How to Find the Best Banks for Nonprofits
Nonprofits have different financial needs from other types of organizations. When choosing a bank as a nonprofit leader, consider whether the bank provides services and amenities to help your organization thrive and whether it's a good fit. Finding the best banks for nonprofits means looking at the entirety of what each institution offers. While making your decision, look closely at the most important factors that impact how a bank meets your needs.
Size and location
First, consider the bank's size. Keep in mind that larger banks may offer a wider range of services and may have acquired more institutional experience working with nonprofits. At the same time, a community bank might provide more personalized support and might form deeper relationships with customers.
In addition, look for a bank that has a branch near your nonprofit's headquarters. This will make it more convenient to stop by the bank for meetings or handle any financial tasks that can't be conducted online. If your nonprofit has several satellite offices or frequently fundraises at a few set venues, you may benefit from working with a bank that has branches near those locations, too.
Products and services
At a minimum, most nonprofits need checking and savings accounts. You might also find your organization requires additional accounts, such as a merchant account to accept donations by credit card and investment accounts for endowments. You'll also likely need payroll services for employees, such as direct deposit. If your nonprofit works internationally, you may need to transfer money abroad or exchange currency. And if you'd like to accept donations in Bitcoin, you might prefer a bank that offers cryptocurrency custody services.
Consider whether the bank can provide all the services you plan to use, because dividing banking activities among multiple banks can complicate your nonprofit's financial operations.
Interest, fees and account requirements
Your nonprofit's donors are counting on you to safeguard their donations and use them to promote the organization's mission. That's why it's important to ensure you're getting a competitive interest rate on your deposits and aren't losing any resources to excessive fees. The best banks for nonprofits offer attractive interest rates and either charge minimal fees or waive certain fees for organizations like yours.
In addition to interest rates, it's also important to examine other account terms, such as withdrawal limits and minimum deposits. It's not unusual for nonprofits to have uneven cash flow throughout the year, so managing your cash flow is extremely important. For example, you might bring in most of your revenue during a short window, such as the holiday fundraising season, or incur most of your expenses in the weeks leading up to an annual event. For that reason, you might prefer a bank that tailors certain accounts specifically for nonprofits or offers greater flexibility.
Experience and trust
Nonprofits have unique tax considerations. You might also receive funding through specialized arrangements, such as public-private partnerships or program-related investments, which can further complicate tax preparation and financial reporting. A bank that has significant experience working with nonprofits will likely be better prepared to address your needs.
Perhaps most importantly, nonprofits should choose a bank they trust. As a leader at your nonprofit, you need to be comfortable sharing sensitive financial information, asking for guidance and exploring funding options. You should feel that your bank is a partner working with your organization to further its mission.
Selecting a bank is only the first step in finding that partner. Next, you'll need to build a long-term relationship with your banker by working closely with them to manage your nonprofit's resources and pursue funding goals. As your organization continues to make the world a better place, you can lean on this strong banking relationship for knowledge and support.
Financial insights for your business
This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.