How to find the right savings account for your charity

If you run a charity, you should already have a current account in place. This is a legal requirement for all registered charities. The next step is to consider opening a savings account to put your surplus funds in.

 

A savings account is a bank account that gives you interest on your reserves. It isn’t a legal requirement for a charity to open a savings account. But it makes good financial sense as you will earn interest on your reserves.

 

 

Types of savings accounts

 

There are different types of savings accounts for charities. These are:

• Instant access accounts that you can take money out of straight away. They pay a low interest rate
• Notice accounts, which allow you to put reserves away for a short-term period (one to six months). You have to give notice to the bank to withdraw funds after a set time period
• Fixed term deposits that require you to put money aside for a set time at a fixed interest rate
• Cash deposit platforms, which are online services that allow you to deposit funds across several banks on the platform

The NCVO says that if you have a lot of money to put in a savings account, you should think about spreading the risk between banks, in case a bank goes into administration. So, a cash deposit platform is a good option.

 

 

How to choose the right savings account

 

There are different factors to think about when choosing a savings account. These include how your organisation operates and the level of finance it deals with.

 

The NCVO has a list of questions on its website to help you work out what you need from a savings account and which one to choose. These include:

• Does the bank understand the charity sector?
• How will you interact with the bank? For example, on the telephone, in-person, or online.
• How do you want to make payments?
• Do you need access to cash?
• Does the bank align with your charity’s mission and values?

 

Savings accounts for charities

 

Here are some UK banks that offer savings accounts for charities:

 

 

CAF Online

 

CAF Online offers charities three types of savings accounts. These are the Instant Access account, 60 Day Notice account, and the 12 Month Fixed Rate Saver. As CAF is a charity, it reinvests any profits it makes into the charity sector.

 

 

Metro Bank

 

You can earn interest on your savings by opening a Community Fixed Term Deposit Account with Metro Bank for one year. Deposits need to be at least £5,000. The account offers a fixed interest rate of 5.52% AER, so you’ll know exactly how much interest you’ll earn.

 

 

Charity Bank

 

When you open a savings account with Charity Bank, you earn interest on your funds and support the work of other charities and social enterprises across the UK. There is a choice of five different savings accounts, depending on the structure of your organisation and what type of access you want.

 

These are the:

• Ethical Easy Access Account for charities, trusts, and unincorporated associations
• Ethical 40-Day Notice Charity, Trust and Unincorporated Association Account for charities, trusts, and unincorporated associations
• Ethical 100-Day Notice Charity, Trust and Unincorporated Association Account for charities, trusts, and unincorporated associations
• Ethical one-year Charity, Trust and Unincorporated Association Fixed Rate Account for UK registered charities or trusts or unincorporated association (club or society)
• Ethical three-year Charity, Trust and Unincorporated Association Fixed Rate Account for UK registered charities or trusts or unincorporated association (club or society)

If you don’t need to get quick access to your funds, it’s worth checking out the account with three years’ notice. This offers an AER of 4.36%.

 

 

Flagstone

 

This cash deposit platform gives you access to savings accounts with more than 30 banks. You can spread your money across several banks which helps you to reduce the financial risk. All of the UK based banks and building societies on Flagstone are members of the Financial Service Compensation Scheme, so your money is secure.

 

Also, you only need to make a single application so there isn’t a lot of paperwork to fill out.

 

If you’re looking for a bank account for your charity, read our article on Charity Digital.