What’s the best way for a charity to handle its finances? Sure, they’re in the business of providing charitable services in the local community. But sound money management is what makes their impact in the community possible.
This is all the more reason why choosing the best charity, CIC bank account, or club bank account is an important part of the process. Charities need to make sure that the account they choose is best suited to serve their group’s interests.
There are a lot of options to choose from and it can be somewhat overwhelming. Fortunately, the team at KG Accountants is here to provide some guidance.
Charities, public interest clubs, and community interest companies are what we do. Below, we’re going to outline the choices you have when it comes to finding a bank for your charity or club. We’ll go over the features charities can expect from each of them, as well as the services the banks provide.
We hope that charitable organisations and their teams will be able to confidently select a bank to handle their organisation’s finances by the time they’re done reading this article. So, stick with us until the end of the article.
There’s going to be a lot of information covered. Make sure to have a pen and paper handy because there’s going to be a ton of notes on this topic.
Let’s get started!
How to Open an Account
Before we get into the “nuts and bolts” of choosing the best charity, club, or community bank account, we’ll need to cover how to open one of these accounts. The process isn’t difficult but it’s slightly different from opening a personal account.
Tips for Choosing the Right Account
The first step is making sure the account is specifically designed for a charity, club, or community group. These types of groups are usually referred to as “Clubs and Societies” on any official banking paperwork.
Some people overlook this step but it’s an important one. Charities need to be able to verify the bank they’re working with offer the type of accounts they need. Some banks only offer accounts for registered charities which is why it’s important to do the research upfront.
Spending the time and energy opening a bank account only to find out it doesn’t serve the group’s end goals doesn’t help anybody.
You’ll also need to make sure that the account isn’t a business account. The main reason is that business accounts are often an unnecessary expense. Most banks will charge fees to open a business account and it’s an extra fee that charitable organisations shouldn’t have to pay.
Signing up for a business account can be an easy mistake to make. This is because, usually, the same team at the bank manages both business and community accounts. Again, just a word of warning to be careful.
If a charity chooses to register their bank account online, they’ll probably need to look under the bank’s Business tab. These types of accounts are grouped together, so make sure to choose a “community” account.
Organisations will also want to make sure the account offers free banking. Try to avoid paying any charges or fees just for having the account. Some banks may require a minimum balance in the account to avoid fees.
Search for a banking option that can offer a truly free account with all of the features the group needs to do their work.
Make Sure to Have the Correct Paperwork
Every organisation needs to provide some information to verify their charity or club. The bank will want to see a group’s constitution or governing document. They will also want to see the letter of registration or deed of trust establishing the charity as a legitimate organisation.
Finally, if the group is formed as a limited liability company, the members may need to provide the bank with the group’s Articles of Association.
It’s important to note that the amount and type of information necessary is going to depend on the bank. Some banks may ask for less information. Other banks may ask for more information like the minutes from a meeting where the charity’s board members select the bank of choice.
Setting Your Account up Properly
Members will also need to pay attention to the way the charity’s bank account is set up. They’ll want to structure the account so that two people are necessary to sign cheques or approval withdrawals for the organisation.
The board should appoint three “signatories” total when setting up the account. This way any two of the three will be able to sign cheques and get withdrawals approved.
The best-case scenario is if these “signatories” have another account with the bank already. This makes the process as easy as possible. If they don’t already bank there, they will need to show up to the branch in person and bring proper identification.
The bank will usually ask for proof of identity and a proof of address. Proof of identity could be a driver’s licence or passport. Proof of address could be a utility bill, benefits letter, or tax demand letter.
Signatories may also need to provide personal banking information. The bank may want to see several months’ worth of personal bank statements or some other document proving the health of their personal finances.
Today, a large number of banks offer online banking services and debit cards. While these are more convenient, they don’t offer the same level of security as requiring two signatories to approve transactions. Organisations will want to keep the same level of security for their online banking, as well.
Make sure the charity’s members designate time daily or weekly to review financial accounts. Two people within the organisation should also be required to approve online card payment transactions.
The Tax Residency Form
Certain financial institutions are beginning to require an additional document known as a Tax Residency form. This form establishes where the community organisation or charity resides for tax purposes.
Filling out the form is less complicated than it seems at first glance. If there are any questions about how to fill out this form, contact our team at KG Accountants. We’re more than happy to help.
Most major banks in the UK offer some sort of community account. Again, it’s important to make sure the community account an organisation chooses meets the group’s needs. This is why it’s a good idea to have a meeting about financial goals and what bank would work best.
Not only does it get everyone on the same page, but an organisation may need the minutes from that meeting as a form of verification down the road.
Consider the practical factors when choosing a bank. Think about things like, “Is there a branch conveniently located for our daily business”? The culture and ethics of the bank you choose to work with are also important.
Think of the bank you choose as an unofficial partner in your organisation. Making sure they have the same concerns and values as the team will ensure the relationship runs smoothly as time goes on.
Bank Accounts to Choose From
Now, let’s get into the specific bank account options to choose from. As we mentioned earlier, each major bank should offer some type of community account. This is a quick rundown of each option available and the features that they offer.
By viewing this list, charities and organisations can get a better idea of which bank might work best for them.
The community account offered by NatWest bank is a popular option. One of the nicest features is that community organisations can apply online. You’ll also get a higher level of security than some of the other, more traditional banks.
At least one of the signatories for an organisation needs to already be a member of NatWest. This is an added step that most banks don’t take toward a charity’s peace of mind.
NatWest also gives its community account holders several options to manage their finances. Members can access their accounts over the counter, online, or through NatWest’s mobile banking app. Members will also get a chequebook, financial ledger, and debit card included with the account.
If the organisation makes less than 100,000 pounds per year, they’ll also be entitled to free banking.
Some people like the added security of banking with a big name like Barclay’s. As a result, many charities choose them as their community banking solution. Currently, however, this is causing a bit of a problem.
The waiting list for a Barclay’s Community Account is currently 4 weeks out. This means you’ll have to wait 4 weeks before you can even get an appointment with a banker. Companies also can’t switch their account if they already have one with another bank.
That being said, banking with Barclay’s might be worth the wait. The community account offers free banking, up to 6 debit cards, and chequebooks. Companies will also be allowed a maximum of 3 signatories.
To qualify, organisations must be charitable and have an income of less than 100,000 pounds.
To apply for a Metro Bank account, members will need to visit the branch office. But, once a member, you can manage the account in a number of ways. Charities will be able to manage the organisation’s finances over the counter, by phone, or online.
A chequebook and financial ledger will be provided and Metro Bank offers free banking up to 200 transactions and 10,000 pounds in transaction value per month.
Charities need to be starting fresh to bank with Lloyd’s. The institution isn’t accepting accounts that are switched over from other banks.
Organisations can apply online if they’re a small club or unincorporated association. Members can manage their accounts over the counter, online, or over the phone. Lloyd’s will also provide a chequebook, financial ledger, and debit card.
If an organisation makes less than 50,000 pounds per year, it will qualify for free banking at Lloyd’s.
At least one signatory of the account must already be a member to apply for an RBS community account. But, if a member meets that requirement, your organisation can apply online.
RBS offers a mobile app in addition to the standard methods of account management. You’ll receive materials like a debit card, chequebook, and paying in book. Organisations making less than 100,000 pounds per year will also qualify for free banking.
The Bank of Scotland isn’t accepting any transfers at the moment. If an organisation currently has an account at another bank, it may want to explore banking options at another institution.
These accounts are specifically designed for not-for-profit or charitable organisations that make less than 50,000 pounds per year. RBS will provide a debit card, chequebook, and paying in book.
If the organisation applying is a small club or unincorporated association, the application can be completed online. RBS offers free banking to all members with this type of account.
The account can be managed at local Post Office branches. This gives members ease of access no matter where they’re located. These accounts can also be accessed over the phone or online.
Santander is currently only taking applications for this account from existing customers. But, these accounts are designed specifically with not-for-profit organisations in mind. As long as an organisation is making less than 250,000 pounds per year, it should qualify for this account.
Santander offers several ways for members to access their accounts. The Treasurer’s Current account can be accessed over the phone, online, at local Post Office branches, local bank branches, and via Santander’s mobile app.
Santander offers free banking to all members who have this account. The bank will also provide a debit card, chequebook, and paying in book to account holders.
- The HSBC Community Account eligibility criteria broadly aligns with the definitions of charitable organisations set out in the Charities Act 2011.
- This means not all not-for-profit organisations will be eligible. Check the following criteria to see if your organisation may be eligible before applying.
- The organisation must:
- be established as a not-for-profit organisation
- not operate for the benefit of shareholders, or for the generation or distribution of profit.
- not be a political party who field candidates for elections. However, it can carry out political activity or non-political campaigning activity if it clearly supports the delivery or furthering of its not-for-profit purpose.
Community Banking Done Right
There it is! All of the community banking choices are available in one, convenient place. Choosing the best charity, community, or club bank account has never been easier.
If there are any questions about which option might be the best fit for a particular charity or organisation, we can help. Contact the team at KG accountants today. We have years of expertise and the industry and would be more than happy to help any organisation that needs it.
Arrange a FREE initial consultation.
0207 953 8913