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IDAs and the American Dream Demonstration

There is also a growing research literature on asset-based antipoverty strategies. The Down payments on the American Dream Policy Demonstration (ADD) was the first large-scale test of the efficacy of individual development accounts. IDAs are savings accounts that help low-income individuals save for the purchase of life-changing assets – a first home, a college degree, or capital to start a business. IDAs match accountholders' savings contributions toward approved needs and provide savers financial education.

The ADD's successful delivery of IDAs entailed a partnership between a wide range of community organizations and private financial institutions offering a few hundred accounts a year along with basic and asset-specific financial training. Over its six-year course, ADD created 2,364 accounts in fourteen sites, generated extensive documentation of their effects, and stimulated the development of a national movement.[1] ADD demonstrated that assets “change people's heads" by increasing the expectations, work, confidence, and economic engagement of accountholders and their families. Ninety-three percent of accountholders said they were more confident of the future, 84 percent more economically secure, 85 percent more in control of their lives, 85 percent more likely to buy a home, and 57 percent more likely to start a business.[2]

While the evaluation of ADD continues, much has been learned. Indeed, ADD has largely established the hypothesis that it began with: that poor people can and will save if offered the right combination of incentives, access, and institutional supports. Low-income people, regardless of race, age, gender, or education and whether employed, unemployed, or receiving welfare, can and will take advantage of the asset-building opportunity provided by IDAs. Neither income, gender, nor participation in the welfare system are good predictors of the likelihood of saving or the level of savings.

  • [1] These findings are drawn from CFED, Robert Friedman, Hope in Concrete Form (2005), pp. 3-8.
  • [2] Ibid.
 
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