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.
We currently don't have that product, but here are others to consider:
How we picked these
Finder Score for bank accounts
To make comparing even easier we came up with the Finder Score. Fees, features and customer service across 20+ of the most popular banks are all weighted and scaled to produce a score out of 10. The higher the score the better the account – simple.
While in theory you can use a personal account for a charity, it’s not recommended. When you apply to register your organisation with the Charity Commission, you will be asked for your charity bank account details, among other things. Plus you will need a charity account if you want to apply for grants or collect donations.
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.
What are charity bank accounts?
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. A charity account may be required to do this.
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 accounts 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 often 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 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 this 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 2 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
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.
You might get access to additional features such as accounting tools.
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 2 different banks for your personal and charity accounts.
Bottom line
A charity should have its own bank account as it helps protect your charity’s money and ensures its finances are separate from your own. Having a charity account may also be a requirement for registering your charity with the Charity Commission.
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.
We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you. Most of the data in Finder's comparison tables is provided by Defaqto. In other cases, Finder has sourced data directly from providers.
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
NatWest offers a range of business banking options including current accounts, savings accounts and business insurance, as well as specialised accounts for startups and charities.
Is Tide’s current account for businesses right for your company? We take a closer look at all of the fees and features of a Tide account.
Advertiser disclosure
Finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which Finder receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. Finder compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
How likely would you be to recommend Finder to a friend or colleague?
0
1
2
3
4
5
6
7
8
9
10
Very UnlikelyExtremely Likely
Required
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
