|By Kevin Robinson-Avila, Albuquerque Journal, N.M.|
|McClatchy-Tribune Information Services|
Porter's organization focuses on asset building to help low-income families in
"We believe in the concept that income gets you by, but assets get you ahead," she said. "Asset building creates a safety net for people to leverage more opportunities. It seeds dreams."
To help people build assets, Prosperity Works manages a statewide program that provides free financial-management training for individuals, plus "matching savings accounts" that allow participants to receive up to
Those funds, known as individual development accounts, or IDAs, allow people to receive dollar-for-dollar grants on up to
Those things help program graduates embark on a long-term road to self-improvement, Porter said.
"It's a coach-based empowerment model that helps people build financial stability and create opportunities for themselves," she said.
IDA participation is limited to individuals who earn up to 200 percent of the federal poverty level, or
But the free training in financial management and asset building is open to everyone.
"We reserve 25 percent of seats in the classes for the community at large," Porter said.
Graduates say the 10-week class can benefit almost anyone who wants to improve his or her financial situation.
"Even if you don't qualify for match-up funds, the financial literacy course alone is worth its weight in gold," said
Bike rental expansion
Noland, 43, did qualify for IDA participation. He used IDA funds to expand his bike rental business, which he launched in 2010 with just 16 bikes. The IDA money allowed him to buy more, generating income growth that has helped him continue to expand to 70 bikes today.
Noland recently moved his business, dubbed The BikeSmith, into an 800-square-foot shop near
Apart from the IDA funding boost, Noland said the program's financial training was just as important in growing his business.
"It forced me to take a comprehensive look at all my finances, put things into perspective and create a new plan for the future," Noland said. "It helped me better control and manage things, and now, several years later, I've become essentially debt free."
The program helps build three types of assets — financial, social and personal, Porter said.
In terms of finances, that means liquid and real assets, including savings, insurance policies, stocks and bonds, owning a home and more.
Personal assets can mean building a good credit score, furthering one's education, or even obtaining a driver's license and appropriate documentation for financial transactions.
"Things you need to navigate the world," Porter said.
Social assets refer to knowing and tapping into community resources.
"We see the asset world as a stool with three legs," she said. "Often the legs are not even. But if you have some strengths in each area, it may wobble a little, but you can endure through crisis situations, be it a job loss, an injury that keeps you from working, or a divorce."
IDA programs are not unique to
Recipients such as Prosperity Works, which has received
Strong success rate
IDA programs have a very high success rate among participants. Since 1999, more than 84,000 individuals have participated nationwide, saving more than
And, thanks in large part to the financial literacy attached to IDAs, graduates appear more capable of retaining and building on their assets. For example, a recent national study on people who used IDA savings to help purchase a home showed that those individuals were two to three times less likely to lose their homes to foreclosure compared to other low-income home buyers.
"People who purchased homes with IDAs weathered the recession much better than other low-income homeowners," said
Apart from financial literacy, the requirement that participants achieve their own savings to receive grants greatly boosts the program's success, said
"They're putting skin in the game," Hommer said. "It's their own money that their saving, and they work very hard to reach their goal. The program is not just throwing money at poverty but contributing to real long-term solutions."
As of March, Hommer's agency had graduated 167 people from the IDA program. Of those graduates, 66 used their IDA funds to start or expand a business, 51 purchased a home, and 50 spent their money on higher education.
"One-hundred percent of the people who purchased a home are still living there," Hommer said. "I believe that's because they've learned how to budget and be ready for emergency situations."
Statewide, nearly a thousand people have graduated from IDA programs managed by Prosperity Works affiliates. Of that total, 405 launched or expanded local businesses, 225 bought houses and 270 pursued higher education.
The financial literacy training also helped improve his bottom line.
"Finances can be very complex, and the IDA course covered stuff I hadn't really learned about before," Daves said. "It opened my eyes to different ways of managing finances to maximize yields."
(c)2014 the Albuquerque Journal (Albuquerque, N.M.)
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