Leverage Strategic Giving: A Natural Fit for Credit Unions

smaller pile of coins with arrow pointing to larger pile of coins
Andy Roquet Photo
Senior Executive Benefits Specialist
CUNA Mutual Group

2 minutes

A charitable donation account can provide a win-win-win scenario.

Community giving is a part of our credit union heritage. It’s who we are, and the people we serve look to us to do the right thing. A survey completed by Markstein/Certus Insights in 2019 recaps this sentiment as 70% of consumers reported they expect companies they do business with to support social and environmental issues.

Is your credit union leveraging opportunities to actively support your commitment to the community, while broadening the base of investments supporting your executive benefits program?

If not, now is a good time to learn more. The extended pandemic, social unrest and turbulent times have shed light on critical gaps that call for more community support than ever.

Economic realities for credit unions are additionally calling for action. The past year has brought declines in lending and fee income, an environment with interest rates and investment returns at an all-time low, matched with high deposits and rising liquidity. Directing funds to a charitable cause can assist with the management of excess liquidity for credit unions in a way that supports community development and motivates credit union staff, leadership and board members.

A charitable donation account can provide a win-win-win scenario for your credit union to demonstrate commitment to the community.

  1. Invest up to 5% of your net worth in non-703/704 investments that dually support charitable giving as well as your executive benefits program. Funding options include annuities, investments, business-owned life insurance and combinations thereof.
  2. Donate your earnings and capital gains to 501(c)(3) charities. (This applies to federally chartered and most state-chartered credit unions. See state regulations for confirmation.)
  3. Put excess liquidity to good work by providing financial support to an important community cause.

Here's a quick history of the credit union industry’s ability to leverage non-703/704 investments toward strategic charity initiatives.

In 2003, the National Credit Union Administration approved the use of non-703/704 investments to fund employee benefits. Adoption started slowly following the tech bubble and then declined after the economic downturn of 2008. As the economy recovered, credit unions started investing again, making use of the expanded universe of investment options available to them.

In December 2013, NCUA established §721.3(b)(2) for federally chartered credit unions, determining that funding account gains needs to be tied to charitable donations. This funding strategy is widely used across the industry and adoption continues to grow.

It’s a great time of year to assess your charity and benefits funding programs in the context of your credit union’s goals and the extended pandemic economic climate and challenging times.

Andy Roquet has been an executive benefits specialist at CUNA Mutual Group for the last 10 years. Before that, he held a number of leadership positions at CUNA Mutual over his 32-year career. To learn more about setting up a charitable donation account and how to structure a charity and funding strategy that is right for your credit union, watch Strategic Giving, a recent CUES presentation on this topic. CUNA Mutual Group and CUES have additionally co-developed an eBook on the NCUA Examiner’s Guide, which serves as another helpful resource. Call us at 800.356.2644, ext. 665.1035, to connect directly with your CUNA Mutual Group executive benefits specialist.

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