 Here in South Dakota, individual development accounts are becoming one of the most promising tools to enable low-income and low-wealth American families to enter the financial mainstream and save money to realize their dreams.
IDAs are matched savings accounts that enable American families to build assets for the future.
Based on the idea that all Americans should have access, through the tax code or direct expenditures, to the structures that subsidize homeownership and retirement savings of wealthier families, IDAs encourage savings efforts by offering low- and moderate-income people one-to-one, two-to-one or more generous matches for their own deposits.
IDAs reward the monthly savings of working-poor families who are trying to buy their first home, pay for post-secondary education or start a small business.
These matched savings accounts are similar to 401(k) plans and other matched savings accounts but serve the specific purpose of building assets.
Several South Dakota nonprofit organizations have established IDA programs. The Dakota Dreams Savings Fund is a joint venture among South Dakota’s community action program organizations, the South Dakota Community Foundation, Northwest Area Foundation, Citibank and the South Dakota Housing Development Authority.
The accounts require a monthly financial commitment from the participant, with the funds being matched by the South Dakota IDA Collaborative on a 2-to-1 basis.
The program also focuses on financial education, home ownership counseling and business planning long before the savings can be spent.
The South Dakota IDA Collaborative is designed to assist nearly 200 South Dakota families over the next three years.
The Four Bands Community Development Fund, based in Eagle Butte, offers another IDA program, in addition to classes in personal financial management, the use of credit and ways to build assets.
The Four Bands IDA encourages and enables individuals, including youths, to set aside money in a savings account that can work toward building an asset base and pattern of saving money.
Four Bands has partnered with Tribal Ventures, a tribal nonprofit enterprise implementing a 10-year poverty reduction program, in its IDA savers and adult financial literacy programs. Four Bands offers regular orientation workshops to help individuals learn about participation in the IDA Savers program.
Individual development accounts are a positive way to motivate individuals who may not have access to capital and resources.
These programs have the potential to strengthen families, energize communities and bolster the economy of South Dakota by empowering people with dreams.
Davis is president of South Dakota Rural Enterprise
978-2804,
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