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.

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 2022.