Paul Wedderspoon: What should charities consider when choosing a specialist for their banking

26 Mar 2020 Expert insight

These are challenging times for charities. However single-minded their mission and purpose, they can seem in stark contrast to the complexity of managing the charity’s finances in an uncertain world. The sector is experiencing closer scrutiny than ever before, with calls for greater transparency on where every penny is spent. A move towards a cashless society, the rise in cybercrime and Brexit are among many factors that are putting further pressure on charities.

No wonder charities want their bank to act as a supportive partner. The banking basics for many charities include domestic and international payments, cash handling and safely optimising their interest income. So the question is, where should a charity look for expert and secure banking that is also fair, compassionate and helpful?

Don’t just look at what a bank does, look at how it does it

Everybody’s banking needs are different. If you have a healthy balance, you may want an account that pays you a good interest rate. Others are looking for a bank that makes reasonable charges if you require an overdraft. Both of these factors are important considerations, and the way a bank treats you should be an essential part of finding the best bank for you and your charity.

Below are some tips on what charities could consider when looking for a specialist charity bank.

Relationship managers

A charity bank can provide customers with their own relationship manager who will fully understand the intricacies of the charity sector. A relationship manager will take the time to understand you, your charity’s mission and values, and where the greatest pressures are.

Understanding funding

A specialist charity bank will understand that funding or grants continue to be squeezed and over-reliance on one funder could leave a charity feeling vulnerable if that funder changes its priorities. Your charity may need to build up reserves to withstand this disruption or the bank may need to provide access to working capital in these circumstances.

Dual authorisation for multiple trustees

If your charity has many trustees, a specialist charity bank will understand that dual authorisation (signing rules on mandates and/or electronic payments) could be important for your charity.

A bespoke approach to banking

Find a specialist charity bank that takes a flexible approach with each customer by agreeing lending terms, fees and facilities on a case-by-case basis. They will understand that your charity will be trying to reach more people with fewer resources, because raising funds, recruiting volunteers, data, technology and premises are all expensive costs.

Dialogue with your stakeholders and experts

A relationship manager can have regular dialogue with the charity stakeholders as well as financial and legal experts that assist your charity.

First rate-customer service

Charities should look for a bank that delivers great service in the following categories:

  • Telephone services;
  • Sector knowledge;
  • Fees/charges;
  • Interest rates; and
  • Commitment to corporate social responsibility (CSR).

A bank that takes the time to understand the specific priorities of charity customers can help you make a positive social impact.

Questions

To gain a better understanding of a prospective charity bank, you could ask the following questions:

  • How does the bank operate?
  • Does the bank operate within strict ethical boundaries?
  • Does the bank prioritise business lending to organisations delivering positive social impact?
  • Does the bank donate its profits to charity?
  • Can I access the following information?
    • Audited financial statements;
    • The mission and values for the bank.
  • Who is behind the bank?
  • Can I access the following information?
    • Contact information;
    • Key staff biographies;
    • Details of the directors.


Paul Wedderspoon is regional manager at Reliance Bank

Charity Finance wishes to thank Reliance Bank for its support with this article 

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