How Credit Unions Can Increase Their Community Impact through Charitable Donation Accounts

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Charitable giving is at the forefront of the minds of many credit union leaders. Survey results revealed at the Discovery Conference suggest that over 60 percent of CEOs would like to give more to increase their community impact.

However, as a credit union, you need to focus on charitable giving while prioritizing the needs of your members. How can you invest their savings responsibly while improving your ability to fulfill your mission to give back to the community?

In short, you need to consider risk management when it comes to funding your organization’s charitable giving. Fortunately, thanks to the rules introduced in 2013 by the National Credit Union Administration (NCUA) you can give more to charity, enhance your brand, boost your bottom line, and minimize financial risks for your organization and members. A Charitable Donation Account (CDA) can help you achieve all these goals.

What Is a Charitable Donation Account?

Essentially, instead of using your operating income to fund your charitable giving, you can use your investment income from your CDA.

As per the new rules of the NCUA, you can now use previously impermissible – and often higher-returning– investments to fund your credit union’s charitable giving. Consequently, you don’t need to subtract your donations from your operating income, enabling you to protect your members while improving your community impact.

Better still, you don’t need to donate 100 percent of your CDA investment earnings to charity. You can allocate a minimum of 51 percent to a charity of your choice and keep the other 49 percent as net income, allowing you to enhance your service offering while protecting the savings of your members.

Is a Charitable Donation Account the Best Option?

As with all investment strategies, there are no guarantees regarding the returns you’ll see on CDA. However, over the past few years, CDAs have dramatically outperformed the more conservative investment accounts held by many credit unions.

While past performance does not guarantee future results, long-term returns of conservative, responsible portfolios have historically been 3 to 4 times the returns of a credit union’s typical investments.

Typically in today’s interest rate environment, a typical credit union bond investment may yield a return of 1 percent per year or less. On the other hand, a conservative CDA fund has historically returned around 6% over the last 10 years (including recent events).

chart for how a CDA works

In the example above, a one-year $1 million investment in a conservative investment account would return $10,000. Invest the same cash into a CDA account, and you could earn $50,000 while funding over $25,000 to the credit union’s foundation or to a charity of your choice.

So, with a CDA, you can improve your return on assets, increase your charitable giving, make your mark in your local community, and improve your service offering for members.

Managing Risk with a CDA

At this point, you might worry that potentially higher-returning investments come with higher risks. While that is generally true, those risks can be managed and incorporated into a customized CDA program for your credit union.

At Members Trust, we were one of the core organizations to influence the NCUA’s ruling on CDAs, meaning you can feel confident that we know how to manage your investment while minimizing financial risks. Our team manages over $3 billion in assets, including $200mm in Charitable Donation Accounts for credit unions across the country. Members Trust Company was ranked by Forbes as the top performer in Managed ETF Portfolios, even in a recession.

chart on CDA returns - MTC versus others

*As of as of 12/31/19. Past performance does not guarantee future success.

Because of our credit union ownership, we can offer your credit union more services for less than our competitors. We abide by the management philosophy of our owners – America’s Credit Unions – to act in the best interest of our clients while fulfilling our fiduciary duty as a trust company.

If you want to learn more about increasing your charitable giving while prioritizing and protecting your members and mission, we hope to hear from you.


This article is for informational and educational purposes only and is not intended to provide specific legal or tax advice. Members Trust products are (1) Not FDIC Insured, (2) No Bank Guarantee, and (3) May Lose Value. Past performance is not indicative of future results; return comparisons are between a composite of MTC Credit Union CDA returns and the average yield on investments as reported by the NCUA from 2013 to 2019. Composite returns are gross of management fees.