In December of 2013, the NCUA Board approved a final rule amending the incidental powers rule (Part 721) to clarify that a federal credit union is authorized to fund a CDA, a hybrid charitable and investment vehicle, as an activity incidental to the business for which a FCU is chartered, provided the account is primarily charitable in nature and meets other regulatory requirements.
A Charitable Donation Account (“CDA”) investment allows a credit union to make a charitable contribution while allowing the contribution to pay for itself. Over the last 3-5 years, an investment in the CDA would have allowed a CU to increase its charitable contributions while retaining a net return significant higher than generated on its traditional investments. Please see below the Investment Return Chart.
Who do credit unions contact to make an investment?
Jason Ritzenthaler, CFA, CTFA
Co-Chief Investment Officer MEMBERS Trust