Across the UK, charities collectively hold billions of pounds in financial reserves. These funds are designed to provide stability, safeguard services, and ensure long-term resilience. Yet these reserves can represent far more than a passive safety net. They are one of the charity sector’s largest pools of capital, and therefore one of its most underestimated levers for driving social change.
Traditionally, reserves policies have focused almost entirely on risk management: protecting organisations against income shocks, supporting short-term operational continuity, or providing a buffer during crises. While this is vital, it overlooks the transformational potential of where those reserves sit and what they support while they remain inert.
If even a modest portion of the sector’s reserves were intentionally placed with mission-aligned banks and held in ethical cash products, the impact could be profound.
These institutions channel deposits into lending for social housing, environmental projects, community businesses, and organisations tackling inequality. In other words, reserves can be deployed twice; once as a financial safeguard, and simultaneously as a long-term force for positive social outcomes.
A way of doing this is through mission-aligned saving, placing reserves with an ethical bank which in turn helps provide affordable loans to charities, many of which are underserved by mainstream lenders or require greater support when borrowing for the first time.
Benefits of using ethical banks
Ethical alignment: Reserves held with mission-based financial organisations help fund activities aligned with charitable goals, including community development, social inclusion projects, and initiatives that improve wellbeing.
Creating positive social circles: Deposits help fund affordable loans for other charities, creating a virtuous cycle of social impact and strengthening the broader ecosystem of community initiatives.
Sector-wide impact: UK charities and social sector collectively hold billions in reserves. If deployed more intentionally, this capital could drive substantial positive change across the sector.
No compromise on security: Charities do not need to compromise on security or returns. Many mission-aligned accounts offer Financial Services Compensation Scheme protection up to £120,000 per eligible depositor. For most decision-makers, the choice is no longer return versus impact, but return and impact, backed by FSCS protection.
Earning a return and making an impact: And with the ability to show a return and impact, mission-aligned saving is rapidly expanding, with UK impact investing rising from £19.3bn in 2021 to £76.8bn in 2023, clear evidence of growing demand for values-based banking.
Good governance and reduced risk: Trustees are increasingly expected to manage reserves ethically, transparently, and in support of the charity’s mission. Mission-aligned saving provides boards with a credible, defensible way to demonstrate responsible stewardship while reducing operational and reputational risk.
A key question for boards
At a time when practical banking issues persist, with 38% of trustees reporting problems with their charity’s bank in 2025, mission-aligned banking offers a straightforward way to improve resilience and show values in action.
Ultimately, the question for trustees is simple: Are you confident that 100% of your funds are being used for good?
By seeing reserves not just as dormant liquidity but as a strategic asset, charities have the opportunity to influence the financial system, strengthen communities, and accelerate the very change they exist to deliver.
