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 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.
How does your credit union retain control over the CDA?
Your credit union maintains authority over the investment management of the CDA. MEMBERS Trust Company will develop an Investment Policy Statement that is compatible with the credit union’s risk tolerance, investment time period and business objective for its CDA. Investment strategy may be changed at any time by the credit union by simply notifying MEMBERS Trust Company of the need to change the Investment Policy Statement. The CDA can be terminated at any time after distributing 51% of the total return earned up to the termination date as required by the regulation.