Donor Advised Funds

What Is A Donor Advised Fund?

A Donor Advised Fund (DAF) is a philanthropic giving vehicle that can be utilized within the credit union space to structure and manage charitable giving. Here are some key points about DAFs in relation to credit unions.

Structure and Function

DAFs provide an efficient structure for charitable giving without the administrative burden of establishing and maintaining a private foundation. Contributors maintain advisory privileges over their charitable funds while benefiting from professional investment management and streamlined grant administration.

This flexible charitable giving vehicle allows organizations to create structured, mission-aligned philanthropy programs that can grow over time while simplifying the operational aspects of charitable giving. DAFs can be customized to meet specific charitable objectives while providing robust oversight and simplified reporting.

Introducing the AACUC Future Fund

In March 2024, the African-American Credit Union Coalition (AACUC) announced the Future Fund, a long-term investment program to fund and sustain critical initiatives of the AACUC in serving the credit union industry (Read full press release here). As part of the Future Fund effort, ALM First has launched a charitable donation account (CDA) private investment fund to benefit the AACUC. The fund adheres to NCUA regulations governing CDA investments, and for credit unions investing in the fund, a share of the portfolio proceeds will be automatically distributed to the AACUC on a quarterly basis.

Why Invest?

By channeling investments into the AACUC Future Fund, credit unions contribute to the realization of the organization’s current mission while laying the groundwork for future initiatives. The fund’s proceeds will be strategically allocated to:

• Internships and Leadership Development
• Small Credit Union Sustainability
• Wealth Building and Community Impact Programs
• Operating Reserve for Future Sustainability

How It Works

Managed by ALM First, the AACUC Future Fund operates as a charitable donation account (CDA) investment fund. Credit unions can invest up to 5% of net worth in CDA investments, with 75% of the portfolio’s income after expenses distributed quarterly to the AACUC. The remaining 25% is available to investors.

1. Structured as a Limited Liability Company (LLC) private investment fund.
2. Investors receive a Private Placement Memorandum (PPM) and execute an LLC agreement for a pro-rata share of fund assets.

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