ALEXANDRIA, Va. (12/16/10)—In a legal opinion released this week, the National Credit Union Administration (NCUA) advised a federal credit union that sought to increase participation at its yearly meeting by giving $25 gift cards to members in attendance. According to the letter, the credit union believed that the gift card giveaways could increase meeting participation at a lower cost than similar giveaways such as free meals. The NCUA found that the gift card giveaway meets a federal credit union’s incidental powers authority, which holds that certain activities are permissible when it is “convenient or useful” to the performance of one of the credit union’s express powers. However, the NCUA said, “while the use of a gift card incentive is generally permissible under a federal credit union's incidental powers authority, a gift card incentive may be objectionable on safety and soundness or corporate waste grounds. “Any incentive offered by a federal credit union to increase participation at its annual meeting must be reasonable,” the NCUA added. The incentive should not be used to influence the outcome of a vote, if there is a vote held during the meeting, the NCUA added. The NCUA cited another credit union’s use of a prize raffle as evidence that the gift card giveaway would be permissible, However, the NCUA added, while the final cost of the raffle was determined in advance, the cost of the gift card giveaway may be less predictable. Specifically, the credit union cannot predict how many members will end up attending the annual meeting. In light of this potential cost variability, it is up to the credit union’s examiner and the NCUA’s regional director “to determine if the proposed $25 gift card incentive is objectionable on safety and soundness or corporate waste grounds,” the NCUA said. For the full letter, use the resource link.