FEAB 101 - Individual Development Accounts

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HARDY: Hello, and welcome to "FEAB 101." I'm your host, Mel Hardy, and "FEAB" stands for financial education and asset building.

This video series is designed to talk about financial education and asset building and the programs that go around it.

We're traveling all across this great country to meet with partner organizations to find out just what are they doing around FEAB.

Today we're in Indianapolis, Indiana, home of the Indianapolis Motor Speedway, where the Indianapolis 500 is run every year.

We're going to go over to the John H. Boner Community Center to talk to them about what they're doing around Individual Development Accounts -- IDAs.

Now, they've partnered with the Indianapolis Campaign for Financial Fitness, and they are going to talk to us exactly about what they're going to do to help their taxpayers understand asset building and financial education.

Good afternoon. We're here at the John H. Boner Center, and I'm here with Dean Johns. How are you?

JOHNS: I'm doing fine.

HARDY: Good to meet you, good to meet you. First of all, thank you so much for having us here today.

JOHNS: You're welcome.

HARDY: Really appreciate it. And tell us a little bit about the John H. Boner Community Center.

JOHNS: The John H. Boner Community Center began in 1971 as a community response to seniors.

And so we actually got our grass roots working with the senior community here on the Near Eastside of Indianapolis.

And from there, we just kind of continued to blossom.

Financial education has always been a part of what we've done. Here at the Boner Center, we offer "Pathways to Your Financial Fitness," which is a 6-week -- or 6-session financial-education training.

So it's about eight hours of your time. And we also have embedded our financial education in our Job Club, which is individuals who are kind of outside of the workforce and trying to get back in.

So, as they're really honing in on their résumé writing and their interviewing skills, we drop a little bit of financial education into things while they're doing that.

It's a real practical thing. The Boner Center has been working around asset development and financial education probably since 1994.

We were one of the original IDA programs here on the Near Eastside -- Individual Development Accounts programs.

So, the big three -- home, business, and education.

HARDY: Home, business, education. Why do IDAs and VITA go together?

JOHNS: Well, I think in order for families to grow their finances, all of this works in tandem. And so savings is absolutely a critical point.

If I could bring in Sherwyn Kerbo, our asset-development coordinator, she can kind of help explain the two.

KERBO: Hi.

HARDY: Hi, Sherwyn. How are you?

KERBO: I'm good. The IDA program is -- The key to that, it's a savings program.

So to get them started in saving, just say, "Let's just take a small portion. Let's take that $200."

HARDY: Okay.

KERBO: Then, going forward, they are just asked to save $35.

"Let's save $35 a month to save up to $400 per year, to be matched 3-to-1."

So that adds up to $1,200 a match, $400 -- a total of $1,600 per year.

HARDY: With your particular IDA program, it's a 3-to-1 match on this? That's outstanding.

JOHNS: On average, our accounts are 3-to-1. We have probably four different funding sources, at this point, that support our IDA program.

Our largest IDA program is through the state of Indiana, and we have probably about 200, 225 savers in that program over time, at varying stages of the program. Some are just spending down. Some are just starting the saving things.

We also have two Assets for Independence grants, which are federally funded IDAs. And then we have another special IDA, but it's for education only, so it's an EDA.

HARDY: Why would someone coming in, getting their taxes done, want to start an IDA?

KERBO: I think it would be, they would have at least that initial deposit for their IDA with any of their refund, that it's nothing but $35.

HARDY: Oh.

KERBO: When they're here to prove a point that they can save money from their taxes, initially that $200, $300 could immediately be put towards an IDA.

JOHNS: Yeah, they do have that initial deposit to get started, and then we can take baby steps going forward.

KERBO: I, myself, am also an IDA participant. And I have saved. I'm a 4-year graduate. Have not purchased yet, but I plan to.

HARDY: For those watching this video -- a small organization, not as many resources -- they may be looking at this, Dean, and saying, "Wow. It's a heavy lift. How could we do it?" What advice would you have for them?

JOHNS: I think, initially, partner with an organization to just kind of figure out what's going on and really understand what the needs are. And really, because they're committed to their folks, this is an absolute benefit to the customers that they're serving and help them kind of grow financially.

But partner first, and then, I think, have a dedicated staff person, if they can, to really help shepherd it.

If they wanted to write a proposal, you know, recruit some local funders to the board, maybe the federal if you don't have a state program.

But I think it's manageable if you really understand your population and what their needs are.

What other asset-development components might be out in the community that you can begin wrapping around just the VITA-site initiative, and that's really how we started, is just kind of continuing to add pieces to that.

KERBO: We do the financial education, but it would take maybe 10 more employees to do all the other pieces. And that's why, again, when Dean was talking about new partnerships, it's very important.

HARDY: Well, that was great. I want to thank our friends at the John H. Boner Community Center for talking to us today about IDAs -- Individual Development Accounts.

Until the next installment of "FEAB 101," take care.