Charity and Club Accounts

What is a savings account for a charity or club?

Charities, clubs, voluntary organisations and other community associations with surplus funds could benefit by opening a savings account. These accounts can not only separate your savings from your day-to-day funds, but also allow you to earn interest and boost your income.

There is a range of savings, or bank deposit accounts, for charitable organisations, including easy access accounts that typically allow unrestricted withdrawals and notice accounts that allow withdrawals, subject to providing notice. While these accounts pay a variable rate of interest that could change, there are fixed rate savings accounts that pay a guaranteed rate of interest in return for not withdrawing from your savings during the term.

Some banks and other providers allow charities and not-for-profits to open their standard business savings accounts, but others will offer specific accounts for charities, clubs and similar organisations.

There are also some providers that specialise in offering accounts and other services to charities and non-profits.

Why should I open a charity account?

Most charities will need a bank account to manage their funds and keep their money secure. It ensures their money is kept separate from the personal funds of the people involved with the charity or organisation, making it easier to manage and comply with financial regulations, for example.

Having a bank account in your charity’s name can also help your organisation appear legitimate to potential funders, for example, and it may be required to apply for any funding and grants.

Moreover, a bank account in the name of the charity or community organisation will typically be required to register with HM Revenue and Customs (HMRC) and claim any tax relief.

While a bank account is important for a charity to have, a savings account can also be useful. A savings account can help you put aside money for future goals and allow you to earn interest on your surplus funds, which you may not be able to do if you left it in your bank account.

What are the benefits of using a charity or community account for clubs?

There are plenty of charity or community accounts available to clubs and similar organisations which can offer several benefits, including:

• Easier management of finances. Having all your club’s finances in one, specific account will make it easier to manage and keep track of your income and expenditure.
• Access to support and special features. Some providers offer extra support and features (such as discounted access to services) with their charity or community accounts.
• A secure way to manage your finances. With their checks and controls, banking providers can help to ensure your organisation’s money is safe and minimise the chances of fraud.
• Allow you to register with HMRC and access any tax reliefs. Clubs, charities and other community organisations typically need to have a bank account to register with HMRC, claim any relevant tax relief and claim Gift Aid, for example.

What are the fees associated with charity accounts?

Charity accounts may come with similar charges to business current accounts, but providers often charge lower fees to clubs and charitable organisations or even waive some or all of these charges completely.

Other providers may set certain criteria that organisations need to meet to qualify for free banking, such as not exceeding a specified annual turnover.

When comparing accounts, it’s worth looking out for the following fees:

• a monthly account fee
• transaction fees for certain services
• foreign transaction fees
• cash deposit and withdrawal fees.

Savings accounts for charities, clubs and similar organisations don’t typically charge any fees.

How do I open a charity account?

Once you’ve found a suitable account for your organisation, you can open it according to the provider’s instructions.

You can often open many charity accounts online, but you may also be able to open one by other means if you prefer. Depending on your situation, some providers may only be able to open an account by phone.

As part of your application, you’ll need to provide certain information that may include:

• personal details of key individuals, such as the treasurer and any partners, directors or trustees of the organisation, including full names and address histories
• details of your charity or organisation, including its registered address and registration number with the Charity Commission, Scottish Charity Regulator or the Charity Commission for Northern Ireland and Companies House (if applicable).
• information about your organisation’s activity, source of funds and expected turnover, for example.

The account provider will run a number of checks on the individuals named on the account, called Know Your Customer (KYC) checks, and ask for proof of identity and address.

They are also likely to ask for supporting documentation to verify your organisation and its purpose, which could include your constitution or governing documents, minutes of meetings and confirmation of your charity’s registration (if applicable).

The exact information and documents required will differ between providers.

How long does it take to open a charity account?

If you have all the required information and documents to hand, it may only take a few minutes to complete your application for a charity bank account. However, depending on the provider and the complexity of your situation, it could take several weeks to review your application and open your account.

How do I open a community account?

The process for opening a community bank account is likely to be similar to the one for opening a charity account and will usually require you to provide similar information and supporting documents.

It’s worth noting that, while some providers may offer a specific account for registered charities and a “community account” for clubs and other non-registered organisations, others may simply have one account that registered and non-registered charities, as well as other clubs and community organisations, can open.

Always check the eligibility criteria and the information you need to provide before applying for a community account.

Can I open a bank account for a community group which isn’t a registered charity?

Yes, charities and other non-profit clubs, associations and community groups that aren’t registered with the Charity Commission (or equivalent) are eligible to open a bank account.

Some providers may offer specific accounts for these organisations while other providers will allow these groups to apply for their general charity account or business account.

If you plan to register your charity but haven’t yet done so, it’s possible to open a bank account and, after registering, you can move to a bank account designed for registered charities if you want to (or if the provider requires).

Always check the criteria of different accounts to see if your organisation is eligible to apply.

Can I open a charity account as a new organisation?

If you’re a newly formed charity or community organisation, you should be able to open a charity account. However, not all providers may cater for new charities.

It’s worth taking some time to check the specific criteria of individual accounts to see which ones you are eligible for and which ones are most suitable for you.

While you may not think you need a separate charity account for your organisation straightaway, setting up an account as soon as possible can make it easier to manage your finances, apply for funding and accept donations, for example. It can also offer a more secure way for your organisation to handle its money.

Even though you don’t necessarily need a charity bank account to register with the Charity Commission, if you plan to register in the future, it can make the process easier.

Are charity savings protected by the Financial Services Compensation Scheme?

Deposits in charity and club savings accounts will typically be covered by the Financial Services Compensation Scheme (FSCS), but not all organisations may be eligible for this protection.

In most cases, charitable incorporated organisations (CIO), charities that operate as limited companies and unincorporated associations (such as clubs) will be eligible for FSCS protection, but it’s always worth double checking to be sure.

Under the FSCS, deposits up to £85,000 held with a provider (or multiple providers if they share the same banking licence) will be covered should the provider fail.

What is the best bank account for charities?

There isn’t necessarily one bank account that’s best for charities and non-profit organisations. Instead, it’s important to compare providers and consider your individual requirements to find the best account for your charity. Some of the factors to think about include:

• account fees
• opening and management methods
• the size and income of your charitable or non-profit organisation
• the specific requirements of your organisation (if it handles a lot of cash or operates internationally, for example)
• the interest paid on the current or savings account
• minimum deposit or turnover requirements
• reviews from existing customers
• the values and ethics of the banking provider.

When choosing a bank account for your charity, make sure you look at the eligibility criteria and all the features to ensure you open an account that’s right for your organisation.

How will my charity receive donations through a bank account?

Your charity can receive donations through its bank account in a number of ways.

For example, donors may be able to set up a Direct Debit or standing order to regularly donate money into your charity’s account or, for a one-off payment, they could simply do a bank transfer.

Alternatively, your charity could make use of an online platform that provides people with a relatively easy way to make donations, before the platform then sends the money to your own charity account.

Or, if you receive donations in cash or cheques, you can deposit these at your bank’s branch or Post Office (as long as the provider allows it) to transfer the money to your account.

Do charities pay tax on bank interest?

Charities may not need to pay tax on any interest they earn on their bank or savings account. However, this is on condition that they use the interest earned for “charitable purposes”.

Note that, to be eligible for tax relief, your charity needs to be based in the UK, registered with the Charity Commission or another regulator (if applicable), be recognised by HMRC and meet other requirements. Find out more on the Gov.uk website.

Charities will also need to register with HMRC to claim Gift Aid on any donations they receive from UK taxpayers.

Is it possible to have more than one charity account with different banks?

Charities can have more than one account with different providers, whether that’s two bank accounts or a bank account and savings account, for example.

However, it’s important that a charity has the number of accounts that is suitable for its requirements, so only open multiple accounts if it’s right for your organisation. Smaller charities may find one account is sufficient.

What type of bank account does a Community Interest Company (CIC) need?

There isn’t a particular bank account that CICs need to have but, as limited companies, it’s crucial for them to have a dedicated account for all their activities.

These organisations may be able to open a charity or community bank account or a standard business account, depending on the criteria of individual providers.

How can I ensure my charity account is secure from fraud?

Like any organisation, charities are vulnerable to fraud. Some of the steps you can take to minimise the risk of fraud include:

• making sure everyone involved in your organisation is aware of the dangers of fraud
• ensuring you have suitable financial controls in place, such as requiring the authorisation of at least two people to approve any payments
• regularly checking your bank statements for any suspicious activity
• making sure any payments you make are to legitimate sources
• keeping all of your banking information secure and confidential
• running checks on people involved in your organisation, including volunteers, trustees and employees
• regularly reviewing your anti-fraud policies to ensure you’re continuing to meet any potential risks
• checking your software and systems are up to date, with firewalls and other security measures in place
• having a plan if fraud (or attempted fraud) is discovered, and making sure everyone knows what to do should this happen.

See more guidance on internal financial controls and taking action against fraud on the Gov.uk website.

How can I make a withdrawal from a charity account?

You can typically make a withdrawal at any time from a charity account, although note that some providers may set limits on the amount you can withdraw in cash each day, for example.

Only a limited number of named individuals, or signatories, will typically be able to withdraw from a charity account or authorise payments. For extra security, it’s often a good idea (or a requirement) to have the authorisation of two or more signatories before a transaction is approved.

If your charity has a savings account, it’s important to be aware of any withdrawal restrictions. Easy access accounts generally allow unrestricted withdrawals while notice accounts require you to provide a minimum amount of notice before you can receive your money. And, if you deposit funds in a fixed bond, you typically won’t be able to access your money until the end of the specified term.

Can I use my charity account to apply for a grant or a loan?

In many cases, a charity will need a dedicated account to apply for any form of grant, loan or funding.

Those offering the funding will typically only pay into accounts held in the name of the charity or club, which is one of the reasons why setting up an account for your organisation is so important.

Having all your funding and donations paid into a specific charity account will also help you to manage and keep track of your financial situation.

Bear in mind that, if you apply for funding for a particular cause, you can only use this money for that purpose. This is known as “restricted funding” and you should be able to show that your organisation has used the funds as intended. By contrast, “unrestricted funding” is more flexible and allows charities to use the money as they see fit.

Useful resources

There are a lot of things to think about when running a charity, club or community organisation. Listed below are some websites and resources that can offer further help and guidance.

• The National Council for Voluntary Organisation (NCVO) is for charities, voluntary organisations and community groups and offers a range of support and guidance.
• The Charity Finance Group aims to help finance professionals in the voluntary sector.
• UK Finance offers a useful banking guide for voluntary organisations.
• The Government website has plenty of resources for charities and not-for-profit organisations, including details about regulation, tax and managing your finances.