Individual Development Accounts and Banks: 

A Solid “Match” 

The more than 8,600 FDIC-insured banks and thrifts in 

the United States offer a wide variety of financial products and services through more than 94,000 banking 

offices. During the past decade, the development of 

alternative delivery channels, such as the Internet, has 

enhanced accessibility to banking products and services. Yet even with this greater access, about 10 million 

American households do not use any aspect of the 

banking system.1 An even larger number, perhaps tens 

of millions more American households, use only a 

limited number of banking services. 

Households, regardless of income level, underuse 

banking services for a variety of reasons. However, a 

large body of research provides evidence that limited 

involvement in the mainstream financial sector is 

most common among low- and moderate-income 

households.2 Although their income may be relatively 

low, these individuals hold assets and regularly 

conduct financial transactions, frequently with 

nonbank financial companies. Estimates of nonbank 

financial company transaction volume vary, but are 

as high as $250 billion annually.3 Not all of these 

revenues can be tied directly to low- and moderateincome individuals. However, these estimates are 

large enough to suggest a reasonable business case 

for insured institutions trying to attract the banking 

business of low- and moderate-income consumers. 

For most people, opening a checking or savings account 

is the first step toward involvement in the financial 

mainstream, followed by the use of credit products, 

investments, and insurance. A relatively low-risk way 

for banks to introduce low- and moderate-income 

households to the banking system is through a particular type of savings account—the Individual Development Account (IDA). This article explains how IDAs 

1 Federal Reserve Board, 2004 Survey of Consumer Finances. 2 Low- and moderate-income households earn less than 80 percent of 

the median household income for their particular geographic area, 

according to U.S. Census Bureau data. 

3 Brian Grow and Keith Epstein, “The Poverty Business: Inside U.S. 

Companies’ Audacious Drive to Extract More Profits from the Nation’s 

Working Poor,” Business Week, May 21, 2007. This article cited data 

from investment bank Stephens, Inc. 

operate, discusses banks’ experience with IDAs, and 

provides resources for bankers who want to know more 

about these programs. 

History of IDAs 

Individual development accounts are matched savings 

accounts that enable low-income families to save 

money for a particular financial goal, such as buying a 

home, paying for post-secondary education, or starting 

or expanding a small business. The framework for IDAs 

is widely believed to have emerged in the early 1990s 

through “asset-based” policy research that advocates 

asset-building programs to alleviate poverty.4 

Asset-based policy contends that traditional poverty 

programs that focus on income transfers, such as 

Temporary Assistance for Needy Families (TANF) 

payments or food stamp benefits, are necessary, but 

meet only short-term consumption needs. Asset-based 

policy proponents note that accumulating assets, such 

as contributing to a savings account or buying a home, 

over a longer time horizon creates a financial cushion 

for emergencies, which in turn generates social, 

behavioral, and psychological benefits. Armed with 

assets, an individual’s options for emerging from 

poverty and entering the financial mainstream are 

greatly enhanced. 

In 1993, Iowa was the first state to enact a law establishing IDAs. Today, 33 states (as well as Puerto Rico 

and the District of Columbia) have either laws or policies that govern the operations of IDAs (see Table 1 

on next page). Of these states, 19 are currently operating programs that are supported by state funding. 

Approximately 540 community-based and -funded 

IDA programs operate across the United States including in the 17 states without IDA laws or policies.5 

4 Michael Sherraden, Assets and the Poor: A New American Welfare 

Policy (Armonk, NY: M.E. Sharpe, Inc., 1991). 5 CFED, “Individual Development Accounts: Providing Opportunities to 

Build Assets,” January 2007. 

FDIC QUARTERLY 22 2007, VOLUME 1, NO.1 
IDAs and Banks: A Solid “Match” 

Table 1 

33 States Plus the District of Columbia and 

Puerto Rico Have Laws or Policies 

Governing IDAs 

States with Operational Other States That Have 

State-Supported IDA programsa Established IDA Policyb 

Arkansas Arizona 

Connecticut California 

District of Columbia Colorado 

Indiana Florida 

Kansas Hawaii 

Louisiana Idaho 

Maine Illinois 

Michigan Iowa 

Minnesota Maryland 

Missouri Montana 

New Hampshire New Mexico 

New Jersey Oklahoma 

North Carolina Puerto Rico 

Oregon Tennessee 

Pennsylvania Texas 

South Carolina Utah 

Vermont 

Virginia 

Washington 

Source: State IDA Policy Summary Tables, Center for Social Development, February 28, 2007. 

Notes: 

a These states are supporting IDA programs developed from policy or administrative rulemaking. 

b These states have passed IDA policy but are not currently developing or supporting IDA programs. 

How Are Banks Involved in IDA programs? 

IDA programs are generally created by nonprofit organizations or divisions of state or local government. 

However, for-profit entities, including FDIC-insured 

banks and thrifts, have also created IDA programs. 

The organization creating the IDA program, called 

the program sponsor, establishes the parameters of 

program participation (within state law or policy 

where appropriate). The program sponsor applies for 

matching funds and deposits those funds in a reserve 

account at a financial institution. Because the sponsor 

typically administers the IDA paperwork, it is sometimes called the administrator. 

The financial institution establishes and services individual savings accounts for program participants. Some 

services, such as providing periodic account statements, 

are similar to the institution’s typical savings accounts. 

However, other services, such as waiving minimum 

account balances or heightened monitoring to prevent 

premature withdrawals, may be specialized. The 

program sponsor usually assumes responsibility for allocating matching funds to individual accounts. 

The relationship between the program sponsor and the 

financial institution is commonly governed by a written 

agreement. In practice, many IDA programs involve 

partnerships of multiple nonprofit or government organizations and financial institutions. Financial institutions may provide some or all of the matching funds 

to the sponsoring organization, and also may provide 

general operational support and funding, such as 

absorbing the costs of marketing or providing financial 

education to participants. 

According to data from CFED, a nonprofit organization 

that provides a clearinghouse of information on IDAs, 

244 FDIC-insured banks and thrifts and 53 credit 

unions participated in IDA programs in 2005 (the 

most recent data available).6 

How Do IDAs Operate? 

In general, IDAs operate similarly to other types of 

“matched” savings plans, such as 401(k) retirement 

accounts.7 With an IDA, the account holder deposits 

money in a savings account, and the funds are matched 

anywhere from dollar for dollar up to eight dollars to 

one dollar, depending on the rules of the particular 

program and state law. Two or three dollars to one 

dollar is the common match range. A “ceiling” of 

dollars and time frames typically is established for the 

match amount. 

Money for the match is provided through a variety of 

public and private sources (see Charts 1 and 2 on next 

page). The U.S. Treasury, under the Assets for Independence Act of 1998 (AFI), provides most of the 

matching funds. The AFI has provided an average of 

$25 million in annual appropriations to fund IDA 

matches. As shown in Chart 1, almost 60 percent of 

IDA programs that receive funding obtain matching 

funds through the AFI. 

State programs, faith-based organizations, philanthropic 

groups, and corporations also provide matching funds. 

Banks are important contributors as well; as shown in 

6 CFED, “2005 IDA Program Survey,” 2005. 

7 At this time, unlike 401(k) plan contributions, IDA program participants are not permitted to use pretax income to fund contributions. 

FDIC QUARTERLY 23 2007, VOLUME 1, NO.1 
Charts 1 and 2 

Public Sources of Operating and Matching Funds for IDA Programs 

Percentage of Programs Receiving Funding 

Operating Source 

Matching Source 

60 

50 

40 

30 

20 

10 

0 

TANF 

Local Discretionary Spending

State Tax Credits 

State Discretionary Spending 

Department of Labor 

HUD Sources 

HHS - Community Service Block Grants 

HHS - Office of Refugee Resettlement 

HHS - Assets for Independence 

Chart 1 

Private Sources of Operating and Matching Funds for IDA Programs 

Percentage of Programs Receiving Funding 

60 

50 

40 

30 

20 

10 

0 

Chart 2 

The Federal Government Provides the Majority of IDA Matched Funds, 

but Banks Are Also Important Contributors 

Operating Source 

Matching Source 

Earned Income

Individuals 

Faith-Based Organizations

United Way 

Businesses and

Corporations 

Federal Home Loan Banks 

Banks/Financial

Institutions

Foundations 

Source: CFED, “Individual Development Accounts: Providing Opportunities to Build Assets,” January 2007. 

Note: HHS refers to the U.S. Department of Health and Human Services and HUD refers to the U.S. Department of Housing and Urban Development. 

Chart 2, they provide matching funds to about 

25 percent of IDA programs that receive funding. 

Banks also provide about 30 percent of the general 

operational funding to these programs. 

IDA participation requirements, which are based on 

state laws and policies as well as rules and requirements 

of the sponsoring organization, commonly include some 

combination of the following: 

• Maximum income levels – These levels are generally 

expressed as a percentage of the federal poverty 

guidelines or the area median income figure.8 

• Net worth – Some programs limit the level of household assets (such as a car, equity in a home, or other 

savings) that a qualified applicant owns. For example, applicants cannot participate in some programs 

if they own assets in excess of $5,000. 

8 The U.S. Department of Health and Human Services is responsible 

for determining poverty guidelines, and the U.S. Department of Housing and Urban Development is responsible for determining and 

reporting annual area median income figures. 

• Earnings – Many programs require that all or a part 

of an applicant’s savings come from earned income, 

most commonly a paycheck. However, public assistance payments, such as unemployment checks, 

TANF funds, disability payments, and Social Security, also usually are considered earnings. 

• Credit history – Poor credit or heavy debt levels may 

disqualify applicants under some programs. 

• Limitations on withdrawal – Withdrawals typically 

can only be made to buy a home, pay for education, 

or start or expand a small business. Some states 

restrict the purpose of the accounts even further, 

while others permit withdrawals for home repairs or 

automobile purchases. A prohibition period, usually 

one to three years, is common for withdrawals of 

matched funds. This period, which usually coincides 

with the length of time during which the funds are 

matched, allows time for the savings to accumulate. 

• Financial education requirements – In most cases, 

participants are required to attend financial education classes, such as the FDIC’s Money Smart 

FDIC QUARTERLY 24 2007, VOLUME 1, NO.1 
IDAs and Banks: A Solid “Match” 

curriculum.9 Participants also may receive other 

types of financial counseling or training.10 

Potential Benefits to Banks of Participating in an IDA 

Banks can use IDAs to tap into new markets by establishing relationships with individuals who may have no 

banking relationships (unbanked) or only minimal relationships with mainstream financial companies (underbanked). Estimates of the size of this market vary, but 

research indicates that a substantial portion of the 

population does not fully use the banking system. 

For example, the results of the Federal Reserve’s 2004 

Survey of Consumer Finances showed that nearly 9 

percent of American households are unbanked; they do 

not have a checking or savings account. A study by the 

Center for Financial Services Innovation (CFSI) indicates that the unbanked rate is 30 percent for low- and 

moderate-income households.11 This study also shows 

that of the 70 percent of low- and moderate-income 

households that have bank accounts, almost two-thirds 

may be considered “underbanked,” as they continue to 

use nonbank financial services.12 

These customers are considered low- and moderateincome, but they do conduct a large volume of financial transactions. For instance, the nearly 1 million 

households surveyed by the CFSI during 2003 and 

2004 bought 1.2 million money orders and cashed 

1.9 million checks per month.13 Extrapolating this 

activity across the country suggests that low- and 

moderate-income households conduct a significant 

level of transactions outside mainstream banking. 

9 Findings from a recent survey of consumers who took the FDIC’s 

Money Smart program showed a strong correlation between financial 

education and opening a bank account. Within 6 to 12 months of 

taking Money Smart, 43 percent of those without a checking account 

and 37 percent of those without a savings account opened accounts. 

See FDIC, “A Longitudinal Evaluation of the Intermediate-term Impact 

of the Money Smart Financial Education Curriculum upon Consumers’ 

Behavior and Confidence,” April 2007. 

10 The description of IDA participation requirements is adapted from 

the CFED Web site “Frequently Asked Questions” at 

http://www.cfed.org. 

11 Ellen Seidman, Moez Hababou, and Jennifer Kramer, “Getting to 

Know Underbanked Consumers: A Financial Services Analysis,” The 

Center for Financial Services Innovation, September 2005. This survey 

represented almost 1 million households in 63 low- and moderateincome tracts in three cities: Washington, D.C., Chicago, and Los 

Angeles. 

12 Ibid. 

13 Ibid. 

Banks can offer IDAs as a way of introducing customers to the mainstream financial system with a very 

simple, low-risk product—a savings account. The 

initial product may be small and perhaps not yet 

profitable. However, over time, at least some of these 

customers likely will continue the relationship and 

expand into other products, becoming profitable in 

the long run. As the goal of the IDA is often home 

purchase, further education, or small business needs, 

account holders may also choose credit products from 

the IDA-administering banks. 

In addition to establishing an initial relationship 

with new customers, banks can benefit as administrators of the master reserve account and the individual 

accounts. Banks can use the funds for general purposes 

while the customer is restricted from withdrawing the 

matched money, usually for a year or more. Establishing IDAs with direct deposit might be particularly 

beneficial, as both the saver and the financial institution are virtually assured that regular contributions 

will be made. Participants who use direct deposit are 

much more likely to be savers and remain active in 

the IDA program.14 

Intangible benefits also accrue to banks that provide 

IDAs. These programs generate goodwill throughout 

communities as well as with existing customers by 

working with local organizations to assist the needy 

and disadvantaged. Local nonprofit organizations that 

sponsor IDAs routinely recognize the efforts of their 

financial institution partners, and these initiatives 

often receive positive local press coverage. 

More tangibly, banks could receive positive consideration from financial institution regulators as their investment, lending, and service performance is evaluated 

under the Community Reinvestment Act (CRA). 

Although each bank, situation, and IDA program is 

different and would be evaluated on its own merits, 

the following are examples of how bank participation 

in IDA programs could receive positive CRA 

consideration: 

• Investment performance – A bank provides direct 

funding to IDA match programs or directly expends 

operational funds in support of an IDA program. 

14 Mark Schreiner, Margaret Clancy, and Michael Sherraden, “Saving 

Performance in the American Dream Demonstration, a National 

Demonstration of Individual Development Accounts,” Center for 

Social Development, October 2002. 

FDIC QUARTERLY 25 2007, VOLUME 1, NO.1 
• Lending performance – A bank lends to an IDA 

program sponsor or to low- and moderate-income 

program participants. 

• Service performance – A bank provides low-cost 

deposit accounts to low- and moderate-income 

program participants.15 

Do IDAs Really Work? 

A review of the effectiveness of IDAs was conducted 

by the American Dream Demonstration (ADD) from 

1997 to 2001; this survey encompassed 14 IDA 

programs across the country.16 The ADD survey was 

organized by CFED, conducted by the Center for 

Social Development, and funded by various philanthropic foundations. The following statistics demonstrate that IDAs can help low-income Americans 

enter the financial mainstream and build assets: 

• One in five IDA participants was unbanked when 

joining the program. 

• About 50 percent of participants were “savers”; that 

is, they not only opened accounts but made periodic 

deposits of at least $100. 

• The average time of participation in IDAs was 24.5 

months. 

• The average amount that participants placed in the 

accounts was $528. 

• With matched funds, the average participant had 

accumulated a total of $2,755. 

• Approximately one-third of the participants had 

made a matched withdrawal with the uses shown 

in Chart 3.17 

The ADD survey did not capture data about whether 

participants who eventually migrated to credit products used their IDA bank for credit. However, it can 

15 Depending on the context, offering IDAs may warrant consideration 

as either a retail banking service or a community development service. See Interagency Questions and Answers (Q&As) for CRA, 66 Fed. 

Reg. 36619, 36631, §.22(a)-1 (July 12, 2001), 

http://www.ffiec.gov/cra/pdf/qa01.pdf. 16 Schreiner et al. 

17 Ibid. 

Chart 3 

IDA Participants Used Their Assets Most Frequently 

to Buy Homes, but Also Made Withdrawals for 

Home Repair, to Pay for Education, and to 

Fund Small Businesses 

Percent of Participants Reporting 

Actual Uses of IDA Funds Retirement, 

7 percent 

Job Training, 

2 percent 

Home Repair, 

18 percent 

Post-secondary 

Education, 

Home Purchase, 

21 percent 

Microenterprise, 

23 percent 

28 percent 

Source: Mark Schreiner, Margaret Clancy, and Michael Sherraden, “Saving 

Performance in the American Dream Demonstration Final Report,” October 2002. 

Note: Data reflect American Dream Demonstration participants who had made a 

matched withdrawal as of December 31, 2001. 

reasonably be assumed that some did. The psychological effects of being able to save are perhaps harder 

to quantify than deepening involvement with mainstream financial companies, but are no less important. 

As Chart 4 (on next page) shows, the vast majority 

of IDA participants feel more confident about the 

future and more economically secure. This may indicate that they are on a path to financial independence and, accordingly, to establishing a long-term 

relationship with a bank. 

In addition to the national ADD study, the FDIC 

tracks the success of local IDA programs. FDIC 

Community Affairs staff routinely serves as communication facilitators between banks and nonprofit 

IDA sponsors and advises about the financial education component of IDA programs. More specifically, 

the FDIC provides access to instructor education on 

the FDIC’s Money Smart financial education curriculum. Money Smart was developed by the FDIC in 

2001 to help low- and moderate-income adults 

enhance their money management skills, understand 

basic mainstream financial services, avoid pitfalls, 

and build financial confidence to use banking services effectively.18 

18 An electronic version of Money Smart is available at 

http://www.fdic.gov. 

FDIC QUARTERLY 26 2007, VOLUME 1, NO.1 
IDAs and Banks: A Solid “Match” 

Chart 4 

IDA Participants Perceive Positive Economic Effects 

Source: Amanda Moore McBride, Margaret Lombe, and Sondra G. Beverly, “The Effects 

of Individual Development Account Programs: Perceptions of Participants,” Center for 

Social Development Working Paper 03-06, 2003. 

* Data based on 298 completed surveys of IDA participants at six American Dream 

Demonstration sites. 

Percent of Survey Respondents* 

“Because I have an IDA, I am/have...” 

Agree 

Disagree 

0 10 20 30 40 50 60 70 80 90 100 

More confident about 

the future 

More economically secure 

More likely to make education

plans for self 

More likely to make education

plans for children 

More likely to make plans

for retirement 

More likely to buy or

renovate a home 

More likely to start or

expand a business 

More likely to work or

stay employed 

The textbox on page 32 describes the outcomes of an 

IDA program facilitated by the FDIC in the Kansas 

City metro area. This program is sponsored by a local 

nonprofit, The Family Conservancy in Kansas City, and 

involves three banks, UMB Bank, N.A., U.S. Bank, 

N.A., and Emporia State Bank.19 The program has been 

successful in creating savers; as of year-end 2006, more 

than 371 individuals have successfully exited the 

program with their matched funds. Additionally, this 

program provides tangible evidence that IDA customers 

do migrate to other bank products; about half the 170 

participants who purchased a home received a mortgage 

from their IDA bank. 

Are IDAs Profitable for Banks? 

Very little empirical data exist about the profitability 

of IDAs for banks. A study conducted in 2003 by the 

Center for Community Capitalism concluded that IDA 

programs have not been subjected to robust cost-benefit analysis at banks.20 Further, it is likely that these 

institutions’ community development goals probably 

result in relaxed profitability targets in the short 

term.21 The same study noted that short-term costs, 

19 The FDIC does not expressly endorse this or any other IDA program 

or bank. This program is used only as an example. 

20 Center for Community Capitalism, “Financial Institutions and Individual Development Accounts: Results of a National Survey,” The Frank 

Hawkins Keenan Institute of Private Enterprise, The University of 

North Carolina at Chapel Hill, October 2003. 

21 Ibid. 

particularly for labor, can be high. As described below, 

federal legislation has been introduced that would 

provide tax credits to insured institutions to offset 

some of these costs, potentially accelerating the timeframe for profitability. However, taking a longer-term 

view—potentially developing long-term customers 

and “graduating” IDA participants into credit and 

other products—may be more appropriate than the 

traditional break-even analysis.22 

What Lies Ahead for IDAs? 

While IDAs have helped low- and moderate-income 

Americans transition to the financial mainstream and 

a potentially more secure future, a number of barriers 

appear to constrain IDA use on a large scale. For 

instance, as with any program that relies on donations, there is a persistent shortage of matched and 

operational funds. However, other, perhaps less obvious barriers also exist. These barriers are described 

below, along with potential solutions. 

Lack of Knowledge about IDAs – A National IDA 

Framework 

Individuals who may qualify for an IDA and banks 

that may want to participate in IDA programs may 

find it difficult to obtain critical information because 

IDAs are dispersed among many organizations. Federal 

IDA laws have been debated that would standardize 

what is currently a patchwork of several hundred 

programs operated under various state laws and 

community program parameters. Most recently, the 

Saving for Working Families Act was reintroduced in 

March 2007. This act, first introduced in 2003, would 

establish a national framework for IDAs and would 

provide $1.2 billion in tax credits to allow banks to 

offset part of the cost of opening and maintaining 

the accounts. 

No Ability to Save – Linking Taxes and Savings 

Potential IDA participants may be discouraged from 

participating because they do not believe they will be 

able or are not disciplined enough to contribute funds 

to the account. Some policymakers believe this obstacle could be overcome, at least in part, by linking tax 

refunds and savings. Generally, the same individuals 

who qualify for IDAs qualify for the Earned Income 

Tax Credit and tend to receive sizable tax refunds. 

Every year, the Internal Revenue Service processes 

22 Ibid. 

FDIC QUARTERLY 27 2007, VOLUME 1, NO.1 
refunds averaging $2,100 for more than 100 million 

taxpayers, many of whom are poor and perhaps 

underbanked.23 

In the past, banks and community and charitable 

organizations have been successful in recruiting IDA 

participants through the Voluntary Income Tax Assistance (VITA) program. Under the VITA program, 

volunteers prepare tax returns for low- and moderateincome Americans at nonprofit locations. Program 

sponsors and banks often use this opportunity to 

market IDAs to consumers, suggesting that they place 

all or a portion of their refunds in IDAs. In 2007, in 

compliance with the Pension Protection Act of 2006, 

the Internal Revenue Service began giving taxpayers 

the option of electronically splitting their tax refund 

among two or three financial institution accounts. 

Consumers now can choose to divide their refunds 

between their IDA and a checking account, for example, which would give them immediate access to some 

of the funds while allowing them to save the remainder for longer-term goals. 

The ability to split refunds will streamline the process 

of opening IDAs and may help expand the use of this 

program. A small-scale demonstration of refund splitting was conducted in the 2004 tax season by the 

Doorways to Dreams (D2D) Fund in Boston, Massachusetts. D2D is a nonprofit research firm that explores 

ways to use technology to address poverty-related issues. 

D2D used its methodology to split the refunds, with the 

following results: 

• Of the 516 tax filers given the opportunity to open 

an account to split their refunds, 27 percent 

accepted the offer, and 15 percent were able to 

participate after meeting account-opening criteria. 

• Participants chose to save 47 percent of their refunds, 

or an average of $606. This represented at least a 90 

percent increase over their existing savings. 

• Four months later, two-thirds of participants continued to save a portion of their refunds.24 

23 Anne Stuhldreher (New America Foundation) and Jennifer Tescher 

(Center for Financial Services Innovation), “Breaking the Savings 

Barrier: How the Federal Government Can Build an Inclusive Financial System,” New America Foundation, Asset Building Program, 

February 2005. 

24 Amy Brown, “Expanding Financial Services to Unbanked 

Consumers: How Tax Preparation Partnerships Can Help Bridge the 

Gap,” The Center for Financial Services Innovation, September 2005. 

Too Much Debt to Save – Linking Small-Dollar 

Credit with Savings 

Some individuals may feel that debt service payments 

on high-cost credit are too large, leaving them no 

funds to set aside in savings. On December 4, 2006, 

the FDIC released for comment the “Affordable Small 

Loan Guidelines,” which encourage banks to offer 

small-dollar credit that is affordable, yet safe and 

sound, as an alternative to short-term, high-cost 

credit, such as payday loans.25 The final Guidelines 

are expected to be issued very soon. 

As part of small-dollar loan programs, banks are 

encouraged to include a savings component, whereby 

borrowers can either set aside a percentage of the 

amount borrowed or of the periodic payment in a 

savings account. Over the long term, this approach 

can help banks develop a relationship with borrowers 

and can help borrowers build assets to lessen their 

reliance on short-term loans. Depending on the 

rules of a particular IDA program, banks may be able 

to offer customers the option to use an IDA account 

for the savings component of small-dollar loan 

programs as a means of leveraging the use of the 

match feature. 

IDA Resources for Banks 

Banks often become involved in IDA programs 

through contacts and relationships with charitable 

and other nonprofit organizations. The FDIC’s 

Community Affairs staff has developed relationships 

with local organizations and can facilitate communications between IDA sponsors and banks. The FDIC 

has also established the Alliance for Economic Inclusion (AEI), a new national initiative of broad-based 

coalitions of financial institutions, community-based 

organizations, and other partners in nine markets 

across the country to bring unbanked and underbanked individuals into the financial mainstream.26 

For more information on these initiatives, contact 

the FDIC’s Community Affairs Office in your state 

(see Table 2 on next page). 

25 The “Affordable Small Loan Guidelines” are available at 

http://www.fdic.gov. 

26 The nine markets are Chicago, Illinois; Austin/South Texas; 

Louisiana and Mississippi Gulf Coast areas; the semi-rural area of 

Alabama; Greater Boston, Massachusetts; Wilmington, Delaware; Los 

Angeles, California; Kansas City, Missouri; and Baltimore, Maryland. 

FDIC QUARTERLY 28 2007, VOLUME 1, NO.1 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IDAs and Banks: A Solid “Match” 

Table 2 (Updated Community Affairs Officer contact information can be found at http://www.fdic.gov/consumers/community/offices.html. 

Bankers who are interested in additional information on IDAs are encouraged to send an email inquiry to the Community Affairs Office for 

their state.) 

Community Affairs Officer 

FDIC Community Affairs Officers 

Division of Supervision Area of Responsibility and Consumer Protection 

Thomas E. Stokes Atlanta Regional Office Alabama 

10 Tenth Street, N.E. Florida 

Suite 800 Georgia 

Atlanta, GA 30309 North Carolina 

Phone: (678) 916-2249 (direct) South Carolina 

Phone: (800) 765-3342 (toll-free) Virginia 

West Virginia 

Timothy W. DeLessio Boston Area Office Connecticut 

15 Braintree Hill Office Park Maine 

Braintree, MA 02184 Massachusetts 

Phone: (781) 794-5632 (direct) New Hampshire 

Phone: (866) 728-9953 (toll-free) Rhode Island 

Vermont 

Michael Frias Chicago Regional Office Illinois 

500 West Monroe Street Indiana 

Suite 3300 Kentucky 

Chicago, IL 60661 Michigan 

Phone: (312) 382-6903 (direct) Ohio 

Phone: (800) 944-5343 (toll-free) Wisconsin 

Eloy A. Villafranca Dallas Regional Office Colorado 

1910 Pacific Avenue New Mexico 

20th Floor Oklahoma 

Dallas, TX 75201 Texas 

Phone: (972) 761-8010 (direct) 

Phone: (800) 568-9161 (toll-free) 

Elizabeth Kelderhouse Kansas City Regional Office Iowa 

2345 Grand Boulevard Kansas 

Suite 1200 Minnesota 

Kansas City, MO 64108 Missouri 

Phone: (816) 234-8151 (direct) Nebraska 

Phone: (800) 209-7459 (toll-free) North Dakota 

South Dakota 

Clinton Vaughn Memphis Area Office Arkansas 

5100 Poplar Avenue Louisiana 

Suite 1900 Mississippi 

Memphis, TN 38137 Tennessee 

Phone: (901) 818-5706 (direct) 

Phone: (800) 210-6354 (toll-free) 

Valerie J. Williams New York Regional Office Delaware 

20 Exchange Place District of Columbia 

4th Floor Maryland 

New York, NY 10005 New Jersey 

Phone: (917) 320-2621 (direct) New York 

Phone: (800) 334-9593 (toll-free) Pennsylvania 

Puerto Rico 

Virgin Islands 

Linda D. Ortega San Francisco Regional Office Alaska 

25 Jesse Street at Ecker Square Arizona 

Suite 902 California 

San Francisco, CA 94105 Guam 

Phone: (415) 808-8115 (direct) Hawaii 

Phone: (800) 756-3558 (toll-free) Idaho 

Montana 

Nevada 

Oregon 

Utah 

Washington 

Wyoming 

FDICQUARTERLY 29 2007, VOLUME 1, No. 1 
The following organizations are additional sources of 

information for banks that may want to participate in 

an IDA program.27 

• CFED is a nonprofit organization established in 

1979 as the Corporation for Enterprise Development (http://www.cfed.org). CFED strives to ensure 

that every person can participate in, contribute to, 

and benefit from the economy by bringing together 

community practice, public policy, and private 

markets. The CFED Web site includes IDA program 

statistics, model legal and operational documents, 

the results of scholarly research, and minutes of 

meetings and conferences in the IDA arena. 

• The Center for Social Development (CSD) is affiliated with the George Warren Brown School of 

Social Work at the Washington University in 

St. Louis, Missouri (http://gwbweb.wustl.edu/csd). 

CSD is a leading academic center of theory and 

research on asset-building strategies for low-income, 

low-asset populations. The CSD Web site includes 

the complete ADD report. 

• The Doorways to Dreams (D2D) Fund works to 

expand access to financial services, especially assetbuilding opportunities, for low-income families by 

creating, testing, and implementing innovative financial products and services (http://www.d2dfund.org). 

An online IDA software package, along with extensive information and product templates for refund 

splitting, are available on the D2D Web site. 

IDAs: Indeed a “Good” Match 

A sound business case exists for banks to develop 

strategies to attract low- and moderate-income 

customers, as these individuals are generating significant revenues for nonbank financial companies. IDAs 

are a straightforward, low-risk way to appeal to such 

customers. Although IDAs are unlikely to be profitable 

in the short term, expanding relationships with these 

customers may generate profitability over the longer 

term. In addition, other benefits accrue to banks participating in IDA programs, such as positive consideration 

during CRA examinations and goodwill in the community. If some of the barriers can be overcome, then IDA 

programs may become more widespread, providing 

additional opportunities for low-income individuals to 

join the financial mainstream and for banks to reach 

out to new customers. 

Author: Rae-Ann Miller, Special Advisor to the Director, 

Division of Insurance and Research, 

rmiller@fdic.gov 

Contributor: Susan Burhouse, Financial Economist, 

Division of Insurance and Research, 

sburhouse@fdic.gov 

The author wishes to thank Elizabeth Russell List 

(Community Affairs Officer, FDIC), Kim Lowry 

(Writer/Editor, FDIC), Vanessa Vaughn 

(Community Relations Specialist, UMB Bank, 

N.A.), Turner Pettway (Community Development Manager, U.S. Bank, N.A.), Kim Pate 

(Director, Field Development, CFED), Emily 

Appel (Program Manager, Field Development, 

CFED), and Julie Riddle (Manager, Asset Building and Family Support Programs, The Family 

Conservancy). The author wishes to extend 

special thanks to Susan Burhouse, without whose 

significant assistance this article would not have 

been completed. 

27 The FDIC does not endorse any specific Web site or program 

related to IDAs. 

FDIC QUARTERLY 30 2007, VOLUME 1, NO.1 
IDAs and Banks: A Solid “Match” 

Local Success Story – The Family Conservancy IDA Program 

Many successful IDA programs operate across the country. The FDIC has participated in a number of programs, 

often facilitating communications between sponsoring 

organizations and financial institutions and providing 

financial literacy and other technical assistance. One 

example is The Family Conservancy (TFC) in Kansas 

City, Missouri. TFC is the oldest and largest nonprofit 

social service agency in the Greater Kansas City area. 

More than 120,000 people are served annually by TFC 

programs that focus on asset building, counseling, early 

childhood education, and family support. TFC is the 

largest administrator of IDAs in the Kansas City metro 

area, offering more than 900 accounts with $1 million in 

committed funding. 

TFC recruits IDA participants from community organizations such as El Centro, an organization offering financial counseling and other services to Latino immigrants; 

Rose Brooks Center, a shelter for homeless women; and 

the Kansas Department of Social and Rehabilitation 

Services. The maximum income for participation is 200 

percent of the federal poverty level, or about $40,000 for 

a family of four. 

Participants may use account proceeds only for home 

purchase, entrepreneurship, or post-secondary education. 

Participants’ deposits are matched two for one, and there 

is a one-year prohibition on withdrawing matched funds. 

TFC applies for grants and receives funding for the match 

from a variety of sources, including the U.S. Department 

of Health and Human Services, state agencies, philanthropic foundations such as the Ewing Marion Kauffman 

Foundation, and public corporations, including banks. 

The FDIC’s Money Smart curriculum is used for TFC’s 

financial literacy training requirement. The Money Smart 

curriculum consists of ten modules and is available in 

English, Spanish, Chinese, Korean, Vietnamese, and 

Russian. TFC IDA participants must complete all ten 

modules to keep their matched funds. Money Smart 

classes are taught at TFC headquarters, as well as at the 

Rose Brooks Center and El Centro. 

U.S. Bank, N.A., and UMB Bank, N.A., administer the 

reserve and participant accounts. These banks have 

provided some direct funding to the IDA program as well 

as operational support. These banks also relaxed policies 

governing the number of years during which potential 

IDA account holders must show a clean check-writing 

record. 

The FDIC also worked with TFC to spin off ten IDA 

slots to the rural community of Emporia, Kansas, in an 

attempt to bring financial education and asset-building 

assistance to immigrants and other local individuals, 

particularly in the meatpacking industry. Emporia 

Community Housing Organization (ECHO), a community-based organization that provides low-income housing to Emporia residents, sponsors the accounts, and 

Emporia State Bank hosts the accounts. 

The TFC IDA program has produced very favorable 

results for individual participants and the banks. As of 

December 31, 2006, 

• 1,183 individuals had opened IDAs; 

• $2,722,250 in total potential participant savings, 

including matched funds, were deposited; 

• 371 individuals had successfully exited the IDA 

program; 

• 170 IDA participants purchased a home, and about 50 

percent of these participants received mortgages from 

partner banks; 

• 175 IDA participants used funds for post-secondary 

education; 

• 73 IDA participants started or expanded a small business; 

• 38 IDA participants used funds for home repairs; 

• 27 IDA participants transferred savings to an individual retirement account; 

• 7,400 hours of FDIC Money Smart financial education 

were completed; and 

• 895 individuals graduated from the Money Smart 

curriculum. 

FDIC QUARTERLY 31 2007, VOLUME 1, NO.1