Individual Development Accounts

Michael Sherraden’s book, Assets and the Poor: A New American Welfare Policy, broke new ground on social policy in 1991. Twenty years later, its impact still is being felt around the world. In Assets and the Poor, Sherraden, PhD, the Benjamin E. Youngdahl Professor of Social Development at the Brown School at Washington University in St. Louis, writes that asset accumulation is structured and subsidized for many non-poor households, primarily via retirement accounts and home ownership. He argues that these opportunities should be available to all and proposes establishing individual savings accounts for the poor — also known as Individual Development Accounts (IDAs). Since Sherraden first proposed IDAs, they have been adopted in federal legislation and in more than 40 states.

A 10-year study on Child Development Accounts (CDAs) has confirmed their viability as a tool for long-term asset building. Beginning as early as birth, CDAs are investment accounts that allow parents and children to accumulate savings for post-secondary education, homeownership or business initiatives. 

TIME magazine has named Michael Sherraden, PhD, the Benjamin E. Youngdahl Professor of Social Development at Washington University in St. Louis, to the 2010 TIME 100, the magazine’s annual list of the 100 most influential people in the world. Sherraden, the founder and director of the Brown School’s Center for Social Development (CSD), is known for his pioneering work on asset building for low-income people.

Child Development Accounts are savings accounts that begin as early as birth and allow parents and children to accumulate savings for post-secondary education, homeownership or business initiatives. “There is evidence that when there are savings and assets in the household – particularly savings in a child’s name – that children have greater educational attainment, are more likely to do well in high school, attend college and graduate from college,” says Michael Sherraden, PhD, the Benjamin E. Youngdahl Professor of Social Development at the Brown School. Sherraden recently was named to TIME Magazine’s TIME 100.

The Center for Social Development at the Brown School is advising and helping to test innovations in asset building — strategies that increase financial and tangible assets for families and businesses — in several countries in East and Southeast Asia.

More than 1,000 Oklahoma babies have received a $1,000 jump-start on saving for college, thanks to SEED for Oklahoma Kids (SEED OK), a seven-year study designed to determine the economic and educational impact of “seeding” a college savings account for children at birth. SEED OK is a collaboration between the Oklahoma State Treasurer and the Center for Social Development at the George Warren Brown School of Social Work.

More than 1,000 Oklahoma babies are receiving a $1,000 jumpstart on saving for college thanks to SEED for Oklahoma Kids (SEED OK), a seven-year study designed to determine the economic and educational impact of “seeding” a college savings account for children at birth. SEED OK, announced June 3 by Governor Brad Henry and State Treasurer Scott Meacham, is a collaboration between the Oklahoma State Treasurer and the Center for Social Development (CSD) at the George Warren Brown School of Social Work at Washington University in St. Louis.

The straightforward solution for many people living in poverty is building savings. For the 9 million disabled Americans living in poverty, the answer isn’t as simple. “The poverty rate among Americans with disabilities is nearly double that of persons without disabilities, and while there is a complex web of federal and state-based programs offering financial assistance to eligible persons with disabilities, policy rules often preclude the accumulation of assets, which are often key for exiting poverty,” says Michelle Putnam, Ph.D., assistant professor of social work at Washington University. “”New research and public policies have the potential to help people with disabilities to have greater economic resources and become more integrated into their communities.” More …

SherradenThe social work professor who pioneered the idea of Individual Development Accounts (IDAs) — matched savings accounts for low-income Americans — says that President Bush’s new individual savings proposals benefit the wealthy but leave behind the working poor. Michael W. Sherraden, Ph.D., the Benjamin E. Youngdahl Professor of Social Development and director of the Center for Social Development at Washington University in St. Louis, says that President Bush’s proposals to expand individual savings are wise, but fall far short of their potential. Sherraden offers suggestions for making investing opportunities available and profitable to all.