members trust

 

NCOFCU’S Charitable Donation Account

Charitable Donation Account (CDA)

The CDA is a hybrid investment approved by NCUA available through MEMBERS Trust Company which grants a federal credit union expanded investment powers to fund charitable contributions.   

For more information, please contact Jason Ritzenthaler, CFA, at 888-727-9191 ext. 705 or e-mail Jason.Ritzenthaler@Memberstrust.com

www.memberstrust.com

"ALM" Advantage of a Charitable Donation Account

MEMBERS Trust Company Charitable Donation Account (CDA) – An Investment Hybrid

What is a NCUA Charitable Donation Account (CDA) Investment?
CDA is a hybrid investment which grants a federal credit union expanded investment powers to fund charitable contributions. To qualify as a CDA, the primary purpose of the investment must be to fund charitable contributions. To the meet the primary purpose test, a minimum of 51% of the earnings and capital gains must be distributed to charities at a frequency of no less than five years. Gains and interest in excess of the 51% are booked as investment income by the credit union. Total investments in CDAs may not exceed 5% of the credit union’s net worth.

How is a CDA Investment booked?
The CDA should be recorded as a Charitable Donation Account using market value accounting (mark to market). Dividends and income to the extent not paid out should be recorded as other investment income. Charitable contributions can be expensed or applied as an offset against income and dividends. Each credit union should consult its Auditor to ensure compliance with GAAP.

How does your credit union retain control over the CDA?
Your credit union maintains authority over the investment management of the CDA. MEMBERS Trust Company will develop an Investment Policy Statement that is compatible with the credit union’s risk tolerance, investment time period and business objective for its CDA. Investment strategy may be changed at any time by the credit union by simply notifying MEMBERS Trust Company of the need to change the Investment Policy Statement. The CDA can be terminated at any time after distributing 51% of the total return earned up to the termination date as required by the regulation.

Why consider funding Charitable Contributions with investments outside U.S. Securities/Agencies?
If a credit union has embraced charitable support for the NCUF, a liability driven investment strategy, like a CDA investment, offers the opportunity to recover the cost of the charitable contribution. Also, implementing our CDA investment will reposition balance sheet assets to different asset classes, a core strategy for effective asset/liability management. The CDA investment option allows a credit union to establish an endowment-like portfolio, yet retain complete control and ownership over the assets in the CDA.


MEMBERS Trust Company CDA Investments

Investment Management By MEMBERS Trust Company, FSB

MEMBERS Trust Company, FSB utilizes a team approach in managing investments. We invite you to review the profiles of the senior members of our team.

John M. Largent, CFA, CFP®, CAP – Chief Investment Strategist
John graduated from the University of Arkansas, Sam M. Walton College of Business with a B.S. in Finance and Banking in 1984 and a Master of Business Administration (MBA) degree in 1985. John has earned the Chartered Advisor in Philanthropy (CAP), the prestigious Chartered Financial Analyst (CFA), designation and the Certified Financial Planner (CFP), certification. Starting his career with a position on the floor of the New York Stock Exchange, John has over 25 years of experience in the financial services industry. He is a member of the national Financial Planning Association (FPA), the Financial Planning Association of Tampa Bay, and the CFA Institute. He is a member of CFA Tampa Bay and is Past President.

Kate Braddock, CFA – Co-Chief Investment Officer
Kate graduated Cum Laude in Economics from the University of Vermont in 1990 and earned her Chartered Financial Analyst (CFA) designation in 1996. Kate has over 20 years experience in the financial services industry including positions at Janus, Putnam, and Eaton Vance where her main focus was on economic, fixed income and yield curve analysis. Kate served as Assistant Portfolio Manager on a top quartile short term bond fund and a senior analyst on a top quartile high yield and flexible income fund. Kate is an active member of the CFA Institute and the CFA Society of Colorado.

Sheldon Reynolds, CFA – Vice President, Trust and Investments
Sheldon serves as Vice President, Trust and Investments, Senior Business Development Officer, Senior Investment Officer and member of the Executive Trust and Investment Committee of MEMBERS Trust Company. He graduated from Appalachian State University, Walker College of Business where he obtained his BSBA degree. He has been a frequent public speaker on various wealth management topics during his twenty year career. Mr. Reynolds has earned the prestigious designation of Chartered Financial Analyst (CFA) and is a member of the CFA Institute and the CFA Society of North Carolina. Sheldon is active in his community, serving as an advisory board member of Academy of Finance of Wake County.

Jason Ritzenthaler, CFA, CTFA – Co-Chief Investment Officer
Jason graduated from Florida State University with dual degrees in Finance and Management Information Systems. He earned the prestigious Chartered Financial Analyst, CFA, designation and the Certified Trust and Financial Advisor, CTFA, certification. Jason collaborated with global portfolio managers and industry experts at the CFA European conference and most recently at Harvard University to study significant trends and academic research in portfolio management. Since joining MTC in 2005, Jason has provided analytical research and strategy while co-managing the ETF model portfolios. Jason began his career in Bank of America’s Private Bank and is an active member of CFA Institute, CFA Society of Chicago, and the Chicago Council on Global Affairs.


Investment Strategy & Management

As evidence from the brief bios, the Investment Team of MEMBERS Trust Company, FSB is comprised of experienced and credentialed professionals. I am very fortunate to lead such a professional team as they strategize and process our investment plan for each client. After 2008, many investment firms had to relearn the fundamental investment principles about the trade off between risk – return and prudent investment management. Please allow me to share two stories that indicate MEMBERS Trust Company never lost sight of those principles.

As a federal savings bank, federal statue requires us to invest 65% of our capital in Mortgage-Backed Securities (MBSs) to support home mortgages. Our choices to meet this legal requirement included MBSs issued by Government-Sponsored Enterprises (GSEs), privately issued MBSs and CMOs with various payment tranches. After reviewing the risk and return on these securities we allocated our capital investments to MBSs issued by GSEs and avoided privately issued MBSs, even though they were highly rated and offered a higher yield.

Prior to 2008, capital markets were driven by the bubble in home prices and excess liquidity. During those years, many firms overly allocated clients to equities to pump up the return, ignoring the risk-return principle. How did we do in 2008? Our investment team was recognized on Forbes.com as the top ranked ETF advisor for 2008 in a survey among ETF providers. Needless to say, our team was very proud of this recognition during one of the most difficult investment years in our Nation’s history, and our clients were very pleased.

 

*The National Coalition of Firefighters Credit Unions, Inc. (NCOFCU) is a non-profit, 501(c) (3) charitable organization. Donors may deduct contributions as provided in IRC 170(c) (3) of the U.S. Tax Code. Employer Identification Number 27-2387106