What a Great IDEA! A Match Savings Model

Melinda Croes & Theresa Gibbons

Assets are Key to Economic Stability

121 Wages and household income are important indicators in defining and assessing economic stability for individuals and families. However, research demonstrates that economic stability for Americans is often dependent on attainment and access to assets. Assets include such positive economic holdings as a saving account, a college degree, a home, and a retirement account which can contribute to future and even generational financial security. Assets also strengthen day-to-day stability for families, build community, ease personal hardships, and improve standards of living for working families.  Unfortunately, many households have zero or negative net worth, increasing the potential of serious financial consequences with even a small reduction in income.

A popular response to these challenges has been the funding of Individual Developments Accounts (IDA) programs which allow those of modest means to save, build assets, and enter the financial mainstream.  Many participants, however, do not have either access to IDA programs or savings goals in line with those of traditional IDAs.

The IDEA Concept

Heartland Alliance has developed an alternative economic empowerment model to reach participants who may not qualify for an IDA program, but would benefit from the skills learned in a match savings program.  As such, the IDEA model was developed.  IDEA is a participant-based match savings model which has proven successful in reaching a broader audience and achieving comparable levels of savings because it:

  • Offers greater flexibility in savings options
  • Employs a strength-based approach
  • Utilizes a harm reduction philosophy

Challenges to Match Savings Participation

Participants are given the opportunity to choose how and where their money will be saved and how much money they will save each month.  Upon enrollment, many participants express hesitation about dealing with mainstream financial institutions for a variety of reasons:

  • Fees
  • Mismanagement of past accounts
  • Chex Systems history
  • Distrust of financial institutions
  • Misinformation about financial institutions
  • Lack of convenient location or accessibility to banks
  • Fears that the money they save will negatively impact their ability to receive public assistance, housing subsidies, etc.

Why the IDEA Model Works

Given these challenges, IDEA program participants are given several alternatives for savings which include using an existing account, opening a new account selected by the participant, or paying down an existing debt in lieu of savings. Regardless of which savings option is chosen, participants retain sole responsibility for their account, making deposits each month, and providing verification of doing so. Participants who make deposits each month for a minimum of five months, save at least $200, and attend a minimum of 10 hours of financial education will receive a 2:1 match of $400. Thus far, participants have saved more than $113,000 with an average savings rate of $530 per participant.

As a result of this alternative savings structure, participants who would normally be ineligible or hesitant to participate have learned valuable financial skills, successfully saved for their futures, and completed the IDEA program.

*Graduates of Heartland Alliance’s IDEA program were recently honored with certificates from the Illinois Saves program in a large graduation event.

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