38 AUGUST 2023
TRAVERSE CITY BUSINESS NEWS
INVESTING & FINANCIAL PLANNING
MATCH MAKER How NMCAA’s IDA funds are empowering local businesses
By Kierstin Gunsberg Northwest Michigan Community Action Agency (NMCAA) is on a mission to uplift local communities. The organization serves 10 counties across northern Michigan by connecting them with valuable services, resources, and programs that foster financial growth and stability. One of these programs is the Individual Development Account (IDA). For nearly 20 years, this matched savings program has assisted local lowto moderate-income households and business owners in building their assets. It was initiated in 2000 by Karen Emerson, the organization’s financial management services department manager, after she first learned about these types of savings accounts at a conference called “Untangling The Funding Jungle.” The conference, hosted by Michigan Community Action, another nonprofit focused on economic stability and poverty reduction, was Emerson’s first in her new role. She says she was immediately interested in how matched savings accounts could propel families and business owners forward in their goals. After the conference, she spoke with her executive director and took steps to attend statewide meetings and apply for funding. In a couple short years, NMCAA became the Michigan IDA Partnership regional co-
ordinating organization, helping more than 12 other IDA program sites from Claire to Houghton-Hancock, she says. The program enables participants to save money while receiving guidance from budget coaches. NMCAA matches each dollar saved by the participants, providing a boost to their savings and momentum toward their goals, which might be the purchase of a home, paying for higher education, or funding a small business start-up or expansion. Once the program requirements are completed per the participant agreement, the participant will receive a 3-1 match for homeownership at the closing after all appropriate paperwork is received. “That means after saving $1,000, the match will be $3,000, she said, adding that it gives the participant $4,000 to use for down payment, closing costs or principal reduction.” For those seeking education or business support, their savings of $1,000 will be matched with $2,000. To qualify for the program, which is financed through private donations and grants secured by NMCAA through fundraising efforts, participants must have earned income from wages and fall below 200% of the federal poverty guidelines. The application process is done via a simple online form through the organization’s website. They also provide in-person application support.
Once participants are selected, they are then required to save consistently for a minimum of six months after enrollment and are given flexibility on which financial institution they choose for their savings deposits. They’ll also attend asset-specific education sessions like homeownership workshops, money management workshops, and monthly meetings with a budget coach to meet their program requirements. The IDA program hopes to act as a catalyst for economic growth and development by integrating low- to moderate-income individuals into the mainstream financial system. Emerson says that the program creates a snowball effect by cultivating educated home and business owners who make informed financial decisions which can lead to more stable and prosperous communities. In an economic environment of increased inflation and rising home interest rates, the factors that contribute to financial instability may run deeper than financial literacy alone, but Emerson believes that there’s a positive impact brought on by pointed education and support. “People learn new skills, become more self-confident in being able to manage their finances, and (become) better stewards of their resources.” She continues to explain that during NMCAA’s history of hosting the program, over 500 qualifying households have
Emerson
achieved homeownership, funded their education, or started or expanded their business, while leveraging over $37 million in total assets purchased. These are numbers that Emerson says are a “huge indicator” of how, when given the opportunity, “people can overcome barriers in generational or situational poverty by saving money, receiving financial education, and coaching.” The organization has also recently submitted a grant proposal that, if awarded, will allow for the expansion of IDAs to include transportation accounts. For those focused on their business startups or expansions, NMCAA provides money management education and resources, along with a match of $2,000