Last year, 42% of charity trustees reported receiving poor customer service from banks. The biggest criticism being that these financial institutions did not understand their specific needs and therefore cannot make accommodations for them. With ever changing and tightening regulation, the question for the banking sector is how can we best support the not-for-profit sector, remain profitable and adhere to regulation? 

The not-for-profit sector faces numerous challenges when it comes to opening and managing their accounts 

Banks often do not understand the unique operating models or legal structures of the not-for-profit sector. As a result, certain founders are facing significant barriers to entry on their initial journey setting up the charity’s finances. These barriers include long and opaque account opening processes not designed for the unique challenges of the sector, as well as minimum account balance requirements.  

An example of this are standardised processes that were not designed for the non-standard circumstances of the not-for-profit sector’s unique structure. Standardisation makes it difficult for not-for-profit firms to be assessed individually, and does not provide the option to explain why the given options don’t apply to their situation. A specific example would be not having a beneficiary, which by definition is not applicable to charities. 
 
Moreover, unexpectedly large transaction fees coupled with low cash flow mean there is a high chance of being de-banked, forcing trustees to use personal bank accounts for their work, thereby breaching fiduciary duty and regulations. This imposes disproportionate hardship, especially since trustees are often unpaid. These long and frustrating processes place an unnecessary administrative burden on small charities, diverting their time away from serving their communities. 

Why should banks care about supporting the not-for-profit sector?  

As Helen Stephenson, CEO of the Charity Commission, stated in 2024, “It is simply not good enough that volunteer trustees, who are giving of their free time to serve society, are faced with such unnecessary challenges in managing their charities’ money”. Charities play a vital role in delivering services to their local communities and challenges with financial management can cause disruption and service breakage. 

Supporting charities aligns with banks’ Corporate Social Responsibility (CSR) and Environmental, Social and Governance (ESG) goals. By providing better services to the not-for-profit sector, banks can make a positive contribution to communities, demonstrate their commitment to societal well-being and improve their reputation in the process. 

The reality is banks are facing tightening regulatory compliance measures driving them to reduce their risk. There is also increasing pressure from governments, including inquiries through the House of Commons, imposing pressure to support small and medium-sized businesses and charities. By proactively addressing these measures, banks can avoid potential regulatory penalties and align with government expectations. 

Finally, while supporting the not-for-profit sector might require initial adjustments, it can lead to long-term profitability. Britons gave £12.7 billion to charity in 2022, according to a Charities Aid Foundation (CAF) estimate. Charities seek banks that understand their unique needs and are more likely to commit to one banking provider for the lifetime of the organisation. Building a strong base of charitable clients allows banks to move higher up the non-profit ladder gaining trusts and foundations with higher volumes of income as new clients. The best way to attract charities with large cashflows is by becoming an organisation that supports charities effectively.  

What solutions can banks implement to support the not-for-profit sector? 

While there is an opportunity for banks to develop specialised financial products for the not-for-profit sector, there are other ways banks can support without major investment in added resources.  

Firstly, collaborating with non-profits to upskill their staff and volunteers in the unique financial challenges they will face as well as the skills and tools they will need to establish in order to overcome them. This can be delivered through one-to-one advisory, group training sessions or even virtual webinars. 

This training can be further subsidised by banks by providing dedicated resources to support charities, such as templates, educational materials and application assistance. Offering specialist tax advisory services, reporting templates and tools can simplify compliance and ensure efficient submissions, reducing hassle for both parties.  

How we can help 

By understanding and accommodating the needs of the not-for-profit sector, banks can fulfil their CSR commitments, enhance their reputation, comply with government and regulatory pressures and achieve long-term profitability. 

At Elixirr, we have extensive experience supporting clients in both the charity and financial services sectors for over 15 years. This includes working with an organisation that provides banking services to charities globally, as well as a number of foundation arms for charities. This experience enables us to understand their specific needs and offer tailored solutions with the additional skills and expertise to implement them effectively. 

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