Asset Building in Israel: Evidence From the Savings for the Future Pilot Program

Background: As in many other countries, social welfare policies in Israel primary depend on income based approaches. Recently, the idea of incorporating asset based interventions in Israel is gaining ground among policy makers and community organizations. The purpose of this study is to present evidence from the implementation of the first asset building pilot program in Israel and to discuss the larger universal asset based policy strategy currently proposed for Israel.

“Savings for the Future” is the first asset based pilot program in Israel, implemented in eleven regions by the non-profit organization Economic Empowerment for Women. This matched saving program is developed based on the U.S. Individual Development Account (IDA) model. The program was designed to help Jewish and Arab low income women in Israel, who have opened a microenterprise business, to save for expansion of their business as a means for improving their financial situation and promoting self-sufficiency.

Methods: Women were eligible to participate in the Savings for the Future program based on four criteria: living in the targeted geographic region, having less than NIS 40,000 (10,000 USD) of savings in the bank, having a family income of less than 70% of the average monthly salary, and owning a business and/or taken steps in beginning business activity.

This study analyzes data on savings performance by participants (n=55) in the first cohort which began in October 2008. Forty-two percent of the sample was of Jewish ethnicity and 38% of Arab ethnicity. The analysis includes measures of savings performance including average monthly and total savings, matched earnings and uses, net deposits as percent of match cap, and deposit frequency. Additionally, the study uses in depth-interviews to gauge the impacts of the program characteristics on saving outcomes.

Results: Participation in the program was high; 82% finished the financial education training (69% of Arab participants and 91% of Jewish participants) and 76% submitted bank statements reflecting an open account (57% of Arab participants and 88% of Jewish participants). The average participant monthly savings was NIS 187 ($51) and about half of the participants made deposits every month. The average total savings per participant in the first year was NIS 1,413 ($385). Examination of participation rates and saving performance by region and ethnicity suggest that Arab women had lower rates of participation and savings when compared with Jewish women. Results from the qualitative data suggest that financial education was a highly valued component of the intervention. In addition, the qualitative data helps to shed additional light on variation in saving performances between Jewish and Arab participants.

Conclusions: Findings from the Savings for the Future pilot project demonstrate the viability of asset building programs in Israel and their potential to help low-income women sustain microenterprises and build regular savings habits. In addition, this evidence informs the larger discussion of asset based policy in Israel, including the recent proposal for universal child development accounts.