The account types, the banks, the fees, and how to choose the right setup
A charity bank account holds and moves a charity’s money in the charity’s own name, rather than an individual’s. Every charity needs one; to keep its funds separate and secure, to receive grants and donations, and to register with HMRC for Gift Aid. Charity banking works a little differently from personal or ordinary business banking, though. The account is run by the trustees through named signatories, banks ask more questions before they open one, and some banks specialise in the sector alongside the familiar high-street names.
This guide covers what charity banking involves: the types of accounts, the banks and how their fees compare, how many accounts a charity needs, and how to keep the money safe. When you’ve chosen and want to get one open, our guide to opening a charity bank account walks through the steps.
What makes charity banking different?
Three things set it apart. The account belongs to the charity, not to a person, so it is opened in the charity’s name and operated by the trustees or the signatories they authorise; no one runs it as their own. Banks also carry out more checks before they open a charity account, since they have to meet money-laundering and know-your-customer rules and confirm the charity is what it says it is. And alongside the high-street banks, a few specialise in charities and social enterprises, offering sector-specific service and, in some cases, ethical use of the money deposited with them.
Service is worth weighing, not assuming. In a 2024 Charity Commission survey, 42% of trustees reported poor service from their bank in the previous year, so the account that opens quickest is not always the one to settle for.
What types of accounts does a charity need?
Most charities end up with two kinds of accounts, doing different jobs. A current account is the day-to-day one – donations and grants in, costs and wages out. A deposit or savings account holds money the charity is not spending now: its reserves, or restricted and designated funds set aside for later. NCVO suggests an instant-access deposit account for money that might be needed at short notice, with notice or fixed-term accounts for money that can be locked away longer in return for a better rate. A small charity may start with a single current account and add a deposit account as it grows.
Which banks offer charity accounts?
The choice divides into three groups: the high-street banks with charity or community accounts, the specialist charity banks, and the ethical savings option.
On the high street, NatWest’s Community account offers free day-to-day banking as long as the account’s annual credit turnover stays under £100,000, moving to its standard tariff above that – with one condition, that at least one person on the application already holds a NatWest personal or business account. Barclays’ Charity and Impact Account gives free day-to-day banking with no maintenance fee, charging only on international and high-value payments, and is aimed at registered charities, excepted charities and CICs with a turnover under £100,000 and a small board. Lloyds runs a Community Account for charities and community organisations, with a payment mandate and dual authentication for online payments; its current fee is on the account’s own page.
The specialist charity banks charge a modest flat fee but bring sector knowledge and take charities’ high-street accounts, sometimes turn away. CAF Bank, owned by the Charities Aid Foundation, offers the CAF Cash Account for a £5 monthly fee and, unusually for a current account, pays a little interest on credit balances; it takes both registered and unregistered charities. Unity Trust, an ethical bank for charities and social enterprises, charges around £6 a month for its business current account, with transaction fees set by turnover, and it also accepts unregistered charities.
Charity Bank sits slightly apart. It offers ethical savings accounts and lends to charities rather than providing a day-to-day current account, so it suits reserves rather than everyday running.
Fees change, and each bank sets its own transaction charges, so treat the figures here as a starting point and check the bank’s current charges page before you decide.
What does charity banking cost?
The pattern is not simply ‘high street free, charity banks paid’. Some high-street charity accounts are free but capped – Barclays and NatWest’s community account costs nothing day to day, but they are built for smaller charities under a turnover limit. The specialist charity banks charge a small flat monthly fee – CAF £5, Unity £6 – in return for taking unregistered charities and offering sector-specific service. On top of any monthly fee, most accounts carry transaction charges for things like faster payments, cash handling and international transfers, which is where the real cost difference often sits for a busy charity. Weigh the monthly fee against how you’ll actually use the account.
How many bank accounts should a charity have?
It helps to separate what the rules require from what is good practice, because the two get muddled. The SORP – the accounting rules charities follow – requires a charity to account for its different fund types separately, keeping records that show the income, spending, assets and liabilities for each restricted fund, and presenting that split in its accounts. That separation lives in the books. The SORP does not require separate bank accounts, and it sets no number – a charity can hold restricted and unrestricted money in one account and still comply, as long as its records track them.
Holding more than one account is then a practical choice, not a rule, and often a reasonable one. Keeping a restricted grant in its own account makes it far harder to spend that money on the wrong thing by accident, and misusing restricted funds can put trustees in breach of trust, so the risk is real. Separate accounts for day-to-day spending, reserves, and a specific restricted project also make reconciliation cleaner. There is a risk angle too: a current account kept at a working balance limits what fraud or error can reach, while reserves sit in a separate account behind tighter controls. And a larger charity may spread deposits across more than one bank so that more of its money falls within the FSCS protection limit, which applies per organisation and per banking licence. For how the fund accounting itself works, our charity accounting guide goes into the details.
How do you keep a charity bank account secure?
The single most useful control is dual authorisation – requiring two people to approve a payment, so no one can move the charity’s money alone. Most charity and community accounts build this in: NatWest through Bankline, Lloyds through dual authentication, CAF and Unity through their payment mandates. NCVO suggests naming three to five signatories so that any two can sign, which keeps the control in place without leaving the charity stuck when someone is away.
Keeping the account safe is part of the trustees’ wider duty to look after the charity’s money, so it is worth reviewing who is on the mandate whenever trustees change, and removing people who have left. The Commission’s guidance on internal financial controls, CC8, sets out good practice in full.
How do you choose the right account?
Weigh a few things against how your charity will actually operate: the fees, and how they land given your turnover and transaction patterns; the eligibility rules, since some accounts are only for registered charities under a size limit; how you’ll handle cash, if you take much; the online banking and dual-control features; and how many accounts you want from the start. A small, newly registered charity often does well with a free high-street community account plus a deposit account for reserves; one that will take restricted grants or handle cash may be better served by a charity bank. Once you’ve chosen, our guide to opening a charity bank account covers what you need and how the process runs.
Choosing a setup that fits
The right banking setup follows from how your charity is funded and how it spends – a single account for a simple operation, a current-plus-deposit pairing for most, and separate accounts where restricted funds or risk make the separation worthwhile. If you’d like help setting your charity up properly from the start, banking included, our charity management support works through it with you.
