Shortly after Veterans Day, the National Credit Union
Administration (NCUA) Board unanimously approved a final rule adding “war
veterans’ organizations” to the definition of a “qualified charity,” which
federal credit unions are permitted to contribute to via a charitable donation
account (CDA).
The new rule recognizes certain groups related to the
military, including clubs and trusts connected to current or former members of
the U.S. armed forces, as among those to which federal credit unions can provide
aid through a designated donation account. Such groups are recognized as
tax-exempt under section 501(c)(19) of the tax code, according to the rule.
“With this final rule, the NCUA is taking an important step
in honoring our nation’s many veterans,” NCUA Chairman Todd Harper said in a
statement. “The rule is good for veterans, good for military families, good for
credit union members, good for credit unions, and good for our country. And, it
fits nicely within the credit union ethos of people helping people.”
The move elicited strong expressed support from multiple
organizations, including the National Association of Federally-Insured Credit
Unions (NAFCU), Defense Credit Union Council (DCUC), the Veterans of
Foreign Wars (VFW) and life insurance company TruStage.
“Allowing credit unions to use investments held in a CDA to
fund contributions to 501(c)(19) veterans’ organizations will increase the
resources available to help veterans in need and further strengthen the credit
union industry’s ties to veterans, military servicemembers, and their
families,” the organizations wrote in a letter to the NCUA.
The organizations suggested the board eliminate or clarify what
the rule is referring to with the term “war veteran” in the regulation,
addressing whether “the intention is to broaden the definition to encompass all
501(c)(19) organizations.”
Per the rule, a “qualified charity” must be both a nonprofit
and have a purpose that helps others, such as doing charitable work or
supporting important causes.
The proposed rule was approved at the NCUA Board’s meeting,
during which members discussed how the attributes of “veterans’ organizations,”
as defined in the Internal Revenue Code, aligned with the purposes of the
agency’s rule governing how federal credit unions may utilize funds allocated
to their charitable donation accounts.
The final rule will take effect 30 days after its publication
in the Federal Register.