Published: September 30, 2015
Whilst running a charity is never straightforward, the provision of banking facilities is an important long-term decision that needs to be made.
Typically, these are four banking challenges regularly faced by charities:
Opening a bank account for any organisation is always at the discretion of the bank, which means a charity (or other similar organisation) is always at the mercy of banking procedures and internal due diligence checks. An article on civilsociety.co.uk from September 2014 shows how a bank’s lack of knowledge of your sector and structure can have a negative impact on your day-to-day operations. By using a bank that understands charities, this impact can be avoided.
Banking activity that may be irregular for a small limited company may be entirely normal for a charity and this may put the charity at risk of being subject to cumbersome additional checks.
Such checks can be avoided when the charity begins working with a bank familiar with such activity variations.
High street banks are driven by profit, which means opening an account for any organisation is a weigh up between potential risk and potential reward. When a bank however understands and appreciates the ‘double bottom line’, the social good that can be made possible by a charity is taken into account.
The double bottom line and social good are naturally part of a charity’s function and the right advice, planning and expertise comes from those who can make the distinction between financial gain and social positive benefit whilst appreciating their equal value.
The borrowing needs of charities may change overnight and it’s important at this point to have a relationship with a bank that already understands what you do and who you are.
Referring again to the double bottom line, by working with a bank that doesn’t take into account the social good that comes from your activity, the charity enters negotiations at a disadvantage.
Conversely, lending decisions by banks that take into account the social good will naturally be more favourable towards charitable organisations.
