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SWFA Implementation

SWFA Implementation. Implications for the IDA Field: Practice & Policy Timothy Flacke D2D Fund, Inc. A Changed Landscape…. unlimited * supply of (core) match funds * well, not quite, but still… up to seven years to save up to 10 years to spend central role for financial institutions

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SWFA Implementation

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  1. SWFA Implementation Implications for the IDA Field: Practice & Policy Timothy Flacke D2D Fund, Inc.

  2. A Changed Landscape… • unlimited* supply of (core) match funds * well, not quite, but still… • up to seven years to save • up to 10 years to spend • central role for financial institutions • lower match (1:1, $500/year) • lower funding for administration • simplified eligibility

  3. Spectrum of IDA Programs

  4. Product: What will it Mean? • financial institutions will be central • compliance will be critical • tax credits at risk = financial risk for banks • key issues: participant eligibility, accounting • “at your own pace” IDA part. experience? • No more “poor to asset owner” in < 3 years • fewer support services • cost will be huge concern • possible new IDA “markets”, new “modes”

  5. New Markets, New Modes • New markets: • existing financial institution customer market • “asset-interested” market • already interested in goal, IDA as tool • e.g., part-time students, aspiring home owners • tax refund market • IDAs funded mostly or only via tax / EITC refund • New “modes” • self-service (no link to social services) • employer-based • asset provider-based (e.g., com. college)

  6. What does it Mean for CBOs? Opportunity: reposition to complement bank weaknesses / needs financial institutions... • well positioned well to: • market (a.k.a. recruit) • hold accounts • provide & track match • issue statements, report to Treasury • but won’t want to: • offer financial education • provide client support • compliance (certify eligibility, purchases) • find additional funding sources

  7. Do CBOs Fit in “Product”? Do you want to be in this business? • how do you want to do asset building? • volume vs. depth (where on spectrum)? • what does your community need? • what are you good at? • financial education? • client support? • advocacy / organizing? • what do your services really cost? • ‘ala carte’ vs. entire program • think cost / client

  8. But it Won’t Happen Overnight... • short term: banks “dabble” (AFIA / hybrid) • channel funds to existing, familiar programs • long term: • some banks will pass, exit IDA field • some will keep it small (AFIA / hybrid) • handful will push for volume (product) • product demands volume, lower cost • path to large scale, sustainability • exciting opportunity for some CBOs • if not CBOs, then... • bottom line: • Good: greater volume, less responsibility • Challenge: less control, “thinner” services

  9. D2D’s efforts to help Product Online IDA: • facilitates partnership model • CBOs, banks & participants linked via web • provides infrastructure for compliance • professional grade match accounting • helps banks offer IDAs at break-even • pools participant (& match) funds • builds from “regular” customer relationship • lowers cost • client side: self-service (via ‘net), paperless • admin: integrated (1 MIS), efficient (less data) • refund “bifurcation” as complement

  10. Policy Implications • Opportunities: • “product” IDAs can increase # of families served • higher profile for asset-building • from “insurgency” to “establishment”? • Integrated in tax code • integrated in financial services industry • Challenges: • “breaking the ice” (getting SWFA started) • integrating models & funding streams • evolving roles for CBOs, funders, banks, policy advocates, participants • “establishment” can still be attacked

  11. Contact Information Timothy Flacke D2D Fund, Inc. 1127 Harrison Avenue Roxbury, MA 02119 www.d2dfund.org tflacke@d2dfund.org 617.541.9066

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