Partners (Fall 2001)
Partners (Fall 2001)
Nancy Montoya, Community Investment Advisor, is in the New Orleans branch and serves southern Louisiana and Mississippi.
Americans have long been encouraged to gain self-sufficiency through programs that promote wealth accumulation. The Individual Development Account (IDA) was born from the idea that low-income workers could achieve better access to homeownership, post-secondary education, and self-employment opportunities by building assets through saving.
IDA programs incent participants to save by providing matching funds. With the cooperation of several local partners, the Greater New Orleans IDA Collaborative is realizing significant results as both an anti-poverty and community empowerment strategy.
In 1997, the Tulane-Xavier National Center for the Urban Community and Neighborhood Housing Services of New Orleans launched pilot IDA programs targeting residents of public housing. Both organizations enlisted the support of Hibernia National Bank to establish the residents’ savings accounts and assist with financial literacy training. Soon, United Bank and Trust joined the effort, and thus the Greater New Orleans IDA Collaborative (Collaborative) came into being.
The Collaborative is now comprised of over 35 members, including service providers, foundations, housing counseling agencies, community action agencies, public housing authorities, and other committed entities. Its objectives are threefold: (1) to share with members the experience and expertise of existing programs, (2) to develop human, financial, and infrastructure resources for their members and, (3) to expand the number of IDA programs, service providers and referrals throughout the region.
Initial funding for the Collaborative was provided by a $195,000 AHP grant through the Federal Home Loan Bank of Dallas. Hibernia, United Bank and Trust, and Whitney National Bank are providing savings accounts and matching funds. In addition, the Collaborative was awarded an Assets for Indepen-dence Act (AFIA) demonstration grant through the U.S. Department of Health and Human Services that provides a 1:1 match to private and non-federal dollars.
To date, the group has raised $175,000 in non-federal funds, which can be matched with AFIA dollars. “We like to call this a process, not a program,” says Donna Darensborg, the Collaborative’s coordinator. “We’re in this to change lives by using education as a means to help poor families work their way out of poverty.”
The process begins when a participating member refers an interested person to the Collaborative. The first step after determining eligibility is to insure that a qualified credit counseling agency obtains the client’s credit report from the three credit reporting agencies, reviews the reports in person with the client, and along with the client develops a budget and credit repair action plan. With these documents, the detailed application form and copies of income documentation in hand, the client meets with Ms. Darensborg to review their responsibilities and establish a savings account with a partner bank.
All participants are required to adhere to certain requirements of the program: stick to a monthly savings deposit goal, resolve any credit issues, and attend 12 hours of financial literacy training. Also, the participant must complete “asset-specific” training based on their specific goals, such as homeownership training, small business planning, or a counseling session with a career planner at the school of their choice. At the end of a 12-to-24 month process, the client should be “ready, willing and able” to achieve their asset-building goals.
Since its inception in October 2000, the Collaborative has enrolled 160 participants and anticipates meeting its one-year goal of enrolling 180 families. Eight families have purchased a home so far, with another 12 not too far behind.
“We know how difficult it is to develop low-income homebuyers without partnerships like the Collaborative. Not only is it a critical community development tool, it’s also a business development strategy for our affordable housing goals,” says Bernadette Johnson, mortgage banker with United Bank and Trust.
For more information please refer to the GNO IDA website at www.freeman.tulane.edu/lri/IDA/IDA_AP_main.html..