Bank accounts for voluntary groups; what can be done?

[S&CLER]

There have been several newspaper reports of HSBC and other banks closing accounts of voluntary groups or imposing burdensome conditions on them. Our walking club experienced delays and difficulties (from NatWest) in changing the authorised signatories when we changed treasurer. The local Ramblers group, for its part, no longer accepts payment by cheque because of charges and insists on cash only, as their treasurer finds it the least time-consuming method and says it is less work for him than going online (and he is an accountant!). I organise holidays for one group and have so far managed to escape difficulties by collecting cheques payable to the tour company. This means that I don't need to hold other people's money in my own account or pay cheques into the club account and incur charges, and can easily keep track of who has paid deposits and balances and who hasn't; if they paid by transfer into the club's account I would have to keep checking that to see who had paid (some people would be sure to pay but omit to tell me) and then get the treasurer and another signatory to write a cheque or authorise a transfer for the total cost of the holiday (usually around £9000 for 40 pax). I always take the booking forms and deposit/balance cheques in person to the tour company in Euxton, enjoying a pleasant day out on the 347 bus, an agreeable run through Lancashire villages, at no cost (though the office of the tour company adjoins the down platform of Buckshaw Parkway station, it's more convenient to go by bus). This solution is very safe and works for me, because I have plenty of spare time, but I can see that it wouldn't be acceptable to many who run voluntary groups.

Have any forum members had problems with their voluntary group accounts? And if so, how have they resolved them?

 

[davews]

Our church is with HSBC so now subject to their new charges. We tried to move to NatWest but came unstuck because being a charity they needed a charity number - but the Methodist Church is run on a national basis and individual churches don't normally have their own charity number. They also needed a form, which we had never heard of, to prove we actually were a church.... so we had to give up. Our amateur radio club though did successfully move to NatWest - then the treasurer posted the account details on their website and we were promptly hit with a fraudulently set up Virgin Media direct debit (maybe that should go in the scam calls/emails thread, never put your bank account details on a website!)

Overall there are very few options for societies like ours and if you want any interest forget it!

 

[Magdalia]

My allotment society got a bank account recently after more than 2 years of trying.

The account is with Metro Bank. Apparently it took a full afternoon to jump through all of the required hoops.

 

[James H]

but the Methodist Church is run on a national basis and individual churches don't normally have their own charity number

It's likely your church is a charity in its own right (with its own trustees) but is an 'excepted charity' so doesn't have a charity number. The national organisation is neither here nor there.

 

[Bletchleyite]

Nothing needs to be done. There is no scope to make money out of voluntary groups' banking, so such groups should simply pay the fees for an account. Free banking is regressive anyway, it is funded from fees and interest charged to those who can barely afford it.

 

[Starmill]

Free banking is regressive anyway, it is funded from fees and interest charged to those who can barely afford it.

Unfortunately in this country we run in general on the free banking model so this isn't really relevant. Also there's another important source of income for most banks, which is cash on deposit in current accounts for which they pay no interest, but can earn central bank rates of interest.

 

[Dai Corner]

I can see that processing forty cheques, keeping the money on deposit for a short time and processing another cheque to empty the account isn't a very attractive proposition for a bank, and one I don't really want to subsidise as all my transactions are electronic.

If I was a member or treasurer of such a voluntary group I'd probably accept that we had limited choices and be prepared to pay a fee for the facility we required.

 

[Gloster]

The modern mantra: ‘If we can’t make money out of it, it’s not worth doing.’ Nowadays charity begins at home and stays there.

 

[Bletchleyite]

Unfortunately in this country we run in general on the free banking model so this isn't really relevant.

This is slowly changing.

Also there's another important source of income for most banks, which is cash on deposit in current accounts for which they pay no interest, but can earn central bank rates of interest.

Rates are too low for this to even cover costs.

The modern mantra: ‘If we can’t make money out of it, it’s not worth doing.’ Nowadays charity begins at home and stays there.

I like to choose which charities I donate to rather than businesses charging me extra so they can do so. Businesses are better supporting charities by way of organised volunteer projects.

I can see that processing forty cheques, keeping the money on deposit for a short time and processing another cheque to empty the account isn't a very attractive proposition for a bank, and one I don't really want to subsidise as all my transactions are electronic.

If I was a member or treasurer of such a voluntary group I'd probably accept that we had limited choices and be prepared to pay a fee for the facility we required.

Exactly.

 

[Starmill]

Rates are too low for this to even cover costs.

So what? It's still a source of revenue which is what I said. A Digital first bank can almost cover their costs with it. And nobody makes a profit on current account provision so you wouldn't expect it to do any more than that.

 

[Bletchleyite]

So what? It's still a source of revenue which is what I said. A Digital first bank can almost cover their costs with it. And nobody makes a profit on current account provision so you wouldn't expect it to do any more than that.

The profit is made on upsells which aren't an option for charities.

 

[2192]

Our church is with the Co-op Bank and they don't charge. Another church switched to them recently from HSBC without difficulty. We have a branch in Derby.

 

[Phil56]

Unfortunately in this country we run in general on the free banking model so this isn't really relevant. Also there's another important source of income for most banks, which is cash on deposit in current accounts for which they pay no interest, but can earn central bank rates of interest.

We may run on the free banking model for individuals, but certainly not for businesses etc. A voluntary organisation is more like the latter than the former, so it makes sense to charge clubs/societies etc at least enough to cover the bank account running costs.

 

[DerekC]

Our village hall banks with CAF Bank (an offshoot of Charities Aid Foundation). Their charges have just about doubled in the past three years and I am looking for other options. We need a "two to sign" facility and not all banks do that on line. HSBC look like the best bet. Does anyone know of other banks which allow this?

BTW it's all very well to say that we should just grin and pay up, but part of my job as Treasurer is to minimise costs for essential functions so I do need to think about the possibilities.

 

[Dai Corner]

BTW it's all very well to say that we should just grin and pay up, but part of my job as Treasurer is to minimise costs for essential functions so I do need to think about the possibilities.

Is accepting and making payments by cheque an 'essential function'?

 

[Bletchleyite]

Is accepting and making payments by cheque an 'essential function'?

Definitely not. Charities seem to hang onto cheques for dear life, but they are not the best way of doing anything at all, really.

In particular there is no better way to show gross disrespect for a volunteer than to pay them their expenses by cheque. Yes, here's your money, you have to faff about to get it.

 

[DerekC]

Is accepting and making payments by cheque an 'essential function'?

Definitely not. Charities seem to hang onto cheques for dear life, but they are not the best way of doing anything at all, really.

In particular there is no better way to show gross disrespect for a volunteer than to pay them their expenses by cheque. Yes, here's your money, you have to faff about to get it.

Obviously I didn't make the problem clear. Many charities have traditionally operated on a "two to sign" basis and ours is required to do that by its Trust Deed. That's easy to do with a cheque but not all banks offer dual authorisation for on line payments. My question is - does anyone have experience of a bank which does (other than CAF and HSBC). And yes, the ability to receive and make payments is an essential function.

 

[87 027]

Our village hall banks with CAF Bank (an offshoot of Charities Aid Foundation). Their charges have just about doubled in the past three years and I am looking for other options. We need a "two to sign" facility and not all banks do that on line. HSBC look like the best bet. Does anyone know of other banks which allow this?

BTW it's all very well to say that we should just grin and pay up, but part of my job as Treasurer is to minimise costs for essential functions so I do need to think about the possibilities.

Barclays offer 'dual authorisation' on community accounts but when I visited just before Christmas they had a moratorium on opening any new charity accounts precisely because of the HSBC situation.

My Scout Group, which is one of the largest in the country, operates numerous accounts and because dual authorisation of online payments is a mandatory requirement of the Scout Association nationally, we could be looking at annual bank charges of £750-£1,000 just to have the facility. That's before we've deposited or withdrawn a single penny.

Metro Bank also offer dual authorisation for online payments but charges look particularly horrendous. The facility costs £20 per month unless you open a business bank account then it costs £5 per user. But there is a fee of 30p per transaction and a monthly standing charge unless you can maintain a balance of above £6,000.

Definitely not. Charities seem to hang onto cheques for dear life, but they are not the best way of doing anything at all, really.

In particular there is no better way to show gross disrespect for a volunteer than to pay them their expenses by cheque. Yes, here's your money, you have to faff about to get it.

If you're referring to the Scouts, the national rules require dual authorisation for online payments and online banking must be cancelled if it allows one person acting along to initiate a payment, even if they undertake never to do so without first getting a second signature on the supporting paperwork. So it may be the only way (other than cash) of reimbursing payments in some cases.

Scouts - Banking

The Scouts requires groups to use bank accounts (POR Rule 3.50). Learn more about banking,

www.scouts.org.uk

Policy, Organisation and Rules requires that, to safeguard charity funds from misuse, two signatures are needed to authorise any payment to a third party.

Internet banking needs to provide the electronic equivalent of this, ie dual secure logins to authorise transactions.

A group informed us that they applied for online banking just to view up-to-date statement information but then found they had been enabled to make payments with just one person authorising. They asked if it was alright to use this provided the person making payments first obtained a second person’s signature on the supporting documents. We had to tell them that this was not acceptable and that they should cancel that online facility. It was possible for one person acting alone to make payments without first getting that second signature, so their proposed safeguard was ineffective.

 

[43096]

Definitely not. Charities seem to hang onto cheques for dear life, but they are not the best way of doing anything at all, really.

In particular there is no better way to show gross disrespect for a volunteer than to pay them their expenses by cheque. Yes, here's your money, you have to faff about to get it.

In my experience of being involved with a charity, all the payments are electronic, it's a minority of people paying in who want to use cheque or postal order - you'd be amazed how many people there are out there who still pay the old way.

 

[davews]

It's likely your church is a charity in its own right (with its own trustees) but is an 'excepted charity' so doesn't have a charity number. The national organisation is neither here nor there.

Indeed, that is how we operate. Except NatWest don't seem to understand the concept. We also require two signatures on all payments, Methodist Church rules, and although in theory HSBC offer this online when you try and set it up it is not straightforward. So for the foreseeable future we are stuck with cheques.

 

[36270k]

I belong to a club that uses NatWest. The main problem is due to branches closing, there are limited places to pay in cash and cheques.

 

[Dai Corner]

I belong to a club that uses NatWest. The main problem is due to branches closing, there are limited places to pay in cash and cheques.

Can't you pay in cheques through an app?

And get a card machine to save members going to the bank to withdraw cash and the treasurer going to possibly the same bank to pay it back in again?

 

[87 027]

Can't you pay in cheques through an app?

Only up to certain transaction and daily limits which depending on circumstances may be insufficient.

However for my Scout Group, the bank's app is incompatible with accounts that have dual authorisation so we can't use it at all.

 

[1955LR]

I am a signatory on two business accounts with Lloyds. One being a club and another a Parish council , both require two signatories to transact payments. The club has online banking with any two authorities' to make payments. When the Council came to go online I found I could transfer money between the two business accounts which was total none starter as far as I or the Council was concerned . The sign on for me as an individual gave access to both . At the moment we are still using cheques and I understand NALC ( National Association of Local Councils ) still recommends not using online banking for that very reason amongst others.

​

 

[87 027]

And get a card machine to save members going to the bank to withdraw cash and the treasurer going to possibly the same bank to pay it back in again?

Yes, these are fairly easy to obtain and the entry level models can be bought for a one-off charge of £29.

However the transaction fee is in the order of 1.7%, so each charity will need to work out how cost effective this route is as opposed to asking people to pay by standing order or direct bank transfer.

 

[PeterC]

Can't you pay in cheques through an app?

And get a card machine to save members going to the bank to withdraw cash and the treasurer going to possibly the same bank to pay it back in again?

I don't know ow about NatWest but when I was treasurer of a comunity account with HSBC the app wasn't available for community accounts. They also steadfastly ignored change of signatory requests until the new treasurer opened an account with Starling.

 

[headshot119]

Obviously I didn't make the problem clear. Many charities have traditionally operated on a "two to sign" basis and ours is required to do that by its Trust Deed. That's easy to do with a cheque but not all banks offer dual authorisation for on line payments. My question is - does anyone have experience of a bank which does (other than CAF and HSBC). And yes, the ability to receive and make payments is an essential function.

COOP Bank offer two to sign for charity accounts for online payments, however I can't really recommend them. Changing signatories on the account was always extremely painful, and the online banking interface was stuck in the dark ages.

 

[87 027]

From reading this thread it is fairly clear to me that those who are not themselves voluntary organisation treasurers or charity trustees just don't appreciate the practical difficulties and constraints that throw obstacles in the way in practice! Yes it would be great if charity banking was as easy as personal banking but sadly that is just not the reality, with account opening, bank mandate changes and 'two to sign online' being especial pain points in my own experience.

I note in post #5 there is a view that charities should just "simply pay the fees" but put yourself in the position of being the one justifying that in front of fellow trustees and wider supporters...

 

[Dai Corner]

From reading this thread it is fairly clear to me that those who are not themselves voluntary organisation treasurers or charity trustees just don't appreciate the practical difficulties and constraints that throw obstacles in the way in practice! Yes it would be great if charity banking was as easy as personal banking but sadly that is just not the reality, with account opening, bank mandate changes and 'two to sign online' being especial pain points in my own experience.

I note in post #5 there is a view that charities should just "simply pay the fees" but put yourself in the position of being the one justifying that in front of fellow trustees and wider supporters...

Such organisations don't generally expect free energy, phone calls, internet access, fuel, stationery, postage etc etc. Should banking be any different?

I write as a former charity trustee and treasurer.

 

[Spamcan81]

Our loco group, a registered charity, banks with HSBC. We did have free banking but that has been discontinued. Charges are becoming quite substantial so we have adopted on line banking to reduce them. We are switching to on line transfer to pay all our bills and will be encouraging our members to use standing orders, direct transfer etc. wherever possible. Cash will still feature as not all visitors to our charity shop and fund raising stalls wish to use card. Our treasurer's local branch has gone all machine so no coin can be deposited but fortunately my local branch still has counter service so we can bank coin there.