INDIVIDUAL
DEVELOPMENT ACCOUNTS:
PRESIDENT CLINTON EFFECTIVELY COMPLETES
1992 COMMUNITY EMPOWERMENT AGENDA
"It's called an Individual Development Account. It would encourage
poor Americans to set money aside in special savings accounts
that they can use for their education, their training
or starting a small business."
Bill Clinton
September 16, 1992
Today, President Clinton Signs into
Law the Human Services Reauthorization Act Which Includes The Individual
Development Act Demonstration Program The President Called for in 1992.
In 1992, Bill Clinton proposed to "establish Individual Development
Accounts (IDAs) to help low-income Americans save, and create new private-sector
opportunities." President Clinton included Individual Development
Accounts in his 1994 Welfare Reform proposal. The 1996 Welfare Reform
law allowed States to use welfare reform block grants to establish IDAs.
The Human Services bill, for the first time, directly authorizes Federal
funds for IDAs, and this year's budget includes $10 million to get this
demonstration off the ground. The fulfillment of the President's 1992
promise effectively completes President Clinton's 1992 community empowerment
agenda.
An Asset-Based Approach To Help Low-Income
Americans Get Ahead. Fully one-half of all Americans have either
no, negligible, or negative assets available for investments. Low-income
individuals and families, whether working or on welfare, should be encouraged
to develop savings and assets. IDAs will help low-income families achieve
greater independence and economic wellbeing by providing incentives
to save for a first home, education and training, or to start a new
business.
Highlights of the IDA Demonstration
Included in the Legislation:
- Establishes a five year, $125 million
demonstration program to establish Individual Development Accounts
(IDAs) for more than 50,000 people.
- For each dollar deposited into the
IDA by a low-income family, the administering agency would provide
a match of between $1 and $8.
- IDA investments could be withdrawn
for three purposes: (1) purchase of a first home, (2) postsecondary
education and training; and (3) the creation of a new small business.
In cases of hardship -- such as job loss or serious medical illness
-- individuals are allowed to withdraw their own savings, but would
lose the matching contributions.
- Households that are either eligible
for Temporary Assistance for Needy Families (TANF) or that qualify
for the Earned Income Tax Credit and have a net worth below $10,000
are eligible to participate in this demonstration.
- Grants will be provided to local entities
-- including non-profits -- to administer the IDA demonstration. The
bill gives a preference to entities that are able to attract pledges
of substantial non-Federal, especially private sector, funding to
serve as a match for the Federal dollars.
- Requires that there be a rigorous
evaluation of the program to determine what works and what does not
in implementing Individual Development Accounts.
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Note: All HHS press releases, fact sheets and other press materials
are available at http://www.hhs.gov/news.
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The page was last updated:
October 22, 2003
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