Having a bank account is essential for every nonprofit organization. However, it’s equally important to have a banking partner that understands your needs, whether you’re receiving donations for the first time or funding a new project.
After consulting with bankers, bookkeepers, and industry experts, it became clear that choosing the right bank for a nonprofit is crucial. Nonprofits require a financial institution that provides valuable advice, efficient software, and shares their mission.
Here’s a guide on how to find the perfect bank for your nonprofit:
1. Identify your donors’ preferences
When starting out, your nonprofit will likely need a business checking account to manage payments, donations, and grants. It’s important to choose an account that supports the preferred payment methods of your donors and grantors.
For example, if you receive cash donations frequently, consider a bank like Capital One that offers fee-free cash deposits at ATMs. Additionally, look for a bank that provides free incoming wire transfers if you often receive major gifts or grants through wire transfers.
Furthermore, if you accept credit card donations, opt for a bank with integrated merchant services to benefit from lower processing rates. U.S. Bank, for instance, allows nonprofits to ask donors to cover payment processing costs.
🤓Nerdy Tip
Consider using payment processing services tailored for nonprofits, such as Zeffy or Givebutter, to reduce processing fees and streamline donations.
2. Check the schedule of fees
To manage your organization’s funds effectively, it’s crucial to avoid unnecessary fees on your day-to-day banking activities. Look for a bank like Truist that offers business checking accounts with fewer fees or higher limits for nonprofits.
Examine the fee schedule of the nonprofit account or business checking account you’re considering and pay attention to fees and limits for monthly maintenance, transactions, cash deposits, wire transfers, and ACH transfers.
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Monthly maintenance fees. Opt for accounts that waive these fees for nonprofits.
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Transactions. Choose an account with unlimited electronic transactions.
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Cash deposits. Ensure that the fee-free limit applies to both ATMs and tellers.
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Wire transfers. Look for banks that offer free incoming wires or charge minimal fees.
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ACH transfers. These should be free unless expedited.
3. Talk to your accountant, bookkeeper and board
Consult with your accountant and bookkeeper to ensure that the bank you choose integrates seamlessly with your accounting software. Consider fintech companies like Relay and Mercury for advanced spend management tools.
Seek recommendations from your board of directors for trusted bankers who align with your organization’s mission. Local and regional banks may also offer grants, so leverage your board’s connections to explore funding opportunities.
Additionally, tap into your board’s knowledge of local charity networks to gain insights into available programs and funding options.
4. Meet with bankers
Arrange meetings with bankers from your top bank choices to gauge their interest in your mission and their willingness to provide support when needed. Ask specific questions about account ownership permissions, loan applications, and business credit card offerings.
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Inquire about the process of changing account ownership permissions and applying for loans or lines of credit.
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Ask about the business credit card options available and how to issue employee cards.
Request a demonstration of the bank’s online banking platform to ensure it’s user-friendly and meets your organization’s needs.
5. Consider a second bank for your reserves
For better interest rates and to separate your operational funds from reserves, consider opening a savings or business money market account at a different institution. This allows you to earn interest while keeping your main funds easily accessible.
Keep your day-to-day operations streamlined by maintaining your checking account for regular expenses and using the second bank for surplus funds.