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 and discussed.
- 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 rates?
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 account?
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 they require.
Do PTAs avoid fees and charges by banking with a charity account?
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 place?
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 organisation.
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
The above is intended as guidance only. We recommend that you contact the relevant organisations with specific reference to insurance, legal, health and safety and child protection requirements. Community Inspired Ltd cannot be held responsible for any decisions or actions taken by a PTA, based on the guidance provided.