ALEXANDRIA, Va. (9/13/13)--The Credit Union National Association on Thursday said it strongly supports the concepts contained in the National Credit Union Administration's charitable donation accounts proposal, which was unveiled during the September open board meeting.
Speaking at his first agency board meeting Thursday, National Credit Union Administration board member Richard Metsger, right, questions NCUA staff on the charitable donation accounts proposal. (CUNA Photo)
The proposed rule is intended to allow federal credit unions to invest in charitable donation accounts (CDA) while creating safeguards to ensure the donations are used for their intended charitable purposes.
"We want federal credit unions to have the ability to make charitable investments in a way that supports charitable work and is not used to prop up an income statement with potentially risky investments," NCUA Chairman Debbie Matz said as the agency board considered the rule.
The proposed rule would limit total investment in CDAs to 3% of a credit union's net worth for the full term of the accounts. A minimum of 51% of the total return from such an account would be required to be distributed to one or more qualified charities. Distributions must be made to qualified charities no less frequently than every five years. The National Credit Union Foundation is one of these approved charities.
The agency will accept comment on the proposal for 30 days after it is published in the Federal Register
CUNA on Thursday noted the NCUA's willingness to create a novel structure to facilitate credit unions engaging in charitable activities, which benefits the credit union system and their local communities.
However, CUNA also noted some initial concerns regarding the proposal, including the 3% net worth limitation, which as currently worded would apply against the total value of the account, not the initial investment amount.
CUNA said that this could cause a credit union to need to prematurely reduce its holdings in its CDA in years in which the investments generate large gains, which would reduce the amount of benefit both to the charity and the credit union.
Thursday's open board meeting was new NCUA board member Richard Metsger's first. Following the meeting, Metsger responded to a News Now
question, saying, "I would hope they would all go this well."
He said he was pleased with all the work done by agency staff ahead of the meeting, and noted the staff briefings clarified that all bases had all been covered on Thursday's issues. "That's what I would expect going forward as well," he said.
As for his own future plans for the NCUA board, Metsger told News Now
there's a lot on the plate that he needs to continue to study up on right now. "I will certainly develop an agenda of items that I will then discuss with the chairman, and we'll see how those come forward. That will happen in the few months ahead," he said.