Charitable Donation Accounts (CDAs) are hybrid charitable and investment vehicles. They must primarily benefit a charity, such as the National Credit Union Foundation. However, the accounts would also allow federal credit unions to make investments that are otherwise prohibited and could have a higher return as long as the majority of the returns are provided to charities. The proposed rule contains several requirements for federal credit unions that invest in these accounts, including:
The Missouri Credit Union Association (MCUA) filed a comment letter on October 21, 2013, and strongly supports the creation of hybrid charitable and investment vehicles. MCUA commends the National Credit Union Administration's (NCUA) willingness to develop a regulatory framework to support this structure. Nevertheless, MCUA urges NCUA to improve the proposal in a few key areas.
First, limitations on a federal credit union’s Aggregate Contributions to CDAs should be made more flexible by specifying the net worth limitation be measured at the time of purchase or placement of the investment in the CDA and at the time of any subsequent additional investment and raising it from 3% to 5% of net worth. It is also recommended that disbursements be made on an annual basis. Second, the rule should include 704 exclusions to allow corporate credit union participation in CDAs. Third, SEC registration requirements for OCC-Supervised Entities that Manage CDAs for federal credit unions should be eliminated to prevent redundant regulatory oversight. Fourth, the proposal should be modified to allow for a credit union to recoup its costs so that these do not impact the Total Return.