IDA program and an important part of the Salt Lake NHS asset-building strategy according to Garciaz. “We set up the IDA program with homeownership in mind because of the tremendous potential for homeownership to build wealth and stability for families and neighborhoods.”
Garciaz says financial education is an equally important component of the IDA program. Participants complete a Financial Fitness workshop covering issues such as credit, budgeting, and saving to qualify for the program. Attendees also learn how to cope with a financial emergency and how to make informed decisions to avoid becoming victims of predatory lending practices.
Once qualified, participants attend additional training related to their goals. Those saving for higher education must enroll in an eligible institution.
Potential homeowners participate in a homeownership-counseling program. Prospective small business owners must open their businesses within the nonprofit’s service area and must attend courses provided by a small business development center before opening their doors.
The first four participants in the Salt Lake NHS IDA program are saving with the goal of funding higher education. Illustrating the exponential benefits of IDA programs, one participant already is thinking about the next step, opening a small business in his local community.