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Individual Development Accounts. Understanding Individual Development Accounts

Individual Development Accounts IDAs are matched savings accounts that enable 

people with low incomes to save money and build assets.

Every dollar that is saved in an Individual Development Accounts IDA will be 

matched with donations from government agencies, non-profit organizations 

and private companies.

Many organizations who partake in Individual Development Accounts IDA programs 

often match the incentive with financial literacy education, training to purchase 

their asset, and case management.

Individual Development Accounts IDAs are emerging as one of the most promising 

tools to enable low-income and low-wealth American families to save, build assets, 

and enter the financial mainstream. 

Individual Development Accounts IDAs reward the monthly savings of working-poor 

families who are trying to buy their first home, pay for post-secondary education, 

or start a small business. 

Additionally, some Individual Development Accounts IDA programs allow participants 

to save for home repairs, computers, automobiles, or retirement.

These Individual Development Accounts are similar to 401(k) plans and other matched 

savings accounts but can serve a broad range of purposes.

There are over 250 Individual Development Accounts IDA programs in the United States. 

Any individual, organization or business can contribute match dollars to Individual 

Development Accounts IDAs. 

Many Individual Development Accounts IDAs are offered through partnerships between 

local non-profit organizations, called the Individual Development Accounts  IDA 

program sponsor, and financial institutions. 

The program sponsor recruits participants and provides Individual Development Accounts  

IDA counseling and training. 

Additionally at Individual Development Accounts participants are required to attend a 

certain number of financial education classes to learn about the basics of money 

management. 

Most Individual Development Accounts IDA programs offer a 2:1 match rate, which means 

for every $1 deposited, $2 in matching funds will be added. 

However, the program match varies depending on the length of the Individual Development 

Accounts IDA program and the amount of match funds raised by the sponsoring organization.

After securing a sponsor, the participant will open up an account with the partnering 

bank or credit union. A monthly report will be given to all participants from their 

respective financial institutions with updates on the amount of accumulated savings 

in their Individual Development Accounts  IDA. 

Individual Development Accounts IDA programs can range anywhere from one to five years 

in length.

Individual Development Accounts IDA programs differ in eligibility guidelines but 

some of the general requirements for participants are based on a specified annual 

income level, earnings, net worth and credit history.

Some of the key findings are that Individual Development Accounts IDAs do lead the 

poor to save or acquire assets, but do not necessarily increase their net worth 

(assets minus debt). 

While costs are declining, Individual Development Accounts IDAs are expensive to 

administer and are often used by the poor as checking and savings accounts as well 

as a means to accumulate wealth, reflecting in part the dearth of savings products 

aimed at the poor.

North Carolina has one of the leading statewide networks of Individual Development 

Accounts IDA programs with 32 local IDA sites in 55 North Carolina counties. 

These 32 programs provide matching funds and support to more than 500 low-income 

account holders. 

There is a four step process when acquiring an Individual Development Accounts IDA, 

this includes; Introduction and Orientation, Opening Accounts, Economic Literacy 

and Training, and finally Withdrawal, Purchasing Assets and beyond.