Creating Wealth for Missouri Poor  The role of assets in poverty alleviation can be simply stated: assets matter. Assets provide more than just an economic cushion—assets provide a psychological orientation that income alone cannot provide. Assets help to address the growing wealth gap and the increasing racial disparities of asset ownership. As an asset-building tool, Individual Development Accounts (IDAs), provide low-income families the opportunity to accelerate savings for a first home, postsecondary education, and small business capitalization. Interestingly, national research has shown that the poorest of the poor save at the highest percentage of their income.
Individual Development Accounts (IDAs) are matched savings accounts designed to help low-income and low-wealth families accumulate a few thousand dollars for high-return investments in education or job training, homeownership and microenterprise. Low-income individuals save regularly, typically over a three-year period, and have their savings matched by public or private funders. Financial institutions, foundations, churches, private donors, and state and local governments fund the matches to the personal savings of IDA holders – usually at a rate ranging from $1 to $3 for each dollar saved. Missouri’s IDA, the Family Development Account Program (FDA), was established by legislation in 1997. The FDA program has $4 million in state tax credits (50%) available each fiscal year.
A typical FDA program budget includes 15% for administrative expenses and the remainder of the budget comprises the matching funds for the individual savings accounts. Eligible applicants include non-profit, charitable, and community-based organizations formed under Chapter 352, RSMo. An organization applying for either a one or two year FDA project may request up to $600,000 in state tax credits. The tax credit is for 50% of the amount of the contribution, not to exceed $25,000 ($50,000 contribution) per contributor.
Financial resources for IDAs throughout the U.S. typically come from state general revenue funds, state tax credits, federal grants, foundation grants, city/county funds and private funds.
An FDA Success Story: Lori had dreams of what she would do if she could only manage to save a little money. Yet, as a woman living with muscular dystrophy and surviving on the meager wages earned as a data manager, purchasing her own home seemed a dream far beyond her reach. Every month she struggled to simply pay her bills, let alone save enough money to buy a home. Throughout her 41 years, she has believed that hard work and determination were the keys to achieving goals. So when a friend mentioned a savings program that contributed $3 for each $1 saved, Lori thought the opportunity sounded too good to be true. The financial education and counseling that Lori received aided her in dealing with the maze of assistance programs that exist for people with low incomes, as well as disabilities. With personal benefits planning, Lori found a variety of funding sources for home ownership as well as juggling the demands of her daily life. Sitting and smiling in the living room of her very own home, Lori enthusiastically insists that is has been more than worth all the sacrifices she has made to achieve her dream.
Business and Community Services
301 W. High Street, Rooms 720, 770, Jefferson City, Missouri 65102
Tel: 800-523-1434 Fax: 573-751-7384 Email: missouridevelopment@ded.mo.gov |