Not-for-profit organisations: Which bank account should we use?

When it comes to choosing the best bank account for your not-for-profit organisation the prospect may seem a little daunting. Questions – 'which bank should we use?' 'what does each account offer?' 'what is the best Account for our group?' – can all make the process seem overwhelming. But don’t fret! This guidance outlines some of the different bank accounts that are available and aims to help you decide on the most suitable options for your group.

Contents:

  1. Things to consider
  1. Some bank account options

1. Things to consider

Every music group is different and therefore the features required from a bank account may vary. However, as a starting point, here are some key things to consider when choosing between options.

Is a deposit required to open the account?

Although this may not be an issue for some of our groups, those who are just starting out and have a lower starting income may need to be aware of any deposit required for opening the account to begin with. Most of the bank accounts listed below have no minimum deposit fee required. Some, however, like CAF (minimum of £1000) and the Unity Trust Bank (minimum of £500) do. In these cases it may be worth thinking about your group’s financial capabilities and ensuring that these deposits are feasible.

Is there an income limit?

Some bank accounts are intended to be used by not-for-profit organisations whose income is below a set amount. For instance, both of the Lloyds and TSB Treasurer Accounts only offer benefits such as free banking to organisations whose total turnover per year is below £50,000. Any organisation whose annual income is above £50,000 therefore will either be placed onto a separate tariff or only have access to other business accounts which do charge for daily banking. As a result, groups with a higher yearly turnover may want to look elsewhere.

Are there bank charges for certain services?

Although a majority of the banks accounts listed below do offer free daily banking, not all types of transactions are included within this offer and there may be limits on the number of free transactions per month. For example, most of these banks have additional charges for making CHAPS payments. Similarly, some (such as CAF bank) charge an additional fee for paying-in high volumes of cheques each month. If your music group rarely uses these types of transactions then it may not be relevant, however, if you do then it might be worth finding a bank account that does not charge for this service.

Similarly, some (e.g. the Unity Trust Bank Current Account) do not offer free banking and have a monthly charge for using the account. Remember to always double check the terms and conditions and set tariff for each account when trying to decide. It might also be worth looking at a typical financial month for your own group and figuring out the quantities of each transaction you usually use to estimate the likely average cost.

Number of signatories allowed

Some banks allow you to set up a mandate which outlines how many people are required to sign when making cheque payments/authorising online banking transfers, while others have a set limit.

Santander limits the maximum number of signatories able to be listed on the account to three, although any one signatory can approve any transaction. Natwest on the other hand requires at least two signatories to authorise cheques but allows any one person to make transactions through online banking without dual authorisation. Since many not-for-profit organisations require that two people authorise payments, this is an important factor to check for any prospective account.

It is worth remembering that this authorisation does not necessarily have to come at the point of actually making payment. So if your account allows an online payment to be made without dual authorisation you could potentially have an email procedure for pre-approving and checking payments.

2. Some bank account options

Banks included in the list below so far are: Barclays, CAF Bank, the Co-operative, HSBC, Lloyds, Metro, Natwest, RBS, Santander, TSB and the Unity Trust Bank. This is by no means an exhaustive list of all available bank accounts and therefore if your group is using an account not currently listed then please do let us know.

This guidance is intended solely to outline some of the different accounts that are available to not-for-profit organisations and assist our member groups in what to think about when searching for a bank account. Before opening a bank account we recommend that you research more information about the accounts which can be found on the specific banks websites and by visiting their branches.

Information correct as of September 2017

Overview comparison table

We’ve created the following downloadable table to provide an ‘at-a-glance’ overview of the main factors that you might use to decide with whom to bank. There is more detailed information on each of these below.

Bank account comparison table for non-profits

In-detail comparisons

Barclays – Community Account

Key Features:

  • Free banking for organisations with an annual turnover of below £100,000 (this includes free outgoing direct debit transactions and BACS transfers. This excludes CHAPS payments)
  • No minimum deposit required to open the account
  • Need to have a minimum of two signatories listed on the account, but can set it up so that only one person is needed to make payments by cheque and through online banking or that dual authorisation is needed for all transactions

Find out more about the Barclays Community Account here

CAF Bank – CAF Cash Account

Key Features:

  • Set monthly charge for each account of £5  (Faster payments and direct debits are included in the £5 monthly fee but paying fees using CHAPS and paying in more than 50 cheques a month incurs additional charges)
  • A minimum deposit of £1000 required to open the account
  • Minimum of 2 signatories required on the account to carry out cheque transactions as well as online transactions and there is no maximum limit of signatories allowed to be put on the account within reason
  • CAF Bank also offer a savings account called the CAF Gold account which can be used alongside the CAF Cash Account

Find out more about the CAF Bank Cash Account here

Co-operative Bank – Community Directplus account

Key Features:

  • Available to all types of registered Charities and Community interest Companies only
  • Designed for those whose annual turnover does not exceed £1m and does not deposit more than £100,000 cash per annum. If your annual turnover goes above this amount then a tariff will be put in place
  • Free daily banking (including direct debit and BACS payments, excluding CHAPS payments)
  • No minimum deposit needed to open the account
  • Minimum of 2 signatories required to be listed on the account but can have as many signatories required to process cheques. For online banking you can request for either one person required to authorise online payments or set up for dual authorisation
  • Chequebook provided if requested

Find out more about the Co-operative Directplus Account here

HSBC Community account

Key Features:

  • Free banking for societies whose annual turnover is less than £100,000 (including direct debit, BACS and CHAPS payments)
  • No minimum deposit needed to open the account
  • Only one signatory required on the account. You can choose how many people are required to sign for cheques and if you want you can place dual authorisation on online payments as well. This all depends on what you have set up on your own mandate
  • Chequebook provided on request

Find out more about the HSBC Community Account here

Lloyds Treasurer Account

Key Features:

  • Intended for organisations that have an annual turnover of under £50,000.
  • Free daily banking (Including paying in or issuing cheques, BACS transfers and setting up direct debits)
  • For groups with an annual income of £50,000 - £1 million you will not have access to the free daily banking and will be charged for using their services
  • No minimum deposit required to open the Treasurer account
  • Just one signatory required on the account and to authorise cheques and no limit on the maximum amount of signatories. Can decide for online banking whether you have one, two or three people needed to authorise transactions
  • Chequebook provided

Find out more about the Lloyds Treasurer Account here

Metro – Community Current Account

Key Features:

  • Need to have a turnover of £2million or under
  • 200 free UK transactions a month (Excluding CHAPS but including direct debits and faster payments) then it costs £0.20 each transaction
  • The first £10,000 cash paid in or withdrawn each month is free then there is a charge of 0.05% per £100.00
  • No minimum deposit required to open the account
  • Only one signatory required on the account and any one person listed can also carry out financial transactions online without having to be authorised by anyone else. Can also put on the mandate if a person can only carry out certain transactions e.g. only telephone banking/online banking
  • Chequebook provided

Find out more about the Metro Community Current Account here

Natwest – Community Account

Key Features:

  • Free banking for organisations whose annual turnover is below £100,000 (including BACS transfers and direct debits)
  • If your groups turnover is above £100,000 across accounts then Natwest’s standard business tariff will apply
  • No minimum deposit required to open the account
  • Two signatories required to authorise cheques but only one required to carry out online banking transactions. There is no maximum number of signatories
  • Chequebook provided

Find out more about the Natwest Community Account here

RBS – Community Account

Key Features:

  • Free banking as long as annual credit turnover does not exceed £100,000 (Including direct debits and faster payments. Excluding CHAPS). Standard tariff applies if annual income does go over this amount
  • No minimum deposit required to open the account
  • Can set up as many signatories as you require to be authorised to carry out cheque payments but these do not apply online. Any one person authorised to carry out online bank transfers can do so.
  • Chequebook provided

Find out more about the RBS Community Account here

Santander – Treasurer’s Current Account

Key Features:

  • Free day to day banking for those whose turnovers are less than £250,000 (this includes faster payments and direct debits but excludes CHAPS)
  • No minimum deposit required for opening the account
  • Can have up to three signatories on the account, although any one signatory can approve any financial transaction. Can’t have dual authorisation.
  • Chequebook provided

Find out more about the Santander Treasurer’s Current Account here

TSB –Treasurer’s Account

Key Features:

  • Designed for organisations with a yearly turnover of less than £50,000 (organisations which earn more than £50,000 can use one of TSB’s other business bank tariffs without the benefit of free daily banking).
  • Free daily banking (Includes BACS transfers and setting up direct debits payments)
  • No minimum deposit required to open the account
  • One signatory required on the account but does allow a second signatory and no maximum limit
  • Chequebook provided

Find out more about the TSB Treasurer’s Account here

Unity Trust Bank – Current account

Key Features:

  • For groups with an income of under £100,000 per year there is a charge of £6 per month
  • If the groups income is over £100,000 the fee is still £6 per month plus 15p per individual credit and debit transaction
  • Additional charge for CHAPS
  • Need to have a minimum deposit of £500 to open the account
  • You can decide on the amount of signatories required to authorise payments both on cheques and through online banking
  • Chequebook provided

Find out more about the Unity Trust Bank Current Account here


We hope you find this Making Music resource useful. If you have any comments or suggestions about the guidance please contact us. Whilst every effort is made to ensure that the content of this guidance is accurate and up to date, Making Music do not warrant, nor accept any liability or responsibility for the completeness or accuracy of the content, or for any loss which may arise from reliance on the information contained in it.