are formally committed to the project as matching
contributions.
‘‘(5) ADEQUACY OF PLAN FOR PROVIDING IN-
FORMATION
FOR
EVALUATION.—The adequacy of
the plan for providing information relevant to an
evaluation of the project.
‘‘(6) OTHER FACTORS.—Such other factors rel-
evant to the purposes of this part as the Secretary
may specify.
‘‘(d) PREFERENCES.—In considering an application
to conduct a demonstration project under this part, the
Secretary shall give preference to an application that—
‘‘(1) demonstrates the willingness and ability to
select individuals described in section 692 who are
predominantly from households in which a child (or
children) is living with the child’s biological or adop-
tive mother or father, or with the child’s legal guard-
ian;
‘‘(2) provides a commitment of non-Federal
funds with a proportionately greater amount of such
funds committed by private sector sources; and
‘‘(3) targets such individuals residing within 1
or more relatively well-defined neighborhoods or
communities (including rural communities) that ex-
perience high rates of poverty or unemployment.
‘‘(e) APPROVAL.—Not later than 9 months after the
date of enactment of this part, the Secretary shall, on a
competitive basis, approve such applications to conduct
demonstration projects under this part as the Secretary
deems appropriate, taking into account the assessments
required by subsections (c) and (d). The Secretary is en-
couraged to ensure that the applications that are approved
involve a range of communities (both rural and urban) and
diverse populations.
‘‘(f) CONTRACTS WITH NONPROFIT ENTITIES.—The
Secretary may contract with an entity described in section
501(c)(3) of the Internal Revenue Code of 1986 and ex-
empt from taxation under section 501(a) of such Code to
conduct any responsibility of the Secretary under this sec-
tion or section 696 if—
‘‘(1) such entity demonstrates the ability to
conduct such responsibility; and
‘‘(2) the Secretary can demonstrate that such
responsibility would not be conducted by the Sec-
retary at a lower cost.
‘‘SEC. 690. DEMONSTRATION AUTHORITY; ANNUAL GRANTS.
‘‘(a) DEMONSTRATION
AUTHORITY.—If the Sec-
retary approves an application to conduct a demonstration
project under this part, the Secretary shall, not later than
10 months after the date of enactment of this part, au-
thorize the applicant to conduct the project for 5 project
years in accordance with the approved application and the
requirements of this part.
‘‘(b) GRANT AUTHORITY.—For each project year of
a demonstration project conducted under this part, the
Secretary may make a grant to the qualified entity author-
ized to conduct the project. In making such a grant, the
Secretary shall make the grant on the first day of the
project year in an amount not to exceed the lesser of—
‘‘(1) the aggregate amount of funds committed
as matching contributions by non-Federal public or
private sector sources; or
‘‘(2) $1,000,000.
‘‘SEC. 691. RESERVE FUND.
‘‘(a) ESTABLISHMENT.—A qualified entity under this
part, other than a State or local government agency, or
a tribal government, shall establish a Reserve Fund which
shall be maintained in accordance with this section.
‘‘(b) AMOUNTS IN RESERVE FUND.—
‘‘(1) IN GENERAL.—As soon after receipt as is
practicable, a qualified entity shall deposit in the Re-
serve Fund established under subsection (a)—
‘‘(A) all funds provided to the qualified en-
tity by any public or private source in connec-
tion with the demonstration project; and
‘‘(B) the proceeds from any investment
made under subsection (c)(2).
‘‘(2) UNIFORM
ACCOUNTING
REGULATIONS.—
The Secretary shall prescribe regulations with re-
spect to accounting for amounts in the Reserve
Fund established under subsection (a).
‘‘(c) USE OF AMOUNTS IN THE RESERVE FUND.—
‘‘(1) IN GENERAL.—A qualified entity shall use
the amounts in the Reserve Fund established under
subsection (a) to—
‘‘(A) assist participants in the demonstra-
tion project in obtaining the skills (including
economic literacy, budgeting, credit, and coun-
seling) and information necessary to achieve
economic self-sufficiency through activities re-
quiring qualified expenses;
‘‘(B) provide deposits in accordance with
section 694 for individuals selected by the quali-
fied entity to participate in the demonstration
project;
‘‘(C) administer the demonstration project;
and
‘‘(D) provide the research organization
evaluating the demonstration project under sec-
tion 698 with such information with respect to
the demonstration project as may be required
for the evaluation.
‘‘(2) AUTHORITY TO INVEST FUNDS.—
‘‘(A) GUIDELINES.—The Secretary shall
establish guidelines for investing amounts in the
Reserve Fund established under subsection (a)
in a manner that provides an appropriate bal-
ance between return, liquidity, and risk.
‘‘(B) INVESTMENT.—A qualified entity
shall invest the amounts in its Reserve Fund
that are not immediately needed to carry out
the provisions of paragraph (1), in accordance
with the guidelines established under subpara-
graph (A).
‘‘(3) LIMITATION ON USES.—Not more than 9.5
percent of the amounts provided to a qualified entity
under section 698(b) shall be used by the qualified
entity for the purposes described in subparagraphs
(A), (C), and (D) of paragraph (1), of which not less
than 2 percent of the amounts shall be used by the
qualified entity for the purposes described in para-
graph (1)(D). If 2 or more qualified entities are
jointly administering a project, no qualified entity
shall use more than its proportional share for the
purposes described in subparagraphs (A), (C), and
(D) of paragraph (1).
‘‘(d) UNUSED FEDERAL GRANT FUNDS TRANS-
FERRED TO THE SECRETARY WHEN PROJECT TERMI-
NATES.—Notwithstanding subsection (c), upon the termi-
nation of any demonstration project authorized under this
section, the qualified entity conducting the project shall
transfer to the Secretary an amount equal to—
‘‘(1) the amounts in its Reserve Fund at time
of the termination; multiplied by
‘‘(2) a percentage equal to—
‘‘(A) the aggregate amount of grants made
to the qualified entity under section 698(b); di-
vided by
‘‘(B) the aggregate amount of all funds
provided to the qualified entity by all sources to
conduct the project.
‘‘SEC. 692. ELIGIBILITY FOR PARTICIPATION.
‘‘(a) IN GENERAL.—Any individual who is a member
of a household that is eligible for assistance under the
State temporary assistance for needy families program es-
tablished under part A of title IV of the Social Security
Act (42 U.S.C. 601 et seq.), or that meets each of the
following requirements shall be eligible to participate in
a demonstration project conducted under this part:
‘‘(1) INCOME
TEST.—The adjusted gross in-
come of the household does not exceed the earned in-
come amount described in section 32 of the Internal
Revenue Code of 1986 (taking into account the size
of the household).
‘‘(2) NET WORTH TEST.—
‘‘(A) IN GENERAL.—The net worth of the
household, as of the end of the calendar year
preceding the determination of eligibility, does
not exceed $10,000.
‘‘(B) DETERMINATION OF NET WORTH.—
For purposes of subparagraph (A), the net
worth of a household is the amount equal to—
‘‘(i) the aggregate market value of all
assets that are owned in whole or in part
by any member of the household; minus
‘‘(ii) the obligations or debts of any
member of the household.
‘‘(C) EXCLUSIONS.—For purposes of de-
termining the net worth of a household, a
household’s assets shall not be considered to in-
clude the primary dwelling unit and 1 motor ve-
hicle owned by the household.
‘‘(b) INDIVIDUALS UNABLE TO COMPLETE
THE
PROJECT.—The Secretary shall establish such regulations
as are necessary, including prohibiting future eligibility to
participate in any other demonstration project conducted
under this part, to ensure compliance with this part if an
individual participating in the demonstration project
moves from the community in which the project is con-
ducted or is otherwise unable to continue participating in
that project.
‘‘SEC. 693. SELECTION OF INDIVIDUALS TO PARTICIPATE.
‘‘From among the individuals eligible to participate
in a demonstration project conducted under this part, each
qualified entity shall select the individuals—
‘‘(1) that the qualified entity deems to be best
suited to participate; and
‘‘(2) to whom the qualified entity will provide
deposits in accordance with section 694.
‘‘SEC. 694. DEPOSITS BY QUALIFIED ENTITIES.
‘‘(a) IN GENERAL.—Not less than once every 3
months during each project year, each qualified entity
under this Act shall deposit in the individual development
account of each individual participating in the project, or
into a parallel account maintained by the qualified en-
tity—
‘‘(1) from the non-Federal funds described in
section 689(c)(4), a matching contribution of not
less than $0.50 and not more than $4 for every $1
of earned income (as defined in section 911(d)(2) of
the Internal Revenue Code of 1986) deposited in the
account by a project participant during that period;
‘‘(2) from the grant made under section 690(b),
an amount equal to the matching contribution made
under paragraph (1); and
‘‘(3) any interest that has accrued on amounts
deposited under paragraph (1) or (2) on behalf of
that individual into the individual development ac-
count of the individual or into a parallel account
maintained by the qualified entity.
‘‘(b) LIMITATION ON DEPOSITS FOR AN INDIVID-
UAL.—Not more than $2,000 from a grant made under
section 690(b) shall be provided to any 1 individual over
the course of the demonstration project.
‘‘(c) LIMITATION
ON DEPOSITS
FOR
A HOUSE-
HOLD.—Not more than $4,000 from a grant made under
section 690(b) shall be provided to any 1 household over
the course of the demonstration project.
‘‘(d) WITHDRAWAL OF FUNDS.—The Secretary shall
establish such guidelines as may be necessary to ensure
that funds held in an individual development account are
not withdrawn, except for 1 or more qualified expenses,
or for an emergency withdrawal. Such guidelines shall in-
clude a requirement that a responsible official of the quali-
fied entity conducting a project approve such withdrawal
in writing. The guidelines shall provide that no individual
may withdraw funds from an individual development ac-
count earlier than 6 months after the date on which the
individual first deposits funds in the account.
‘‘(e) REIMBURSEMENT.—An individual shall reim-
burse an individual development account for any funds
withdrawn from the account for an emergency withdrawal,
not later than 12 months after the date of the withdrawal.
If the individual fails to make the reimbursement, the
qualified entity administering the account shall transfer
the funds deposited into the account or a parallel account
under section 694 to the Reserve Fund of the qualified
entity, and use the funds to benefit other individuals par-
ticipating in the demonstration project involved.
‘‘SEC. 
695. 
LOCAL 
CONTROL 
OVER 
DEMONSTRATION
PROJECTS.
‘‘A qualified entity under this part, other than a
State or local government agency or a tribal government,
shall, subject to the provisions of section 697, have sole
authority over the administration of the project. The Sec-
retary may prescribe only such regulations or guidelines
with respect to demonstration projects conducted under
this part as are necessary to ensure compliance with the
approved applications and the requirements of this part.
‘‘SEC. 696. ANNUAL PROGRESS REPORTS.
‘‘(a) IN GENERAL.—Each qualified entity under this
part shall prepare an annual report on the progress of the
demonstration project. Each report shall include both pro-
gram and participant information and shall specify for the
period covered by the report the following information:
‘‘(1) The number and characteristics of individ-
uals making a deposit into an individual develop-
ment account.
‘‘(2) The amounts in the Reserve Fund estab-
lished with respect to the project.
‘‘(3) The amounts deposited in the individual
development accounts.
‘‘(4) The amounts withdrawn from the individ-
ual development accounts and the purposes for
which such amounts were withdrawn.
‘‘(5) The balances remaining in the individual
development accounts.
‘‘(6) The savings account characteristics (such
as threshold amounts and match rates) required to
stimulate participation in the demonstration project,
and how such characteristics vary among different
populations or communities.
‘‘(7) What service configurations of the quali-
fied entity (such as peer support, structured plan-
ning exercises, mentoring, and case management) in-
creased the rate and consistency of participation in
the demonstration project and how such configura-
tions varied among different populations or commu-
nities.
‘‘(8) Such other information as the Secretary
may require to evaluate the demonstration project.
‘‘(b) SUBMISSION OF REPORTS.—The qualified entity
shall submit each report required to be prepared under
subsection (a) to—
‘‘(1) the Secretary; and
‘‘(2) the Treasurer (or equivalent official) of the
State in which the project is conducted, if the State
or a local government or a tribal government com-
mitted funds to the demonstration project.
‘‘(c) TIMING.—The first report required by sub-
section (a) shall be submitted not later than 60 days after
the end of the calendar year in which the Secretary au-
thorized the qualified entity to conduct the demonstration
project, and subsequent reports shall be submitted every
12 months thereafter, until the conclusion of the project.
‘‘SEC. 697. SANCTIONS.
‘‘(a) AUTHORITY TO TERMINATE DEMONSTRATION
PROJECT.—If the Secretary determines that a qualified
entity under this part is not operating the demonstration
project in accordance with the entity’s application or the