Individual Development Accounts (IDAs) are subsidized matched savings programs, generally for low and moderate income individuals and families. Participants deposit money into an IDA and savings are matched by program sponsors. To retain matching funds, withdrawals from the IDA must be used for qualified expenditures such as home purchases, postsecondary education, or small business development. Programs are often sponsored by government agencies and run and funded through partnerships between financial institutions and nonprofit organizations that already provide services to potential participants1.
Expected Beneficial Outcomes (Rated)
Increased asset accumulation
Other Potential Beneficial Outcomes
Increased college enrollment
Evidence of Effectiveness
There is some evidence that Individual Development Accounts (IDAs) facilitate modest asset accumulation in the short-term among low income households, especially those with particularly low wealth2, 3, 4, 5. However, additional evidence is needed to confirm effects.
Studies of early IDAs and initial assessments of more recent programs indicate that low income participants can save, generally small amounts2, 4, 5. While some participants withdraw their savings for unqualified purposes, losing the match6, others use their savings and matched funds for qualified purchases. Participants in a Tulsa-based IDA program who were renters at program start, for example, increased homeownership four years after entering the program3, though non-participants had similar rates of homeownership at 10 years7. IDA homebuyers may be more likely to take out government-insured loans than higher interest or subprime loans, and foreclosure rates may be lower for IDA participants than for other low income homebuyers8. However, IDA participation may not increase assets and savings over the long-term9, 10.
IDA participation may increase postsecondary enrollment among those saving for higher education11. An assessment of participants in Tulsa, Oklahoma, suggests no effects, positive or negative, on mental health 10 years after initial participation12.
Financial education, peer group meetings, match rates, direct deposit, and monthly savings targets appear to increase the success of IDA programs13. High intensity IDA programs may not be a cost-effective means of encouraging saving; an evaluation of one of the American Dream Demonstration sites, a four year, county-level IDA program in Tulsa, Oklahoma, estimates an average of $3 in program costs for every $1 saved by the 471 participants14.
Impact on Disparities
Only 11 states and Washington DC funded Individual Development Account (IDA) programs in 20171.
Non-governmental organizations can support IDAs; for example, the Jim Casey Youth Opportunities Initiative’s Opportunity Passport IDA program provides funding for programs for youth transitioning out of foster care in many states15.
The federal Assets for Independence program, authorized in 1998, has historically been the largest source of IDA funding in the US, supporting programs in 49 states and Washington DC through competitive grants12. However, funding has been suspended since fiscal year 201616.
CBPP-McNichol 2004 - McNichol L, Springer J. State policies to assist working-poor families. Washington, DC: Center on Budget and Policy Priorities (CBPP); 2004.
US DHHS-AFI Resource Center - US Department of Health and Human Services (US DHHS), Administration for Children & Families (ACF). Assets for Independence (AFI) Resource Center.
Prosperity Now-IDA - Prosperity Now. Individual Development Accounts (IDA).
Prosperity Now-IDA program map - Prosperity Now. Find an IDA program.
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1 Prosperity Now-State IDA - Prosperity Now. Individual Development Accounts (IDA): What states can do.
2 Urban-Mills 2016 - Mills GB, McKernan SM, Ratcliffe C, et al. Building savings for success: Early impacts from the Assets for Independence program randomized evaluation. Washington, DC: The Urban Institute; 2016.
3 Grinstein-Weiss 2008* - Grinstein-Weiss M, Lee JS, Greeson JKP, et al. Fostering low-income homeownership through individual development accounts: A longitudinal, randomized experiment. Housing Policy Debate. 2008;19(4):711-739.
4 Huang 2010a - Huang J. Effects of Individual Development Accounts (IDAs) on household wealth and saving taste. Research on Social Work Practice. 2010;20(6):582-90.
5 Richards 2011 - Richards KV, Thyer BA. Does Individual Development Account participation help the poor? A review. Research on Social Work Practice. 2011;21(3):348–62.
6 Mills 2008* - Mills G, Gale WG, Patterson R, et al. Effects of Individual Development Accounts on asset purchases and saving behavior: Evidence from a controlled experiment. Journal of Public Economics. 2008;92(5-6):1509-30.
7 Grinstein-Weiss 2013a* - Grinstein-Weiss M, Sherraden M, Gale WG, et al. Long-term impacts of individual development accounts on homeownership among baseline renters: Follow-up evidence from a randomized experiment. American Economic Journal: Economic Policy. 2013;5(1):122-145.
8 McKernan 2011* - McKernan SM, Rademacher I, Ratcliffe C, et al. Weathering the storm: How have IDA homebuyers fared in the foreclosure crisis? Housing Policy Debate. 2011;21(4):605-625.
9 Grinstein-Weiss 2015a* - Grinstein-Weiss M, Sherraden M, Gale WG, et al. Effects of an individual development account program on retirement saving: Follow-up evidence from a randomized experiment. Journal of Gerontological Social Work. 2015;58(6):572-589.
10 Rothwell 2013* - Rothwell DW, Sultana N. Cash-flow and savings practices of low-income households: Evidence from a follow-up study of IDA participants. Journal of Social Service Research. 2013;39(2):281-292.
11 Grinstein-Weiss 2013* - Grinstein-Weiss M, Sherraden M, Gale WG, et al. Long-term effects of Individual Development Accounts on postsecondary education: Follow-up evidence from a randomized experiment. Economics of Education Review. 2013;33:58–68.
12 Rohe 2017* - Rohe WM, Key C, Grinstein-Weiss M, Schreiner M, Sherraden M. The impacts of individual development accounts, assets, and debt on future orientation and psychological depression. Journal of Policy Practice. 2017;16(1):24-45.
13 Grinstein-Weiss 2010* - Grinstein-Weiss M, Chowa GAN, Casalotti AM. Individual Development Accounts for housing policy: Analysis of individual and program characteristics. Housing Studies. 2010;25(1):63-82.
14 WU CSD-Schreiner 2004 - Schreiner M. Program costs for Individual Development Accounts: Final figures from CAPTC in Tulsa. Saint Louis: Center for Social Development, George Warren Brown School of Social Work, Washington University in St. Louis; 2004.
15 Urban-Edelstein 2014 - Edelstein S, Lowenstein C. Supporting youth transitioning out of foster care, issue brief 2: Financial literacy and asset building programs. Washington, DC: The Urban Institute; 2014.
16 US DHHS-AFI Resource Center - US Department of Health and Human Services (US DHHS), Administration for Children & Families (ACF). Assets for Independence (AFI) Resource Center.
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