An Analysis of IDA Program Participation

Cäzilia Loibl, PhD., C.F.P.

Ohio State University, Department of Consumer Science

Beth Red Bird

Ohio CDC Association

See the Executive Summary here

See the Full Report here

About the Study

In April of 2007, the Ohio State University and the Ohio Community Development Corporation Association initiated a study of the long-term impact of Individual Development Accounts (IDAs) on the economic, social, and psychological well-being of former participants. IDAs are an anti-poverty program that helps low ]income families to build assets by matching savings that are used to purchase a home, start a small business, or attend school. Specifically, the study asks:

1. Does IDA program participation help individuals achieve long-term savings?

2. What factors affect long-term savings?

3. How do successful program participants differ from those who left the program prior to completion?

A mail survey was sent to more than 500 former participants who had been out of the program between six months and five years, including those who successfully completed the program (“Graduates”) and those who left the program prior to completion (“Dropouts”). The survey assessed respondent’s financial situation, ability to plan for the future, self-efficacy, and levels of financial stress. The survey sample included 465 individuals, and consisted of 279 graduates (60%) and 186 dropouts (40%).

Key Findings

Asset Purchase and Maintenance

IDA participants purchased and maintained their assets. Of those who graduated from the program

94.5% kept their assets. In contrast, only 21% of program dropouts went on purchase an asset after leaving the program.

• Of the 83 graduates who purchased a home, all but one still own that same home. Most reported that they rarely or never had difficulty making their housing payments, and most homes remained in good repair.

• Of the 23 respondents who used their funds to finance higher education, 21 were still in school or had received their degrees.

• Of the 22 graduates who used IDA funds for micro enterprise development, 18 (78%) maintained their businesses. Most started their businesses without any additional loans.

Use of Mainstream Financial Services

Program graduates reported lower levels of economic strain and a better ability to pay bills on time. Interestingly, program graduates were less optimistic about their financial futures, which may indicate that participants who completed financial education learned to more realistically appraise their financial situations. Additionally, IDA graduates were more likely to use mainstream financial products and services.

• Of program graduates, 83% continued to hold a savings account. Also, program graduates show significantly higher levels of continued saving.

• 48% of graduates opened an investment or retirement account and 78% owned a mortgage.