Charities, government and banks need to work more closely together to reduce the instances of international aid organisations being labelled ‘high risk’ and denied access to banking facilities, a new report from Demos claims.
Last year a number of Muslim charities had their bank accounts closed by HSBC. The Muslim Charities Forum has called on the government to do something to prevent banks from withdrawing services from registered charities.
The Demos report suggests that a kitemarking system to “help banks determine which NGOs meet approved due diligence and governance standards” should be introduced and that government and regulators need to provide stronger leadership to deal with the issue.
Uncharitable Behaviour was authored by Tom Keatinge, a finance and banking regulation expert, who said: “The impact of creeping counter-terrorism fears on the banking sector means that delivering the benefit of this generosity is becoming increasingly challenging, costing charities millions in lost donations and due diligence expense.”
The report recommends that banks consider the benefits of being associated with charities and work more closely both with individual charity clients and with sector umbrella bodies such as CFG and the Muslim Charities Forum.
Charities 'need to build trust with their bankers'
The report also recommends that charities become more professional in their dealings with banks.
“NGOs need to build the trust and confidence of their bankers. Thus NGOs should be willing to work harder to develop relationships with their bankers – at present, dialogue appears to be generally woeful,” the report said.
It also suggests that smaller charities should also consider merging to reduce administration costs.
