Full report. - Social Research and Demonstration Corp

learn$ave Project: Final ReportFinally, the generally high levels of participantsatisfaction in the project suggest that similar programsoperating with similar approaches would be well receivedby the target population who takes part. Research on IDAsin the U.S. (e.g., Sherraden et al., 2000) and project reportson smaller IDAs in Canada generally share learn$ave’sfindings that participants like the program and feel theirexperience was a positive one. 3The role of delivery agentsThe focus of this last section is on the role of the variousdelivery agents involved in the project. Until now, therehas been almost no research regarding the characteristicsof service delivery approaches in IDA programs in Canadaor the United States (U.S.).Before we look at the role community-based organizations,non-profit agencies and financial institutionsplayed in the delivery of learn$ave, it is useful to reviewbriefly some of the existing proposals and models for thedelivery of IDAs.Delivery models for IDAsNon-profit community-based agencies are typicallythe primary point of contact for IDA participants in theU.S. and in Canada. These organizations are generallyresponsible for promoting the program among the targetpopulation; recruiting, screening and enrolling participants;providing case management and financial training;and supporting participants when dealing with bankstatements and administering matched withdrawals. Theagencies usually establish partnerships with financialinstitutions, but the role played by the latter has beenessentially limited to opening the IDA saving accounts andaccepting deposits and withdrawals from these accounts.Those in the IDA field who argue for a strong role forcommunity agencies argue that these agencies are neededto including hard-to-reach disadvantaged clients in theprogram.While the U.S. has a long history of delivering IDAs viamainly community agencies, programs remain small inscale. One reason often cited for the small scale of IDAprograms is their high delivery costs, largely attributedto the intensive nature of ancillary services provided bysponsoring community organizations (Schreiner, 2005).A cost study of the ADD project site in Tulsa, Oklahomafound that the cost was about $60 for every month that aparticipant was enrolled in the project, which representsabout $3 for every dollar saved by the participant(Schreiner, 2005). However, the “human factor” associatedto this mode of delivery, while costly, was highly3 See, for example, SEED Winnipeg Inc. (www.seedwinnipeg.ca/programs.htm ) andMomentum (www.momentum.org/home) on their local IDA programs.valued by participants in the project, who felt they neededpersonalized interactions and assistance to be successfulsavers (Schreiner, 2005).It is argued that financial institutions are best placedto carry out all of the financial transactions of openingaccounts, issuing statements, accepting deposits, andtransferring matched withdrawals (Schreiner, 2005). Thekey tension is between more efficient program deliverythat can be scaled-up through financial institutions,versus more responsive, higher-touch and higher-costservices offered by community organizations. Someauthors (e.g., Sherraden, 2000 and Schreiner, 2005) havesuggested a hybrid system that would combine a universal,statutory and publicly-funded system of matchedsavings accounts available through financial institutions,as well as a network of “high-touch,” intensive andcommunity-based IDA programs supported by multiplefunding organizations (including foundations and lowerlevels of governments), providing greater, though shortertermservices, and reaching fewer participants in greaterneed.One model being considered in the U.S. is to use thetax system to promote private sector investments inIDAs and to expand access and take-up of IDAs amonga larger segment of the low-income population. Onesuch approach has been codified in the draft Savings forWorking Families Act (SWFA), 4 a bill that has repeatedly(since 2000) been introduced in the U.S. Congress, andwith bipartisan support, but has never succeeded inbeing passed into law. The SWFA model would offertax credits to financial institutions to encourage theirparticipation in IDAs by reimbursing them for the costsof matching a tax-free IDA at $1 for each $1 saved (seeChapter 8 for more discussion of this approach in thecontext of the cost-effectiveness analysis). Participatingfinancial institutions would be expected to seek out andform partnerships with non-profit organizations, butthese would assume a lesser role than under current IDAmodels and presumably would focus their services onthe higher-needs segment of the low-income population.If enacted, the recent version SWFA has been touted toexpand the number of IDA accountholders in the U.S. toabout 2.7 million. In contrast with the Canadian context,it is important to note that U.S. financial institutionsare subject to annual targets under the CommunityReinvestment Act. Part of the rationale behind the SWFAmodel is that it would provide a tax-based incentiveto shape the community reinvestment choices offinancial institutions towards IDAs over other alternativecommunity giving activities. It is not clear whether a4 See description at: http://cfed.org/policy/federal_policy_advocacy/policy_highlights/ida_tax_credit_swfa/ (accessed August 23, 2010)Social Research and Demonstration Corporation Chapter 4 | 41