I am the treasurer of the local affiliate of Habitat for Humanity. We occasionally have considerably more than $100,000 in our accounts at our bank, especially after a major fund-raising event.
With all the recent press on bank failures, the question of FDIC insurance came up at our recent board meeting. Are the funds that we have earmarked at the bank for tax and insurance escrows and those for building new homes separately insured from the funds we use for our operating costs?
As we understand the Habitat model, you hold or service mortgages for homeowners who have purchased the homes that your affiliate has built. Like most mortgage loans, yours require that the borrowers pay a portion of their annual insurance and real estate tax bills with each mortgage payment, and you (the affiliate) hold those funds to pay insurance and tax obligations.
If you hold those escrow funds in a separate depositaccount, identified on the bank's records as an escrow account, or otherwise, to indicate your fiduciary capacity, and if you keep records of the individuals on whose behalf you hold those funds, that account will be covered on what is called a "pass-through" basis, as the individually-owned funds of each of those mortgagors (borrowers), combined with any other funds those individuals have on deposit at that institution, with a cap of $100,000 per individual. Other funds that you have on deposit at any individual bank, whether they are earmarked for building efforts or operations, are combined as the funds of your affiliate, and insured up to $100,000, whether those funds are held in checking, savings, money market or time deposit accounts.
It would always be wise for your affiliate to deposit its funds in institutions such that your FDIC coverage is optimized. If your institution participates in the CDARS program, you may be able to use that institution as a conduit through which to place time deposits with other CDARS participants so they are all fully insured, but if you need to keep your funds liquid and local, you'd be prudent to place parts of your funds with other area institutions. That could, incidentally, be a catalyst for improved support for your organization from those institutions.
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As we understand the Habitat model, you hold or service 