Financial development

Forsyth United Way boosts savings by low-income working people.

By Todd Cohen

WINSTON-SALEM, N.C. [03.30.04] — Helping low-income working people save money so they can buy a home is the focus of a three-year-old effort spearheaded by United Way of Forsyth County.

That effort, launched by public and nonprofit partners in 1999, has grown into a $1 million program that aims to have helped 250 people buy homes by July 2007.

“People really won’t become self-sufficient in their lives unless they move to asset-building, and home ownership is the key,” says Ron Drago, United Way president.

The “individual development account” program matches dollars saved by the working poor and trains them in economic literacy and home ownership.

Launched by Forsyth County and two nonprofits, the Experiment in Self-Reliance and the Consumer Credit Counseling Service, the effort initially received county funds and provided $2 for every $1, up to $1,000, saved by participants.

United Way agreed in 2001 to spearhead the effort, which is getting $1 million over five years, half from the county and half from the city of Winston-Salem.

The two nonprofits provide economic-literacy and home-ownership training, with administrative costs paid with $15,000 a year from the two five-year grants, plus $125,000 from the Winston-Salem Foundation, $18,500 from individual donors and $30,000 from a United Way “Caring Shares” fund.

And with federal and city approval, United Way has begun providing $4 to match every $1 saved by participants.

On average, it costs $115,000 to $120,000 and takes a four-month search to buy a home in the region, says Pam Wyatt, vice president of United Way’s community impact division.

Depending on their credit history, and their ability to save and to qualify for a mortgage, she says, participants take about two years to complete the IDA program and buy a home.

Currently, 158 people are enrolled in the program, mainly African American women.

Eighty-nine people have graduated from the nine-month economic-literacy training, 41 have completed the six-hour home-ownership training, 29 have met the goal of saving $1,000, 49 are searching for a home and 24 have closed on a home and moved in.

The program encourages participants to apply for the federal earned income tax credit, which the Internal Revenue Service estimates is worth $8 million in unclaimed benefits in Forsyth County, Wyatt says.

Participants also can fill out a Form W5 with their employers to get part of the earned income tax credit in advance and jump-start their savings.

In an initiative funded by the Winston-Salem Foundation and the Jessie Ball duPont Fund in Jacksonville, Fla., the IDA effort has teamed up with the county and Wake Forest University to field volunteers at 15 sites such as churches and libraries to help the working poor fill out tax returns and apply for the tax credit.

And as a part of a United Way of America program, Forsyth’s United Way is enlisting employers to help employees use the tax-credit advance to boost their take-home pay, and to boost employee recruitment and retention.

Novant Health, with 2,200 employees earning less than $12 an hour, and Flow Motors are expected to participate, Wyatt says, and an advisory group headed by Don Flow of Flow Motors is recruiting other employers.

The IDA program also offers a savings and financial-literacy program for children of participants, and hopes banks will create “no-cost” products for participants, many of whom have no banking relationship.

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