Let’s face it, whilst the relationship between banks and charities is vital, it’s not always easy and they certainly don’t always speak the same language. A positive partnership between the two not only ensures financial resilience but also allows the charity in question to focus on delivering against its mission and values. When the relationship is more fractious, however, it leads to stress, disruption and puts into jeopardy the charity’s ability to deliver against its mission.

The Charity Finance Group’s “Charity Banking Challenges Report, 2024” detailed how a staggering 92% of charities had experienced at least one issue relating to their banking experience in the previous two years. Those issues ranged from relatively minor but inconvenient hurdles such as updating contact or signatory details, or delays in opening a new account, through to more concerning issues including accounts being frozen or blocked (experienced by 6% of respondents) and the loss of banking records (experienced by 7% of respondents).

Significantly, 14% of charities who responded confessed to having difficulty in understanding what their banks wanted from them.

Imagine being in a foreign country. You’ve asked for directions in your very best attempt at the local language, yet the response is delivered at speed in a local dialect that you’re not familiar with. The chances of accurately interpreting the information received are slim. The same can be said for the relationship between banks and charities. On the one hand, banks are communicating in a language that’s focused on fiscal structures, compliance around regulations such as anti-money laundering and financial crime and are not necessarily familiar with the nuances of charity governance or the variety of their income streams. On the other hand, charities are by their very nature, mission-driven and often run by quite lean operational teams. Simply, the two often speak very different languages.

It doesn’t, however, need to be this way.

Specialist banking providers have been built to understand the needs of charitable organisations, the ways in which they’re governed and the variety of their income streams and they will often have dedicated relationship managers who appreciate the challenging environment in which the charity operates.

There are, of course, steps that can be taken by charities too and our advice in this respect would include:

• Remember that not all banks are the same and it pays to shop around to find the one that best meets your charity’s needs
• Make sure your charity’s governance structure is robust and in line with The Charity Commission’s guidance
• Adopt a positive approach to the relationship between your charity and the bank – this can be further supported by encouraging your finance staff to take the time to understand what the bank will require from them and, conversely, what the bank is required to do for your organisation too
• Commit to proactive communication with your bank – don’t wait for tricky situations to escalate and become potential red flag incidents

Of course, banks and charities will always approach their relationship from differing perspectives – there is power, after all, in the strengths they each bring to the party. However, there is clearly a need to speak a common language and adopt a collaborative working relationship so that what really matters – delivering for the causes that the charity is committed to – isn’t lost simply because something got lost in translation.

Interested in exploring how banks and charities can build stronger, more collaborative relationships?

Hear from CAF at our upcoming Charity Accountant’s Conference for the session “Speaking the same language: how banks and charities can work better together”, where experts will unpack real-world challenges and share practical steps to improve understanding and partnership.

👉 Click the link to book your place and secure your tickets now: https://www.dsc.org.uk/event/the-charity-accountants-online-conference-2025/?dm_t=0,0,0,0,0#buy-now