The Patrick Administration is targeting substantial State funds to be allocated to community based nonprofits by the Department of Housing and Community Development (DHCD) through the State's Individual Development Account (IDA) Program.
IDAs are matched savings accounts that enable low-income American families to save, build assets, and enter the financial mainstream. IDAs supplement the savings of low-income households with matching funds. Supported with financial literacy training, IDA programs are an innovative anti-poverty tool that demonstrates an asset-based approach to helping low-income families and individuals break the cycle of poverty. Participants of DHCD's IDA program can use these savings accounts for the purchase of a first home, small business capitalization, and post-secondary education and/or training.
The Massachusetts IDA Program is in its third program year. In FY 2009, $700,000 was dedicated to IDAs, an increase of $100,000 from FY 2008. Support from the State Legislature was critical to increasing the line item in the Commonwealth's 2008 budget.
Seven agencies have been contracted through DHCD to provide IDA services. DHCD's IDA providers are: Center for Women and Enterprise, Compass Working Capital, Inc., International Institute of Boston, Massachusetts Association for Community Action (MASSCAP), MIDAS, Springfield Partners for Community Action, and United Way of Massachusetts Bay, Inc. These agencies will partner with more than two dozen grassroots organizations all across the Commonwealth, including local community action agencies and development corporations, local housing authorities and other non-profit organizations and financial institutions to run the program. Participants may use these assets to purchase their first home; receive post-secondary education or training; or, start or expand a small business.
The funds are used to support financial literacy training and asset management along with an average 3:1 in matching funds for eligible participants with savings set aside to purchase their asset. The FY 2009 $700,000 award will enable agencies to leverage $968,680 in additional funds from the public and private sector to further support the initiative. As a result of this initiative, it is estimated that:
- 1,782 individuals will complete financial literacy training,
- 434 individuals will buy homes,
- 249 individuals will move from State subsidized housing
- 87 individuals will start or expand a small business, and
- 196 will complete post-secondary education and/or training.
The program targets preference to Massachusetts residents living in state subsidized housing who earn up to 80% of area median income, as defined by the US Department of Housing and Urban Development. Participants must show a high degree of program readiness, including being currently employed with a consistent work history and a commitment to participate in and complete financial literacy training.
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