A Charitable Donation Account (CDA) is a strategic financial tool that allows credit unions to generate additional income specifically for charitable giving. By investing funds in higher-yield assets, credit unions can significantly increase their charitable contributions while maintaining financial stability. A minimum of 51% of the investment returns must be donated to qualified charities, making it a sustainable and mission-driven approach to community support.

Key Features

• Investment-Based Giving – Credit unions invest a portion of their assets in approved vehicles to generate returns for charitable contributions.
• Regulatory Compliance – CDAs are governed by the National Credit Union Administration (NCUA), ensuring adherence to financial and charitable guidelines.
• Sustainable Philanthropy – By leveraging investment earnings rather than direct donations, credit unions can amplify their community impact without affecting core operations.
• Flexible Charitable Support – Funds can be directed toward 501(c)(3) organizations, including local nonprofits, education programs, financial literacy initiatives, and community development projects.

Key Benefits for Credit Unions

• Increased Charitable Impact – CDAs enable credit unions to potentially triple their giving budgets without additional financial strain.
• Enhanced Community Engagement – Supporting local charities strengthens relationships with members and reinforces the credit union’s commitment to its cooperative values.
• Financial Growth with Purpose – By investing in CDAs, credit unions turn idle funds into a force for good while maintaining financial health.
• Reputational Advantage – Demonstrating a commitment to social responsibility differentiates credit unions in a competitive financial landscape.
• Regulatory Flexibility – Unlike traditional donations, CDA-funded giving is supported by NCUA-approved investment strategies, making it a sustainable long-term solution.

Considerations

• Regulatory Compliance – CDAs must align with NCUA guidelines to ensure investments and donations meet federal requirements.
• Investment Strategy – Credit unions should carefully select investments that balance risk, return, and liquidity while supporting charitable goals.
• Governance & Oversight – Transparent management and reporting are essential to maintain accountability and align with the credit union’s mission and values.

By implementing a Charitable Donation Account, credit unions can maximize their community impact while reinforcing financial sustainability—ensuring that their commitment to "people helping people" grows stronger over time.