Compliance Blog details NCUA charity rule
Dec. 27, 2013 – A new entry in NAFCU’s Compliance Blog details the implications of NCUA’s final rule on charitable donation accounts, which allows credit unions to support charities through a specially designated account.
The rule was approved by a 3-0 vote at the NCUA Board meeting on Dec. 12. In the blog post, Regulatory Compliance Counsel Alicia Nealon explains that the rule mandates that distributions from such donation accounts must be made no less frequently than every five years, and that assets for donation must be held in segregated custodial accounts or special purpose entities.
“This final rule establishes new ways in which credit unions may use their preapproved incidental powers to support charitable donations and contributions to the community,” Nealon writes. “The rule defines CDA as a hybrid charitable investment vehicle that facilitates the charitable activities of federal credit unions by allowing for investments with a higher expected return, within the safe and sound parameters the rule establishes.”
NCUA also requires that a minimum of 51 percent of the total return from the account be distributed to one or more 501 (c)(3) charities.
Nealon also reviewed comments from Rep. Mel Watt, D-N.C., on his plan to delay the planned increase in guarantee fees, or g-fees, after he is sworn in as Federal Housing Finance Agency director on Jan. 6. Watt said he wants to “evaluate” the plan further. NAFCU opposed the increase and had already expressed its concerns to the agency’s acting director, Edward DeMarco.
NAFCU Compliance Blog