NCUA Board to Issue Final Rule on Charitable Donation Accounts; League's Carrie Hunt to Attend Meeting

The NCUA Board has announced the agenda for their November board meeting. In addition to a Quarterly Share Insurance Fund Briefing, the Board will issue a Final Rule on Charitable Donation Accounts (CDAs). The Proposed Rule on CDAs was issued earlier this year.

League President/CEO Carrie will be attending the meeting in-person on Thursday. We will be reviewing the final rule when it is published on Thursday.

In 2013, the NCUA Board approved the CDA rule and permitted federal credit unions to fund a CDA. This account could hold investments that were otherwise impermissible for FCUs, but the account could only be used to provide charitable contributions to qualified entities. The 2013 rule defines "qualified charity" as a charitable organization or other non-profit entity recognized as exempt from taxation under 501(c)(3) of the Internal Revenue Code.

This proposed rulemaking would add veteran's organizations to the scope of qualified entities that credit unions are allowed to donate to through their CDAs. These organizations are under Section 501(c)(19) of the Internal Revenue Code, which lays out a number of requirements and qualifications. In the proposed rule, the NCUA wrote that the Board has been made aware that some federal credit unions want to donate to veterans' organizations through CDAs. This change would allow that to happen by adding 501(c)(19) organizations to the definition of qualified charities, in addition to 501(c)(3)s.

I expect the final rule will be approved largely as proposed, if not entirely. The proposed rule received seven comments, most of which were supportive of the change. The proposed rule also asked if they should consider adding additional groups, organizations, or entities to the definition of "qualified entity" in future rulemakings, and if so, who? The proposed rule noted that the Board has reviewed the list of organizations in section 501(c) and believes that several of them may be considered charitable in nature. As such, it's possible we could see further expansion of this qualified entity list in the future.