FOOD BANKS - CRA QUALIFIED?

The FDIC came in August, 2009 to perform a Compliance/CRA exam (no PE received to date). When reviewing our Community Development Services the examiner discounted all entries that weren't related to financial services. So donations to Food Pantries and Christmas gifts provided to LMI children were eliminated. Has anyone been able to qualify these activities without a provision of financial services? IF so, how was it done? Thanks a bunch!

Community development services are related to the provision of financial services. Community development loans and qualified investments do not have that provision. Therefore, if your employees were volunteering their time to collect or organize food for the food bank, I would agree that those services do not qualify. Your employees are not using their financial expertise to serve. However, a donation to the food bank should give you credit under the investment test. Similarly, a loan to the food bank might count as a community development loan, as long as it's not already reported as a small business loan.

The bank should have made the donation in its own name and presented in the investments/grants category. Same for Christmas gifts. Any donations by staff personally do not count.

Any activities such as working at the food pantry or giving out gifts get no direct "credit" but do set a tone for the banks' involvement. If the bank has someone on the board of a food pantry - representing the bank - and sharing expertise that will qualify for services.

We were told that bank funds used to purchase Christmas gift for LMI children did NOT count. Only explanation that I was given was that the OCC had put that in their "guidelines". Of course, banks are not privey to those guidelines. I'm not sure how we are supposed to anticipate changes such as these in order to tailor our CRA programs accordingly. I also have no idea why "gifts" do not count.

4 exams ago they were counted, the last two I was told "it is comparable to giving a child candy, makes them happy for a few minutes but does not help their housing situation." This exam it looks like they are going to count both the food banks and the charity Christmas fundraisers.

I guess it depends on the examiner...

That is where CRA makes no sense - examiner personal opinion should not matter. Nowhere does it say that all funds must go to housing.

Our examiner is big on meeting "vital needs" - shelter, food, education, medical care, employment. If we can prove that a donation or activity/service is going towards providing one of those things to LMI people in our area, we've been OK so far. As far as the Christmas gifts for LMI children, we've been allowed it a couple of times as long as we could prove that the majority of the gifts were clothing and school supplies, with maybe one or two 'wish' items per kid.

MS Kaybee you are absolutely correct. Nothing in the law indicates that toys or gift should not count. Plus, there is a more than sufficient amount of research that proves that toys contribute to the physical, emotional and social development of children. I even pulled that out for my examiner to no avail. I truly believe that regulators are over-stepping their bounds on issues like this. Who gave regulators the right to decide that kids don't need toys? I really don't get it and I have written to everyone on the planet (regulators, legislators, the President, etc.) with virtually no success.