Is a United Way donation a qualified CRA investment?

Is there any regulatory guidance on this issues?

It should be since the UW benefits low and moderate income people. Is it for use within your assessment area?

We get a letter from United Way stating that our donation went to programs specifically for low- to moderate-income families/individuals/areas...that way there's no question.

Two exams ago we used United Way for credit and the examiner accepted it. This year we put it in and they were going to throw the whole amount out. I won't go into the conversation we had about accepting it at one exam and not the other.

We had to contact the UW office and get a list of the non-profits that get funding from them and then prove that over 50% of those entities had a CD purpose. What a pain. I think they have long forgotten that this version of CRA is supposed to be less paperwork than the old.

Whatever community organization to which you contribute, it is necessary to establish that the primary beneficiaries of the program are low or moderate income people or low or moderate-income areas (or distressed, underserved or disaster areas). There are some terrific community organizations doing wonderful things but which don't qualify as "community development" under CRA. Do you remember what qualifies as community development under CRA? Identify the community development purpose and get documentation to substantiate it. If the organization isn't targeting primarily LMI people for its overall programs, make certain your funds are earmarked for a program that is. I've seen too many banks "throw away" money intended to earn recognition under CRA because the bank thought almost any non-profit community group qualified.

There is no substitute for documentation from the organization as evidence. I have done a lot of web searching as well and put the support in the file so the examiners' questions are pretty much already answered when they review my donations file.

While I know it is the political things to do - giving to the United Way. The sure fire way is to give directly. In our community the United Way pockets about 10-12% of all donations and only about 40% of the remaining funds go directly to non-profit organizations and the rest now funds "special projects".

No guidance on this issue that I have found.
We recently argued this point to our examiners...

One other thing you can do is put restrictions on your donation re use for benefit of low to moderate income beneficiaries/groups that help low to mod....and then obtain follow up documentation that your requirement was followed. Never just give the money and hope for the best. Put some strings on it. It is a little more work up front but saves a made scramble during an exam as you have everything you need.

I believe 2 years after 9/11, 50% of the $1,000,000,000 donated immediately after the attack was still sitting in accounts instead going to the intended recipients. The United Way rep has never been able to give a good answer to my questions on that - and I have not given them any money since that day.

All digression aside, the bank has always reported the United Way dollar contributions and volunteer time and has not run into any issues...yet.

Less is more!

From one former examiner's viewpoint; I always looked at what is the bank doing that only a bank can. Everybody and anybody can contribute to the UW. If you really want to have an impact and receive credit, give your money directly. The smaller number of Non-Profits that you deal with, less paperwork but better results.

That examiner probably does not understand the pressure put on banks to be a strong giver to UW as part of the community. I can see not getting CD credit for the donation, but don't expect banks not to be on the list of UW givers.