WASHINGTON—NCUA needs to update its Charitable Donation Accounts (CDA) rule definition of “qualified charity” to allow credit unions to do more to serve worthy organizations, according to CUNA.
The CDA rule allows federal credit unions to make investments that would otherwise be prohibited provided the proceeds are for charitable purposes.
In a letter to the agency, CUNA called for the definition to be expanded to include 501(c)(19) veterans organizations, in addition to the currently allowed 501(c)(3)s.
“The primary purpose of a CDA is to generate funds to donate to tax-exempt organizations chosen by the federal credit union,” the letter reads.
“Equally Worthy”
At the time the CDA rule was adopted, these tax-exempt organizations were described as “charities” by the board, CUNA wrote, saying it that was understandable given the rule’s narrow definition of “qualified charity” to include only 501(c)(3) organizations.
“We believe tax-exempt veterans organizations under 501(c)(19) are equally as worthy of financial investment from credit unions as are 501(c)(3) organizations,” the letter adds. “Therefore, the NCUA should consider expanding the definition of a ‘qualified charity’ in the CDA rule to include organizations included in section 501(c)(19) of the IRC.”
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