Bank Accounts

Charities like other businesses require banks to provide them with current accounts and in many cases supply loans or be the holders of their savings.  

Banks lend money to all different types of businesses, from large corporations, public institutions and even the occasional country. They also invest money in companies and corporations on behalf of businesses including charities, and individuals through investment funds, ISAs and pension funds.  

Banks use the money they make from customers to make more money by investing in companies and institutions. There are very few prohibitions as to where a bank can loan or invest its money.  

As a charity it is important to be aware of your bank’s lending policy, and especially whether this contradicts your charity’s mission and aims. For example, a bank’s investment in fossil fuels would contradict the aims of an environment charity, and could be against those of health, education and poverty charities because of the effects climate change could have on these areas.  

Key considerations

  1. Responsible investing: Is your bank investing in companies that are harming people and the planet? E.g. Fossil fuels, armaments, poor labour standards 
  2. Responsible lending: does your bank ensure its lending to people who can afford to make repayments? Do they provide advice or debt management services if customers fall into financial difficulty?
  3. Tax evasion/avoidance: Is your bank conducting appropriate due diligence on its large clients with regards to the source of their money? Has the bank conducted tax evasion or avoidance themselves?  
  4. Internal practices: Is the bank paying its own staff a living wage? Does it have appropriate policies on equality, diversity and inclusion? 

What can you do?

Talk to your bank 

Read the bank’s policies on investing. Some banks will have a Responsible Investment and/or Stewardship policy on their website. If you cannot find it, do not hesitate to reach out to your bank manager as such queries are part of their role.  

Switching bank accounts 

If you’ve spoken to your bank and you feel their current and future plans do not meet your charity’s values, you can switch banks. This has been made a lot easier in recent years with the Current Account Switch Guarantee, which is relevant for business with an annual turnover of less than £6.5m.  

SwitchIt is a great resource to learn whether your bank is investing in areas you may wish to avoid.