individual development accounts: asset-building opportunities for survivors of domestic violence...
TRANSCRIPT
Individual Development Accounts: Asset-Building
Opportunities for Survivors of Domestic
Violence
Mary O’DohertyEconomic Justice Project Director
Kentucky Domestic Violence Association
Results so far…
• There are currently 77 individuals enrolled in KDVA’s Classic (AFI-funded) IDA program.
• In the 8 years KDVA has operated the Classic-IDA, it has helped with 266 asset purchases.
114 Education
121Homes
31Small
Business
Economic Abuse• Examples:
• Lack of access to financial resources• Damage to credit• Debt accumulation• Identity theft and fraud
•Economic dependency is one of the strongest predictors of the decision to remain, leave, or return to abusive relationship.
•Leaving an abusive relationship is a process, not an event.
Asset building
• Idea came from Michael Sherraden: Assets and the Poor: A New American Welfare Policy in 1991
• Welfare reform was in national spotlight
• Private foundations provided funds to test idea
• Assets for Independent Act passed in 1998 with broad bipartisan support
• Sherraden argued that welfare policy failed to recognize a tenet of middle class life by focusing on income.
Shift focus from income to asset
ownership• Income (TANF, SSI, SSDI) an important
part of safety net, but only asset ownership increases economic stability and provides hope for the future.
• People with assets have more options in life and can pass on status and opportunities for future generations.
• Income helps families get by. Assets help families get ahead
Christy Wooldridge, homeowner
Five years before she bought this home, Christy Bailey was a methamphetamine addict, married to an abusive husband and homeless. She hit bottom when she lost custody of her three children. Today Christy and her four-year-old daughter, Serenity, live in their own three bedroom home in Owensboro, Kentucky.
Christy Bailey: tax-paying citizen
Director of Operations at the Boulware Mission in Owensboro
• Not eligible for the EITC anymore
IDAs: How they work
• Participation in financial education is required
• Must have EARNED income & be income-eligible (200 percent of the federal poverty level)
• Match amount -- 2:1, 3:1 or 4:1. KDVA’s match is 4:1
• 3 years to save
• Most IDAs are federally funded
Qualified Purchases-Federally funded
IDAs• First home
• Post-secondary education
• Micro-enterprise
• Transfer to dependent (usually for education)
Meet our first homeowner
Andrea Langefeld: “The IDA program is a great program, but it is something that you have to work for. You have to have ambition.”
Andrea Langefeld, homeowner
Car IDA program
• Began 2009
• Privately funded
• Up to $2,000 in savings matched 1 : 1
• Participants finish with $4,000
• Designed with input from advocates who wanted to avoid car payments
Car IDAs
• Transportation is a huge obstacle to survivor’s self-sufficiency
• IDA matches participant’s savings 1:1 • Participant saves $2,000 and earns $2,000 in
matched funds for a total of $4,000
• Six months to two-year program
• Earned income not required
• Stepping stone to opening a federally funded IDA
Car IDAs
• 86 IDAs opened
• 30 cars purchased
• Participants required to complete “Car Maintenance 101” and a Car-buying class
• Most have purchased cars outright only a few have financed their purchases
Car IDA results
86 car IDAs opened; 30 purchased
Financial education
• Credit report pulled when account is opened provides framework for one-on-one economic advocacy
• Year 1: monthly meetings
• Year 2 & 3: can meet quarterly
• Goal for homeownership: 680 credit score but many have purchased homes with lower scores
Intensive One-on-One Support
• Deposits -- avg. $20-$40
• Getting clients to the bank
• Making deposits for clients
• Mailing deposits/direct deposit
• Emergency withdrawals
• Leave of absence
Emergency Fund
Christa McMichael
• Moved to Kentucky in 2005• Received TANF, Ready to Work• Credits 2 advocates: TANF worker & IDA advocate• Financial educations classes & budgeting instruction• Monthly peer support group meetings were key• Child care & dinner for kids at monthly group mtgs. • Education IDA helped her become an LPN • Homeownership IDA, bought a home in Oct. 2009
18
Christa McMichael, LPN,
AFI IDAs for Education, HomeEducation IDA Year One Year Two Year Three Total
Indiv. Savings 360 890 1,250
AFI & Other Match-Education
720 1,780 2,500
Total 1,080 2,670 3,750
Home IDA Year One Year Two Year Three Total
Indiv. Savings 2,000 2,000
AFI & Other Match
4,000 4,000
Total 6,000 6,000
Credit as an asset
• Credit score = financial resume
• Good scores gives survivors access to jobs and rental housing
• People with good credit ratings will pay $250,000 less in interest over lifetimes
• To improve scores participants must use credit wisely
Micro loan program
• Loans of $200-$2,000 repaid over 12 months
• KDVA reports payments to credit bureaus
• Loans secured with IDAs
• Goal: Increase scores by 50-100 points after 12 on-time payments
• 82 loans made.
• 14 loans repaid with IDA funds.
Results
• 33 survivors increased scores by 30 points or more
• 10 survivors increased their scores by more than 100 points
• 8 established a credit score
Sharon Hayes
As the mother of two young children, Sharon Hays could not see the way out of her abusive marriage. Two years ago, with the help of economic empowerment programs that put her on the road to financial independence, she found the will to leave her husband. The IDA program has helped Sharon go back to college, and with the help of her one-on-one credit coach, Sharon was able to raise her credit score by 126 points.
Asset purchase
• Check that mortgage terms are not predatory
• Check sent directly to college, mortgage company, small business vendors
• Home purchase checklist
• Documents terms of mortgage
• Compares mortgage payment to rent payment
• Down payment assistance
“I own a real house!”
Tammy Eidson and her sons at their home in Ashland, Kentucky
Questions, Comments??
For more infortmation:
Mary O’Doherty
Kentucky Domestic Violence Association
502-209-7856