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Kentucky Domestic Violence Association Economic Justice Project

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Title: Kentucky Domestic Violence Association Economic Justice Project


1
Kentucky Domestic Violence Association Economic
Justice Project
  • Asset-Building Opportunities
  • for Survivors of Domestic Violence
  • Mary ODoherty
  • Economic Justice Project Director

2
Economic justice components
  • Free Credit Reports
  • Credit Building
  • Individual Development Accounts (IDAs)
  • Car IDAs
  • Microloan Program
  • Free Tax Preparation and EITC Outreach
  • Bankruptcy Counseling

3
I own a real house!
  • Tammy Eidson and her sons at their home in
    Ashland, Kentucky

4
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

5
IDAs How they work
  • Participation in financial education is required
  • Income qualifications
  • Match amount -- 21 is typical
  • 3 years to save

6
Christy Bailey, 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.

7
Qualified purchases
  • First home
  • Post-secondary education
  • Micro-enterprise

8
Dramatic growth
  • More than 57,000 IDA accounts today
  • Most funded by U.S. Assets For Independence
    Program under HHS
  • 540 IDA programs serve 73,000 savers
  • 8,400 new homeowners, 6,000 higher education
    purchases 5,200 small business startups
  • 33 states provide some support for IDA programs

9
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.

10
Andrea Langefeld, homeowner
11
KDVAs IDA program
  • Began in 2004
  • Nearly 200 accounts open
  • So far 118 participants have purchased assets
  • 62 homes
  • 5 small businesses capitalized
  • 51 post-secondary education

12
IDA participants saved
  • Total Participant Savings 165,715
  • Total Match Earned 325,827
  • Total Spent on Assets 491,542

13
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
  • Average credit score today is 720
  • Goal for homeownership 680 credit score but many
    have purchased homes with lower scores

14
Financial education with an emphasis on safety
  • REAP Curriculum Realizing Your Economic Action
    Plan
  • Developed by Redevelopment Opportunities for
    Women in St. Louis
  • Seeks to reduce self blame, examine feelings and
    values about money, examine economic abuse and
    create an environment of empowerment.
  • To create a realistic budget. Pay down debts,
    examine spending leaks, set financial goals and
    find creative strategies to patch income.

15
Financial education contd.
  • Allstate Foundations Moving Ahead Through
    Financial Management
  • NeighborWorks America Credit Counseling for
    Maximum Results

16
Making it safe for survivors of intimate partner
violence
  • Most participants have left their abusers
  • Wait until after divorce or bankruptcy
    proceedings are finished
  • Accounts are custodial
  • Accounts can be set up at safe address
  • Post office box, agency address, safe family
    member, or friend

17
IDA account operations
  • Eligibility Income no more than twice federal
    poverty level

18
IDA account operations, contd.
  • Savings plan agreements
  • Survivor-centered policies
  • Benefits of allowing eligible staff to enroll
  • We create monthly statements that show match

19
Myriam Ibanez, homeowner
  • Myriam Ibanez moved her family from an apartment
    in public housing to a three-bedroom frame home
    three years after opening her IDA.

20
Caseworkers helped Myriam find the confidence to
get a better job
  • Myriam was working part-time at a day care center
    when she enrolled in the IDA Program. She got a
    CNA certification and found a higher paying
    full-time job. Her income meant that she could
    afford this home in Bowling, Green, Kentucky.

21
Intensive case management
  • Deposits -- avg. 20-40
  • Getting clients to the bank
  • Making deposits for clients
  • Mailing deposits/direct deposit
  • Emergency withdrawals
  • Leave of absence
  • IDA emergency fund

22
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

23
Micro loan program
  • Loans of 200-500 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

24
Results
  • 11 survivors established or increased score
  • 6 survivors increased scores by 50 points or more
  • 1 survivor increased her score by 126 points

25
Sharon Hayes
  • As a mother of two young children, and one of
    which has special needs, Sharon Hayes credits the
    program for helping her find the will to leave
    her abusive husband two years ago. The IDA
    program has helped Sharon go back to college. In
    addition, with the help of her one-on-one credit
    coach, Sharon was able to raise her credit score
    by 126 points.

26
IDA emergency fund
  • Nearly 20,000 spent since 2004
  • To pre-empt missed deposits
  • Funded with interest earned on IDA master account
  • Utility bills, rent, security deposits, car
    repairs
  • Builds loyalty among participants

27
Earned Income Tax Credit
  • Governments largest, best-funded anti-poverty
    program
  • Created in 1970s, expanded by Reagan, Bush, and
    Clinton, with strong bipartisan support
  • President Obama recently expanded the credit
  • Includes a third qualifying child
  • Added two new rules to the definition of
    qualifying child
  • Taxes must be filed to receive the credit
  • EITC lifted 5 million above the poverty line by
    returning more than 40 billion in 2007

28
Earned Income Tax Credit, contd
  • Average refund is more than 1,500 but families
    can receive up to 5,657
  • Income limit for the credit for filers with three
    or more children is about 43,279 (48,279
    married filing jointly)

29
EITC IDAs
  • Raise awareness about predatory nature of
    high-interest refund-anticipation loans
  • In first year, EITC refund typically used to pay
    debt/repair credit
  • In second/third year, clients more likely to save
    a portion of refund in IDA account

30
Tax timeopportunity
  • EITC is responsible for the largest one-time
    infusion of cash each year for low-income,
    working families
  • Tax season is already a time of intense financial
    planning for most low-income families
  • IDA participants can triple their savings

31
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

32
Car IDAs
  • Transportation is a huge obstacle to survivors
    self-sufficiency
  • IDA matches participants savings 11
  • 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

33
Challenges
  • Getting case workers to focus on clients
    long-term needs vs. immediate needs
  • Getting programs to devote staff time for
    self-sufficiency work
  • Recruitment/account-opening strategies

34
Challenges, contd.
  • Staff
  • Sustainability
  • IDA emergency fund
  • Holiday gift cards/back-to-school gift cards

35
Want to start your own program? You need
  • A banking partner
  • Strong commitment from your executive director
  • And the hardest part finding matching funds

36
Questions, Comments??
37
For more information
  • Mary ODoherty
  • Kentucky Domestic Violence Association
  • modoherty_at_kdva.org
  • 502 209-7856
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