Asset-Development Among People Experiencing Homelessness: An Individual Development Account Model

Background and Purpose: Wealth can moderate financial distress.  However, low-income individuals often lack access to bank accounts and employer-sponsored retirement and are more likely to come from unbanked families lacking early financial exposure. This is problematic as financial functioning is central to well-being and poverty is one of the primary determinants of health disparities. One promising avenue to address wealth inequalities is the asset-development mechanism known as the Individual Development Account. We examine one such program, the Community Empowerment Fund (CEF), focusing on people experiencing homelessness to answer the following questions: 1) Did assets increase; 2) What did participants learn; 3) What were savings barriers; and 4) What did participants value most?

Methods: In this mixed-method study we evaluate CEF through administrative data, surveys, and qualitative interviews.  Administrative data on all members was used to determine total amount saved.  Of these members, 17 were recruited for qualitative interviews and short demographic surveys. Administrative and survey data were analyzed using descriptive statistics.  We analyzed interview transcripts according to content analysis procedures by developing themes and subthemes based on literature, study objectives, and interview questions. We then created a list of the themes and subthemes, coded the data from each transcript, and extracted illustrative quotes.

Results: CEF members saved $89,831.55 since the 2010 inception. Of the 17 participants, half were female, half African American and half White. Most were single and had a high school degree or above.  Over half were employed and working close to full-time.  Fifteen had opened a savings account and saved an average of $1,356.24 (SD = 823.82) toward a variety of goals including housing (n=14), emergency savings (n=11), cars (n=6), education/training (n=4), and computers (n=3). When asked about what they had learned, the commonly reported topics were budgeting, how to save, resume development, and interviewing.  The most common savings barriers were insufficient income and unexpected expenses related to maintaining a car, health costs, child support, and debt. Participants also noted a lack of a saving culture as children and challenges surrounding delaying gratification. Respondents cited the accountability, the class topics, the relationships built with staff, and the savings match as the most valuable parts of the program.

Conclusions and Implications: This study described an evaluation of an asset-development program for individuals at risk of or experiencing homelessness.  To date few asset-development programs in the US have focused on this population, although the results demonstrate that very low-income people can save and build assets. This population may even be particularly ripe for savings as many live in shelters with low expenses.  Building savings is also particularly important as a substantial level of savings is needed to sustainably transition to independent housing.  Of the CEF respondents who opened accounts the majority had begun saving and saved a substantial amount, remarkable considering the U.S. saving rate has been hovering close to zero for several years. This evaluation suggests that the CEF model is effective in working with the most disadvantaged populations to successfully save towards wealth accumulation.