Dakota Dream Savings Fund

Questions Frequently Asked by Applicants

What is the Dakota Dream Savings Fund?

The Dakota Dream Savings Fund is a matched savings account designed to help families and individuals establish a pattern of regular saving and, ultimately, purchase a “productive asset.” A “productive asset” is something of value that is likely to return substantial long-term benefits to its owner-- benefits like security, stability and opportunities for increased income. Savings Fund participants may use their savings and match money toward any of the following three assets: a first home, small business start-up/expansion or a post-secondary education.

What is a “savings match?”
A “savings match” is a promise to supplement a participant’s savings deposits at a specific rate; in other words, a 3:1 savings match means that for every dollar participants save, they will have another 3 dollars added to their total savings at completion!

How much money will I receive?
The match ratio depends on funding; it may be a 1:1 up to 3:1 match. For example, participants are able to save up to $2,000 for a match of $6,000 if the match ratio is 3:1. This means if the maximum amount is saved, the participant receives a total of $8,000 to use for asset purchase.

What are the other eligibility requirements?

The program is open to individuals or families who meet the following criteria:

1) Residence in South Dakota.

2) Total household net worth (assets minus liabilities) cannot exceed $10,000, excluding primary residence & one vehicle.

3) Total household income that does not exceed 200% of poverty as published by the Department of Health and Human Services annually.

INCOME GUIDELINES for 2008

200% of the poverty level

Household Size:

One person.................................................... $20,800

Two people.................................................... $28,000

Family of three................................................ $35,200

Family of four................................................. $42,400

Family of five.................................................. $49,600

(Add $7,200 for each additional household member.)

Do I have to be currently employed in order to qualify for the Dakota Dream Savings Fund?
Yes, federal regulations clearly state that deposits made into the savings fund MUST be from earned income. Although, for this program, some funds have been set aside for individuals with unearned income such as SS, SSI, SSDI, pensions, retirement, etc, the match rate will be $3:$1.

Even though I qualify now, what happens if my income increases?
Once you have proven eligible and accepted into the program, eligibility is “locked in”. Participants need only be income eligible at the time of acceptance.

What do I have to do to receive the match funds?

The program has four main requirements that must be completed before participants can receive match funds:

1. Deposit at least $25 into your Savings Fund each month of participation. Participants must save for at least 6 months, possibly 10 months, before becoming eligible to use savings for an asset purchase. Savings periods generally last about 3 years but a savings period of up to four years may be possible depending on grant guidelines.

2. Enroll in case management and meet regularly with a case manager to set and work toward personal and financ0ial goals.

3. Complete 10 hours of financial education. One of the following curricula will be offered during the first year of saving:

a. Money Smart

b. Practical Money Skills for Life

4. Complete 8 hours of specialized asset training. The type of training received depends on the participant’s savings goal.

a. Homeownership

i. Homebuyer Education Course (FREE)

ii. One-on-One budgeting sessions with the IDA Coordinator. (FREE)

b. Post-secondary Education

i. One-on-One sessions with a educational advisor appointed by the college chosen. (FREE)

ii. Education Funding Worksheet

iii. Individual Research

c. Small Business Start-up or Expansion

i. One-on-One session with business counselor after courses are completed. (FREE)

ii. Complete an approved business plan and marketing research.

iii. Complete various online business workshops

What happens if I decide to open an account but later change my mind?

Any deposits made are owned by the participant and can be withdrawn to leave the program. However, if leaving the program without completing the asset goal a participant loses access to any match funds. Match funds are only awarded at the completion of the asset goal and are provided directly to the vendor of the asset (for example, the mortgage company or college.)

What if I want to change my savings goal during the savings period?

Participants are able to change a savings goal if they have a reasonable amount of time to complete asset specific training for that goal and plan for the purchase. The Dakota Dream Savings Fund encourages long-term planning for a specific goal, but sometimes circumstances change causing goals to change as well.

Will a Dakota Dream Savings Fund affect my benefits from other programs? Will it affect my taxes?

Not fully, a Savings Fund opened as part of an Assets for Independence demonstration project is disregarded in determining eligibility for other means-tested programs. Match funds are NOT taxable and do NOT count toward any asset limit for assistance programs. However, the participant’s savings are counted and taxable – but since all savings must come from earned income, these savings have already been taxed and counted as income for other programs.

Can I use my Dakota Dream Savings Fund in addition to other assistance programs?
Yes. For example, education Savings Fund can only be used to pay for tuition and fees, but Pell grants can be used toward a variety of living expenses, so participants are able to use Savings Funds to pay for classes, freeing up Pell grant funds to use for rent and transportation. However, keep in mind that some assistance programs cannot be used in addition to other programs. For example, two federally funded home purchase assistance programs cannot be used together, but a city funded and federally funded program can. A staff member will always be available to help with these questions during the purchase process.

I already have some money saved. Can I move existing savings into the Dakota Dream Savings Fund?
No. All savings must come from income earned during the savings period. Participants are encouraged to open or keep another savings account for any extra savings that is not deposited into the Dakota Dream Savings Fund.

Where can I buy my asset (home, start my business, go to school)?
Dakota Dream Savings Funds may be used anywhere in South Dakota. Each Community Action Agency will serve their prospective service areas.

Where are savings deposited?

Accounts are held at a local bank in your area. Participants will open their accounts and make monthly deposits at that bank. Accounts do not incur any service fees and do accrue a small amount of interest.

What about making savings withdrawals?

Because IDAs are intended to help people purchase productive assets, withdrawals for non-asset uses are strongly discouraged. However, in certain emergency situations, program participants may withdraw some of their savings before they are ready to purchase their chosen asset goal. Such withdrawals would not include savings matches. And, of course, participants are always free to close their accounts, withdraw from the program and receive all of their savings and earned interest. However, withdrawing before reaching an asset goal does forfeit all matching funds.

How do participants receive match funds?

Match funds will be made available to participants when they are ready to purchase an asset. At that time a vendor check will be issued directly to the company, institution or individual furnishing all or a part of a participant’s asset goal (a mortgage company, wholesale supplier or community college, for example).

For more information about the Dakota Dream Savings Fund, please contact:

Northeast South Dakota Community Action Program

Rural Office of Community Services, Inc.

Interlakes Community Action Agency

Western South Dakota Community Action