As a non-profit organisation it is essential that you stay on top of your finances and how they are organised, which is why many now opt for a dedicated charity savings account. These accounts are often free of fees and provide a secure and transparent way to manage your donations and grants, and stay accountable at all times. A charity savings account can play an important role in managing strong financial foundations and staying in line with financial regulations.

Managing money as a charity is about more than just balancing the books. Charities are accountable to regulators, donors and the communities that they serve, so being able to clearly separate and report on funds is crucial. This is why a dedicated savings account can give organisations of all sizes the important tools that are needed to show they are acting responsibly with the money that has been entrusted to them. At the same time, it offers opportunities to earn interest and plan for the future.

In this article, we take a look at what charity savings account are, why charities need their own account and how they work. We will examine the different types of account that are available, what you need to be able to open one, and who they are for. It is important to remember that this guide is for general information purposes only and does not constitute financial advice. Always check with your chosen provider for specific details.

Do charities need their own bank account?

According to guidance from the Charity Commission, charities should hold money in a separate account under the charity’s legal name. This helps to keep finances distinct from any personal or business money, and makes the process of accounting, annual reporting and auditing much more straightforward. It is also useful for providing additional clarity for any donors, funders and regulators.

A charity savings account can also help with internal controls and governance, as it allows for multiple signatories. However, it is important to remember that many banks or building societies will not allow anyone to open a charity account unless it is in the name of the charity. Having a specific bank account for the charity will be a big step towards building credibility and professionalism with your donors.

The rules around separate accounts are not only practical, but they also protect trustees and committee members legally. By keeping charity funds ring fenced, it becomes much easier to demonstrate that money has been used in line with the charity’s objectives. Many grant-making bodies now require proof of a dedicated account before they will release funds, so this step becomes essential if you want to access new streams of income.

How do charity savings accounts work?

Just like a standard savings account, charities can earn interest on their balances, although the rates will depend on the type of account you have chosen. You will have the ability to add or withdraw funds depending on whether you have opted for an easy access, notice or fixed term account.

It is important to remember that charity savings accounts are still subject to strict governance which means they must be operated in line with all charity laws as well as the constitution of the individual organisation.

It is also essential that you think about who the authorised operators of the account will be. This is usually the trustees, treasurer or nominated committee members of the charity. A charity savings account will usually operate under the joint authority of trustees or nominated signatures which adds a vital layer of accountability. All income, whether it is from fundraising events, grants or regular donations, can be deposited into the account and tracked with full transparency.

When operating a charity savings account you need to be thorough in your record-keeping. This means that all transactions should be fully documented for compliance and transparency purposes.

Types of charity savings accounts

As with any other type of bank account, there are a range of different savings accounts that you can choose from for your organisation. Fixed rate savings account tend to have higher interest rates, but the funds will be locked in for a set period of time such as one to three years. Therefore, these are best suited for surplus funds and not the day-to-day money needed for the charity.

Notice accounts give you more access to the money that is kept within them, but you have to give notice in order to make a withdrawal. This means informing the bank 30, 60 or even 90 days in advance of the funds being required. This type of account is great for providing a balance between access and the higher interest rates that you usually associate with fixed rate accounts.

You may also want to opt for an easy access savings account as this means your money is available at any time. These do tend to have lower interest rates, which means they are more useful for short term funds and emergency spending.

It is also worth noting that some providers now design specialist products for the charity sector. These may include additional support, such as access to free banking advice or accounts where part of the interest generated supports wider community initiatives. Many organisations will also benefit from using more than one type of account. This means they can run an easy access account for their day-to-day needs alongside a fixed rate account for longer term reserves in order to strike a good balance between flexibility and financial growth.

What do you need to open a charity savings account?

Charities will need a number of documents in order to get their savings account set up. You will need to provide proof of registration, such as your Charity Commission number or the equivalent in devolved nations. You will also need to provide governing documents like your constitution, trust deed, or articles of association.

The provider will also want to undertake a number of identity checks so you will need to provide a proof of identity and address for all signatories or trustees. Board or trustee approval will also be required to confirm who is authorised to manage the account. In addition to all of this you will also be required to complete all of the usual applications and declarations from the provider itself.

Who are charity savings accounts designed for?

There are a number of different organisations that can benefit from a charity savings account. Registered charities are the most obvious, whether they are large national charities or smaller local ones. However, charity savings accounts can also be very useful for community and voluntary groups such as clubs, societies or grassroots organisations. They can also be used for charitable trusts and foundations for managing endowments or grant-making funds, and for schools, churches or sports clubs who have a charitable status or equivalent.

Is a charity savings account right for your organisation?

Charity savings accounts are designed for charities to be able to manage their funds more securely whilst meeting government requirements and potentially still earning interest on the money they have accrued. Before choosing your charity savings account, you need to consider how accessible the money needs to be and how much surplus cash you have available to put into savings. It is important to think about the governance and trustee approval process before comparing providers for the best interest rates, account fees and eligibility.

When deciding if a charity savings account is the right move it helps to ask a few practical questions. Do you have a stable stream of income or do your funds fluctuate from month to month? How quickly are you likely to need access to your reserves? Is your board more focused on achieving the best possible interest rate or on ensuring cash flow is always readily available?

Once you have worked out what you need from an account, you can take the time to review the different options, read the terms and conditions and seek independent financial advice if needed before moving forwards to opening an account.

By weighing up these factors and comparing providers carefully, charities can make an informed decision that strengthens both their financial security and their reputation.

Disclaimer: This article is for information purposes only and does not constitute legal or financial advice. Mansfield Building Society does not provide advice on the suitability of Charity savings accounts. Please consult a qualified professional to ensure any trust account meets the needs of your trust and its beneficiaries.