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4000 - Advisory Opinions

Insurance Coverage Afforded Funds Held by Church and Associated Non-Profit Charitable Foundation


June 15, 1992

Walter P. Doyle, Counsel

This responds to your correspondence dated April 27, which was recently forwarded to the Legal Division from the FDIC's Office of Consumer Affairs. In your letter you ask for clarification of the deposit insurance coverage afforded to accounts held by your organization (the "Foundation") and *** (the "Church").

In your letter you state that the Foundation is a non-profit charitable corporation organized under Florida law. And, although you do not indicate whether the Church is a corporation as well, for the purposes of calculating deposit insurance, coverage of both entities' funds would be governed by section 330.9 of our regulations. Section 330.9 provides that the deposit accounts of a corporation or an unincorporated association engaged in any independent activity shall be added together and insured up to $100,000 in the aggregate, separately from the accounts of the stockholders or the person(s) or entity(ies) comprising the corporation or unincorporated association. (12 C.F.R. sections 330.9(a)(1) and 330.9(c).) A corporation or an unincorporated association is engaged in "independent activity" if the entity is operated primarily for some purpose other than to increase deposit insurance. And, an unincorporated association is deemed to exist whenever there is an association of two or more persons formed for some religious, educational, charitable, social or other noncommercial purpose.

The test for separate insurance coverage for Foundation funds and Church funds, therefore, is whether the Foundation is operated primarily for some purpose other than increasing deposit insurance coverage. If the answer is yes, then the accounts of each entity in the same depository institution would be separately insured up to $100,000. If either entity owns deposits in more than one account in the same insured institution, all such accounts would be added together and insured up to $100,000 in the aggregate, per entity.

Finally, you ask whether there is any significance to the fact that the Diocese, the Foundation and the Church all use the same tax identification number. While not conclusive, this fact would tend to suggest common ownership of funds. It does not preclude separate coverage for the Foundation and the Church, as discussed above, but we would need more detailed information about the legal organization of the Episcopal denomination to determine whether the Church and the Diocese would have separate $100,000 limits for deposits in the same insured institution. Basically, that would depend on whether the local church or the diocese (bishop) has ultimate legal ownership of deposits held in the Church's name.

For your reference, I have enclosed a copy of the FDIC's deposit insurance regulations. Also enclosed is a copy of our insurance pamphlet entitled "Your Insured Deposit," which provides answers to the most commonly asked questions about deposit insurance and examples of how it works.

I hope this letter and the enclosed materials have been responsive to your request. Please let us know if we can be of any further help.

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