© 2003 By Default! A Free sample background from Slide 1 SWFA Implementation Implications for the IDA Field: Practice & Policy Timothy Flacke D2D Fund, Inc.

© 2003 By Default! A Free sample background from Slide 2 A Changed Landscape… unlimited * supply of (core) match funds unlimited * supply of (core) match funds * well, not quite, but still… up to seven years to save up to seven years to save up to 10 years to spend up to 10 years to spend central role for financial institutions central role for financial institutions lower match (1:1, $500/year) lower match (1:1, $500/year) lower funding for administration lower funding for administration simplified eligibility simplified eligibility

© 2003 By Default! A Free sample background from Slide 3 Spectrum of IDA Programs

© 2003 By Default! A Free sample background from Slide 4 Product: What will it Mean? financial institutions will be central financial institutions will be central compliance will be critical compliance will be critical –tax credits at risk = financial risk for banks –key issues: participant eligibility, accounting “at your own pace” IDA part. experience? “at your own pace” IDA part. experience? –No more “poor to asset owner” in < 3 years –fewer support services cost will be huge concern cost will be huge concern possible new IDA “markets”, new “modes” possible new IDA “markets”, new “modes”

© 2003 By Default! A Free sample background from Slide 5 New Markets, New Modes New markets: New markets: –existing financial institution customer market –“asset-interested” market already interested in goal, IDA as toolalready interested in goal, IDA as tool e.g., part-time students, aspiring home ownerse.g., part-time students, aspiring home owners –tax refund market IDAs funded mostly or only via tax / EITC refundIDAs funded mostly or only via tax / EITC refund New “modes” New “modes” –self-service (no link to social services) –employer-based –asset provider-based (e.g., com. college)

© 2003 By Default! A Free sample background from Slide 6 What does it Mean for CBOs? Opportunity: reposition to complement bank weaknesses / needs financial institutions... well positioned well to: well positioned well to: market (a.k.a. recruit)market (a.k.a. recruit) hold accountshold accounts provide & track matchprovide & track match issue statements, report to Treasuryissue statements, report to Treasury but won’t want to: but won’t want to: offer financial educationoffer financial education provide client supportprovide client support compliance (certify eligibility, purchases)compliance (certify eligibility, purchases) find additional funding sourcesfind additional funding sources

© 2003 By Default! A Free sample background from Slide 7 Do CBOs Fit in “Product”? Do you want to be in this business? how do you want to do asset building? how do you want to do asset building? –volume vs. depth (where on spectrum)? –what does your community need? what are you good at? what are you good at? –financial education? –client support? –advocacy / organizing? what do your services really cost? what do your services really cost? –‘ala carte’ vs. entire program –think cost / client

© 2003 By Default! A Free sample background from Slide 8 But it Won’t Happen Overnight... short term: banks “dabble” (AFIA / hybrid) short term: banks “dabble” (AFIA / hybrid) –channel funds to existing, familiar programs long term: 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 product demands volume, lower cost –path to large scale, sustainability –exciting opportunity for some CBOs –if not CBOs, then... bottom line: bottom line: –Good: greater volume, less responsibility –Challenge: less control, “thinner” services

© 2003 By Default! A Free sample background from Slide 9 D2D’s efforts to help Product Online IDA: facilitates partnership model facilitates partnership model –CBOs, banks & participants linked via web –provides infrastructure for compliance –professional grade match accounting helps banks offer IDAs at break-even helps banks offer IDAs at break-even –pools participant (& match) funds –builds from “regular” customer relationship –lowers cost client side: self-service (via ‘net), paperlessclient side: self-service (via ‘net), paperless admin: integrated (1 MIS), efficient (less data)admin: integrated (1 MIS), efficient (less data) refund “bifurcation” as complement refund “bifurcation” as complement

© 2003 By Default! A Free sample background from Slide 10 Policy Implications Opportunities: Opportunities: –“product” IDAs can increase # of families served –higher profile for asset-building –from “insurgency” to “establishment”? Integrated in tax codeIntegrated in tax code integrated in financial services industryintegrated in financial services industry Challenges: 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

© 2003 By Default! A Free sample background from Slide 11 Contact Information Timothy Flacke D2D Fund, Inc Harrison Avenue Roxbury, MA