The CDA is a hybrid investment approved by NCUA available through MEMBERS Trust Company which grants a federal credit union expanded investment powers to fund charitable contributions.
For more information and examples go to; www.ncofcu.org/Resources/Documents/ALMAdvSingletb.pdf
What is a NCUA Charitable Donation Account (CDA) Investment?
CDA is a hybrid investment which grants a federal credit union expanded investment powers to fund charitable contributions. To qualify as a CDA, the primary purpose of the investment must be to fund charitable contributions. To the meet the primary purpose test, a minimum of 51% of the earnings and capital gains must be distributed to charities at a frequency of no less than five years. Gains and interest in excess of the 51% are booked as investment income by the credit union. Total investments in CDAs may not exceed 5% of the credit union’s net worth.
How is a CDA Investment booked?
The CDA should be recorded as a Charitable Donation Account using market value accounting (mark to market). Dividends and income to the extent not paid out should be recorded as other investment income. Charitable contributions can be expensed or applied as an offset against income and dividends. Each credit union should consult its Auditor to ensure compliance with GAAP.
• Who do credit unions contact to make an investment?
Jason Ritzenthaler, CFA, CTFACo-Chief Investment OfficerMEMBERS Trust
813-386-8705
Jason.Ritzenthaler@memberstrust.com
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