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An individual development account (IDA) is an asset building tool designed to enable low-income families to save towards a targeted amount usually used for building assets in the form of home ownership, post-secondary education and small business ownership.[1] In principle IDAs work as matched savings accounts that supplement the savings of low-income households with matching funds drawn from a variety of private and public sources.[2]
While anti-poverty policy makers have traditionally focused on issues of income and consumption, an expanded vision of poverty alleviation has emerged in recent years—one that encourages savings, investment, and asset accumulation in conjunction with, not instead of, traditional anti-poverty programs.[3] Assets play a vital role in poverty alleviation by providing not only economic security but also a psychological orientation that encourages low income families to save and plan for the future. In his book, Assets and the Poor: A New American Welfare Policy (1991),[3] Michael Sherraden proposed establishing individual savings accounts for the poor calling for the government and the private sector to match individual contributions to IDAs as a means of encouraging savings and breaking the cycle of poverty.[4] Sherraden argued that asset and saving accumulation requires institutional structures and incentives and that asset based development policies can have psychological, social and economic impacts. Since then IDAs have been adopted by United States federal legislation via the Personal Responsibility and Work Opportunity Reconciliation Act of 1996[5] and in more than 40 states of the country.[4] Evidence of IDA programs also exists outside of the continental United States especially in Hawaii,[6] Sub-Saharan Africa.,[7] the UK, and also all around Europe[citation needed].
^"Individual Development Accounts: An Asset Building Product for Lower-Income Consumers" (PDF). Community Affairs Department – Comptroller of the Currency Administrator of National Banks. February 2005. Retrieved 11 April 2013.
^"Individual Development Accounts (IDAs)" (PDF). Corporation for Enterprise Development. Archived from the original (PDF) on 1 June 2010. Retrieved 11 April 2013.
^ abSherraden, Michael (1991). Assets and the poor: A new American welfare policy. M.E. Sharpe Inc.
^ ab"CSD's Michael Sherraden named to TIME Magazine's TIME 100". Center for Social Development. 2010-04-29. Archived from the original on 3 June 2013. Retrieved 11 April 2013.
^"Personal Responsibility And Work Opportunity Reconciliation Act of 1996 – Summary of Provisions" (PDF). National Association of Social Workers. August 1996. Archived from the original (PDF) on 23 October 2013. Retrieved 11 April 2013.
^Rothwell, David W. "Asset Building Among Native Hawaiians: Lessons from the Kahikü Individual Development Account Program" (PDF). Hülili: Multidisciplinary Research on Hawaiian Well-Being. 6: 187–211.
^Ssewamala, Fred M.; Sperber, Elizabeth; Zimmerman, Jamie M.; Karimli, Leyla (2010). "The Potential of Asset-Based Development Strategies for Poverty". International Journal of Social Welfare. 19 (4): 433–443. doi:10.1111/j.1468-2397.2010.00738.x. ISSN 1369-6866.
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