Savers get a boost for college, housing and businesses
When Tory Myles first heard about a program that would triple the money she was saving for college, it sounded too good to be true. She did research to make sure it wasn't just a gimmick. Even now, with more than $4,000 in savings, her first semester at Virginia Commonwealth University paid for without debt, and money still rolling in, she laughs incredulously when she thinks about it.
She's saving money through Capital Area Asset Builders, a nonprofit group in the District that helps low- and moderate-income people better manage their money. And now she's getting an even better deal, as a new Web site features some of the people saving through the group and encourages donors to give money to them. SaveTogether is a national nonprofit group that matches online contributions to savings accounts through donations; anyone can go to the Web site and add to Myles's or other screened accounts. The savers are required to deposit money regularly and take financial literacy and other classes, and the program has safeguards to ensure that the money goes directly to tuition, closing costs and the like.
It's a new twist on philanthropy, with donors able to directly help low-income people save more, borrow less and work their way to financial independence.
Many places offer similar accounts. Virginia, for example, runs a program through its Department of Housing and Community Development with partner agencies across the commonwealth, such as Enterprise Development Group and Buyers and Renters Arlington Voice. "I've seen dramatic changes," said Christina Cain of New Visions, New Ventures, who said she thinks the education on budgeting is as valuable as the matching dollars.
The state agency encourages eligible low-income working people to open individual development accounts by tripling savings: It will match $2 for every $1 deposited into one of the accounts, with up to $4,000 in matching dollars. The money must be used to buy a first house, start a business or pay tuition.
For people such as Myles who are featured by SaveTogether, those matching funds can be increased still more by contributions from private donors.
"For us, it's very exciting," said Colleen Dailey, executive director of Capital Area Asset Builders. The group has a five-year, $1 million federal grant that has to be matched with non-federal funds, and it hasn't gotten money from the District for the past couple of years, Dailey said, so it is trying to ramp up private fundraising.
"We have between 400 and 450 individuals in our savings program. The only limitation on that is our funding," she said. "We have the capacity and the federal dollars to serve a lot more. We could double the size in the next year" by raising the $750,000 needed to match the federal grant. The group has a waiting list of 125 people.
"This is a pretty compelling message: For every dollar you give, you're leveraging another dollar from the grant funding," Dailey said. The group's three-year program monitors savers closely to be sure they're putting money aside regularly; the matching amount is capped at $3,000. The participants can't earn more than 85 percent of the area median income, about $52,000 for a family of four.
Myles, an 18-year-old freshman marketing major from the District, said that she watched her mother borrow money and get into debt, and that she didn't want to get into trouble with lots of loans for college and, eventually, law school. She started putting away money from summer jobs, but the matching funds made her even more motivated, she said, with monthly statements showing the balance going up and up. "Saving is awesome!" she said.
She said she used to shop at stores like Forever 21 and H&M too much, and now she uses her willpower to keep the money for tuition and books. Most of it, anyway. "I want to spend allllllllllllll the time," she said, laughing, but she's resisting.
Even in the weeks before Christmas when she was tempted to shop, she said, "I did really good."
And she'll take a bus back to campus when school starts next week. "Right now I really, really, really want a car . . . a punch buggy, a VW Beetle, either a yellow or a green one. But I have to put necessities first," she said. "I need to make sure I can afford next semester's tuition."