Workshop Learn$ave: An Anti-Poverty Tool

Presented by Jim Wilson, Learn$ave Project (YMCA, Fredericton, N.B.)

This was a presentation of a national demonstration project called “Asset-building & Individual Development Accounts”

The session began with an overview of how such an alternative policy had developed. It was explained that there was some belief that until recently, poverty had generally been seen as an income problem. Further, that income support programs that provide a bare minimum of subsistence tended to trap the poor with severe restrictions not only with the amount of income they can earn, but with very low amounts of savings they can accumulate. Consequently, the emphasis on income, allowed us to tend to ignore the effects of asset accumulation on the well being of families and individuals.

In a book by Michael Sherradan, Assets and the Poor (1991), the author introduced asset-based thinking to re-define how poverty could be addressed. Sherradan argued that while income support programs are vitally important, the accumulation of assets is the only sure way to exit and stay out of poverty. He pointed out that assets, even more than income, are concentrated in the hands of the wealthy and that asset-development policies that target the poor are needed to redress this imbalance.

He offered however, that asset-building initiatives would require a change to well-entrenched current public policies that favour asset development by the well off rather than the poor. Indeed, he felt that we would need to change thinking on welfare policies that penalize recipients for accumulating savings by raising or altogether eliminating welfare asset limits. Furthermore, that we need to create vehicles to accelerate or enhance the ability of the poor to save, in order to redress the imbalance of assets that currently exists.

Individual Development Accounts (IDAs) were proposed as one such vehicle for translating this concept into effective programs. Essentially, IDAs are matched savings accounts that assist low-income earners accumulate funds that can be only be used for high return investments such as education, new business start-up or homeownership in a relatively short period of time.

It was reported that a number of demonstration projects have taken place to illustrate the value of assetbased policy decisions. The American Dream Demonstration was started in the U.S. in 1997. At the close of 1999, more than 2,000 IDA account holders were saving an average of $33 per month and had accumulated $286 over nine months in the ADD program. With matching funds from a variety of public and private sources, more than $1.3 million in savings have already enabled account holders to invest more than $300,000 in housing, education, and small business start-ups.

Canadian programs include Calgary’s 1999 Fair Gains Program, Winnipeg’s Housing IDA Program that was started in 2000 and learn$ave – a national demonstration project of individual development accounts for learning.

Even though it is early in the project, the initial results from the Fredericton learn$ave site were described as “exciting!” For example, as of February 2003, the monthly savings of all participants in Fredericton has averaged more than $50.00 per month over the past two years. This translates into over $77,000.00 in personal savings by participants and over $226,000.00 in matched savings in the Fredericton area alone! In addition, 15 Fredericton participants have begun using their learn$ave funds to go back to school and over $28,000.00 have been dispersed to qualified institutions on behalf of these participants.

The project leaders believe these initial results provide compelling evidence for the development of further IDA projects or programs that will help in the fight against poverty.