Just as 401(k) accounts help feather the nest for retirees, a lesser-know savings and investment account is helping a relatively small, but growing number of needy families buy their nest -- without the risk associated with stock market-based retirement funds.

Individual Development Accounts (IDAs) match a household's savings dollar-for-dollar -- in some cases three dollars per one dollar saved -- to build a fund that can be used to purchase assets. IDAs are used most often toward the purchase of a home, but they can also be used to start a business, for education, for job-related skills training and for other expenses.

IDAs are the brainchild of Michael Sherraden who founded and directs the Center for Social Development (CSD) at Washington University in St. Louis and wrote "Assets and the Poor: A New American Welfare Policy," as the blueprint for IDAs in 1991.

Beginning with the success of a few Midwestern IDA programs in the early 1990s, the number of IDA programs have grown to 555 nationwide serving some tens of thousands of individuals or households. Only a half dozen states have no IDA activity.

IDAs received an initial boost from the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, enacted to effect changes in the way the federal government delivers welfare benefits -- a hand up instead of a hand out -- and again from the Assets for Independence Act of 1998 (AFIA) which earmarked $125 million specifically for IDAs over a five year period which just ended in 2003.

The Corporation for Enterprise Development (CED), a national, nonprofit, nonpartisan organization committed to expanding economic opportunity and asset-building strategies in low-income communities, sponsors the IDANetwork.org, a gateway to more information about the matched savings accounts.

Targeting the working-poor, IDAs come in a variety of initiatives both nationwide and population specific -- earmarked for kids, people with disabilities, Native Americans and refugees.

The network offers a roster of available programs by state. Where IDAs are available, individual accounts are implemented and managed by a host of community and social organizations, funded by public and philanthropic funds and held at local financial institutions.

IDA account holders don't merely deposit savings and wait for matching funds. During savings plan terms that can last as long as five years, account holders are trained in budgeting, credit repair, money management and other home economics. Studies show financially savvy homeowners are most likely to keep their home and stay out of foreclosure.

Those who purchase a home also realize some of the same benefits that may be out of their reach through the GI Bill, IRAs, 401(k)s and other ways the federal government has helped millions acquire assets and achieve economic independence.

A recent report, "Home Ownership's Path To Wealth," prepared for the Consumer Federation of America, says a greater portion of the wealth of lower income and minority home owning households is in their home, compared to other groups because relatively fewer low-income households manage to hold other financial investments.

What's more, as IDAs help more people acquire home ownership-based wealth, the economy gets a return. The CED says for each federal dollar invested in IDAs there's a return of approximately five dollars to the national economy in the form of new businesses, additional earnings, new and upgraded homes, reduced welfare costs, and the human capital associated with greater educational attainment.

Published: January 8, 2004

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.