The best bank accounts for charities

There is perhaps no greater priority for charity leaders than keeping their organisation’s money safe.

Supporters make donations with the understanding that this money will be looked after and used as judiciously as possible. In a difficult fundraising climate, charities are expected to stretch funds further than ever.

Supporters expect that their contributions will be protected and valued: not only by the charities they donate to, but by the banks that process the transactions.

Charity finance professionals have a number of important decisions to make, as they work behind the scenes to ensure both smooth day-to-day operations and a sustainable future.

Choosing a bank is one of these important decisions, and can have implications for a charity’s financial health in both the short and the long term.

It is important that charities have the right kind of bank account. In theory, charities could operate functionally with a personal account. But such an arrangement would not provide the same level of transparency and protection from financial misappropriation that a dedicated charity bank account offers.

There are many factors to consider when choosing a bank, including how your organisation operates, the level of finance that it deals with, and the nature of the donations which it processes. All of these factors need to be considered when choosing a bank account.

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What is a charity bank account?

A charity bank account is not that different to a personal or business account.

It includes many of the same features as another type of account, such as the ability to:

• accept incoming payments
• make outgoing payments (to vendors, contractors, and staff)
• accrue interest on savings
• make recurring payments (such as direct debits and standing orders)
• use an overdraft to ease cash flow issues
• keep track of spending

The main differences between personal or business accounts and specially-designed charity bank accounts are related to tax exemptions and Gift Aid.

Charities do not need to pay tax on interest accrued by charity bank accounts, as long as they can show their bank a Letter of Recognition.

Having a dedicated charity bank account can also make the process of applying for Gift Aid easier and simpler.

What are the best bank accounts for charities?

Charity Bank

Where better to start than with a bank run specifically by charities?

Charity Bank is an ethical bank founded to support charities with loans, as well as to provide private individuals with an ethical way to invest their savings. The organisation is entirely owned by charitable foundations, trusts, and social purpose organisations. 

This specialist bank is not only run and administered by charities – it also offers some great options for charities seeking an ethical option for their banking.

Charity Bank offer an ‘Ethical 1-Year Charity, Trust and, Unincorporated Association Fixed Rate Account’. The account has a 0.47% rate of AER – meaning that an investment of £10,000 would accrue interest of £47.00 over a year.

The account can have an unlimited number of account holders. Payments can only be made once a year and can range from £10,000 and £500,000.

Metro Bank

Metro Bank is the top-rated bank for charities, according to reviews from charity professionals on Trustpilot.

Metro Bank’s model prizes convenience, and this extends to their offerings for charities. Account holders benefit from a number of convenient services, including up to 200 no-fee transactions per month, as well as the ability to manage transactions via internet banking or a mobile app.

Metro Banks’s charity bank accounts even include options for giant promotional cheques – a staple for many charity fundraisers.

Trodios Bank

Just behind Metro Bank in the TrustPilot ratings is the somewhat lesser-known Trodios Bank.

Trodios Bank is an ethical bank founded in 1980. They finance organisations that they believe add cultural value and benefit to people and the environment. 

Trodios Bank offer a number of services and products designed specifically for charities: including loans, savings, investments, and a specially-designed current account.

The ‘Charity Current Account’ pays interest on deposits over £5,000. As of October 2021, interest will be paid at a rate of 0.02%. The account’s charges and fees are presented transparently, and are reasonably-priced between 10p and 40p per transaction.

Reliance Bank

Formerly known as The Salvation Army Bank, Reliance Bank specialises in commercial lending to charities, social enterprises, and other good causes.

They offer a range of products and accounts designed specifically for charities.

These options include:

• ‘90 Day Notice Charity Savings Account’ – charities that can give three months of notice before making a withdrawal can benefit from a higher rate of 0.40% AER variable interest, which is calculated applied at the end of March, June, September, and December
• ‘35 Day Notice Charity Savings Account’ – charities that can give 35 days of notice before making a withdrawal can benefit from a rate of 0.30% AER variable interest
• ‘Instant Access Charity Savings Account’ – charities that need to withdraw capital at short notice can register for this savings account, which comes with a rate of 0.05% AER variable interest
• ‘Charity Current Account’ – a simple current account for everyday charity financial transactions

Reliance Bank were ranked #1 for customer satisfaction in the 2021 Charity Finance Banking Survey.

Royal Bank of Scotland

The Royal Bank of Scotland (RBS) offers an account for lower-income charities, community groups, and social enterprises.

The RBS Community Bank Account is designed to offer free banking for charities, clubs, and societies that have a turnover below £100,000.

This current account offers simple, effective banking for small charities. RBS offers charities 24/7 access to digital and phone banking services, as well as a dedicated option for mobile banking in the form of a smartphone app.

You may be able to switch accounts online, which is a boon for charity finance workers with greater demands on their time.