Credit Union Client Alert – September 2015

By Dustin H. DeVore, Lender Representation, Credit Union

As is well known, federal credit unions are not permitted to directly compensate members of their Boards of Directors. However, the National Credit Union Administration (NCUA) has approved a number of methods to assist directors financially through NCUA guidance issued in response to inquiries from many federal credit unions anxious to support the work of their Board members and to encourage volunteers. Some of the expenses NCUA’s guidance has found to be permissible are well known (such as reasonable travel reimbursement), while others less so. NCUA has typically found expenses directly incurred for the benefit of the federal credit union, or in connection with a director’s official business on behalf of the federal credit union, to be permissible. While the rule does have a gray area, the less direct the connection of the expense to the federal credit union or the official business, the less likely that expense is to be permitted by NCUA.

Below you will find a chart to help you navigate questions related to director compensation with the applicable NCUA document referenced. Federal credit unions can use this chart and the details provided by NCUA in the source letters to prepare or amend policies relating to director expenses. New guidance is issued periodically so, as always, if you have any questions related to director compensation please consult with NCUA or your attorney.



ActionNCUA Source letterActionNCUA Source letter

$ 250 gift card provided to officials as a 5th year service award

  • sets gift limit at $50/year
11-0805Reimbursement of baby-siting expenses while official is engaged in official activity92-0507

small gift made to officials share account

  • no set value but must be nominal
93-0233Reimbursement for taking vacation time to conduct official activity92-0507
Long-term care insurance without coverage limited to associated activity10-0913Long term care or cost reimbursements for non-voting officials (modified by 11-0152 which limited this opinion to honorary members)10-0913
Training cost and expense reimbursement for non-voting members that are not purely honorary11-0152Free banking services00-0508
Reimbursement for use/ provision of electronic equipment/internet03-1053Annuity97-1257
Direct purchase of health insurance or reimbursement of premium99-0621Reimbursement of medical expenses not covered by health insurance (i.e. co-payments and deductibles)02-1203
Case specific analysis
Evaluation factors:

1. Was the meal cost incurred while on official business?
2. Was the meal reasonable and propriety according to the norms of the Board?

91-0215Preferential banking services/terms/conditions95-1236
Reimbursement for travel expenses to CU meeting of official and one (1) immediate family member00-0524Reimbursement of cost of official’s “friend” accompanying official to CU meeting00-0524
Reimbursement of travel expenses via per diem (must be reasonable/proper)96-0709Reimbursement of health insurance costs that are not greater than 3rd party benefit received by the official02-0123
Reimbursement of cost for attending conference as CU official (includes the cost of one (1) additional family member)96-1217  
Provision of Long Term care insurance as long as the official is capable and is actually serving as a CU official03-0382  
Participate in self-funded health benefit plans (need to meet conditions set forth in letter)95-1148  
Extension of health benefits to immediate family members of official if there is no additional cost to the FCU00-0849  

1) Reimbursement of premiums for disease specific health insurance in accordance with written policy outlining reimbursement, documentation requirements, and monitoring

  • Plan must have reasonable coverage and amount,
  • Plan must be within bounds of safety and soundness
  • Coverage must stop with termination of board service


The contents of this publication are intended for general information only and should not be construed as legal advice or a legal opinion on specific facts and circumstances. Copyright 2020.