FCUs Can Donate Funds to Other CUs, NCUA Says

ALEXANDRIA, Va.-Federal credit unions have the authority to make charitable contributions to other credit unions, according to a recent legal opinion letter (04-0223) from NCUA Associate General Counsel Sheila Albin. In response to an inquiry from the Pennsylvania Credit Union Association Senior Vice President and General Counsel Richard T. Wargo, Jr., Albin wrote, “Credit unions have a long tradition of helping credit unions through such means as nonmember deposits, correspondent services, and contributions of staff, equipment and money. NCUA has long recognized an FCU’s authority to make charitable contributions and donations under its incidental powers authority. Charitable contributions made by FCUs are within their incidental powers because contributions promote name recognition and generate goodwill. NCUA has also specifically recognized an FCU’s ability to make donations to other credit unions over the years.” Albin pointed out that in 1979, NCUA interpreted the Federal Credit Union Act’s incidental powers clause to allow ” reasonable donations” to tax-exempt entities that promote and develop credit unions and other federal credit unions. She also noted an earlier NCUA legal opinion (96-0321), which stated a federal credit union could pay for another credit union’s officials to attend a conference they might not otherwise be able to or provide scholarships for credit union volunteers and officials as “ legitimate FCU expenditures, and not charitable donations subject to the limitations of Interpretive Ruling and Policy Statement No. 79-6.” The opinion found that IRPS 79-6 did not restrict contributions to a conference and NCUA sees not distinction between giving scholarships to the conference and contributing directly to the credit union for the same end.