Opening a bank account for a charity is quite similar to opening a bank account for a small business.
It is also an essential step when initially setting up your charity, allowing you to properly manage all things money. This guide focuses on current accounts and everyday banking for charities. We have a separate guide on comparing savings accounts for charities.
No, you can’t. Just like a limited company, a charity is an independent legal entity, so its finances should be managed separately.
When you apply to register your organisation with the Charity Commission, you will be asked for its bank account details, among other things.
Having a dedicated bank account will also makes things easier for you: you will be able to keep track of the charity’s money without having to sift through your personal transactions and account statements.
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Dankse Bank’s day-to-day current account for registered charity customers charges a low monthly fee of £2.50, plus low fees for everyday banking transactions. The account comes with a Mastercard debit card to make purchases and get cash anywhere in the world, and an overdraft facility is also available. When managing the account, customers will have the option of using the Dankse online banking platform, District, to get a full view of their business finances, order new cards and block existing ones. Alternatively, they can carry out banking transactions in their local Dankse Bank branch or local Post Office branch. Customers can apply for the account by phone, in branch or by post and can choose to set up email, SMS or Push mail notifications about their balance and transactions.
HSBC’s bank account for charities charges a monthly fee of £5, but offers reduced fees for everyday banking transactions. Online payments and debit card payments are free of charge. Customers have the option of an arranged overdraft and the account can be managed online, via the app or in branch. In addition, when you apply for the Charitable bank account, you’ll receive a free 12-month British Cycling Fan membership, giving you discounts on bikes and cycling equipment as well as bike insurance. If your organisation is a club, society or organisation with a turnover of less than £2 million, you can apply online. If your organisation is not a club, society or organisation or has a turnover of more than £2 million, you’ll need to call HSBC’s account opening team to discuss your options.
This business account is designed for non-profit organisations such as charities, churches, clubs or societies that have a turnover of less than £50,000. To apply, you'll need to give Lloyds Bank a ring. The account offers free day-to-day business banking and there is no minimum deposit requirement. You can withdraw funds as and when needed, manage your account online and by phone and you have the option of adding a second signatory onto the account. The account offers free presentation cheques to use when making a large donation or awarding a major prize. You'll also be able to benefit from a free three-month trial of online accounting software Business Finance Assistant to help manage your invoices and submit your VAT tax returns. Its Cardnet service helps businesses manage accepting card payments, and you will have access to the Lloyds online digital skills training.
Pros
Free account (provided you qualify)
Three month trial of accounting software
Access to digital skills training
Cons
You’ll need to have an annual turnover of less than £50,000
You can only authorise one other signatory on the account
This straightforward bank account from Metro Bank is designed for charities, clubs and societies that have an annual turnover of less than £250,000. There are no monthly maintenance fees and you'll get up to 200 free transactions per month. You'll be allowed a maximum of 3 account operators, who can withdraw or deposit up to £10,000 per month with no fee. There's also the option of applying for an arranged overdraft and the account offers free giant cheques, perfect for prize givings or charity donations. Additionally, you will have a local business manager as a dedicated point of contact. If you regularly travel as part of your club, another bonus is that there are no fees for using your debit card in Europe (fees apply outside Europe). The account can be managed online, in store, over the phone or in the app.
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The Community account from NatWest is free of charge, provided at least one person named on the account is an existing NatWest personal or business banking customer and your organisation's annual credit turnover is less than £100,000. The account offers free access to FreeAgent's online accounting software to help you with invoices and expenses, cash flow forecasts, and your tax timeline. Account holders have access to 24/7 online banking and phone banking, plus you can bank anywhere with the mobile banking app. There is the option of having a cheque book and paying in book which could be useful if you're receiving cash or cheques. Plus, you can digitally sign payments and account changes with other members of your group through Bankline for Communities. You can also authorise up to four individuals as signatories on the account.
Pros
Free account (provided you qualify)
Access to free online accounting software
Authorise up to four individuals as signatories on the account
Multiple ways to bank
Cons
At least one account holder must be an existing customer
If your turnover exceeds £100,000, your account will be moved onto the standard tariff (fees apply)
Bank accounts for charities operate like business accounts – they enable organisations to manage their finances separately from the personal finances of their directors, or in the case of charities, their trustees.
Many high-street and online banks offer accounts specifically for charities. There are also a handful of financial services providers who mainly look after charities or social enterprises.
By law, any charity that receives at least £5,000 per year has to be registered with the Charity Commission, the regulator which oversees the charitable sector in the UK. All registered charities must have their own bank account.
But if your charitable organisation is just starting up, you won’t necessarily need to set up a separate bank account for it until it starts to raise income up to the £5,000 per year mark.
Are bank accounts for charities free?
It depends on the bank and on how big your charity is, but it will be hard to find an account that is completely free. Still, charity bank accounts are usually cheaper than standard business accounts.
Some of the fees your organisation might incur are:
Monthly fee. This is just a fixed monthly fee to keep the account open. If your charity has a comparatively low annual turnover, you should be able to find a charity account that does not charge it.
Foreign transaction fee. Most banks will charge you a fee if you use your debit card to make payments or withdraw cash from an ATM outside the UK.
Depositing cash. Some bank accounts may charge you to deposit cash into the account, especially if you go beyond a certain limit.
International bank transfers. Sending money abroad from your UK charity account is also unlikely to be free.
Overdraft. If your account offers an overdraft, it will come at a certain interest rate. You should really avoid using it if possible, they’re hardly good value for money.
Cheques. There may be fees for issuing or paying in cheques.
This is just an overview of the most common fees; you should always check your charity account’s fees document carefully before applying.
What features do charity bank accounts offer?
As you would expect, charity bank account features will vary depending on the bank offering the account. But many such account usually include the following common features:
Debit card. As with a current or business account, a charity account can come with a debit card to make it easier for charities to make purchases of supplies or relevant services.
Dedicated relationship managers. Many banks offer a relationship manager for the account holders, in a similar way to business account holders.
Certain number of free transactions. As with many business accounts, charity account holders can enjoy a certain number of transactions free of charge.
Cash counting machines. Some banks enable their charity customers to take donations in coins and banknotes in-branch to put them through counting machines and then deposit them into the account.
Limited free deposits and withdrawals. These monthly limits will usually cover a number of payments or a set amount.
Cashback. Some accounts offer cashback on certain types of purchase.
Overdraft functions. Some banks offer their charity customers limited short-term borrowing facilities.
How to find the best bank account for a charity
While it may seem more stressful and complicated, opening a bank account for a business or a charity is not that different from opening a personal current account. Which also means that there is no one-size-fits-all solution; you will need to find an account that works for your organisation and management style.
Here are some tips on how to go about picking your charity’s bank account:
Think about what you need.Try and picture how you will be using the account. What transactions will you need to make? How often? How many people will they need access to it?
Compare many different options. There are more charity accounts than you might think out there; don’t stop at the first or second you see. Actually take the time to compare and contrast options instead.
Fees. This is of course the main thing to consider. As a charity, chances are that money will be tight, and you don’t want to waste it on banking fees. Calculate how much the account is likely to cost you in a year.
Ways to bank. Some banks will have branches and allow you to sort things out in person; others will be much more online and mobile focused. What suits you best?
Eligibility criteria. You want to check them carefully before starting your application in order not to waste time.
Account features. Apart from all the standard stuff, what else does the account offer? For example, will you be able to accept card payments if you need to? Can it help with budgeting and accounting?
Other banking products. Opening a current account is the first step, but you might need other banking services in the near future (such as savings accounts). See what else the bank you are considering can offer to your charity.
Read the terms and conditions carefully. It’s tedious, but don’t skip this step. You don’t want any surprises down the line.
One more thing to keep in mind is that there are different types of banks offering charity accounts. There are traditional banks (think Lloyds and the like), which list them under their business account section as “community accounts”.
Then there are challenger or digital-only banks, which will not usually have dedicated charity accounts but still sometimes accept applications from charities for their standard business accounts (and can be quite cheap too).
Finally, there are financial companies that specialise in charities, such as Charities Aid Foundation, which is the biggest provider of charity banking services and a charity itself.
How to open a charity bank account
Depending on the bank, you might be able to open a charity bank account online or need to do it in person. You will usually need to provide:
Details and documents of your charity. Depending on your charity’s structure, these may vary; you might have to give your charity registration and Companies House numbers, or if you don’t have them, your organisation’s constitution documents.
Details of people involved. Normally at least two trustees as well as any other signatories on the account. You will need to give their personal details, proof of identity and proof of address.
Who manages a charity bank account?
Like a regular business account, a charity bank account (sometimes known as a community account), will have one or more signatories. These are people who can authorise withdrawals and payments on behalf of the organisation. It is usually a good idea for a charity’s treasurer or finance director to be in charge of managing the account.
The Charity Commission states that “where practicable”, bank mandates should need 2 signatories, one of whom is a trustee. But the commission acknowledges that some charities may allow for low-value amounts to be authorised by just one individual. It’s important to get familiar with all the commission’s rules on banking before opening an account.
How are charity bank accounts treated for tax purposes?
Charities don’t pay tax on most types of income (as long as the income is spent on recognised charitable purposes). But they can claim gift aid, which is a scheme which allows charities to reclaim any tax paid on donations given by UK taxpayers.
So being able to manage all this within a charity bank account is very important. As with businesses, charities still need to submit annual accounts and tax returns, even if they pay little or no tax. So again, using a single account to manage all of the incoming and outgoing payments is vital.
Pros and cons of opening a charity bank account
As an independent legal entity, your charity needs a bank account.
Opening a new account allows you to separate the charity finances from your personal cash.
Some suitable business accounts can be opened and managed online, or via a banking app.
Bank accounts for small businesses and charities usually aren’t free and can come with a range of irritating transaction fees.
Slightly more banking administration, especially if you go via two different banks for your personal and charity accounts.
Bottom line
As an independent legal entity, a charity must have its own bank account. Not only is this a requirement for getting your charity registered with the Charity Commission, it also helps you to separate the charity’s finances from your own.
The process for setting up a bank account for a charity is similar to opening an account for a small business. It’s likely that the bank account will charge fees, both for certain transactions and for general account management. It’s a good idea to shop around to find an account that suit’s your organisation’s needs.
For example, if you receive donations in cash, it may be helpful to open an account with a bank that has a sizeable network of physical branches in your area so you can make regular cash deposits.
Frequently asked questions
It depends on the bank, but usually limits have to do with the charity’s turnover more than with the overall balance. If your organisation grows and its turnover goes over a certain limit, the bank may start charging you a higher fee or change your account type.
It really depends on the bank (and often on whether it’s a busy time). Challenger banks tend to be quicker compared to traditional ones.
You should be able to, yes. The bank may ask for proof of your charitable purpose, such as your governing document or constitution.
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Valentina Cipriani was a writer at Finder UK. She wrote news, features and guides about banking and credit cards, helping people to improve their financial lives. She holds an MA in International Journalism. See full bio
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