What is an
Individual Development Account (IDA)?
are savings accounts opened in credit unions by their members. The ultimate use of the savings
accumulated in the IDA is specific to each program. The purpose is often
for such things as education, down payment on a home, home improvement, or the
start-up of a small business, but does not have to be limited to these
uses. IDA programs encourage saving by members because the amount
deposited by the member in the account each month triggers a matching deposit by
the credit union at a certain multiple.
Depending on the specific program, the member’s savings are matched by
multiples ranging from 1 to 1 to 6 to 1, but could be even higher. Each IDA has goals that include amounts
to be put away each month, the match, and the number of months. The money
cannot be withdrawn until the goal is met.
How does an
Individual Development Account work?
||3 to 1 |
|Member’s monthly savings deposit:
|Credit union’s matching
the goal is met at the end of the period the IDA account holder “graduates” and
is able to take his/her funds. The credit union’s sources of funding for IDA
accounts include community banks, non-profit agencies, the federal CDFI Fund,
state and local assistance agencies, and others, including NFCDCU.
What is an IDA Grant for? Are there any
restrictions on the use of the proceeds?
The grant from NFCDCU is given to the credit union
only to provide matching funds.
Funds are to be used by recipient credit unions only to match Individual
Development Accounts opened by their members. IDA grant funds cannot be used for other
purposes, even for expenses related to running the
Who is eligible for an IDA Grant
The credit union must be a regular
(policy) member in good standing and it must have established an IDA
What type of Documentation is
An IDA Grant Agreement, in which all
of the terms and conditions are specified, is signed by the credit union and by
What is required in order to apply
for an IDA Grant?
Complete and send in an application
form, including the amount and the description of the proposed use of the
funds. Include the most recent NCUA
Form 5300 and the most recent financial statements since the last Form 5300.
Applications should include a description of how the program fits in the credit
union’s overall plans, and the IDA program policies.