We are currently enjoying a CRA exam with the FDIC. My 6th in 22 years, and new this year is a question around donations requests that include a "sponsorship" component. These requests are usually event driven, but are, at their core, fundraising opportunities for the non-profit.
The EIC has questioned the idea of these contributions being reported as "donations" because the bank might be "getting something" in return. She seemed to want me to quantify the value to the bank. She seems to want to lower the value of the donation based on the perks the bank gets. Has anyone else run across this push-bank on donations?

Often these requests come with marketing perks, such as a logo on a website or in the even program. I have no way of assigning a $ to that benefit. In other cases, it comes with a certain number of tickets. Again, unless it's a really large non-profit with a huge development staff, they don't tell us, nor do I think they know, the value of the tickets. And we may or may not even use the tickets.

Have others come across this situation recently, and what are you doing about it?

I've been consulting on CRA matters for more than 30 years and I have not heard this issue brought up before. Anytime a bank does something for a community organization they usually (and rightfully) publicize it. The "value" to the bank is incalculable and should not be a factor for recognizing a qualified community development investment or donation. The impact on the community is the more relevant question. These things are difficult to measure so the default is to use the cost to the bank.

Please post on the outcome of your situation. Sometimes examiners will go rogue on obscure areas.

Same as Len. I've been working in CRA for more than 30 years (examiner, consultant, and banker at various points), and I've never heard of this issue. Benefit to the bank is not a component of community development consideration. Quite the opposite - regulators consistently state that serving all of a bank's communities is a good business practice and safe and sound banking.

Expanding on the tickets to events detail: this would include sponsorships that have tickets to a dinner event. Or sponsorships to golf events that include the opportunity for a foursomes to play.

Does anyone attempt to deduct the cost of dinner or a round of golf from the amount they report. Of course this assumes the proceeds are going to a qualified CD activity.

"Benefit to the community" is the only thing that matters. Impact on the bank is irrelevant.

I agree. In the few exams that I have been part of, these have counted and have not been questioned as to "what the bank got" in return for their sponsorship/donation. The whole idea is to form partnerships with these community groups where you both benefit- it's good business for all.

We had the same issue in our 2024 exam. Any sponsorships were considered marketing expenses by the examiner and we had to get evidence from the non-profit to specifically show what our funds were used for, which is often difficult. Any golf sponsorships were out-right disqualified. I think there was something communicated internally (FDIC). Who knows how it will be looked at in this new environment.

The FDIC has expected us to be able to distinguish amount of actual donation portion of any sponsorship separate from value received by the bank for our past several exams, with only those portions considered to be true donations to CRA-qualified organizations or for eligible activities (with documentation to support) given credit in our investment test.

Wow- Although I am new to my CRA duties, I am not new to banking (40+ years). We are an OCC bank, but we were FDIC in my early years. We’ve never run across this.

My take on most of these sponsorships is they are not just a CD Donation, they also provide a service to the nonprofit; there is additional value received than just the monetary donation. For example, several of our partners consider our sponsorship as an anchor and catalyst for other businesses and individuals to do the same. In those cases our sponsorship provides more bang-for-the-buck than a donation to support operations. There’s also a community leadership aspect behind our sponsorships. Although tickets are sometimes given to us as part of the sponsorship, staff attending are primarily there to show our support of the non-profit. The events are promoted as such internally, and even Sr. Management has designated their own attendance as a priority. I just don’t see how this type of involvement can be ignored or monetized in an assessment of a bank’s Community activities.

Granted, this take on service is more a corporate philosophy than an actual CD Service, and we do not submit it as such. I have been documenting this approach as part of our bank’s story and commitment to our Community. We’ll see how this flies in my CRA Audit coming up this Summer!

I would push back hard on this. Most advertising from sponsoring an event for a non-profit is negligible. How much is your logo on a shirt for a 5k or your name mentioned on the orgs social media page really worth? Do they really want you to do a value analysis for every sponsorship and donation that you do? That's just ridiculous. Then, what if they don't agree with your value. It's just a complete waste of your time and theirs. The IRS allows you to write off the whole sponsorship/donation amount as a tax deductible charitable donation, so why should regulators have more strict guidelines.

I've been through 6 CRA exams with the FDIC (SF region) and this has never come up. I would take it up the chain and find someone with some common sense, which seems to be more difficult with all the 25 year olds that make up a majority of our exam team lately.

I've been hearing more of this lately. I do think there was some recent communication, and different examiners are dealing with it differently. Might be able to avoid the issue with wording and how you are presenting your donations. If you describe the donation as a "$500 sponsorship of local golf tournament for advertising on 3rd hole," it sound less like community development than "$500 donation to local non-profit that provides housing to LMI individuals." Obviously don't be misleading, but there's no reason to call out everywhere your name goes. "Sponsorship" seems to be a flag, so just call it a donation.