Native Asset Building Initiative

May 23, 2013 Presented by Christy Finsel, AFI Resource Center

For Further Information: Heather Wiley, Program Specialist, Assets for Independence, (202)

401-5633, Heather.Wiley@acf.hhs.gov

Christina Clark, Program Specialist, Administration for Native Americans, (202) 401-5399, Christina.Clark@acf.hhs.gov

Native Assets• Assets can be thought of as what you value. • Assets in Native communities can include spirituality, natural

resources (such as land), education, community, and sovereignty, as well as financial assets such as savings, bonds, investments, or equipment.

• When engaging in asset building, we can think of how we historically thought of assets and how we think of them today.

• With an understanding of assets, we can design asset building programs with a cultural fit.

• We can have a cultural fit, customize our programs to meet local needs, and still use mainstream asset building tools (such as Individual Development Accounts funded by AFI and other funding sources).

Finsel, C. (2008, September). Asset Building: Is It A Cultural Fit? Paper presented at the Assets Learning Conference, Washington, D.C. Copyright Christy Finsel All Rights Reserved.

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What is Asset Building?

Asset building is an anti-poverty strategy that helps low-income people move towards greater self-sufficiency by accumulating savings and purchasing long-term assets.

A comprehensive asset building approach includes strategies such as financial education, credit and debt repair, federal benefits maximization, outreach on Earned Income Tax Credits (EITC) and other federal tax benefits, getting the unbanked to bank, and encouraging savings and Individual Development Accounts (IDAs).

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Examples of Asset-Building Strategies for Tribal Nonprofits and Tribal Governments

LEARN

EARN Offer homeownership

counseling

INVESTSAVE

PROTECT Provide foreclosure counseling, forgivable emergency loans, assistance to renters

* To learn more about secured transaction codes, see the Model Tribal Secured Transaction Act Implementation Guide at www.nccusl.org/Act.aspx?title=Model%20Tribal%20Secured%20Transactions%20Act

Ensure comprehensive financial education is provided for K-12 students

Remove asset limits from public benefit programs

Establish credit counseling and credit repair services

Enact secured transaction codes to promote investments in Indian country*

Enact and enforce consumer protection laws

Offer culturally relevant financial education classes for Tribal members

Partner with a VITA site to provide free tax prep, build public awareness about EITC

Offer IDAs to incentivize savings

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What is an Individual Development Account (IDA)?

IDAs are matched savings accounts held by low-income individuals for designated purposes. As part of a structured program, regular savings in these accounts are matched by funding from private and public sources. By rewarding individuals for saving, IDA programs encourage people to develop savings habits, to manage their savings wisely, and to use them to acquire economic assets that will appreciate over time-such as to purchase a home, to engage in post-secondary education or to start a business.

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Example of an Individual Development Account (IDA) Saver

Joe is saving to purchase a home.

• If Joe deposits $55.00 each month for three years, he will save a total of $2000.

• If his savings is matched 2:1, he will receive a total of $4000 in match funds.

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Joe’s IDA

$2000 Savings

$4000Matching

$6000 forHome

$2,000 Federal

$2,000 Non-Fed

$2000 Joe Saves

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How are Native IDA Programs Funded?

IDAs can be funded with: – Tribal funds– Tribal TANF funds– Private donations– Grants from financial institutions and foundations– Office of Hawaiian Affairs– U.S. Department of Treasury– Assets for Independence – Assets for Independence and Administration for Children

and Families (Native Asset Building Initiative funding)

Christy Finsel, 2013. 8

What is the Native Asset Building Initiative (NABI)?

The Native Asset Building Initiative (NABI) is a joint funding opportunity, offered through a partnership between the Office of Community Services (OCS) Assets for Independence (AFI) program and ANA's Social and Economic Development Strategies (SEDS) program.

The Initiative's goal is to build capacity for Native communities to offer financial literacy, asset building, and related services to more families.

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NABI and IDAs: An Essential Piece for Any Project Submitted under the NABI Funding Opportunity

Announcement Must be the IDA Program

How does an AFI IDA work? – Save earned income: AFI IDA participants contribute earned

income to a special matched savings account, known as the Individual Development Account (IDA).

– Receive match funds: For every dollar a participant saves in his/her IDA account, he/she is matched any where from $1 to $8.

The match funds come from AFI funding and non-Federal funding. Participants can receive match funds up to $2,000 per individual, or

$4,000 per household from the AFI grant award and at least an equal amount from non-Federal funds.

– Purchase an Asset: After saving earned income in the IDA for at least 6 months, participants can use their IDA savings and match funds to purchase a first-time home, start or expand a business, or pursue postsecondary education.

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Additional Asset Development Services

In addition to the IDA account, NABI funds can be used to support the following comprehensive asset development services:

• Financial Education: Financial literacy, debt management, credit building, and credit repair services.

• Support for Earned Income : Workforce development and job placement services, entrepreneurial education, Volunteer Income Tax Assistance.

• Home Ownership Assistance: Homebuyer and home ownership education classes.

• Secondary Education Assistance: FAFSA completion, college application assistance.

• Program Support: Curriculum adaptation and development, staff training and certification.

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Uses of NABI Funding: AFI and SEDS85% of AFI funds must be used to match IDA savings. AFI funds may cover limited administrative and financial education costs. SEDS funds will cover the rest of these costs.

AFI SEDS

85% of AFI funds must be used for AFI IDA savings match.

May be used to match additional types of IDAs or matched savings accounts.

Financial education and related participant costs. (Not more than 5.5%)*

Asset building strategies in addition to the 5.5% covered by AFI.

General program administrative costs. (Not more than 7.5%)

Project administration such as project staff salary or other costs in addition to the 7.5% covered by AFI.

Data collection for OCS-AFI administered evaluations (at least 2%)

Indirect Cost Rate utilization

* If the costs of non-administrative functions is less than 5.5%, excess funds may be used for administrative purposes.

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Award InformationAward Project

PeriodBudget Period

Ceiling Amount

Floor Amount

Estimated Average Award

Matching Requirement (non-Federal: Federal)

AFI Award

60 Months (5 Years)

One 60 Month Budget period

$1,000,000 $50,000 $350,000 1:1

SEDS Award

60 Months (5 Years)

Five 12 Month Budget Periods

$250,000 $50,000 $125,000 1:5

* Project periods will start September 30th, 2013.

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A Few Notes about NABI Awards

As mentioned, the Native Asset Building Initiative (NABI) is comprised of AFI and ANA funds. If you are awarded a NABI award, you have five years to spend your AFI award (primarily on match funds for your IDA savers).

The ANA SEDS awards are awarded on a yearly basis and are for comprehensive asset building strategies and to cover the costs of administering a NABI-funded IDA program.

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Notes NABI Awards continuedIf applying for NABI, you should ask for an award that you can realistically draw down as you do not want to return unused ANA or AFI funds, if you can help it.

Also, NABI grantees, like AFI grantees, must have firm commitments of cash support from nonfederal sources, prior to applying for the grant and, if awarded, must deposit these nonfederal funds in a Project Reserve Fund for the duration of the grant award. An example is found below.

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NABI: Benefits to Community• Help individuals save for and purchase assets

more quickly than if they were saving on their own for an asset purchase such as a home.

• Participants continue to develop their savings habits and increase their financial literacy.

• Increased financial stability for families in community.

• NABI funds cover the administration of an IDA project.

• NABI funds cover costs for other related comprehensive asset building strategies.

Christy Finsel, 2013.

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Who Can Apply for a NABI Grant?Eligible applicants include:

• Federally recognized tribal governments or Alaska Native Villages, as defined in the Alaska Native Claims Settlement Act, that are joint applicants with a 501(c)(3) Native non-profit organization

• Native 501(c)(3) non-profits serving Native Americans

• Native non-profit organizations designated by the Secretary of the Treasury as Community Development Financial Institutions (CDFIs) or Native non-profit credit unions designated as low-income credit unions by the National Credit Union Administration (NCAU) – CDFIs and credit unions must demonstrate a collaborative relationship with a local community-based organization whose activities are designed to address poverty and the needs of community members for economic independence and stability

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Who Can Apply ContinuedIf a tribe has a 501(c)3 in their community, they would not have to partner with a 501(c)3 external to their community.

An example of this is the Choctaw Nation, located in Durant, Oklahoma. They partnered with the Chahta Foundation, an existing 501(c)3 in their Nation. In this case, the Choctaw Nation is the direct grantee.

Some Native communities are partnering with a network or consortium to access AFI funds. These networks or consortiums may be willing to be flexible when signing a Memorandum of Understanding (MOU) with a sovereign nation.

Christy Finsel and Sharon Henderson. Effective Use of Assets for Independence (AFI) Funds by American Indian, Alaska Native, and Native Hawaiian Communities, for Assets for Independence, under review, January 2010.

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Examples of Those Who Might Apply for the NABI

• Tribal colleges (you could use current sources of funding for scholarships as the match for a NABI application)

• Native Community Development Financial Institutions (CDFIs)

• Native Housing Authorities• Native nonprofits

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Suggestions from AFI for Sources of Non-Federal Funds and Program Designs

• Tribal Colleges leveraging scholarship or foundation funds for the non-federal match and partnering with Federal Work Study, allowing student participants to earn income for post-secondary education IDAs.

• Tribal leaders forming Microenterprise Development Organizations and leveraging the USDA Rural Microentrepreneur Assistance Program with NABI to assist small business growth.

• Leveraging NAHASDA's Indian Housing Block Grant (IHBG) and Title VI Loan Guarantee with established non profits housing agencies such as Habitat for Humanity with NABI to increase new housing opportunities.

Heather Wiley, AFI, 2013.

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Mazaska K’Sapa NitawaIDA Program

Cheyenne River Sioux ReservationSouth Dakota

Presented by Lakota Mowrer, Assistant Director

About Four Bands Community Fund

The mission of Four Bands Community Fund is to create economic opportunity by helping people build strong and sustainable small

businesses and increase their financial capability to create assets and wealth.

Between April 2000 and December 2012 Four Bands has: • Financed 750 loans totaling over $4.1 million dollars• Graduated 350 entrepreneurs from our business development class • Helped start or expand over 100 businesses• Opened 302 IDA accounts for a total of $349,988 in matched savings

Why IDAs?

• Asset building accounts such as IRA’s, 401k’s, Roth IRA’s etc are the fastest growing form of domestic policy in the United States.

• Our target market on Cheyenne River Reservation had not been benefiting from these strategies, historically.

• In order to develop capacity, families and communities must accumulate assets and invest for long-term goals.

• IDAs are a step in the right direction for progressive asset based policy.

IDA’s at Four Bands Community Fund

• 70% of our savers are women and 30% are men• 94% of the savers are Native American

• 168 total completed savers in our traditional IDA program• 93 Education• 9 Homeowners• 20 Business• 46 Home Renovation (non-AFI)

• 120 total savers in our youth IDA program• Education related expenses (non-AFI)

• Current NABI project: 5 savers in our traditional IDA program and 7 youth savers.

IDA’s at Four Bands Community Fund

Current NABI Project: Match rate of 4:1 with a savings of $1,000 in a savings period of 6 months – 2 years.

Client flow

1. Completes client intake

2. Asset test and income eligibility is determined

3. Enrolled in program

4. Completes action/savings plan with staff member

5. Purchases asset

Day to day includes follow up with action plan goals and monitoring savings accounts. (Avg 8 hrs/wk)

*Various match rates

with IDA’s 1:1; 2:1; 3:1

IDA’s at Four Bands Community Fund

• IDA Funders:• HUD RHED• Northwest Area Foundation• Cheyenne River Sioux Tribal Ventures• Administration for Native Americans• Assets for Independence• South Dakota Community Foundation

• Who are your IDA partners?• Cheyenne River Housing Authority• Cheyenne River Youth Project• Black Hills Federal Credit Union• Girl Scouts of America• Many, many more…..

Lessons Learned

• The greatest organizational benefit to having an IDA program: is to relentlessly advocate for the inclusion of the poor in asset building policy. Additionally, it is a program which changes lives and the community supports it.

• The biggest challenge is poverty. Changing economic behaviors is a hard task given the everyday realities of our community.

• We have overcome it by being as flexible as possible and incorporating evidence based practices.

Lessons Learned (cont’d)

A good screening question:• Do you have an existing asset building strategy as a core

operation in your organization?

• If the answer is no, it is not as easy to recommend due to the fundraising and administrative costs to run the program.

• If the answer is yes, then it would be fairly easy to incorporate an IDA program.

Questions?

Lakota Mowrer

Assistant Director

lakota@fourbands.org

605-964-3687

http://www.fourbands.org

NABI Summary• NABI combines complementary funding streams from two ACF offices,

OCS-AFI and ANA-SEDS, to fund a single project that implements a comprehensive asset building strategy.

• The comprehensive asset building strategy must include an Individual Development Account (IDA) component.

• The IDA component consists of an AFI IDA participant contributing earned income to a savings account, receiving match savings contributions, and making an asset purchase.

• Match contribution funds must come from both the AFI grant and non-Federal cash contributions.

• The comprehensive asset building strategy may also include financial education, credit repair, tax services, workforce development, and other activities that support financial self sufficiency and asset accumulation.

• SEDS funds may be used to fund the additional asset building strategies, as well as program administration costs.

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Sources of Non-Federal Funds for a NABI Application

• Financial institutions and their foundations

• State and local governments• Tribal governments• United Way• Foundations (local, regional,

national)• State/Local tax credits• Special needs funding

opportunities (Mental Health, Youth Programs, Disability Programs, and other nonfederal funding streams that target specific populations)

• Locally-based corporations/employers

• Places of worship• Individuals/online donations• Sponsoring organization

funds• Federal Home Loan Banks• Community Development

Block Grants

Making the Business Case: http://www.idaresources.org/IDA_Fundraising

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Raising Non-Federal FundsExamples from Native AFI Projects

• National financial institutions, private/local financial institution, community development financial institutions, and credit unions

• State funds• Alaska Mental Health Trust Fund (as in the case of the

Cook Inlet Lending Center)• Tribal contributions• Citi Foundation, Bush Foundation, Scott Evans

Foundation, and the Northwest Area Foundation

Christy Finsel and Sharon Henderson. Effective Use of Assets for Independence (AFI) Funds by American Indian, Alaska Native, and Native Hawaiian Communities, for Assets for Independence, under review, January 2010

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Additional Approved Funding Sources for a NABI Application

• Indian Community Development Block Grant Program (ICBDG), Native American Housing Assistance and Self-Determination Act (NAHASDA), and Public Law 93-638 (the Indian Self-Determination and Education Assistance Act) are now allowed for use as non-federal match.

Christy Finsel and Dan Van Otten, 2010. 33

How’s the Fit?

• For your Native community?– Does NABI support your economic

development/asset building plans?

• For your target population?– What’s the need for asset building in my

community or among those we plan to serve?– What’s the interest?– What’s the potential for some number to

participate, complete the process, and purchase an asset?

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Who Can be a NABI IDA Saver?• TANF-eligible in their state

OR• Meet both of the following two criteria

Income: twice the poverty guidelines (about $44,000 for family of four) OR EITC eligible

AND

Net worth: maximum $10,000 (less one residence/one vehicle)

• Administrating agencies may apply additional eligibility rules

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If your community is ready to learn more about the Native Asset Building Initiative, here is some further information:

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FOA Information

• The 2013 Funding Opportunity Announcement (FOA) will be posted on Grants.gov.

• To see the 2012 FOA, please go to:http://www.acf.hhs.gov/grants/open/foa/view/HHS-2012-ACF-ANA-NO-0322

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Support for NABI Grantees• There is technical assistance (TA) available through ANA and AFI.• Some NABI grantees have hired Native asset building consultants to

provide them with TA. • There are several Native asset building coalitions nationally that provide

free training and technical assistance to Native communities designing and implementing IDAs. Some of these Native coalitions also provide peer-learning calls and opportunities for face-to-face roundtable discussions to share Native IDA best practices and models.

• There are loose peer networks of Native IDA practitioners nationally who share sample documents.

• Occasionally, Native asset building organizations, such as First Nations Oweesta Corporation provide IDA trainings. One is scheduled for May 6-10, 2013, in Portland, Oregon, at the NeighborWorks Training Institute.

Christy Finsel, 2013. 38

Helpful Contacts

AFI Resource Center:

AFI Resource Center

Office of Community Services

370 L'Enfant Promenade, S.W.

5th Floor, West

Washington, DC 20447

Telephone: 1-866-778-6037

E-mail: info@idaresources.org

AFI Program Website: www.acf.hhs.gov/assetbuilding

AFI Resource Center Website: www.idaresources.org

ANA Help Desk:

Administration for Native Americans

370 L'Enfant Promenade SW

Aerospace Building, 2nd Fl-West

Washington, DC 20447

Telephone: 1-877-922-9262

Email: NativeAssetBuilding@acf.hhs.gov

ANA Website: http://www.acf.hhs.gov/programs/ana/index.html

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NABI Specific Contacts

Christina Clark, Program Specialist, Administration for Native Americans, (202) 401-5399, Christina.Clark@acf.hhs.gov

Heather Wiley, Program Specialist, Assets for Independence Program, (202) 401-5633, Heather.Wiley@acf.hhs.gov

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Thank you for your participation

in the webinar!

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