FAQs charity banking
Even the most experienced PTA members can get confused
when it comes to PTA banking queries. Whether it's setting one up,
switching banks, getting the best rates or the best deals, we could
all do with a bit of advice. The Charity Finance Group (CFG)
answered some of our burning questions:
How would a PTA go about setting up a bank account?
All charities need a deposit or current account to hold cash for
the day-to-day running of the organisation. It may seem daunting
that different banks offer accounts with different names, such as
societies' accounts, trustees' accounts, charities' accounts, small
business accounts, and so on. However, all of these accounts are
similar to a straightforward current account.
- See if you can get a charity account. Many charities use
business bank accounts. In some cases banks stipulate that larger
charities (by turnover) or those with certain organisational forms
(e.g. if your charity is a charitable company limited by guarantee)
have to open a business account rather than charity account.
- Document your research. Ask around different banks to see what
works best for your organisation. When researching different bank
accounts, document your research -record the answers and results of
enquiries made to various banks so they can be properly compared
- Ensure you have the right kind of documentation. Common types
of identification required to open up a bank account include a
passport, driving licence, proof of address (often in the form of
utility bills), and/or a birth certificate.
Do charity banks have a minimum opening deposit?
Some banks require that a certain amount is placed into the
account on opening. This is normally not substantial, but it is
worth checking that you will be able to deposit that amount when
the account is opened.
What is your advice on switching bank accounts to get the best
You should regularly review your banking arrangements to ensure
that you are getting a competitive deal, suited to your
organisation. As a result of your reviews you may want to consider
changing your bank. Account switching is becoming easier and
faster. UK Finance has an account switching service
which is free to use for consumers, small charities, small
businesses and small trusts. The service is designed to make
switching current accounts simpler, and more reliable
Do you have to be a registered charity to have a charity bank
If you are opening a charity account, banks generally require
some proof of charity identification - a charity registration or
tax reference number, for example. Speak to your bank and ask what
Do PTAs avoid fees and charges by banking with a charity
A number of banks offer free banking for smaller charities,
however some banks charge a fixed monthly fee for running the
account and additional services. Other banks may offer a cost per
transaction or a mixture of both. Ask your bank about their
charging structure and consider what types of transaction you
process most - for example, do you mainly pay in small cheques as
opposed to large direct credits such as grants? Additionally, it is
worth checking whether the bank offers specialist charity rates
and, if so, how these compare with regular charges.
Can PTAs pay invoices online and take payments online?
Yes, consider how suitable all of these things are for your
charity. For example, for small charities where signatories do not
meet regularly, internet banking is hugely beneficial, whereas
visiting branches or telephone banking may not be. If you're
thinking of banking online you need to consider whether your
internal financial controls are appropriate for the purpose of
online banking. Seek guidance from your bank if you are uncertain
about how to make this work.
What safeguards or measures would you recommend having in
There have been stories of money going astray within PTA
committees.The Charity Commission has produced a guide called
Internal Financial Controls for Charities, which outlines a number
of basic banking controls that charities should consider. Here is
our summary of the main recommendations:
- Cheques and cash are banked regularly and promptly
- Cheque books are kept in a safe place
- Nobody signs blank cheques
- There is a clear policy for the use of payment cards, the
criteria for their issue, spending limits and security
- Dual authorisation arrangements are put in place if making BACS
and other payments
- Only specifically authorised individuals are able to set up
arrangements to make payments by standing order, direct debit or
BACS. This authority should be limited to a small number of people
with a list of authorised individuals drawn up and retained,
- If using electronic banking, passwords are changed periodically
and all PCs are kept up to date with anti-virus, spyware and
firewall software.These financial controls should be part of a
wider anti-fraud policy and risk assessment within your
If a school suddenly closes and there is money in the PTA bank
account, how should they deal with this?
The Charity Commission has general guidance about what to do
with your assets if your charity becomes insolvent. In winding up,
your charity should have a dissolution clause which includes where
to allocate your assets. You should be able to document these
financial transactions and pass them on to the Charity Commission
with information about winding up.
For more information
Group (CFG) is the charity that champions best practice in
finance management in the charity and voluntary sector. For more
information, visit cfg.org.uk.
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