What are Charitable Donation Accounts?
Charitable Donation Accounts (CDAs) are investment accounts that grant credit unions special investment capabilities while supporting their donations to charities. By utilizing CDAs, your institution has the opportunity to fund charitable contributions through investment returns rather than through operating income.
Align your CDA with ALM First
ALM First believes institutions can play a great role in improving the communities in which they operate. By partnering with ALM First, you can:
In addition, working with ALM First’s team of experts, you receive an unbiased perspective, a low-fee portfolio operation, and the industry-leading analytics needed for successful management.
Adherence to regulatory and compliance guidelines is critical when constructing CDAs. The Internal Revenue Code and U.S. Federal Regulations govern eligible organizations and charitable donations. The following are some of a CDAs’ fundamental aspects and benefits:
- Maximum Aggregate Funding
Limited to 5% of net worth for duration of all accounts.
- Return for Donation and Excess Return
At least 51% of total return must be donated to a qualifying organization.
- Minimum Distribution
Required distribution no less than every 5 years, and the discretion on frequency of distributions is made during each 5 year period.
- Education and Due Diligence
Credit unions must demonstrate an understanding of the risks involved with their investments and perform proper due diligence.
Ensuring that CDA investment accounts are properly managed and their risks are well-understood is a win-win for credit unions and their communities. ALM First is here to help.