Federal Grant to Fund IDA Tax Pilot for Homebuyers

WASHINGTON - The U.S. Department of Health and Human Services announced it has awarded the National CU Foundation a $415,000 grant to fund pilot Individual Development Accounts programs at three pilot credit union organizations. The organizations will provide volunteer income tax assistance and advise low-income families applying for Earned Income Tax Credits, which will be used to open savings accounts earmarked for mortgage down payments, the foundation announced yesterday.

The organizations are: Option 1 CU, in East Lansing, Mich.; Syracuse Cooperative FCU, Syracuse, N.Y.; and El Paso Affordable Housing CUSO, in which eight area credit unions participate. Each of these organizations was chosen because of their existing expertise in offering IDAs.

Low-income members who commit to financial education and saving for a down payment will be selected for IDAs, which will receive $2 in matching funds for every $1 saved. Each credit union will establish a reserve account for the credit unions to draw down as IDA holders reach their savings goals.

The foundation has committed to paying half of the matching funds and each credit union organization will pay the other half.

The HHS grant was awarded by the agency's Office of Community Outreach under its Assets for Independence program. The five-year program is contingent on the credit union participants building sustaining funds.