Charitable Giving by Individuals and Credit Unions

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A Donor Advised Fund (DAF) charitable investment account is an option for individuals who wish to support charitable organizations in a more organized manner. The funds are administered by third parties such as a mutual fund or broker-dealer. A person can contribute cash, securities, or other assets and take an immediate tax deduction.

The funds can be invested in various investment options for tax-free growth. Donors can recommend grants to virtually any IRS-qualified public charity (501C3) they may wish to support at a future date.

The major advantage is that DAF contributions provide an immediate tax benefit while allowing assets to potentially grow tax-free in the future. The flexibility in managing contributions and subsequent gifting versus answering numerous individual appeals is an advantage along with the tax planning options.

The annual reports of these various funds also provide insights into where this segment of the population focuses its giving.

T Rowe Price’s DAF 2021 Annual Giving Report shows its 1,600 donors made over 29,300 individual grants to 11,100 charities.

The five most supported charities were:

  1. Doctors without Borders
  2. Salvation Army
  3. Maryland Food Bank
  4. American Red Cross
  5. Planned Parenthood

These individual donors are a very small and possibly elite sample of the population. However, I found the top five instructive because they are well-known charities and national in scope.

While I would presume many donations were made to educational, religious institutions, and other local charities, it was heartening to see the communitarian spirit indicated by these leading gifts.

Credit union charitable activity

In addition to individual credit union 501C3 foundations, the most popular long-term charitable effort has been the Children’s Miracle Network.

However, credit unions in 2013 received another option via Charitable Donation Accounts. These accounts were approved as an incidental power by the NCUA. Multiple credit union organizations including CUNA Mutual, CUES, and Members Trust Company offer programs for managing these special investment accounts.

While limited to 5% of net worth, their advantage is they can invest in securities outside those permitted for credit unions by rule 703. Their only requirement is that 51% of the total return must be donated to 501C3 organizations over a five-year period.

As of June 30, 2021, there were 187 credit unions that had established CDAs with a total value of $1.084 billion.

The CDA option is established, credit union by credit union, for both fund contributions and subsequent donations. Individual accounts range in size from Pentagon FCU’s $136.4 million to Temple-Inland’s $1,000 balance.

There is no current process for aggregating and reporting these individual charitable efforts as in the T Rowe Price report. As the majority of these accounts appear to be managed by three providers, it would seem feasible to report collective donations by credit unions on an annual basis.

Credit unions certainly promote their individual donations, often with press releases and photos; but the overall impact is missing. I wonder what the top five credit union charitable contributions might be? Whether these are local, national, or even international organizations, the message of cooperative community assistance is only being partially told.

Author


  • A nationally recognized leader in the credit union industry, Filson is an astute author, frequent speaker, and consultant for the credit union movement. He has more than 40 years of experience in government, financial institutions, and business. Chip co-founded Callahan and Associates. Filson has held concurrent positions at the NCUA as president of the Central Liquidity Facility and Director of the Office of Programs, which includes the NCUSIF and the examination process. He holds a magna cum laude undergraduate degree in government from Harvard University. After being awarded a Rhodes Scholarship, he earned a master’s degree in politics, philosophy, and economics from Oxford University in England. He also holds an MBA in management from Northwestern University’s Kellogg School in Chicago.

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