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Tuesday, February 9, 2016

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Cascade: No. 61, Spring 2006

Bank and Nonprofit Help Moderate-Income Families Build Assets

Over three years ago, Open Hearth Inc., a Chester County nonprofit, and Patriot Bank, now Susquehanna Patriot Bank (SPB), recognized the great need to promote asset building for moderate-income individuals. At the time, these individuals did not qualify for Pennsylvania’s Family Savings Account (FSA) program, administered by the Pennsylvania Department of Community and Economic Development, because the program provided matching funds only to low-income participants whose earned income was less than 200 percent of the official federal poverty standard.1

Open Hearth and Patriot Bank agreed to create an individual development account (IDA) program for moderate-income individuals, including all those who have earned income below 60 percent of the median income.2 Open Hearth also was one of the nonprofits that administered the state’s FSA program to low-income individuals.

When Patriot Bank was acquired by Susquehanna Bancshares in 2003, the newly formed SPB committed to continue to support the program. Ellen Crain, senior vice president and CRA officer for SPB, said, “This program enables us to assist moderate-income workers to build assets and is also CRA-eligible.”

Today, Open Hearth refers to the IDA programs that it administered for low-income and moderate-income individuals collectively as the Family Savings Partner Program. Through the moderate-income portion of the program, SPB provides a match of up to $500 per year for two years for a total match of $1,000. Those enrolled in the program must complete one-on-one sessions with Open Hearth staff members and four group financial-management classes offered by Open Hearth.

Crain said that the matching funds for the program come from SPB’s community development budget. In 2005, SPB contributed $5,000 to the program and has committed to contributing $10,000 in 2006. In 2005, the funds that weren’t used for matching contributions were given to Open Hearth to cover the administrative costs of the program. Open Hearth also has community development block grant funds from Chester County to cover a portion of the administrative costs, in addition to private funding.

Participants in the moderate-income program can save for car purchase or car repair, home purchase or home repair, business start-up, retirement, or education. Five participants have achieved their saving goals through the program. Of the five, three have saved for car purchase and two have saved for both car repair and retirement purposes. Four of the five have taken advantage of the full SPB match of $1,000 over two years. There are currently nine other individuals enrolled in the program. Of the nine, three are saving for home purchase, three for car purchase, two for home repair, and one for business start-up.

Eric Forsythe, executive director of Open Hearth said: “The main lesson we have learned from administering the Family Savings Partner Program is the importance of partnership. You really need to partner with other organizations, such as the funding institution and other nonprofit agencies in the area, to make this type of program work. This is not a stand-alone program for Chester County. It is also important to develop strong relationships with the individuals participating in the program. Susquehanna Patriot Bank has been a tremendous asset to our nonprofit organization as we have developed this program.”

Editor’s note: Pennsylvania’s Act 29 of 2005 modified the guidelines of the FSA program, effective July 5, 2005, enabling more participants to qualify. Participants are eligible if their earned income is less than 200 percent of the official federal poverty standard or less than 80 percent of median income. This modification applies only to new allocations awarded by the state for the 2005–06 fiscal year. It does not apply to previously awarded allocations, even if those allocations have not yet been distributed by the nonprofit or public agency to low-income individuals. Open Hearth and SPB are determining how this change in guidelines will affect their moderate-income IDA program.

For information about the Family Saving Partner Program, contact Andrea Bosbach of Open Hearth at (610) 792-9282 ext. 204 or

  • 1 In 2005, 200 percent of the official federal poverty standard for a family of four in the continental U.S. was $38,700 (U.S. Department of Health and Human Services,
  • 2 To determine program eligibility, Open Hearth uses the income limits established by HUD for the Philadelphia metropolitan statistical area (MSA). In 2005, median family income for a four-person household in the MSA was $68,800. Sixty percent of median family income was $41,280. When comparing the participants eligible for Open Hearth’s low-income program and moderate-income program, there is a greater difference in the eligibility requirements for small families. For example, in 2005, 200 percent of the official federal poverty standard for a one-person household was $19,140, and 60 percent of median income was $28,920.