Take Tiffany B., a young woman who makes a compelling case for the magic of asset building and IDAs. Just a couple of years out of high school, pregnant and fleeing an abusive relationship that left her credit in tatters, Tiffany was forced to move back into her parents' home and soon found herself coping with a debilitating disease. Like a godsend, Alternatives Federal Credit Union, one of the most respected community development institutions in the country, came to Tiffany's rescue--with a dose of self-empowerment. Through her membership in Alternatives, based upstate in Ithaca, Tiffany used a portion of her $400 in savings to secure an additional $1,200 in matching grant dollars from the Alternatives' IDA program.
The Alternatives IDA was transformative for Tiffany. She leveraged Alternatives' matching money, financial education classes, and other resources to help her move forward with her life--to rent an apartment, finance her education, pay for health care and consolidate her debt. Tiffany speaks of an emotional and physical stability that she had never before experienced in her young adult life. "When I became pregnant, I had the future in mind, but I really had no idea what the future could possibly look like. I didn't know what I had to do, much less how to do it," says Tiffany. The IDA program, she adds, "was a decisive factor in my being able to find and fix things I perceived as problems in my life."
Enterprising and inspirational, Tiffany is undoubtedly an IDA success story. She is also an unwitting representative of a much larger phenomenon. Qualified to participate in the IDA program because of her $27,000-a-year job and support from her family, Tiffany is an example of how asset-building strategies like IDAs, which were originally touted as pathways out of poverty, are increasingly focused on helping those who are employed and within reach of the middle class.
Forty years after Lyndon Johnson declared a war on poverty and almost 10 years into the end of welfare as we knew it, IDAs stand as a landmark in America's dramatically shifting conversation about how to help poor Americans realize the American dream. IDAs have been largely successful in helping ordinary citizens turn a corner in their lives and build wealth. But the struggles of organizations trying to make IDAs work in the real world have muted some of the most ambitious claims of asset builders. So did the success of conservatives in limiting who could participate. After the first wave of IDAs, we still don't know what government, foundations and financial institutions ought to be doing to lift up the underclass.
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The Good Word
I first heard the gospel of Individual Development Accounts during a speaking engagement at the Yale School of Management in the mid-1990s, when I was board chair of the Central Brooklyn Federal Credit Union. During my discussion of financial service provision in low-income neighborhoods, a couple of students began to describe the wonders of a new social welfare vision. What was more disarming than the approach they described--encouraging the poor to save by offering them a sizable cash reward--was the comportment of the shiny, happy grad students who presented it. They spoke as if they had witnessed a revelation, one that promised to help turn the tide in the struggle against persistent poverty. Upon closer inspection, IDAs seemed like a pretty crude way to give the poor a leg up: Save a dollar, receive two or three more, plus interest.
