Bank accounts for charities UK 2021
Looking for a bank account for your charity but not quite sure of where to start? Here are a few tips that may help.
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.
Compare bank accounts for charities
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Can I use a personal account for a charity?
No, you can’t. Just like a limited company, a charity is an independent legal entity, so its finances should be managed separately.
Moreover, 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.
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.
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.
Starling business bank account for charities
Starling Bank’s business account charges no fees for transactions that most business accounts charge for, including overseas transactions. By choosing Starling Bank for your charity bank account, you therefore ensure more of your income goes directly to supporting good causes.
You’ll be eligible for a Starling business bank account if your charity is a limited company registered with the Charities Commission.
Cashplus business bank account for charities
Cashplus allows you to open a business account within minutes online, and you won’t need to go through a credit check. So, if you’re looking to start a charity but you have a poor credit score, it could be the perfect option. Check your credit score here.
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