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New Rules on Credit Union Charitable Giving

September 20, 2012

by Drew Edwards, Esq.

With the New Jersey Credit Union Foundation’s silent auction coming up on September 30, now is a perfect time to examine NCUA’s recent changes to regulations on charitable giving by credit unions.  Before the recent changes, credit unions could only give to non-profit organizations in the credit union’s local community, or to tax-exempt charities operating “primarily to promote and develop credit unions.”  In addition, all charitable contributions had to be approved by the board of directors.  RegFlex relaxed this rule for well-capitalized credit unions, but those without access to RegFlex were still bound.

On July 2 of this year, a new rule went into effect which eliminated both RegFlex and the charitable contributions rule.  All credit unions are now able to make charitable donations as part of their incidental powers, without approval from the board of directors.  While this gives credit unions substantially more freedom, charitable giving is still not completely unrestricted.  All actions taken under a credit union’s incidental powers must be free from conflicts of interest — specifically, “No official, employee, or their immediate family member may receive any compensation or benefit, directly or indirectly” as a result of charitable giving.  This prohibits your credit union from, for example, sponsoring a little league baseball team if your teller’s daughter is a team member.  Or, if an employee were to take up a collection for his spouse’s medical costs, the credit union itself could not make a donation (employees and officers could, of course, donate personally).

The important thing to remember is that these new rules make it easier for your credit union to make a purchase at the NJ Credit Union Foundations’ silent auction.  Enjoy the conference, and don’t be afraid to be generous.

DISCLAIMER: The foregoing is provided for informational purposes only, and does not constitute legal advice. It is not a substitute for legal or professional advice. Any legal advice should be tailored to specific clients and their specific needs. No attorney-client relationship is created by any use of this website. You should not act on the information contained in any of the materials on this website without first consulting a competent attorney licensed to practice in your jurisdiction.

From → Credit Unions

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