Wisconsin state-chartered credit unions are preapproved to invest in Charitable Donation Accounts (CDAs) per DFI-CU 75.04 (3) as an incidental power. Wisconsin credit unions that invest in these accounts must comply with NCUA Rules & Regulations Part 721.3(b)(2) and the conditions set forth in the rule.
Charitable donation accounts are investments that carry risk. It is expected that any credit union that makes this type of investment will conduct the necessary due diligence and retain the due diligence documentation for examiner review. In addition, the board of directors must establish a policy and investment limits for charitable donation accounts. The board must also document the investment strategies, risk tolerances and must account for the CDA in accordance with generally accepted accounting principles.
Credit unions must also be mindful of Wisconsin Statute Chapter 186.113(8), Donations. The statute states that credit unions can “make donations and grants, the total of which may not exceed 1.0 percent of regular reserves within a given year.” The statute also requires that the board of directors approve any donations and grants after it determines that the donation or grant is in the best interest of the credit union and is reasonable given the size and financial condition of the credit union.