Written by Steve Van Beek
I hope everyone had a great long weekend. I wanted to thank all the loyal readers out there as today marks the 1000th blog post for the NAFCU Compliance Blog. You guys are what makes the blog great - thank you!
Last week, NCUA issued Legal Opinion Letter 11-0805 regarding compensation for volunteers. Here is the opening paragraph:
"Thank you for your letter to the General Counsel of July 23, 2011, seeking our opinion on whether Hudson Valley FCU’s policy of giving a Volunteer Service Award of a $250 Visa gift card is permissible under NCUA’s rule limiting compensation of officials, 12 C.F.R. 701.33 (“the Rule”). The policy provides for such awards “at the end of each five-year period of service” to volunteers who may include members of the credit union’s board of directors (“BOD”) and committees. As explained below, our opinion is that a Volunteer Service Award recognizing an individual director’s or committee member’s substantial length of service is permissible under the Rule so long as the award is nominal in valuein proportion to the period of service it covers." (emphasis added).
What is nominal? From the closing of the letter:
"Based on our prior opinions, and adjusted for inflation, we would consider a maximum of $50 per year of service to be 'nominal.'"
One of the prior opinions from NCUA on this issue is a 1993 letter where NCUA took the same position for nominal gifts.
May I play devil's advocate for a moment? Thanks. Considering that NCUA has had the same opinion since at least 1993 - why doesn't NCUA amend 12 C.F.R. 701.33 to provide an additional exception to the definition of "compensation"? There are already three exceptions in Part 701.33(b) to the definition of "compensation" so this wouldn't be new territory.
Why make credit unions research and review legal opinion letters to find this longstanding exception? Remember - NCUA reviews 1/3 of their regulations each year. It appears Part 701.33 will come back up for review in 2012. Hopefully NCUA will take the initiative and add this exception to the regulation itself.
Of course, be sure to review the full letter if your credit union offers a similar award or is thinking about doing so.
Again - wanted to thank you for supporting the blog and supporting NAFCU! Tomorrow will be post 1001 - see you there!