During the early stages of setting up your group, much of your time may be spent attracting members, forming a committee and generally getting started. After this you may begin to start thinking about raising funds for your group, it is at this stage that you will most likely need to open a bank account.

The relationship between an organisation and the bank it uses should be the same as it would be with any two businesses. Banks offer a range of services and charge a range of costs. Ask for an explanation of any words that you don’t understand - be clear what you are getting for your money.

This fact sheet gives you some useful information and advice on how to prepare for your trip to the bank including what documentation you will need and what questions to ask.

Be Prepared:

Most banks require one or both of the following:

• A copy of your constitution or set of rules
• Minutes of the meeting at which the committee agreed who should open the account and in what name. The minutes should list the additional signatories and should be dated and signed.

Bear in mind that the bank will complete credit reference checks on the proposed account holders and signatories.

Choosing a Bank:

• Choose a bank which is easy for the main account holders to get to, particularly if you expect to be depositing or withdrawing cash regularly. Try to estimate the approximate number of transactions that will pass through the account(s) each month. Ask several banks which services they offer and the relevant charges - there is often a range of costs.

Banks which have good accounts for charities and Voluntary organisations include:

• Triodos Bank 0800 328 2181 www.triodos.co.uk
• Unity Trust Bank 0845 11 777 22 www.unity.uk.com
• Charity Bank 01732 520 029 www.charitybank.org
• Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it
• Co-operative Bank 0845 7 213 213 or 0800 783 4741 www.co-operativebank.co.uk or www.communitydirectplus.co.uk 
• CAF Bank www.cafonline.org.uk 0870 264 3296

Choosing an Account

• Most banks operate a current account suitable for voluntary and community groups. The actual name of the account varies between banks, some may be called Treasurer’s accounts or Community Current Accounts. Never open a Personal Account for a voluntary or a community group.
• New groups are unlikely to have sufficient income to warrant opening both a current account and a savings account. Longer standing groups, with a greater income, need to weigh up the benefits of gaining interest on savings, against the extra work involved in managing two accounts. Where a deposit/savings account is deemed to be useful, all income should be put through the current account first, with only transfers made to and from the deposit or savings account. 

Cheque Signatories

• When you have successfully opened your account, you will need a cheque book. Unlike your personal account, your new groups’ account will need at least two signatories on cheques. You can authorise/nominate a number of people to sign cheques. Each agreed signatory must complete the relevant section on the application form and provide evidence of identity and address. It is useful to have more than 2 people able to sign cheques due save delays if signatories are on holiday or taken ill etc.
• Application forms vary between banks. As a general guide, the following information may be requested for each signatory:
• Personal Details
• Name, address, date of birth, mother’s maiden name, length of time you’ve resided at your address.
• Evidence of Identity
• Either passport, full driving licence or similar.
• Evidence of Address
• Utility Bill, Council Tax Bill, House Insurance Certificate, or similar. 

Remember…

• It is worth planning ahead and getting all the information together you need well in advance of any deadline you have set yourself for opening the account. Banks generally do aim to process your application within a few working days, however in practice it may take a couple of weeks to get all the paperwork completed.
• It’s a good idea to talk to other voluntary/community groups in your area to see who they bank with and whether they’re happy with the service they receive before committing to a particular bank.

! Before opening an account – ask the following questions and expect clear answers

What charges will be made on the account with the expected level of activity that you have estimated?

Can you have a copy of the bank’s charges (tariff)?
If you are offered free banking:

• ensure that it is for the duration of the account and not just short-term
• check the limitations on transactions and financial limits

What identification does the bank need and why?

• English law requires that banks and building societies get positive identification and proof of address from all prospective customers, including individuals who will be acting as officials of organisations. It is not possible to open an account without full identification being presented. 

Can the organisation have a cheque book?

• If the answer is ‘no’ what will you do, how will you manage?

How often will a bank statement be sent out?
Monthly statements are normally free of charge; weekly or duplicate statements may attract a charge.

What about payment of interest?

• Is it gross (no tax deducted) or net (tax deducted at the standard rate)?
• Is it paid monthly/quarterly/annually or at the end of an investment period?

(Registered charities should automatically get gross interest; some banks will give this to even unregistered charitable groups)

Will the account allow for regular bills being paid by standing order or direct debit?

Is there a minimum deposit required to open an account?

• Some banks will insist that you deposit a minimum amount before they open an account for you. This can sometimes be a problem if you are waiting for a grant or funds to come in.

Is there a requirement that you must be a registered charity?

• Some banks will insist that you should be a registered charity in order to benefit from their services. If you do not have registered status, it is advisable to check before requesting further information.

Do they offer internet banking?

• Internet banking can often be beneficial if you have to work out of normal office hours and it is convenient for paying bills and salaries. Some internet banking accounts offer a dual authorisation option where you can nominate two or more people to authorise transactions. This helps to improve security for your organisation. Be aware of any restrictions in your governing document on authorising transactions.

What encashment facilities or arrangements are there?

• A lot of the socially responsible banks do not have a branch network so that they can pass savings on to you. Some of the banks may only offer encashment through one nominated high street bank whilst others will let you choose. Make sure these arrangements are convenient for you.

Is there a local representative in your area or someone that you can ask if you have any questions?

• You may feel that there is a lot of paperwork or that the accounts offered do not suit your needs. If you have a local representative they will be able to help answer your questions and tailor an account to suit you. 

Tips

• Keep the bank fully informed of situations which might adversely affect your finances
• Change to a new bank if you are not happy with the service you get from the existing one

Prevent cash flow problems by

• Spreading the cost of bills over 12 month
• Asking funders to pay grants and other monies directly into your bank account through the Bankers Automated Clearing System (BACS). This could save you quite an amount in lost interest in a year as cheque deposits take several days to clear
• Asking people who make regular payments to you to use standing orders

Make the most of cash in the bank by

• Setting up a short term deposit account
• Every penny of interest counts. Ask the bank for an interest-bearing account if you have any money that can be invested, even if it is only temporarily. 
• Some funders will pay their grant upfront for a full calendar year – you could invest some of this money in a high interest deposit account, however, check the restrictions on withdrawals.
• Reducing the amount of time spent on day to day money managing
  Pay wages and other regular bills through BACS or internet banking. 
• There may be a charge for using BACS or internet banking but it:reduces the number of cheques you use and incurs a lower item charge
• saves on postage
• saves calling in your signatories
• suppliers and employees will be happy as they receive their payments and salaries on a specified date directly into their bank account.

When assessing a need to borrow money:

Check that your governing document allows you to borrow
Ensure you have an identifiable and definite source of repayment
Maintain a cashflow
Assume the worst situation
Invite the bank manager to visit your organisation – so she/he has a better understanding of what you do and what you are trying to achieve

• Will your organisation require working capital or project finance support from the bank? (ie short term overdrafts or longer term loans)