NCUA Board Approves Proposal to Include Veterans Organizations in Charitable Donation Accounts

The National Credit Union Administration Board held its fifth open meeting of 2023 and approved a proposed rule that would amend the charitable donation accounts section of the NCUA’s incidental powers regulation. In addition, the NCUA’s Chief Financial Officer briefed the Board on the performance of the National Credit Union Share Insurance Fund during the first quarter of 2023.

Board Approves Proposed Rule Adding “Veterans Organizations” to the Definition of a Qualified Charity

The NCUA Board unanimously approved a proposed rule(opens new window) that would add “war veterans’ organizations” to the definition of a “qualified charity” that a federal credit union may contribute to using a charitable donation account.

“Within the credit union system, we have many credit unions with fields of membership that specialize in serving military branches, military bases, and defense-related organizations,” NCUA Chairman Todd M. Harper said. “With this proposed rule change, we will allow them to better serve their members and to fulfill their missions. That’s good for veterans, good for military families, good for credit union members, good for credit unions, and good for our country.”

The NCUA Board approved the proposed rule noting the attributes of “veterans’ organizations” as defined by section 501(c)(19) of the Internal Revenue Code are aligned with the purposes of the current charitable donation account rule. A “qualified charity” is a section 501(c)(3) entity defined by the Internal Revenue Code and must be both a non-profit and be organized for a charitable purpose.

The proposal also asks commenters if there are other groups, entities, or organizations the NCUA Board should consider adding to the definition of a “qualified charity” to inform potential future rulemaking in this area.

Comments on the proposed rule must be received no later than 60 days following publication in the Federal Register.

Share Insurance Fund Assets Grow; Equity Ratio Projected to Be 1.25 Percent

The Chief Financial Officer briefed(opens new window) the NCUA Board on the performance of the Share Insurance Fund and the status of its equity ratio, noting that the fund reported a net income of $41.9 million and a net position of $20.9 billion for the first quarter of 2023. The Share Insurance Fund’s total assets increased to $21.0 billion at the end of the quarter from $20.4 billion at the end of the fourth quarter of 2022.

“The Share Insurance Fund generally continued to perform well in the first quarter of the year. Investment income continued to increase with the rise in interest rates and the shift in the fund’s portfolio to overnight investments, which yielded more than longer-term securities,” Chairman Harper said. “The NCUA Board will continue to closely watch credit union and Share Insurance Fund performance so that we may take any necessary actions to maintain the system’s stability and ensure the Share Insurance Fund’s strength.”

The quarterly report included an equity ratio projection. For June 30, 2023, NCUA staff projects the equity ratio for the Share Insurance Fund will be 1.25 percent.

Additionally, for the first quarter of 2023:

• The number of composite CAMEL codes 4 and 5 credit unions increased from 122 to 127 at the end of the fourth quarter of 2022. Assets for these credit unions from the fourth quarter of 2022 remained the same at $5.6 billion.

• The number of composite CAMEL code 3 credit unions increased from 769 to 779 at the end of the fourth quarter of 2022. Assets for these credit unions increased from the fourth quarter of 2022 to $80.0 billion from $71.4 billion.

At the end of the first quarter of 2023, two federally insured credit union failures cost the Share Insurance Fund approximately $1.2 million in losses.

The first quarter figures are preliminary and unaudited. Additional information on the performance of the Share Insurance Fund is available on the NCUA’s website.