Banking services are not meeting the needs of many charities, report finds

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A growing number of charities are struggling to find banking services that meet their needs, according to a new report.

Charities have reported that in-person banking services have become increasingly inaccessible and unavailable, forcing some to keep money at home or use their personal accounts.

Smaller charities in particular said they could no longer access their bank branches due to recent closures, while organizations also felt that online banking services were not suitable.

Services inaccessible and unavailable

The Civil Society Group, a coalition of charities, surveyed 1,262 voluntary organizations between March 31 and May 6 about the banking challenges they have faced over the past 18 months.

The poll asked respondents to rate the availability of in-person services on a scale of 1 (not available) to 4 (very available). The average score was 2.25 (poorly available).

Charities responding to the survey said they could no longer access their bank branches due to closures in recent years, reduced opening hours and reduced staff.

The report says these challenges have “disproportionately” affected smaller charities, especially those located in rural areas and small towns.

He said: “When bank branches close it can mean longer journey times to get to the nearest branch. With 81% of respondents being trustees or volunteers, many described taking time off from work or taking advantage of their lunch break to visit the bank during its opening hours.

“Going to a branch can also mean dealing with parking and congestion zone charges, limited parking or a lack of suitable public transport options – all of which can make a visit to the bank more expensive. and longer, with a disproportionate impact on small and/or volunteer-led charities.

More than a third of respondents (38%) admitted to having to find “workarounds” to deal with these problems, such as keeping cash at home until there was a sufficient amount for the bank to accept a deposit, remove dual authorization so they can access online banking and deposit money into their personal account before writing a check to the charity’s account.

Lack of understanding of the needs of charities

Another issue highlighted in the report is that banks tend to treat charity accounts as business accounts, which means that “the complexity of banks’ requirements can be disproportionate to the needs and risks of charities”.

Some 67% of respondents reported problems when changing signatories in the last 18 months.

The report states: “Procedures that manage the risk of issues such as money laundering can make operating a charity account extremely difficult and time-consuming, and there does not appear to be flexibility in the rules to take into account recognize the difference between the needs of businesses and charities. .

“Account management, including opening an account or changing mandates, can be complex, time-consuming and hampered by repeated delays. In fact, 33% of respondents had difficulty opening a bank account in the past 18 months.

Additionally, 64% of respondents said they would prefer to bank online, but suggested that online services are not for them. They cited reasons such as the inability to have two signatories, lack of bank support and poor customer service.

Civil Society Group: Addressing Challenges Collectively

The civil society group said the challenges identified in the report can be overcome through collaboration between the government and the charitable and banking sectors.

He writes in the report: “We appreciate that the banking industry has faced a convergence of regulatory and commercial pressures in recent years. For example, stricter anti-money laundering and anti-fraud regulations have accompanied growing competition from new market entrants, especially digital banks, and pressure on revenues from higher interest still low.

“These trends were present long before 2020, but the Covid-19 pandemic and its continued impact on the economy will no doubt have exacerbated and accelerated them. These trends have certainly contributed to the banking difficulties that charities currently face. »

He added: “Such complex and overlapping challenges cannot be solved by the voluntary sector, banks or government alone, but must be tackled collectively. Failure to do so would jeopardize the good governance of charitable funds and the delivery of charitable services. As well as worrying charities, voluntary groups and community organisations, this situation concerns the whole sector and will be of interest to the Charity Commission, as regulator of the sector.

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