What is charity banking?
Charities, voluntary organisations and community groups all need somewhere safe and secure to keep their money.
Your charity might keep its money in an account with a bank, building society or credit union. As charities grow, they sometimes find it better to have several different accounts with one bank or building society – or accounts held by more than one bank or building society.
Charities which have been in existence for several years may also have a collection of different accounts with a range of financial institutions. It’s always worth asking about the reason for this and whether it still makes sense to keep money in lots of places.
Why does charity banking matter?
Whether your money comes from donations, fundraising efforts, legacies, grants, providing services, or trading, the people who hand over their money expect you to keep it securely and use it wisely to further your cause. You need to keep it safe from fraud and theft, and to be able to demonstrate how you have used it. When you prepare your financial reports, you will need to be able to show where the charity’s money has come from, and where you have spent it.
You’ll also need to comply with laws that keep us all safer from money-laundering, identity theft and so on.
Although there are still some banks, building societies and credit unions that provide free banking for charities, community groups and voluntary organisations, many financial institutions charge for banking. You should review your banking arrangements regularly to ensure your accounts meet your operating needs.
Some charities will seek out free banking but others may prefer to pay a charge if this means they have a simpler system to operate which saves them time.
Who needs to know about charity banking?
Trustees are ultimately responsible for running the charity, but they can delegate powers to others, including management of the charity’s finances.
If you are a trustee or have been delegated responsibility for a charity’s financial affairs, you must ensure that you exercise care and skill when making decisions.
As part of this responsibility, trustees must make sure the organisation’s funds are managed properly – and therefore must ensure banking arrangements are suitable for the charity’s needs.
Where do we start?
You should consider your charity’s overall financial position and what you are looking for from a bank before deciding which bank(s) to approach.
You may just need somewhere to keep your charity’s cash: a straightforward current account with instant access. The days of keeping the money in a tin are long gone!
Alternatively, your charity may need a range of different accounts and services, for example a current account, savings account, credit facilities and longer term investment options.
[Turn the checklist from BBA leaflet into a PDF?]
Charity Finance Group and BBA (2016)
Banking troubles? Tell us about it!
In March 2022, CFG’s Director of Policy and Communications Dr Clare Mills took part in a roundtable at HM Treasury on banking issues with senior leaders from several high street banks, UK Finance (the membership body for the banking industry) and the Charity Commission, thanks to the involvement of Economic Secretary to the Treasury John Glen MP.
Read all about it
Small Charity Guide to improving cyber security by NCSC
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Have you seen our other CFG Guides for Small Charities? Head back to Series 1 which includes guides on essential finance, GDPR and records management.