Sec. 39. Special purpose share accounts; charitable donation accounts.

674 words·~3 min read·/il/chapter-205/act-305/39

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(1)If provided for in and consistent with the bylaws, Christmas clubs, vacation clubs and other special purpose share accounts may be established and offered under conditions and restrictions established by the board of directors.

(2)Pursuant to a policy adopted by the board of directors, which may be amended from time to time, a credit union may establish one or more charitable donation accounts. The investments and purchases to fund a charitable donation account are not subject to the investment limitations of this Act, provided the charitable donation account is structured in accordance with this Act. At their time of purchase, the book value of the investments in all charitable donation accounts, in the aggregate, shall not exceed 5% of the credit union's net worth.

(a)If a credit union chooses to establish a charitable donation account using a trust

vehicle, the trustee must be an entity regulated by the Office of the Comptroller of the Currency, the U.S. Securities and Exchange Commission, another federal regulatory agency, or a State financial regulatory agency. A regulated trustee or other person who is authorized to make investment decisions for a charitable donation account, other than the credit union itself, shall either be registered with the U.S. Securities and Exchange Commission as an investment advisor or regulated by the Office of the Comptroller of the Currency.

(b)The parties to the charitable donation account must document the terms and

conditions controlling the account in a written operating agreement, trust agreement, or similar instrument. The terms of the agreement shall be consistent with the requirements and conditions set forth in this Section. The agreement, if applicable, and policies must document the investment strategies of the charitable donation account trustee or other manager in administering the charitable donation account and provide for the accounting of all aspects of the account, including its distributions and liquidation, in accordance with generally accepted accounting principles.

(c)A credit union's charitable donation account agreement, if applicable, and policies

shall provide that the charitable organization or non-profit entity recipients of any charitable donation account funds must be identified in the policy and be exempt from taxation under Section 501(c)(3) or Section 501(c)(19) of the Internal Revenue Code.

(d)Upon termination of a charitable donation account, the credit union may receive a

distribution of the remaining assets in cash, or a distribution in kind of the remaining assets, but only if those assets are permissible investments for credit unions pursuant to this Act.

(3)Pursuant to subsection

(20)of Section 13 authorizing a credit union to make reasonable contributions to civic, charitable, service, or religious corporations and to avoid the cost, administrative expenses, and reporting requirements associated with establishing its own private foundation, a credit union may establish one or more donor-advised fund accounts. The credit union shall maintain the account on its books and records under a name it selects, which may identify the account as a charitable or grant fund or other name that reflects the charitable nature of the account. The account shall be subject to the terms and restrictions set forth in this subsection.

(a)Transfers from a donor-advised fund account shall be limited to foundations exempt

from taxation under Section 501(c)(3) of the Internal Revenue Code.

(b)Distributions by a foundation receiving donor-advised funds from the credit union

shall be:

(i)based upon specific grant recommendations of the credit union; and

(ii)limited to public charities exempt from taxation under Section 501(c)(3) of the

Internal Revenue Code.

(c)Transfers by a credit union from its donor-advised fund account to a foundation

irrevocably conveys all right, title, and interest in the funds to the foundation, subject only to the continuing right of the credit union to designate the entity or entities that will receive the grant funds. Grants may not be used to satisfy any obligation of the credit union and no goods or services may be received by the credit union from the recipient organization in consideration of the grant.