How to Add Leverage to Your Strategic Giving Program

By Andy Roquet, Executive Benefits Specialist, CUNA Mutual Group

In a survey by Markstein/Certus Insights, 70% of U.S. consumers said they expect companies they do business with to support social and environment issues.* This attitude, combined with a distressed economy, makes this a perfect time to publicly emphasize and build on your credit union’s strategic giving program.

Our industry’s reputation for community service gives you a great platform to build on. Build that platform even higher with a funding strategy that includes non-703/704 funding instruments approved by the National Credit Union Association (NCUA).

Is your credit union leveraging opportunities to actively support your commitment to community, while broadening the base of investments supporting your executive benefits program?

If not, now is a good time to learn more. The extended pandemic, social unrest, and turbulent times have shed light on critical gaps that call for community support.

Economic realities for credit unions are additionally calling for action. The past year has brought declines in lending and fee income, an environment with interest rates and investment returns at an all-time low, matched with high deposits and rising liquidity.

Directing funds to a charitable cause can help you manage excess liquidity in a way that supports community development and motivates credit union staff, leader, and board members.

A charitable donation account can provide a win-win-win scenario for your credit union to demonstrate commitment to your community.

1. Invest up to 5% of your net worth in non-703/704 investments that dually support charitable giving as well as your executive benefits program. Funding options include annuities, investments, business-owned life insurance, and combinations thereof.
2. Donate your earnings and capital gains to 501(c)(3) charities.
3. Put excess liquidity to good work by providing financial support to an important community cause.

Here’s a quick history of the credit union industry’s ability to use non-703/704 investments to fund strategic charity initiatives.

In 2003, the NCUA approved the use of non-703/704 investments to fund employee benefits. Adoption started slowly, following the tech bubble, and then declined following the economic downturn of 2008. As the economy recovered, credit unions started investing again, making use of the expanded universe of investment options available to them.

In December 2013, the NCUA established §721.3(b)(2) for federally chartered credit unions, determining that gains for charitable funding accounts need to be tied to charitable donations. This funding strategy is now widely used across the industry, and adoption continues to grow.

What makes sense for your organization?

To learn more about setting up a charitable donation account, and how to structure a charity and funding strategy that is right for your credit union, call us at 800.356.2644, Ext. 665.8576.