CUNA Mutual Group Proprietary Reproduction, Adaptation or Distribution Prohibited © 2016 CUNA Mutual Group, All Rights Reserved. Boost Charitable Donations While Supporting Your Credit Union’s Bottom Line by Mike Bremer Executive Benefits Specialist

2 Agenda Market Trends What’s a Charitable Donation Account (CDA)? CDA InvestmentsDue DiligenceWrap-Up

33 Market Trends

4 Market Data 60% of credit union leaders and employees say they wish their credit union could give more to its favorite charities. 2 63% of high net worth donors cite “giving back to the community” as a chief motivation for giving. 1 Source: 1 The 2014 U.S. Trust® Study of High Net Worth Philanthropy; Discovery Conference attendees

5 Credit Union Pains Credit unions are philanthropic by nature Many investments are impermissible to credit unions Return on Investment (ROI) from traditional investments for credit unions is low Limited in how you can recognize the service provided by board of directors

66 Charitable Donation Account: What? How? Why?

7 What is a Charitable Donation Account (CDA)? Allows credit unions to generate income through otherwise impermissible investments for donations to 501(c)(3) charities December 2013 – NCUA established §721.3(b)(2) for Federal credit unions

8 Invest up to 5% of a credit union’s net worth Minimum 51% of earnings donated Remaining 49% of earnings used as credit union chooses CDA must remain at or below 5% of net worth CDA Requirements Charitable Donation Account

9 Separate custodial account or trust Document distribution frequency – at least every 5 years (recommend annually) Name charity Document investment policy statement Additional CDA Requirements Charitable Donation Account

10 Why establish a CDA? May help generate additional donation funds Variety of higher-yielding investment vehicles, otherwise impermissible Remaining earnings retained by credit union New way to recognize board members

11 CDA Investments

12 CDA Investment Income Example $10,000 Planned Giving by Credit Union $10,000 Donation Generated Nothing additional for CU $1,000,000 Permissible Investment Earning 1% $25,500 Donation Generated $24,500 Income to CU $1,000,000 CDA Investment Earning 5%

13 OPTION 1: Director Recognition: $15,500 Contribution in Director’s Name $10,000 Original Planned Giving OPTION 2: $15,500 Additional Charitable Donation + or CDA Distribution Example $25,500 = New Total Charitable Contribution (51% of return)

14 Due Diligence

15 Regulatory Considerations NCUA Letter on 5300 CU Call Report (updated March 2014) NCUA guidelines on impermissible investments (Q or Q1 2016) FASB Updated Accounting Standards ASU (January 2016)

16 Analyze the program for: ̶ Legal authority ̶ Accounting considerations ̶ Risk management Evaluate alternatives to the program and/or investments Regulatory reporting items Ongoing 3 rd party vendor relationship Due Diligence

17 Wrap-Up A CDA allows you to: Do Your Due Diligence! Enhance charitable giving Increase income/earnings Recognize board members

18 Mike Bremer Executive Benefits Specialist CUNA Mutual Group , Ext Questions?

19 Proprietary insurance is underwritten by CMFG Life Insurance Company. Proprietary and brokered insurance is sold by CUNA Mutual Insurance Agency, Inc., a wholly owned subsidiary. This insurance is not a deposit and is not federally insured or guaranteed by your credit union. For more information, contact your Executive Benefits Specialist at Representatives are registered through, and securities are sold through, CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, 2000 Heritage Way, Waverly IA 50677, toll-free Insurance and annuity products are sold through CMFG Life Insurance Company. Non-deposit investment products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the credit union. EBSD © CUNA Mutual Group, 2016 All Rights Reserved