MOKANSave Individual Development Account Conference

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MOKANSaveIndividual Development Account
Conference

• FINANCIAL INSTITUTIONS AS PARTNERS IN IDA
  PROGRAMS
• May 8-9, 2003
• Presented by
• Angie Franklin
• Communities United Credit Union
• Wichita, KS

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WHO CAN ADMINISTER AN IDA PROGRAM?

• One or more not for profit 501(c) 3 tax exempt
  organizations
• State or local government agency
• Tribal government submitting an application
  jointly with a not for profit organization
• A credit union designated as a low income or CDCU
  credit union by NCUA
• An organization designated as a community
  development financial institution (CDFI) by the
  US Treasury Dept

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 FINANCIAL INSTITUTIONS AS PARTNERS WITH
SPONSORING ORGANIZATIONS

• Qualifying financial institutions are banks or
  credit unions that offers consumer financial
  services and products, that are insured by the
  Federal Deposit insurance Corporation (FDIC) or
  the National Credit Union Administration (NCUA).
  These financial institutions have a stated and
  demonstrated commitment to the communities in
  which it does business.

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WHAT IS A LOW INCOME CREDIT UNION?

• A low income credit union (LICU) is a credit
  union designated by NCUA to serve a membership of
  which over 50 of its members annual household
  income falls at or below 80 of the national
  median household income.

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WHAT IS A COMMUNITY DEVELOPMENT CREDIT UNION?

• Community development credit unions are special
  purpose financial institutions that
• promote economic revitalization and community
  development
• have a designated target market that is either
  low income or historically underserved by
  traditional financial institutions and
• is not an entity of the state or local government

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WHAT IS A COMMUNITY DEVELOPMENT BANK?

• A community development bank (CDB) is an insured
  bank that
• has a primary purpose of providing capital to
  rebuild economically distressed communities
  through targeted lending and investments
• provides basic financial services to a targeted
  population of low income people or others who
  lack adequate access to financial services

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WHAT IS THE CDFI FUND?

• The Community Development Financial Institution
  Fund is a program administered by the U S Dept of
  Treasury to make capital grants, investments and
  awards for technical assistance to community
  development financial institutions.

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FINANCIAL INSTITUTIONS AS PARTNERS CAN PROVIDE.

• Administer and track IDA accounts
• Incentive savings match
• Financial literacy classes
• Staff support

• Personal finance workshops
• Interest bearing savings accounts
• Matching Funds
• Financial support for operating expenses

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WHAT IS A SPONSORING ORGANIZATION?

• Sponsoring organizations are not for profit
  community organizations (also can be a low income
  financial institution or community development
  credit union) whose mission is to help low-income
  individuals and families achieve economic
  independence and become more vital community
  members.
•  

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SPONSORING ORGANIZATIONS (contd)

• Establish IDA programs in order to help low
  income individuals and families become
  homeowners, develop or expand a small business or
  attend a post secondary education program

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SPONSORING ORGANIZATIONSASSISTS PARTICIPANTS IN
.

• Setting realistic short and long term personal,
  financial and asset goals
• Establishing a strategy to achieve goals
• Financial skills and knowledge to make informed
  financial decisions
• Developing and improving self discipline, self
  esteem, self confidence and assertiveness
  particularly with regard to financial matters

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IDA PROGRAMS NEED FINANCIAL INSTITUTIONS TO.

• Open new accounts
• Enhance existing accounts
• Provide funding
• Design and implement programs

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 WHY SHOULD FINANCIAL INSTITUTIONS GET
INVOLVED?

• CRA Consideration
• Positive Public Relations
• IDAs are low transaction, low cost accounts
• IDA holders are potential customers for other
  bank products
• IDAs can help rebuild communities

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DESIGNING AN IDA PROGRAM IN A FINANCIAL
INSTITUTION

• Determine the feasibility of an IDA program,
  level of interest
• Develop mission and purpose of IDA
• Select a IDA Task Force
• Identify community based organizations with
  similar mission as possible partners
• Develop and conduct Survey

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DESIGNING AN IDA PROGRAM IN A FINANCIAL
INSTITUTION (contd)

• What purposes will members save for with the IDA?
• What is the average amount that someone would
  need for this purpose?
• What is the desired length for someone to save?
• What is the appropriate amount to save per month?

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DESIGNING AN IDA PROGRAM IN A FINANCIAL
INSTITUTION (contd)

• How does it fit with other products offered by
  financial institution?
• What other sources are available in the community
  to assist account holders?
• Who will develop plan for raising operating
  expenses and match funds?
• Task force to research, write grants, seek
  funding, etc.

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DESIGNING AN IDA PROGRAM IN A FINANCIAL
INSTITUTION (contd)

• Identify partners to conduct financial literacy
  plan
• Develop policies and procedures
• Identify staff to manage IDA program
• Develop plan to market IDA program

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RESOURCES

• Contact local community based organizations or
  the national CFED office at 202-408-9788 who will
  direct you to local IDA programs in your
  community.
• To find a list of financial institutions that are
  currently participating in IDA programs
  www.idanetwork.org, click on financial
  institutions, select your state

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RESOURCES (contd)

• For more information on financial institutions
  engaging in IDAs www.cfed.org
• For more information on Community Reinvestment
  Act (CRA) www.frb.org
• For more information on Bank Enterprise Awards
  www.treas.gov/cdfi

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FINANCIAL LITERACY RESOURCES

• Financial literacy training resources
• Money Smart Program contact FDIC _at_ (202)
  942-3404
• Financial Tool Kit contact Fannie Mae Foundation
  _at_ www.fanniemaefoundation.org