What is an Individual Development Account (IDA)?

IDAs are savings accounts opened in credit unions by their members.  The ultimate use of the savings accumulated in the IDA is specific to each program.  The purpose is often for such things as education, down payment on a home, home improvement, or the start-up of a small business, but does not have to be limited to these uses.  IDA programs encourage saving by members because the amount deposited by the member in the account each month triggers a matching deposit by the credit union at a certain multiple.  Depending on the specific program, the member’s savings are matched by multiples ranging from 1 to 1 to 6 to 1, but could be even higher.  Each IDA has goals that include amounts to be put away each month, the match, and the number of months.  The money cannot be withdrawn until the goal is met.

 

How does an Individual Development Account work?

          For example:

      

Savings Goal:	$2,400
Period:	24 months
Match:	3 to 1
Member’s monthly savings deposit:	$25
Credit union’s matching deposit:	$75

When the goal is met at the end of the period the IDA account holder “graduates” and is able to take his/her funds. The credit union’s sources of funding for IDA accounts include community banks, non-profit agencies, the federal CDFI Fund, state and local assistance agencies, and others, including NFCDCU.

What is an IDA Grant for? Are there any restrictions on the use of the proceeds?

The grant from NFCDCU is given to the credit union only to provide matching funds.  Funds are to be used by recipient credit unions only to match Individual Development Accounts opened by their members.  IDA grant funds cannot be used for other purposes, even for expenses related to running the program.

 

Who is eligible for an IDA Grant from NFCDCU?

The credit union must be a regular (policy) member in good standing and it must have established an IDA program.

 

What type of Documentation is signed?

An IDA Grant Agreement, in which all of the terms and conditions are specified, is signed by the credit union and by NFCDCU.

 

What is required in order to apply for an IDA Grant?

Complete and send in an application form, including the amount and the description of the proposed use of the funds.  Include the most recent NCUA Form 5300 and the most recent financial statements since the last Form 5300. Applications should include a description of how the program fits in the credit union’s overall plans, and the IDA program policies.