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#129036 - 11/06/03 07:51 PM CRA Donation
bean Offline
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Joined: Mar 2002
Posts: 225
We have been approached by a group that assists a county within our assessment area in helping low-mod families repair their homes etc....
This is our first request for a donation and I am not sure other than their proposal what we need for documentation.
Clearly I believe this would make sense for us but I have never had to go through this process.

Any advice here would be great.

Thanks

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#129037 - 11/06/03 11:19 PM Re: CRA Donation
Princess Romeo Offline

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If the group is a non-profit, you should ask for their 501(c)3 letter from the IRS along with a written request for the money, a copy of the mission statement from the organization that states who it is they are helping and in what form is the assistance. If the group has any literature such as a brochure that lists the types of aid available and to whom, that is another handy item to get. Also, perhaps the group can give you their policy on how they determine someone qualifies for their aid - i.e. income level and such.

Finally, if this group has any letters of recommendation from any city or county authority, that is another helpful item to have.

Basically you need to be able to substantiate that your donation will provide a benefit to low- and moderate-income persons. During a CRA exam, it can be interesting the amount of documentation that an examiner will require.
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#129038 - 11/07/03 01:46 AM Re: CRA Donation
Pale Rider Offline
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Whew, Bonnie nailed it ! Assuming the non-profit provides the info you should get dollar for dollar credit. But donations alone are difficult to get your bank to the critical mass you will need under the Investment Test to get a satisfactory rating.
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#129039 - 11/07/03 01:56 PM Re: CRA Donation
bean Offline
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Joined: Mar 2002
Posts: 225
Bonnie:

Thank you very much for your full response. If it wasn't for experts like yourself I don't know where I would be.

I don't know why we didn't ask if they were a non for profit organization. I guess I just assumed that they were.
They did provide us with this in depth proprosal that included their mission statement and a whole lot more....
It appears that we would be silly not do do this. They are not asking for a lot of funds either....

Just out of curiousity if this organization was for profit, would we still want to consider a donation?

Thanks again.

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#129040 - 11/07/03 02:26 PM Re: CRA Donation
Anonymous
Unregistered

Hey Lisa - I have a huge word document of State of Illinois Community Development Opportunities - sort of like a book validating certain organizations. What is the name of the organization? Also, PM me with e-mail if you want me to e-mail this to you. Also, although it's probably not related to your topic, I did come across the following resource the other day that assists in evaluating ~ 2,500 charitable orgs - Check your charity

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#129041 - 11/07/03 08:00 PM Re: CRA Donation
Anonymous
Unregistered

You can also check out the non-profit status by using the guide star website. There is a post about it in this forum.

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#129042 - 11/07/03 08:01 PM Re: CRA Donation
Anonymous
Unregistered

The thread with the guide star website link is called Documenting Community Development Loans to Non-Profits.

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#129043 - 11/08/03 01:22 AM Re: CRA Donation
Princess Romeo Offline

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Where the heart is
Quote:

Just out of curiousity if this organization was for profit, would we still want to consider a donation?




You can still call it a donation for your CRA Investment performance.

You could not consider it a donation for tax reporting purposes*.

*NOTE - I am not a tax expert, so I am speaking out of personal experience. If in doubt, please consult a qualified tax advisor.
_________________________
CRCM,CAMS
Regulations are a poor substitute for ethics.
Just sayin'

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#129044 - 11/10/03 10:04 PM Re: CRA Donation
tiner Offline
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tiner
Joined: Sep 2003
Posts: 48
South Carolina
We were just examined for CRA (FRB). One comment our examiner said was that we could not donate enough money to make a difference (in our score). I'm sure that each bank will be different according to asset size and the amount of funds available for investment depending on your loan portfolio. You may want to check with your examiner and obtain their opinion on the donation and whether or not it will benefit your bank in the overall scheme of things.

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#129045 - 11/10/03 10:29 PM Re: CRA Donation
Princess Romeo Offline

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Where the heart is
Quote:

One comment our examiner said was that we could not donate enough money to make a difference (in our score)



There's something very sad in that comment. On the one hand, I can understand that an examiner is not going to allow a bank to "buy" it's CRA rating with a bunch of donations, but on the other hand, that creates a real disincentive for banks to donate ANY money for CRA.

There are a lot of very small community organizations that do wonderful community development work, but they would not be able to accomplish these things without financial support from banks. There should at least be something for the donation, perhaps a negative reinforcement that if a bank makes charitable donations, but none of them are for CRA, this would be mentioned as a negative?

Let's face it - I've seen banks more than willing to hand over $50,000 to sponsor a golf tourney. But to give $5,000 to an organization that provides dental services to the poor? Yeah - it's like pulling teeth......
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Regulations are a poor substitute for ethics.
Just sayin'

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#129046 - 11/18/03 09:20 AM Re: CRA Donation
HRH Dawnie Offline
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HRH Dawnie
Joined: Aug 2002
Posts: 7,353
Anchorage Alaska
Quote:

One comment our examiner said was that we could not donate enough money to make a difference (in our score).




I'd agree with Bonnie...SAD comment!

I struggle with the investment test and I work every cent I can towards CRA efforts. Sometimes a five hundred buck donation does so much more than a five thousand dollar donation and I work full time to point out the value of that five hundred bucks to my regulator. If that small donation starts a floodgate of donations to an entity that meets the goals of the muni, I then become a leader by starting the flood. I get more credit for being innovative and a market leader than I do for the small dollar amount, but in the game of CRA innovative, flexible, creative, leaders...WIN!

I can never meet the stated goals that the OCC has for banks of my size, with my net tier one capital. I just have too much money and too little opportunity. The fact that I focus our donations budget towards CRA related entities grants me a leg up on the test. Some of the small deals, when they're market firsts or creative (I didn't just cut a check) give me more credit than my big donations. While it's apparent that the FRB examiner didn't possibly give this credit to the bank that pointed this out, it's not a good example of what the goals of CRA are.

My suggestion...continue to strive for those cool, innovative, market related goal, investments. Don't worry about the non-profit/for profit issues (let the CFO deal with that) and just do your best to meet the needs of your community, documenting ALL of the donations and the value they provided (all of the donations that met CRA criteria). For profit/not for profit isn't a factor. I take credit for both with no issues from my examiners. The difference is purely an accounting issue not a CRA related issue.
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#2182663 - 06/21/18 07:19 PM Re: CRA Donation bean
dcarter Offline
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Joined: Jun 2018
Posts: 1
Question concerning CRA donations...... I am new to the CRA arena as far as being the person responsible for deciding if a loan/donation/investment is CRA reportable or not. If we make donations to a volunteer fire department in a high income census tract, but the volunteer fire department goes on calls to individuals in low/moderate income neighborhoods would this donation be CRA reportable?

And what documentation would I need for the file?

Thanks,

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#2182668 - 06/21/18 07:39 PM Re: CRA Donation bean
Lori01 Offline
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Joined: Jan 2007
Posts: 138
VT
My guess on the fire department is no. I recently tried to get CD credit for a loan to buy a new fire truck in an actual mod income tract and could not get credit for that. (we were an ISB)

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#2183016 - 06/25/18 06:25 PM Re: CRA Donation bean
Tennismom Offline
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Tennismom
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Posts: 764
Interesting......

From a CRA PE, an FDIC regulated bank was given Community Development lending credit for the following:
"The bank originated a $50,025 loan to a fire department in XXXXX County. Loan proceeds were used to purchase a fire truck. The fire department is located in and serves a moderate-income census tract."

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#2183053 - 06/25/18 08:03 PM Re: CRA Donation bean
CompliantOkie Offline
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CompliantOkie
Joined: Dec 2013
Posts: 420
OOOOOOklahoma
Very interesting Tennismom. We've never gotten credit for any work with a fire department regardless of the income level of the tract served.

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#2183114 - 06/26/18 01:22 PM Re: CRA Donation bean
Tennismom Offline
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Tennismom
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Now I understand why the regulators no longer elaborate on exactly what type of activity they gave a bank credit for in the CRA PEs. We keep an arsenal of CRA PEs in our files, in the case an examiner questions why we think an activity qualifies we point to a PE where credit was given.

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#2183118 - 06/26/18 01:32 PM Re: CRA Donation bean
CompliantOkie Offline
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CompliantOkie
Joined: Dec 2013
Posts: 420
OOOOOOklahoma
I do the same thing Tennis. I've got them saved by the "activity" the other bank received consideration for.

However the OCC is headed towards more consistent CRA exams according to their recent exam announcement.

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#2183132 - 06/26/18 02:22 PM Re: CRA Donation bean
RR Jen Offline
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RR Jen
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Running and riding everywhere ...
I have received similar credit for similar activities in our distressed/underserved counties.
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#2183446 - 06/28/18 01:56 PM Re: CRA Donation bean
Tennismom Offline
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Tennismom
Joined: Jan 2004
Posts: 764
One more example from a CRA PE:

"The bank originated a $1.8 million loan to a township to fund a bond issue that will allow for the construction of a new fire house and the purchase of a new tanker truck and other equipment. The township is located within distressed middle-income census tract due to high ratios of poverty."

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#2183949 - 07/03/18 02:57 PM Re: CRA Donation bean
Lori01 Offline
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Joined: Jan 2007
Posts: 138
VT
well GRRRRRRRRRR! SO much for my fire truck...but happy for others to get the credit...that we all should get in these cases!

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#2184439 - 07/06/18 10:06 PM Re: CRA Donation bean
Princess Romeo Offline

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Even if you find examples in the PEs of other banks, it may not sway your examiner because they can just come back with the attitude of "It doesn't matter what OTHER examiners gave credit for in the past, we're not giving your bank credit for it now."

When the ANPR comes out, I'm thinking of writing in a comment letter that the agencies need to have a CRA "clearing" panel where banks can submit their CD loans, services, investment and donations either before they are made or perhaps on a quarterly basis, and the panel will either "green-light" or "red-light" to indicate the item qualifies or does not qualify for CD.

Then come exam time, no more wasted time and effort in trying to convince those examiners with an attitude that your CD loans, services, investment and donations qualify.

Sure - I can hear all kinds of arguments from the agencies as to why they can't do that, and every argument falls on its face because the agencies actually DO do that - except they wait until the "gotcha" moment of an exam.
_________________________
CRCM,CAMS
Regulations are a poor substitute for ethics.
Just sayin'

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#2191050 - 08/29/18 04:09 PM Re: CRA Donation Princess Romeo
fretzer Offline
Member
Joined: Dec 2008
Posts: 76
Pennsylvania
I like Princess Romeo's comment! We need consistency and fairness across all regulatory agencies!!

CD Loans are also difficult to come by. I'm sure all banks make plenty of loans under $1MM that would fall under the CD definition, but because they're not multi-family they cannot be counted.

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