Abt Associates: Bold thinkers driving real-world impact
Individual Development Account (IDA) programs have great potential to help the poor lift themselves into socioeconomic stability and prosperity according to a study by Abt Associates. Findings show that the estimated third-year program effects are positive and statistically significant on all three forms of AFI-supported asset ownership, indicating that AFI participants derived very substantial benefits from the program in the targeted forms of asset building: homeownership, business ownership, and postsecondary education.
The program is estimated to increase the rate of homeownership by the end of the third year by 10.9 percentage points above the level that would otherwise be expected, the comparison group mean (31.1 percent). The estimated program effect on third-year business ownership is even larger in proportional terms, with the rate of business ownership raised by 10.0 percentage points above the comparison group mean (11.9 percent). For education, the estimated effect of the program is to increase the share of participants engaging in postsecondary education during the three years by 21.2 percentage points from the comparison group mean (22.3 percent). The proportion effect is thus 95 percent, with the program estimated to nearly double the likelihood that an individual pursued additional postsecondary education.
The Assets for Independence (AFI) Act provides grants for states and local nonprofit organizations to establish five-year IDA programs, in which low-income individuals can open savings accounts earmarked for home purchase, microenterprise development, and postsecondary education. The federal funds serve to match accountholders’ deposits into these accounts and also to offset some program administrative costs. Abt Associates’ congressionally mandated evaluation is the first systematic assessment of the effectiveness of AFI programs nationwide. The work culminates years of research and data collection on the effects that AFI projects have on low-income individuals and families. This phase of the evaluation builds on the work completed since 1999 during the Implementation Phases I, II and III of the national evaluation — a team effort led by Abt Associates.
The evaluation analyzed the effects of incentives and services on participant savings; the extent to which participant savings vary by demographic characteristics; the effects of project participation on savings rates, homeownership, postsecondary educational attainment, and self-employment; and the lessons learned from the demonstration project and whether an IDA program should become permanent.
A nonexperimental impact component of the study included a three-year longitudinal survey of 485 AFI participants to assess the effects of program participation on low-income savings, asset accumulation, and other aspects of family well-being. The datasets included the three waves of survey data for the national sample of 485 AFI participants, the administrative data at the account level and the project level for the members of the AFI participant sample, and the Census-collected data from the Survey of Income and Program Participation (SIPP) to construct a comparison group of AFI nonparticipants.
The evaluation also included a process study including annual visits to 14 selected sites to provide a comprehensive picture of the development, planning, start-up, and on-going operations of selected AFI projects. The projects chosen for the process study were selected to encompass wide variation in project characteristics and local settings, rather than as a representative sample of AFI projects nationwide.
Since the initial site visits were conducted for this study in 2001, there have been enormous gains in collective knowledge and experience among IDA practitioners. These gains in understanding have come through the growth and maturity of the AFI program itself, with a new set of grantees awarded funds each year and early cohorts of grantees completing their projects. But some issues, such as attracting sufficient numbers of participants, assisting participants in attaining realistic savings goals, navigating the regulations of diverse funding sources and requirements, and raising nonfederal funds remain challenging for AFI grantees.
Abt Associates is a mission-driven, global leader in research, evaluation and program implementation in the fields of health, social and environmental policy, and international development. Known for its rigorous approach to solving complex challenges, Abt Associates is regularly ranked as one of the top 20 global research firms and one of the top 40 international development innovators. The company has multiple offices in the U.S. and program offices in more than 40 countries.