PART 721—INCIDENTAL POWERS Authority: 12 U.S.C. 1757(17), 1766 and 1789. Source: 66 FR 40857, Aug. 6, 2001, unless otherwise noted. § 721.1 What does this part cover? This part authorizes a federal credit union (you) to engage in activities incidental to your business as set out in this part. This part also describes how interested parties may request a legal opinion on whether an activity is within a federal credit union's incidental powers or apply to add new activities or categories to the regulation. An activity approved in a legal opinion to an interested party or as a result of an application by an interested party to add new activities or categories is recognized as an incidental powers activity for all federal credit unions. This part does not apply to the activities of corporate credit unions. § 721.2 What is an incidental powers activity? An incidental powers activity is one that is necessary or requisite to enable you to carry on effectively the business for which you are incorporated. An activity meets the definition of an incidental power activity if the activity: (a) Is convenient or useful in carrying out the mission or business of credit unions consistent with the Federal Credit Union Act; (b) Is the functional equivalent or logical outgrowth of activities that are part of the mission or business of credit unions; and (c) Involves risks similar in nature to those already assumed as part of the business of credit unions. § 721.3 What categories of activities are preapproved as incidental powers necessary or requisite to carry on a credit union's business? The categories of activities in this section are preapproved as incidental to carrying on your business under § 721.2. The examples of incidental powers activities within each category are provided in this section as illustrations of activities permissible under the particular category, not as an exclusive or exhaustive list. (a) Certification services. (b)(1) Charitable contributions and donations. (2) Charitable donation accounts. (i) Maximum aggregate funding. (ii) Segregated account. (iii) Regulatory oversight. (iv) Account documentation and other written requirements. (A) Provide that the CDA will make charitable contributions and donations only to charities you name therein that are exempt from taxation under section 501(c)(3) of the Internal Revenue Code; (B) Document the investment strategies and risk tolerances the CDA trustee or other manager must follow in administering the account; (C) Provide that you will account for all aspects of the CDA, including distributions to charities and liquidation of the account, in accordance with generally accepted accounting principles; and (D) Indicate the frequency with which the trustee or manager of the CDA will make distributions to qualified charities as provided in paragraph (b)(2)(v) of this section; (v) Minimum distribution to charities. (vi) Liquidation of assets upon CDA termination. (vii) Definitions. (A) Distribution in kind (B) Qualified charity (C) Registered Investment Adviser (D) Total return (E) Affiliate (c) Correspondent services. (d) Electronic financial services. (e) Excess capacity. (f) Financial counseling services. (g) Finder activities. (h) Loan-related products. (i) Marketing activities. (j) Monetary instrument services. (k) Operational programs. (l) Stored value products. (m) Trustee or custodial services. (n) Representative activities. [66 FR 40857, Aug. 6, 2001, as amended at 69 FR 45238, July 29, 2004; 73 FR 62856, Oct. 22, 2008; 75 FR 34621, June 18, 2010; 77 FR 31992, May 31, 2012; 78 FR 76731, Dec. 19, 2013; 81 FR 93580, Dec. 21, 2016; 86 FR 72818, Dec. 23, 2021; 88 FR 80952, Nov. 21, 2023; 91 FR 50677, Aug. 6, 2026] § 721.4 How may a credit union apply to engage in an activity that is not preapproved as within a credit union's incidental powers? (a) Application contents. (b) Processing of application. (c) Decision on application. (1) Whether the activity is convenient or useful in carrying out the mission or business of credit unions consistent with the Act; (2) Whether the activity is the functional equivalent or logical outgrowth of activities that are part of the mission or business of credit unions; and (3) Whether the activity involves risks similar in nature to those already assumed as part of the business of credit unions. § 721.5 What limitations apply to a credit union engaging in activities approved under this part? You must comply with any applicable NCUA regulations, policies, and legal opinions, as well as applicable state and federal law, if an activity authorized under this part is otherwise regulated or conditioned. § 721.6 May a credit union derive income from activities approved under this part? You may earn income for those activities determined to be incidental to your business. § 721.7 What are the potential conflicts of interest for officials and employees when credit unions engage in activities approved under this part? (a) Conflicts. (b) Permissible payments. (1) Payment, by you, of salary to your employees; (2) Payment, by you, of an incentive or bonus to an employee based on your overall financial performance; (3) Payment, by you, of an incentive or bonus to an employee, other than a senior management employee or paid official, in connection with an activity authorized by this part, provided that your board of directors establishes written policies and internal controls for the incentive program and monitors compliance with such policies and controls at least annually; and (4) Payment, by a person other than you, of any compensation or benefit to an employee, other than a senior management employee or paid official, in connection with an activity authorized by this part, provided that your board of directors establishes written policies and internal controls regarding third-party compensation and determines that the employee's involvement does not present a conflict of interest. (c) Business associates and family members. (d) Definitions. (1) Senior management employee (2) Official (3) Immediate family member