How small charities can choose the right bank

Charities are facing a raft of challenges when accessing banking services. This includes finding sector appropriate accounts, which cover the specific services that not-for-profit organisations need. 

Cost-cutting by banks, which has led to branch closures and reduced telephone banking services, is also impacting the not-for-profit and community sector, particularly affecting small charities.  

Here, we look at the latest evidence around the challenges small charities are facing in accessing appropriate banking services to manage their finances. 

We also pinpoint the best accounts available to small charities as they search for a bank that understands their distinct needs.  

What do small charities need from a bank? 

Small charities are different from businesses and individuals in the support the require from their bank and their ability to access support.  

They can often be based in small towns and rural areas, which have been disproportionately impacted by branch closures. This strips away vital face-to-face banking support, which is valued by small charities, whose trustees and staff may lack confidence with online banking. But even finding a bank with appropriate online support is a problem.  

The dual and multiple authorisations on accounts charities need to keep their finances secure are too often not available. 

Charities also want to ensure they are banking ethically. Small charities are set up to support good causes, such as those benefitting communities, society, and the environment. It is right they should expect their bank to invest in good causes. 

Challenges accessing banking services 

A survey released in 2022 by charity sector coalition the Civil Society Group highlights the specific challenges facing charities in accessing banking services.  

The coalition, which includes National Council for Voluntary Organisations (NCVO) and the Charity Finance Group (CFG), highlights how small charities are being hardest hit.  

It also reveals how some charity leaders are being forced to use “poor practice” and “workarounds” to manage their finances due to a lack of access. This includes paying cash into trustees’ personal accounts, which is later transferred to the charity.  

Some small charity leaders are even keeping cash at home, until there is enough for their bank to accept a deposit. 

Others are not carrying out dual authorisation procedures on transactions as it is not being offered by their bank. Such workarounds were reported by 38 charity leaders surveyed.  

 
“These are high-risk strategies for any organisation, and it is worrying that some charities feel they must engage in poor financial governance to enable access to the banking services they need,” said the Civil Society Group, which is urging the banking sector to work with charities to solve access issues.  

Nealy two thirds (64%) of charities told the Group that they would prefer to bank online to access services, but the lack of options for dual signatories online on many accounts is preventing them from doing so. More than half (57%) of respondents say they do not bank online for such reasons.  

This is causing stress among small charities staff. NCVO Policy and Insight Manager Sam Mercadante said: “We heard over 1,200 stories, behind each of which is a person or group of people who are trying to do the best for their community but are finding their every path blocked. 
 
“One person told us, ‘I just find it all very confusing and emotional’, and that has really stuck with me.” 

The best banks for small charities  

To help charities access appropriate accounts for their needs sector group the Scottish Council for Voluntary Organisations (SCVO) has produced a guide to the best bank accounts available.  

This is useful to small charities across the UK and includes sector specialist banks as well as community account options from mainstream high street banks. You can find some of the charity-specific highlights below. 

ZEN DigiPay 

ZEN DigiPay is the UK’s specialist NeoBank (or ‘challenger bank’) designed for charities, Community Interest Companies (CICs), and unincorporated charitable associations, such as sports clubs or societies. There are no turnover requirements and the service does not segregate organisations by income level. 

The bank does not handle physical money, cash or cheque, and currently offers no card, virtual or otherwise (though there is the suggestion they will offer this in the future).

ZEN DigiPay offers: 

• No turnover requirements or minimum deposits
• A built-in fundraising platform    
• Unique charity URLs so donors can donate directly to the charity’s e-Wallet  
• 24/7 access to your online banking
• Ability to segregate your funds using sub-accounts
• Secured funds within a “ring-fenced” account
• Multi authorisation for transactions
• Monthly fees start from £5 (excluding VAT), dependent on charity size 

Charities Aid Foundation Bank  

This provides specialist services for charities and is run by the Charities Aid Foundation. All profits are reinvested into the charity sector.

Its CAF Cash Account offers:  

• Free online and day-to-day banking 
• Access to high street branch network, via HSBC and Royal Bank of Scotland 
• Minimum deposit £1,000 
• Online banking with dual authorisation 
• £5 monthly fee 

Triodos Bank  

This bank has a focus on positive social, environmental, and cultural change.

Its Charity Current Account offers:  

• Online, phone and postal account management  
• Choice of authorisation level with online banking 
• Access to high street branches via NatWest Royal Bank of Scotland 
• However, there is no credit or debit card available on current accounts
• Charities must have an expected turnover of more than £5,000 a year 

Unity Trust Bank 

SCVO points out that this is another bank that is focused on positive social, economic and community change.

Its Unity Current Account offers:  

• Online and telephone account management 
• Online banking with single, dual or triple authorisation 
• Minimum deposit of £500 required
• Access to high street branches via NatWest Royal Bank of Scotland
• No debit card on current accounts
• Aimed at charities with an annual turnover of less than £100,000
• Fees from £6 a month 

Reliance Bank 

The Reliance Bank is part of the Salvation Army. All profits support its work. Its Charity Current Account is aimed at charities with a turnover below £500,000.

Benefits include: 

• Free online and day-to-day banking 
• Access to high street branch network 
• Dual authorisation online 
• Clubs, trust and societies can get six months free banking 

The SCVO also notes that several mainstream banks offer charity specific accounts, including Barclays, Royal Bank of Scotland, The Co-operative Bank, Lloyds Bank, Clydesdale Bank, Santander and HSBC.