MACAA’s Family Self Sufficiency Program
The Monticello Area Community Action Agency (MACAA) was founded in 1965 to combat poverty and its causes. Serving the City of Charlottesville and the Counties of Albemarle, Fluvanna, Louisa and Nelson, we work to “eradicate poverty and to improve the lives of people living in our communities." MACAA operates 10 Head Start centers and a number of family service and youth programs for low-income citizens (usually at or below 125 percent of the poverty level.) This year our services will benefit nearly 3,000 individuals.
The goal of Family Self Sufficiency (FSS) is to provide low-income people a path out of poverty. The FSS program enables the local working poor to increase their income by claiming the Earned Income Tax Credit (EITC), provides Financial Education workshops and opportunities for matched savings through Individual Development Accounts (IDA’s). IDA’s provide matching contributions to encourage personal savings by the working poor for home ownership, business ownership, or higher education.
FSS recently expanded its services to provide financial education training offsite and throughout the community; including at the Regional Jail, public housing centers and at other non-profits. In addition, the CARES (emergency services) program participants and Hope House clients are directed to FSS classes as a co-requisite for assistance. Clients receiving help filing for the EITC credit are also encouraged to attend FSS classes.
129 people completed the FSS program in the past year, and most were parents. This by itself enlarges greatly the number of people that will benefit from the program.
170 families received assistance with tax preparation; and of those 83 families received EITC amounting to $141,480.; 83 families received other federal or state tax credits (such as child care credits) amounting to $25,292. For families (where every dollar counts) who otherwise may not have received this benefit these credits were extremely important, and as local consumers these dollars found their way back into our own economy.
Without assets, poor families are likely to remain poor. Michael Sherraden, author of Assets and the Poor, observes that, “Few people have ever spent their way out of poverty. Those who escape do so through saving and investing for long-term goals.” Ever since the New Deal, America’s public and private sectors have spent billions in the form of income support, safety nets, rental assistance, transitional aid, and supplemental spending for the poor, but these sectors have rarely invested in the poor, empowered them with assets, enabled them to own a piece of their neighborhoods, or encouraged them to build wealth. Thus, while the U.S. has succeeded in preventing the vast majority of poor families from falling through the bottom, it has failed in offering the asset-building tools and policies necessary to let those families move from the bottom to the middle or top.
If you have any questions, please contact Karen Shepard, Executive Director, 434.295.3171, ex. 3044 or email@example.com
FAMILY ECONOMIC SECURITY
MACAA’S SUITE OF ASSET BUILDING PROGRAMS
MACAA’s portfolio of asset building programs will consist of the following:
- Earned Income Tax Credit (EITC) tax preparation services to help the working poor collect tax refunds that provide the opportunity to reduce debt and build savings. Direct service provision within MACAA’s EITC project will consist of free tax preparation assistance in our capacity as a Volunteer Income Tax Assistance (VITA) site. With continued funding from the Virginia Community Action Partnership this project will allow MACAA clients and other eligible individuals to receive free tax preparation services at our Charlottesville office, as well as information about how to maximize the financial benefit of the credit. MACAA is a member of a local coalition of agencies working together to provide EITC education and tax services to as many eligible individuals as possible.
- Financial Education is considered to be the foundation for all asset-building programs and is designed to help people learn how to manage their money and use mainstream financial services. The goal of financial education is to make people more aware of their options and of the possible consequences of their choices. For example, financial education might highlight that one can choose to make a budget and then choose to treat monthly deposits as if they were bills. It might then point out that frequent deposits are more likely to lead to high asset accumulation than infrequent deposits. In short, financial literacy allows individuals to control their finances rather than letting their finances control them.
- Expanded services will include an Individual Development Account (IDA) program. IDAs are matched savings accounts that enable low-income families to save, build assets, and enter the financial mainstream. IDAs reward the monthly savings of working-poor families who are building towards purchasing an asset - most commonly buying their first home, paying for post-secondary education, or starting a small business. IDAs make it possible for low-income families to build the financial assets they need to achieve the American Dream. The match incentive - similar to an employer match for 401(k) contributions - is provided through a variety of government and private sector sources. MACAA will couple the match incentive with financial literacy education, training to purchase their asset, and case management.
Why support MACAA’s Family Self Sufficiency program?
MACAA’s FSS Program:
- Promotes economic independence. MACAA’s asset building strategy emphasizes the need to equip low-income families and individuals with the resources (assets) and tools (economic literacy) to be self-sufficient. By fostering self-sufficiency, FSS can be part of a long-term solution to the problems of poverty.
- Is innovative. FSS recognizes that traditional "income maintenance" social policy isn’t enough to end poverty. Asset building is an innovative, new philosophy and IDAs are a unique approach to working with low-income populations, an approach that combines self-help with financial and personal support.
- Are not untested. Although FSS and IDAs are a relatively new concept, the theory on which they are founded — that low-income people can and will save for long-term goals — has been tested through microenterprise programs, homeownership programs and decades of Community Development Credit Union experience in low-income communities.
- Follows a middle class precedent. Asset ownership has been a long standing “American Dream” and has been encouraged through legislation like the Homestead Act and GI Bill. FSS is a way to extend a traditional middle-class value to low-income communities. In some sense, FSS will simply make more widely available government programs that have for decades allowed middle class Americans to obtain meaningful assets.
- Builds financial knowledge and skills. In addition to developing asset owners, FSS teachs participants important skills, such as how to plan a family budget or manage a financial emergency. This skill development aspect may ultimately be as valuable to clients and their communities as the ways in which IDAs promote asset ownership.
- Increases homeownership. Creating homeowners is a direct outcome of IDA programs. The value of homeownership has been widely recognized, as homeowners are able to provide more stability for their families and have a strong incentive to be invested in their communities.
- Leads to education and jobs. IDAs encourage and make possible enrollment in education programs of all types, from community colleges to vocational training programs. Making educational and training opportunities more widely available has long been seen as a key to fostering long-term economic self-sufficiency.
- Develops microenterprises. IDA programs bring self-employment within the reach and imagination of low-income people not only by creating vital microenterprise financing, but also by equipping IDA holders with the skills that are essential for entrepreneurial success.
- Strengthen families. Economic self-sufficiency and asset ownership strengthens families, both immediately and for generations to come. Asset ownership, as a pathway to economic self-sufficiency, is an ideal way to make a lasting impact on families' lives.
- Protects children. Asset ownership promotes family stability and self-determination. These qualities make more secure homes for children. Parents who have earned a post-secondary degree or who own a home, for example, are more likely to raise children who will one day obtain a post-secondary education or become homeowners.
- Serves women and men. A great number of IDA participants are women. With their focus on asset ownership, IDA programs are both an excellent way to foster economic self-sufficiency and autonomy among women and a means to create opportunities for often-neglected groups of low-income men.
- Strengthens communities. Asset ownership gives participants a stake in their communities and provides an incentive to more fully participate in community affairs. In addition, as participants' standards of living and disposable incomes rise, the economic benefits of FSS will diffuse throughout an entire community.
- Delivers measurable outcomes. FSS targets clear, measurable goals (asset ownership) and therefore is straightforward to evaluate and to “hold us accountable” for the funding we receive.
- May help reform welfare. FSS can help welfare recipients learn new financial skills and, by becoming asset owners, make lasting, meaningful changes in their lives. With the current focus on welfare reform and resulting benefit time limits, the need for innovative programs to help welfare recipients achieve self-sufficiency is all the more acute.
- Are not "handouts." Before receiving any direct financial support, FSS participants must demonstrate a commitment to fiscal self-discipline, long-term saving and financial skill development. Participants will not receive any “unearned” support or assistance.
The IDA concept has a multifaceted appeal. Private charitable foundations, government agencies, community activists and ordinary citizens are united in support of IDA programs not only because they believe IDAs offer concrete hope to impoverished families, but also because they see that IDAs are sound public policy for a wide range of reasons.