The Inclusive Economy
Innovation Update: Ed Khashadourian
By Sean Luechtefeld on 07/14/2010 @ 04:57 PM
This week’s Innovation Update comes from Ed Khashadourian, whose idea has evolved into the Ramp-UP Accelerated Savings Account. Ed will be sharing his idea in an Innovation Station with an audience of over 1,000 professionals in the asset-building field at the 2010 Assets Learning Conference. Here is what Ed had to share about his innovation:
Ed is working to scale the Ramp-UP Accelerated Savings Account, sponsored by the United Way of Greater Los Angeles and Citi. Participants open a savings account with an initial deposit of $500 and make a $40 deposit each month for a 14-month period. After six months of savings, participants receive an interest subsidy of 19.35%, and receive additional interest after months twelve and 14. Traditional IDA participants receive matching funds upon completion of the program requirements, but Ramp-UP enables participants to save and receive significant interest payments during various intervals, regardless of their ability to purchase an asset. At the end of the savings period, participants are encouraged to transfer their funds into an IRA or other investment product. As of February 2010, six organizations are offering Ramp-UP accounts.
Ed’s goal is to scale the Ramp-UP program by creating a social enterprise called Opportunity to Assets that would market the Ramp-UP model as a turn-key savings product for organizations with a penchant to matched savings, but at a lower cost than the traditional IDA model. Organizations would not have to fundraise for the non-federal match, which is a significant barrier for some non-profits to participate in the Federal Assets for Independence, IDA program. In this current economic climate where funding for the IDA program is sparse, an organization could work directly with a financial institution partner with an interest to open matched savings accounts and possibly provide limited funding for the program. Financial institutions would not need to make a significant gift to the non-profit to manage the program. Instead, they would offer the interest yield which is significantly less than the cost to provide matching funds. Also, the nonprofit would not need to increase staffing to operate the program since Opportunity to Assets would provide the back-office functions. Ed secured an additional sponsor, Union Bank, for the Opportunity to Assets model, which has offered a grant to the United Way to open additional accounts.
Thanks, Ed, for sharing this update. Be sure to check out Ed's Innovation Station at the Innovation Marketplace, one of the many exciting events planned for September’s Assets Learning Conference.