ALEXANDRIA, Va.--By a 3-0 vote, the NCUA Board Thursday issued a proposed rule related to charitable donation accounts—a move that now allows credit unions to provide greater monetary support for military charities.
“A qualified charity is a charitable organization, or other nonprofit entity recognized as exempt from taxation under section 501c3 of the Internal Revenue Code. This proposed rule amends the (current) definition of qualified charity by including veterans groups as defined by section 501(c)(19) of the Internal Revenue Code,” NCUA staff explained. “Meaning, if finalized this change would allow federal credit unions to use charitable donation accounts to fund donations to veterans groups.”
Board Chairman Todd Harper explained the current charitable donations account regulation was created nearly a decade ago to allow credit unions to develop charitable giving accounts that could be funded with investments otherwise impermissible for federal credit unions. The current rule requires these funds to go to a qualified charity, as defined by the Internal Revenue Code.
“But the charities that support our nation’s veterans, their families, and survivors fall under a different regulation under the Internal Revenue Code,” Harper note. “This left credit unions that wanted to support veteran organizations unable to use the charitable giving accounts for that purpose. While nothing prevented credit unions from donating to veteran organizations, the current structure may have ultimately been a deterrent.”
Vice Chairman Kyle Hauptman added that given the makeup of the credit union movement, the proposed change is “especially meaningful. Military credit unions represent a significant portion of the nation’s credit union system. According to NCUA call report data, nearly 20% of America’s over 130 million credit union members belong to military credit unions.”
Board Member Rodney Hood said the change lets the U.S. military know credit unions are their supporters.
“The men and women of the U.S armed forces—whether serving in the Army, Navy, Air Force, Marine Corps, Space Force, Coast Guard, or National Guard and Reserve forces—make big sacrifices for our country. We ask a lot of them, and they need to know the NCUA has their backs,” Hood said.