By Dennis Quick
Senior Staff Writer

If you’ve never heard of Individual Development Accounts, join the club. IDAs were new to me until I read Orlando Sentinel columnist David Porter’s Dec. 31 piece.

An IDA can help poor folks emerge from poverty. It is a savings plan. Every dollar a needy household puts in a special interest-bearing account is matched by state and federal funds. Money accrued from IDAs can be used in three ways—to pay for post-secondary education, to buy a house or to start a business.

The brainstorm of Michael Sherraden, founder and director of Washington University’s Center for Social Development in St. Louis, IDAs were federally legislated in the late 1990s and are run by community-based organizations. Today there are more than 500 IDA programs in more than 40 states.

In the Palmetto State, some 540 low-income people have participated in the IDA program since it began here in 2000, according to the South Carolina Association of Community Development Corporations, based in Charleston.

In five years, the participants saved $122,224. Those savings earned $173,802 in matching funds. Twenty participants have used their IDA savings to help purchase a home, 22 have attended post-secondary education, and 25 have started a business.

We have 345 active IDA accounts in the state. Considering that some 567,660 South Carolinians live in poverty, according to the U.S. Census Bureau, we need more IDAs.

One way to help increase the number of accounts and available matching funds is to put a spotlight on IDAs so people know they exist. And though low-income people don’t comprise the Business Journal’s readership, business owners, executives and leaders do.

So I suggest that our readers support IDAs by contributing whatever funds they can to help match whatever poor folks put into the account.

Consider it another form of charitable giving, except it is not just for the poor. It is for all of us. Helping people further their education, buy a home or start a business strengthens our economy. Everybody benefits.

Another anti-poverty measure worth considering is the Children’s Savings Account, or CSA, which Washington University’s Sherraden is also promoting.

At birth, every child in the United States would get a savings account that would grow through family contributions and matching donations from government sources and nonprofits.

Children wouldn’t be allowed to withdraw money from the account until they reached the age of 18. As with the IDA, money from a CSA would be used for education, home buying or business launching.

Britain already has such a program (“baby bonds” they call them over there). Word is that U.S. politicians are giving CSAs a close look.

To those who would sneer at CSAs as another entitlement program our already obese government can do without, I say lighten up, stop sneering and start looking ahead.

CSAs would be an investment in our nation’s future. We’d be investing in our kids.

Is there an investment more vital than that?

It would be delightfully shocking if South Carolina sped past the rest of the nation and took the lead in establishing CSAs. We would actually be first in something decent for a change.

Of course, it is highly unlikely our state government will take the CSA lead and establish a savings account for every South Carolina baby.

But maybe the businesses in our state could get CSAs started, at least in their own regions and for children of poor and low-income families.

I’m imagining businesses working with community development corporations to encourage needy families to scrape up whatever savings they can for a CSA.

I’m imagining businesses contributing whatever they can into a pool from which matching funds for CSAs could be drawn.

No, I haven’t worked out the details. I’m still in the dream phase.

IDAs and CSAs alone will not eradicate poverty, but they seem to be a good start.

Dennis Quick is senior staff writer at the Business Journal. E-mail him at dquick@charlestonbusiness.com.

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