Research Report Building Savings, Ownership, and Financial Well-Being
First- and Third-Year Assets for Independence Program Randomized Evaluation Findings in Context
Signe-Mary McKernan, Gregory B. Mills, Caroline Ratcliffe, William J. Congdon, Michael Pergamit, Breno Braga, Kassandra Martinchek
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Savings and assets play an important role in economic stability and upward mobility for families with low incomes. To help households with low incomes build assets, the federal government launched the Assets for Independence (AFI) program, authorized by Congress in 1998. This program funded individual development accounts (IDAs) that matched personal savings for assets such as a first home, capital to start a business, or higher education and training. Federal fiscal year 2016 marked the final year of five-year grant awards under the demonstration, as no funds were appropriated for the AFI program for 2017 or 2018.

The Urban Institute evaluated the AFI program at two sites, using a randomized controlled trial. This brief summarizes our findings, particularly AFI’s short-term (first-year) and medium-term (third-year) effects. We also contextualize those findings with other research on programs and policies that incentivize saving.

We found that AFI increased savings in the short term, and although the program did not result in greater asset ownership among the full sample of participants, exploratory subgroup analyses provide suggestive evidence that AFI participation might have increased homeownership among renters and increased business ownership among nonbusiness owners, all while reducing economic hardship and use of alternative check-cashing services. These findings suggest that matched savings programs such as IDAs can effectively support savings and wealth-building and can help connect people with low incomes to mainstream financial services.

Primary Research Questions

  1. What are the effects of AFI program participation on savings and assets?
  2. What are the effects of AFI program participation on other aspects of financial well-being, such as material hardship, use of alternative check-cashing, future-oriented planning, and perceived financial well-being?
  3. What can we learn from putting these findings into the broader research context of other policies and programs that promote financial well-being?


The purpose of this brief is to summarize findings from our evaluation of the AFI program’s impact at two sites: Prosperity Works in Albuquerque, New Mexico, and RISE Financial Pathways in Los Angeles, California. This brief also considers these findings in the context of other studies of IDAs, including the American Dream Demonstration (ADD), and other programs and policies that promote savings and financial well-being for people and families with low incomes. Our evaluation seeks to inform the next stage of incentivized saving programs that benefit low-income earners.

Key Findings and Highlights

Our findings suggest incentivized saving programs can achieve the following:

  • AFI increased participants' savings. AFI increased the share of participant savings by 9 percent. Participants saved $881 compared with $224 for nonparticipants. AFI and other matched savings programs demonstrate that families with low incomes save when provided a savings account, financial incentives, and financial education.
  • AFI might help low-income earners acquire assets. Like AFI's three-year findings, ADD did not find significant asset ownership among all participants. However, exploratory subgroup analysis provides suggestive evidence that AFI increased homeownership among renters by 52 percent and business ownership among non–business owners by 53 percent.
  • AFI participants had fewer hardships and experienced improved financial well-being. AFI reduced material hardships both in the short term by 34 percent and the medium term by 25 percent. Previous short- and medium-term evaluations did not examine participants' material hardship, so our findings bring new insight to IDA research. AFI also improved personal financial outlook and shifted people's time preferences from present to future oriented by the third year.
  • Incentivized savings programs help connect people with low incomes to mainstream financial services. AFI led to a 39 percent decline in participants' use of alternative check-cashing services in the short term and 47 percent in the medium term.


The AFI evaluation randomly assigned study participants at two AFI project sites to a treatment group, which could receive AFI services, and a control group, which could not, allowing differences in outcomes between the two groups to be attributed to the AFI program. This evaluation was the first large-scale, multisite study to evaluate the AFI program using a randomized design.

We then synthesized first-year and third-year experimental evidence from the AFI randomized evaluation and put that evidence into the broader research context.


Consider more systematically how IDAs fit with other programs. Additional research on how asset-building programs interact with, complement, and compare with other supports for homeownership, education, and small business formation can build valuable knowledge for policymakers seeking to provide the most effective and efficient support for people with low incomes.

Building rigorous evidence on newer innovations can point to new directions for experimentation and evidence building that can expand on AFI’s findings. Further research is needed to understand new saving incentives and what may be most effective.

AFI reduced economic hardships, but our findings do not show why. Understanding the relationship between asset-building and emergency savings programs and their effects on financial well-being and hardship can be important for future program design.

Matched savings programs remain small in terms of the total number of participants and the overall level of assistance they provide. An important direction for future research is to learn how to make matched savings programs like AFI work on a larger scale.

Authors’ Note

This brief was updated August 4, 2020. We updated the description of our findings to clarify that our exploratory analysis suggests that, in the medium term, AFI increased homeownership among renters and increased business ownership among non-business owners.

Research Areas Wealth and financial well-being
Tags Asset and debts Financial products and services Mobility Financial stability Family savings
Policy Centers Center on Labor, Human Services, and Population