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Confidence, Competence, Connections, and – Capital

In 1987, the Mott Foundation asked the Corporation for Enterprise Development (CFED) to identify the elements of effective economic opportunity strategies. After studying a wide variety of strategies across the nation – housing, business, organizing, training, employment, education – the researchers concluded that all successful initiatives built confidence, competence, and connections (Noftdurth and Dyer 1990; Okagaki 1988). The three C's have great relevance to today's as- set-building and community renewal efforts.

Why are confidence and competence so important? The poor are often caught in a vicious cycle of low wages, little education, bad role models, and weak links to the wider mainstream economy. The savings process initiated through ID As breaks the cycle and builds confidence step by step – by each expense avoided because it is merely “a want, not a need" and by each deposit rewarded through deposit slips and bank account statements.

After a few months during which savings grow and are matched, there is an unmistakable change in accountholders' self-esteem and self-confidence: even though achieving the asset goal is months or years away, accountholders know that they can get there simply by continuing to do what they have been doing. The money they have accumulated provides measurable evidence of their success in controlling their economic lives.

But IDA programs accomplish even more than that. Through basic financial education and asset-specific training, IDA programs provide an opportunity for accountholders to build critical knowledge – skills and practices ranging from savings and debt reduction to credit repair to preparing a budget and balancing a checkbook. IDA accountholders come to know themselves much better too. They become clearer on what they value, want, and need and on the behavior that corresponds to those goals.

Which brings us to connections: through IDAs, accountholders establish relationships with financial institutions and become accustomed to making deposits and transacting business. Classes introduce accountholders to bankers, financial planners, investment managers, real estate brokers, entrepreneurs, and counselors. Accountholders may visit home sales, employment fairs, and college expos. In a very concrete way, IDAs invite people to live in the financial future, to consider what they most want and need: a house, a business, or an education.

To the three C's we add a fourth: capital. IDAs mobilize the savings of working families and, in matching them, create a powerful, though modest, fund for selfinvestment. Capital anchors the other three C's and measures progress in simple numbers. Therefore, the most successful initiatives build confidence, competence, connections, and capital.

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