Micro-savings
After financial literacy, one could argue that savings is the next most important aspect of an overall microfinance strategy. Learning to save, or building a savings culture, is critical to one's economic self-reliance over a lifetime. What examples are there of good savings programs, including matched savings, in Canada? Are there promising practices that emerge from those programs?
A Winning Initiative
One of the programs Community First Development Fund of Saskatoon administers was originally an initiative of the Saskatoon Credit Union (now Affinity Credit Union). As one of Affinity’s flagship youth programs, the Individual Development Accounts is an idea begun by an Affinity staff member who served on the CF board from 2000-2007; this program has garnered national recognition for Affinity.
IDA is a financial literacy project. High school students considered “at risk” who are admitted to the program commit to saving money in an Affinity account from part-time jobs that IDA’s co-ordinator assists them to secure. They agree to stay in school and attend regular presentations on different aspects of finances and budgeting, job skills and life skills.
For the past five years CF has been responsible for fundraising to maintain the IDA program. Sources of funding have included the provincial government, the Muttart Foundation of Edmonton, Rotary Club and the Saskatoon Foundation, as well as Affinity Credit Union.
The full-time co-ordinator is a CF employee. She works closely with all of the high schools in the city, through teachers and counselors who advise on candidates for the program. She works with employers to secure job openings and build understanding and support for these students, while still holding them to a regular work standard, something to which many of the students were previously unaccustomed. The program began at Nutana High School in 2003 with 10 students; this year 71 applicants were interviewed, 34 accepted into the program, and 28 students completed the program, ending with a matching grant equal to double what they had saved in the course of the year, to a maximum of $800 per student in matching funds. Over the years 175 students have graduated from the program while another 125 started it but didn’t complete it for various reasons (single parent responsibilities, family disruption, moving away, no savings).
Most years about one-third of the students are Aboriginal, and one-third new Canadians, though these are not selection criteria. At the beginning of the year each student sets a personal goal; they save for clothes, a car, a family vacation, or tuition for post-secondary education. The best saver ended up with $3,000 and planned to attend university. None of the students had ever had bank accounts or jobs before this program.
Of the failures the saddest one was a young person whose family “borrowed” his savings. The teen was discouraged from saving because the family kept taking it away and spending it. Since then, we have arranged to have the accounts locked against withdrawals until the end of June, when the matching grants are added.
For CF, the main challenge is to continue finding funding, and maintaining program quality by keeping a highly qualified co-ordinator. This program, by its nature, cannot become self-sufficient! The demand and need for this type of program is growing. Its strength is the one-on-one attention to each student because these are special-needs teens; but to expand beyond the 30-student average would require more funding. Does the I.D.A. program make a lasting difference? A survey found after a year nearly all of the students were either still working or taking post-secondary education. Students have commented: “I.D.A. has been a great experience. I have learned a lot about life, and many helpful skills that will benifit (sic) me all through my life.” “Thank you for the opportunity for me to learn to save, earn, and grow.”
