Navigating Thin Margins: How Charitable Donation Accounts Help Credit Unions Thrive
The financial landscape for credit unions is facing unprecedented challenges. The Federal Reserve’s proposal to lower the debit interchange cap threatens to slash one of the few remaining stable sources of income for credit unions. Compounded by the looming specter of tax reform, credit unions are grappling with an existential question: how can they sustain their operations, preserve their values, and continue serving members while navigating a financial environment increasingly hostile to their traditional revenue models?
The heart of this issue lies in the thin margins under which credit unions have historically operated. As member-driven institutions, credit unions have prioritized low fees, competitive rates, and personalized services. However, with revenue streams facing heightened regulatory scrutiny, many credit unions are at risk of decimating their already slim financial buffers. The potential retraction of services as a cost-saving measure may seem prudent in the short term but risks serving as a Trojan Horse, undermining the very values that define the industry—a commitment to the principle of "people helping people.”
Charitable Donation Accounts (CDAs) speak eloquently to this fraught moment. CDAs amplify the “people helping people” ethos by enabling credit unions to generate significant funds for charitable giving while serving as a diversified revenue stream to help offset losses from interchange fees and other regulatory impacts. This additional non-interest income to a credit union’s bottom line is particularly crucial, now more than ever, as it allows credit unions to continue providing mission-driven services without compromising their financial stability.
To learn more about Members Trust’s CDA solutions, go to https://www.memberstrust.com/institutional-asset-management-cda. Scroll down to the bottom of the page and schedule an introduction. We can walk you through how it works, discuss ways to limit income statement reporting impact, and how to share the good news with your community.
Lean into the movement of “people helping people”!
Non-deposit investment products available through Members Trust Company are not deposits of or guaranteed by the trust company, a credit union or credit union affiliate, are not insured or guaranteed by the NCUA, FDIC or any other governmental agency and are subject to investment risks including possible loss of the principal amount invested. Members Trust Company, owned and managed by America’s credit unions, is a special purpose federal thrift regulated by the Office of the Comptroller of the Currency. This is for informational purposes only and is not intended to provide legal or tax advice regarding your situation. For legal or tax advice, please consult your attorney and/or accountant.
