Assets for Independence ( AFI ) is a federal program that distributes discretionary donations to help the poor achieve one of three targets: (1) home ownership; (2) business ownership; and (3) post-secondary education. AFI was created by Assets for the Independence Act.
To strengthen communities and individuals, AFI uses several tools including financial education and grants that support Individual Development Accounts (IDA), also known as matching savings accounts.
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First introduced in 1991, the Asset for the Independence Act (AFIA) worked through several Congress sessions, eventually passing in 1998. The 105th Congress earned $ 105 million to fund the IDA for 5 years. AFI is the "IDA's largest federal funder of programs" providing grants to more than 400 nonprofit and government programs. More than 84,000 families received such assistance from AFI through IDA and financial education programs. More than 40% of these families have been able to "join the mainstream of the economy" through asset purchases.
The main purpose of AFI is to help people get out of poverty by creating the habit of saving their income and using the savings to buy assets. With this money, organizations fund individual development accounts (IDAs) that can help qualified participants acquire the desired assets in the future. Money from this savings account can only be used for the three previously mentioned specific assets of home ownership, business ownership, and post-secondary education. In addition to providing grants for IDAs, the program also manages a national resource center with the intention of assisting AFI grantee to better understand IDA and other asset development strategies.
AFI is currently managed through the Office of Public Services (OCS) and part of the US Department of Health and Human Services (HSS). As stated in its mission, AFI is working to help the transition of low-income families to economic self-sufficiency. In a special partnership between OCS and the Administration for Indigenous Peoples (AFA), AFI helps support the building of assets in indigenous communities through the Native Asset Building Initiative (NABI).
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Stakeholder
To meet their goals and objectives, AFI works with a wide range of organizations ranging from government departments to local charities. Several groups are described below. Before taking down special groups working with AFI, it is important to consider that each organization has a specific purpose, but they are related to the overall goals and objectives of AFI. It is also interesting to note that although these are not all organizations and programs that collaborate with AFI, the various programs are very real.
The groups we will mention in the following sections are Refugee Refugee Offices, IRS, US Department of Housing and Urban Development, and nonprofit groups.
Refugee Refugee Offices, such as AFI, are part of the Department of Health and Human Services. Refugee Settlements focus on policies, programs and initiatives to assist IDPs in the country. As a result, AFI uses the Refugee Resettlement Office as a resource for grant recipients.
The IRS acts as another resource for AFI. One of the main objectives of AFI is to help individuals and groups to effectively save, and one way AFI is able to achieve this goal is with the help of an IRS program called the Earnings Income Tax (EITC) program. AFI uses this program, in collaboration with the IRS, to train organizations that receive grants.
The US Department of Housing and Urban Development, like many AFI recipients, works on development projects. As a result, the Department of Housing also acts as a useful resource and assistance to AFI and their grant recipients. Specific projects undertaken by AFI and the Department of Housing have similarities with development in poor areas of the country, and neither AFI nor the Housing Department reach a group of ordinary people, and in some situations they have to collaborate on the same project.
Nonprofit and Grant Recipients are the largest part of AFI's organization relationships. Although the grantee may not look like a partner, many organizations that receive funds from AFI have been recipients for years. Because AFI provides grants to a large number of organizations in almost all 50 states, there is no need to list them all. However, most organizations are in the following groups: public universities, development councils, community shelters, child support services, Native American Countries, Community Action, United Way, and local non-profit organizations.
Organizational structure
With a basic understanding of AFI and its goals, objectives, and partners, we can better understand the inner structure and potential organizational problems. In the next short section, we will discuss the organizational structure - the process of internal grants and makeup - as well as the budget, and finally the different problems that AFI has.
In this short section, we will discuss the organizational structure. There are two parts to the organizational structure. These two sections are the internal organization, and the grant process.
Internal organization
AFI is a federal program headed by the Public Service Office, within the US Department of Health and Human Services Administration for Children and Families. The AFI Program Manager works closely with the Grant Management office located near the project site. When a particular grant is awarded to an individual group, the grant management office works as an intermediary between the AFI headquarters and the group concerned.
AFI is a program within the structure of the Department of Health and Human Services (HHS). Each year, Congress provides funds for AFI in the HHS budget. Although AFI receives funds through HHS, AFI is basically run by the Grants Management Office (OGM) and the Public Service Office (OCS). These two offices work together to distribute funds to grant recipients across the United States.
OCS approves grantees to receive funding depending on their ability to match funds. Grant recipients partner with Qualified Financial Institutions (QFIs) - banks or credit unions - and they later, with their banks or credit unions, find eligible individuals to set Individual Development Accounts (IDA) Once money is approved and individuals save money in the IDA, The HHS Payments Management Division (DPM) delivers money.
When the OCS approves and fund the grantee, OGM is responsible for requesting the grantee to be responsible for AFI's general objectives and oversight. This office also evaluates the effectiveness of grants, as well as other offices.
Grantees
After understanding AFI's internal organization and its grant process, we can now describe the organizations and groups that receive the AFI grant. The groups included in the 501c3 status include the following: nonprofit organizations; state or local governments; tribal government; low-income credit unions; community development financial institution; and any organization that can show relationships with community-based organizations that handle poverty.
The main organizational issue for AFI relates to the grants it offers. Table 3.1 illustrated below is a description of what a grant offers, who can apply, how many times an organization can apply and how grant money is released.
- Who can register? The grantor must have a 501c3 status.
- How many times organizations can sign up? There is no limit to the number of times an organization can apply for a grant.
- How do I get grant money? Funds are only released when matching funds are generated (information below).
The following is an example of a grant process to a nonprofit. An organization that received a $ 20,000 grant from AFI, but only had $ 5,000 co-financing will initially receive $ 5,000 from an AFI grant and the remaining $ 20,000 as more funds are raised. In addition, the organization must use the whole of the grant before the set deadline, if the funds are returned to AFI.
To qualify, the above organizations should be able to donate at least the equivalent of grants provided by the federal government. Grant recipients find and distribute funds to qualified individuals. Grants from the federal government will not donate more than $ 2,000 for each individual. Every dollar invested by individuals is matched by $ 1 to $ 8 (the average is between $ 2 and $ 3).
Budget
What AFI is receiving
Although the internal process of AFI is important to understand, it is also important to understand the role played by the budget. Like any program or organization, the budget plays a key role in AFI's internal processes. In this section, we will describe the average budget for AFI, as well as the average AFI amount given in the form of a grant.
AFI receives funds through the Grants Management Office. After Congress passes the budget, HSS (Health and Human Services) manages the budget through the Administration for Children and Family Community Service Offices. By channeling funds from HSS, AFI has received an average of $ 20,123,400.
Although the changes have not been drastic, since 2008, AFI funding has fallen by about 5 percent, and has been on a slow slope since then as shown in Figure 4.1. In response, AFI not only spends less, but has spent a larger percentage of the funding devoted to the program.
What AFI gave
The budget can basically give an idea of ​​AFI's ability to meet its program objectives. On average, AFI spends $ 22,144,890 per year, and typically AFI splits its budget among the following: grants, research and evaluation, program development, program support, and technical assistance.
The largest allocation of funds is given to grantees. Using this fund, AFI rewards an average of 44 grants annually for programs across the United States. As mentioned earlier, this grant is in accordance with the grant, at least $ 20,000 each.
Problem
AFI faces four major problems: (1) lack of funds, (2) program inefficiencies, (3) bad publicity, and (4) inefficient long-term behavior.
Funding
Congress lacks AFI funds every year because there are other programs that have priority, and are larger in size. Congressional oversight is due to the great emphasis on other programs, and consequently, AFI has been torn by annual allocations, which have been trimmed by 40 percent in recent years.
Further funding is prevented by legislation; these rules prohibit grants of more than $ 1 million for every single organization and stop IDA federal matching for a total of $ 2000. As there are groups that regularly receive grants from AFI, this limits the assistance afforded by AFI to organizations that successfully dispersed fund. It also makes the process of applying and rewarding more expensive because it must be done repeatedly.
Inefficiency
The grant process is a major inefficiency in AFI. Applications must navigate through multiple organizations before completing anything, and the various stages are expensive. Wages of foreign workers are issued to guide potential applicants. Basically, this blocks potential recipients from receiving money and brings additional costs to the program. The process of implementing, and receiving grants can be increased by reducing administrative costs, clarifying certain sponsoring organizations and defining grant processes from congressional appropriations to IDA individuals.
Publicity
The third issue facing AFI is the lack of publicity; because most AFI funds are used for other needs in the program, there is no focus on publicity. More eligible people need to apply and take advantage of this great asset; however, publicity is expensive, and recruitment is expensive with the budget already bundled by the program.
An innovative solution to this problem is partnering with existing organizations. Jackson and Orwell suggest that partnering with a subsidized housing program will bring AFI to the applicants it needs. The AFI website provides an example of integrating a micro business development program with an AFI recipient to provide a more holistic approach to applicants. AFI has many paths to choose from to connect with participants. Instead of running expensive, ineffective ad campaigns, an innovative partnership strategy is an interesting answer to publicity.
Does not meet all the needs of the poor
Another difficulty for AFI is the long-term needs of its participants. Although basic finance skills courses are mandatory for those involved, and AFI succeeds in helping save a lot for a particular asset, many participants withdraw funds for short-term needs. For example, 64 percent of IDA holders make unparalleled withdrawals.
References
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