We have received requests from time to time for fundraising or memorial accounts.  We have determined 3 ways to handle these requests.  Each option carries risks to the credit union and should be evaluated carefully before approving the account opening.

Branch managers must approve each of the following accounts.

1. An Existing member with a positive member relationship may open an account and designate it as a "Special Account" (i.e. "Charlie Johnson Memorial Fund").  That designation is only for convenience purposes and doesn't really affect ownership of the account.  It should an individual account with joint ownership notan organizational account, because there is no organization that has actually been formed.  We will use type code 50 for these accounts for tracking purposes.  However, the account is "owned" by the person or persons who opens it.  They are listed as the owner, and dividends/interest are reported under their taxpayer identification number.  They can solicit donations in the community and people can deposit them in the account, but we are not responsible for overseeing the use of the funds. 
   
   We must be clear that any publicity or advertisement about the account does not give the impression that the OCU oversees it or manages the funds in any way.  To document the account and get the member's agreement to these terms, we will use a "special account addendum" – shown below.  Anyone who makes a deposit in a branch will be given a receipt that indicates "Charlie Memorial Fund, administered by [ account owners name ]"  (We will have to be able to set the appropriate flags in the system and communicate to staff in order to make that an effective tool.  In response to any inquiries, or in any publicity about the account, we must ensure that there is a disclaimer indicating that the account is administered by the member, and the CU is not responsible for distribution of the funds.  We should have the members opening the account to designate the alternate use for the funds should the initial purpose no longer be  appropriate. Example would be, a fundraiser to help with medical expenses and the illness is cured.
   
   We could suffer a blow to our reputation if the funds are misused, we do NOT want to open such an account for everyone who asks.  Thus branch managers must review and approve each account request.   If we question someone's motives or ability to follow through on promises or statements regarding use of the funds, etc., then we will simply decline to open the account.  The account must have a pre-stated time frame for activity at which time the account will be closed.  Typically this time frame would run between 3 and 12 months.
   
   
2. A second approach is to establish an account that is administered by a recognized nonprofit such as the Red Cross or maybe chamber of commerce under their ownership and administration.  The account would be titled in the name of the entity and use the entity EIN, but it would also use the "Special Account Addendum" designation indicating what person or cause it was benefitting.  In this way, deductions would be tax deductible, and the OFCU avoids any potential problem of having the member misuse the funds being administered.  Typically this time frame would run between 3 and 12 months.  These accounts would also use the Type Code 50 for “Memorial Trust Accounts” but will be differentiated by the EIN vs. SS#.
   
   
3. With some expense a member can actually set up a formal trust based on an executed trust agreement.  The CU can then establish the account for the trust as in any other type of trust account.  The trust must obtain a TIN from the IRS prior to opening the account.  This option would typically be used in the case where larger amounts are expected.  Any such accounts must be approved by senior management.  The trust will serve as the documentation for the account and thus the “Special Account Addendum” is not needed.
   
   One important issue for the trust to address is what happens if the stated purpose of the account changes or is no longer applicable? For example, if a fund is established to pay for an individual's medical expenses, what happens if the person dies or all expenses are paid and funds remains in the account? In one such instance, a financial institution was forced to escheat the remaining funds to the state. Most likely the contributors intended the funds to be utilized for the stated purposes or if the stated purpose became moot, they assumed the funds would be used for a similar purpose. We should strongly suggest that the stated purpose also include contingencies so we are not faced with this dilemma. A recognized charity with a purpose consistent with the original solicitation for donations would be an appropriate alternative beneficiary.  These accounts may run longer than the typical 3 to 12 months.
   
   In each of the above cases we want two owners or in the case of the last two options two authorized signers on the account to avoid confusion should one become incapacitated.  We should be extremely cautious of member wanting to open these accounts for individuals or groups they do not have a personal and previous connection with.  In most cases we will not want the funds sent directly to the credit union as it could give the impression that we have somehow approved of or are managing the account in some way.