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 like – '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 looks at the key considerations when choosing a bank account to help you decide on the best option for your group.

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 bank accounts have no minimum deposit fee required, but some do. Consider your group’s financial capabilities and ensure any deposits required are feasible.

Are there fees for using the bank account?

Most banks offer accounts for small not-for-profit organisations that do not have a monthly fee attached. If you qualify for an account with a monthly fee is does not necessarily mean all your banking is free, as they might charge a fee for certain services (see below).

The specifics vary form bank to bank but most commonly it will be:

No monthly fee if your annual turnover is under a certain level (£100k is a pretty typical turnover level to qualify for a free account but it varies form £50k to £1m depending on the bank). This will generally mean all banking is free, but some might charge transaction fees for specific services:
- CHAPS payments are a common one (these are normally for high-value payments or time-critical lower-value payments – so unlikely to be relevant for most groups)
- Or banking is only free if you stay under a certain number of monthly transactions, and each transaction is charged thereafter. This could be for all total transactions or linked to a specific service such as paying in cheques).
Some charge a monthly fee regardless of income. These can still come with extra charges for certain services (typically CHAPS)
If your group has turnover higher than the limits for free banking, then you might be charged:
- a monthly fee
- per transaction
- a combination of both.

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 (or longer period) 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.

Since many not-for-profit organisations require that two people authorise payments, this is an important factor to check for any prospective account.

Requiring two signatures for cheques is pretty standard and offered by most banks
Requiring two people to authorise online payments is not as standard – but is becoming more common.

Dual authorisation for online payments does not necessarily have to come at the point of actually making payment. If your account does not offer dual authorisation for online payments you could potentially have an email procedure for pre-approving and checking payments. However, this does carry risks as it is ultimately possible for one account user to make unapproved payments. Having an account that offers dual authorisation for an online payments is the best way to safeguard your finances, and the least amount of work for you.

Access to services

There has been reduction in the local branch network for banks. This means you might not always be able to easily visit a local branch of your bank. Even if there is one currently it might not be around forever. Consider:

Online and phone banking services:
- Quality: most banks offer online and phones services, normally to a pretty high standard – but usability can vary. Ask committee members if they have had positive (or not) experiences with the online / phone services for their personal accounts.
- Security: where services are offered security is paramount, and banks take it seriously. You should expect two factor authentication as a minimum for online banking. This is the process of having more than just a password to gain access to the online account. This might be using a card reader and PIN or receiving a code via a text message.
Alternative local access: if there isn’t a local branch, is their provision for alternative forms of local access to the account, and is there a fee for this? For example, you can use Post Office counters to access bank services, but banks differ in what types of transactions they allow at Post Offices and if / what they charge.

Interest rates

Interest rates on current accounts can be beneficial when general rates are high, and help to offset account fees. The rates offered for current accounts don’t vary that much between different banks, but it is worth factoring that into your research. Some banks offer accompanying deposit accounts with better rates of interest, these are worth consideration, especially for group with high reserves.

Green banking

Music groups can have considerable power in dictating their group’s sustainability practice. If this is important to your group, then careful consideration must be taken to select a bank that aligns with your group's values, for example not going with a bank that supports fossil fuels. A useful criteria is looking at a bank’s ESG (Environmental, Social and Governance) credentials that demonstrates their commitment to sustainability.

Bank Green is a useful tool to find out more about a bank's ecological footprint. Check out our Climate Change Network page for more resources and ideas for what your music group can do.

CharityFinance banking survey 2024

In 2024, CharityFinance surveyed around 300 charities, 61% of which had their income below £1million. Their customer satisfaction ratings yielded interesting results, that might be useful to your music group. Read the full report here

Read below for the top five banks in each category.

Top five banks in customer satisfaction ratings

Relationship manager: Reliance Bank Lloyds Co-operative RBS CAF Bank	Branch services: Reliance Bank Bank of Scotland Lloyds Metro Bank NatWest	Telephone services: CAF Bank Reliance Bank Lloyds Unity Trust Co-operative
Internet services: Lloyds CAF Bank RBS RBS Reliance Bank HSBC	Sector knowledge: CAF Bank Reliance Bank RBS Lloyds Unity Trust	Fees/charges: Co-operative Lloyds CAF Bank RBS Metro Bank
Interest rates: Unity Trust CAF Bank Bank of Scotland Reliance Bank Metro Bank	ESG credentials: Co-operative Reliance Bank CAF Bank Lloyds RBS	Overall: Lloyds CAF Bank Reliance Bank Co-operative Unity Trust Bank

2. Some bank account options

We have listed some banks we know members use below. This is by no means an exhaustive list of all available bank accounts. If your group is using an account not currently listed please do let us know.

We have included links to find out more about each account. Before opening an account, we recommend you do further research on the bank’s website, in branch or over the phone or email.

3. Useful guidance

NCVO has published their own guidance on banking for charities and voluntary organisations, including a question list on how to work out your banking priorities - NCVO guidance

Gov.uk have more information about charity banking and what support is available to charities trying to access adequate banking services - Gov.uk guidance

UK Finance have a banking guide for voluntary organisations, including an account opening checklist, FAQ and glossary - UK Finance guidance

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.

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

Contents:

1. Things to consider

Is a deposit required to open the account?