Running a nonprofit? Before you open a bank account to hold your business funds, you’ll need to research banks. Look for a bank with services and perks especially for nonprofits. Here are some questions you’ll need to ask:
- What experience does the financial institution have with nonprofits? Has it had many nonprofit clients? The ideal bank will have a decent percentage of nonprofits as current clients. If you want to apply for tax-exempt loans, bonds and financing, a bank with experience in that area will help you navigate the application process so your group can receive the funding.
- Does the bank have ethical standards and guidelines? For nonprofits that are socially focused, it’s important to find a bank that prioritizes social responsibility. Ask about the bank’s code of ethics and investigate the bank’s relationship with community members in day-to-day operations. Discover how the bank positions itself within the community. Perhaps you want to work with a smaller bank, credit union or regional bank with local ties that can assist you with networking and identifying local issues.
- What services does the bank offer? If you plan to form a public-private partnership, a bank that’s worked with public agencies and private organizations is more likely to offer useful guidance and advice. You’ll want to create a checking account for depositing receivables and making payments and make it the central hub of your bank accounts, so look for a bank that offers business check cards to pay bills and make purchases directly from the bank account.
- Can it handle payroll? If you have paid staff, it’s helpful to have a separate payroll account. Compensation checks are issued or automated payroll is withdrawn directly from the account.
- Will the bank help with loans? A short-term bank finance account supports cash flow while you wait to deposit fundraising income, government grants and other contract receivables. Does the institution offer term loans to pay for such purchases as furniture and other equipment? What about a mortgage loan if you want to purchase commercial premises?
- Can the bank help with long-term projects to support your philanthropic mission? You may want a financial institution that will work with your endowment funds. If you want to expand your organization, your directors may want to place investment funds in low-risk, high-performing options the bank recommends.
Get yourself organized
As you research banking options, start pulling together your documentation:
- Your group’s incorporation paperwork, bylaws, tax ID number and a letter of exemption from the IRS.
- A list of which officers will sign checks on behalf of the organization. The bank will want their IDs.
In selecting a bank for your nonprofit, start your research by checking banks’ websites and then visit the premises personally to check their proximity to your location. Not all banks offer the same perks for nonprofits, so research all your options carefully.
To learn more about how our firm can serve your nonprofit organization, don’t hesitate to contact Kathy Corcoran at (302) 254-8240.
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