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Charitable Donation Proposal Tweaks Could Improve Participation: CUNA
ALEXANDRIA, Va. (10/22/13)--While the National Credit Union Administration's proposed creation of hybrid charitable and investment vehicles "will allow federal credit unions to do well by doing good," the Credit Union National Association Monday recommended a few changes that could improve the proposal. The changes would "facilitate credit union participation without raising safety and soundness concerns," CUNA said in a comment letter to the agency.
 
The NCUA plan, introduced at the agency's September open board meeting, would limit total investment in charitable donation accounts (CDAs) to 3% of the credit union's net worth for the duration of the accounts. A minimum of 51% of the total return from such an account would have to be distributed to one or more qualified charities. Distributions could be made to qualified charities no less frequently than every five years.
 
These CDAs will allow federal credit unions to make investments that are otherwise prohibited, provided that the proceeds are primarily for charitable purposes. This would facilitate a federal credit union's charitable activities by allowing investments that could generate a higher return, CUNA wrote.
 
Changes recommended in the CUNA comment letter include:
  • Making the limitations on a federal credit union's aggregate contributions to CDAs more flexible by specifying the net worth limitation be measured at the time of purchase or placement of the investment in the CDA and at the time of any subsequent additional investment and raising it from 3% to 5% of net worth;
  • Making CDA disbursements on an annual basis;
  • Allowing corporate credit union to take part in CDAs;
  • Eliminating U.S. Securities and Exchange Commission registration requirements for Office of the Comptroller of the Currency-supervised entities that manage CDAs for federal credit unions. Such a change would prevent redundant regulatory oversight; and
  • Allowing credit unions to recover their costs so that these do not impact the total investment return.
For the full CUNA comment letter, use the resource link.
Other Resources

CUNA Comment Letters
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