Money Matters

Open a charity bank account


Even though a bank account is not a requirement for setting up a charity, for most structures the Charity Commission will require proof of income as part of the registration process, which is often proved using a bank statement.

So, you will usually need a bank account BEFORE you register with the Charity Commission, but the bank will probably require you to have a constitution. You can use the Charity Commission’s model constitution for a small charity as a temporary solution to see you through this chicken-and-egg situation – but please be aware that you cannot use this to register with the Charity Commission.

If you register as a CIO, then you do not need to provide proof of income (as there is no minimum income threshold) and therefore can register without first opening a bank account. This will be optional on the registration form.

There are different types of banks and building societies:

  1. High street banks/building societies – many offer free accounts for small charities
  2. Charity banks – exclusive current accounts for the sector


High street banks/building societies

  • Many high street banks offer free accounts for small charities. These are part of a bank’s business services rather than personal banking.
  • The free services apply to everyday transactions. You will usually have to pay for things like cancelling cheques, overdrafts and requesting extra statements.
  • To open a charity account for the first time, you might be asked to call or visit the bank’s business services department. They may need to see your constitution or governing document; or the minutes (notes) of the meeting that appointed the signatories. Be prepared!


Charity banks

  • There are two banks which provide current accounts exclusively for the charity sector. They are CAF Bank (a trading arm of the Charities Aid Foundation) and Unity Trust Bank.
  • Although they don’t have a visible presence on the high street, these banks exist for charities (large and small). The services closely follow the requirements of the Charity Commission. Both banks can verify your trustees’ identity through your charity’s registration with the Charity Commission.
  • Find out more about CAF Bank.
  • Find out more about Unity Trust Bank.


  • Consider a bank with a local branch which is convenient for your trustees.
  • Think about using a bank that your treasurer already banks with personally – this might help to shorten the process.
  • Check that the account meets the needs of your charity (eg banking methods, fees, ethics).
  • Look for accounts that offer online banking (to look at statements and make payments easily).
  • Set up your account so that at least two people are required to sign each cheque or approve withdrawals.
  • Choose signatories with good credit ratings (the bank will run credit checks).
  • You might find this Better Business Finance resource useful to compare different banks and what they offer.

Keeping records (accounts)

Every charity needs to keep careful accounting records of how much money has come into the organisation, where it has come from, what it is for and how it has been spent.  This can all be done online – either with the help of various software programmes or just a simple excel spreadsheet.

The Charity Commission allows some charities (unincorporated charities with an income less than £250,000) to keep a simple ‘receipts and payments account’ (R&P). This is a simple statement of ins and outs during the year, with any balance or deficit from the previous year brought in at the beginning.  

All companies (incorporated charities) such as CIO’s must keep an ‘income and expenditure’, or ‘accruals’ account. This is based on the R&P but will need to include a ‘balance sheet’ which sets out the charity’s assets (what it owns or is owed) and liabilities (what it owes), plus a statement of financial activities and explanatory notes.


It‘s a really good idea to have at least one trustee acting as the Treasurer; someone with bookkeeping or accounting experience. However, ALL trustees should understand aspects of finance such as accountability, budgeting and reading a set of accounts.

Read NCVO’s guidance on trustee financial responsibilities and on the role of the treasurer.

You must also keep documentation:

  • To show the source of your income, such as a letter that comes with a payment or, for cash income, a note with the date and the amount collected.
  • To show that your money was spent in the way recorded in your accounts, such as invoices and receipts, counterfoils in a chequebook, and bank payments by standing order or direct debit.

Put in strong controls against fraud:

  • You should have at least two unrelated signatories to your bank account and require both signatures (or two out of three) to release any expenditure.
  • Trustees should set a budget for the year and monitor expenditure against that budget on a regular basis (monthly or quarterly).
  • Trustees should receive regular reports on the charity’s financial position. It is part of their job to ask questions and this should be encouraged.
  • Cash collections should be done by two people who can supervise each other.



Stay up to date with the bookkeeping. Never let it slide or it’s easy to become overwhelmed. But it really is straightforward once you get your head around it.

Everything can be sorted out if you have proof of all income and expenditure. Just make sure you check all bank statements regularly to see if they match the information in your accounts.

Charities are required, by law, to submit an annual report and accounts to the Charity Commission. Trustees are responsible for making sure that this is done and that the charity’s assets are only used to support or carry out its purposes.

Each registered charity receives an annual return form from the Charity Commission shortly after its financial year end. In all cases, the annual return should be completed online.



In order to make sense of your finances and to submit the required information to the Charity Commission, you will need to decide on your financial year.

The most commonly used financial years are either 1 January to 3 December OR, in order to comply with the tax year, 1 April to 31 March.  But you can use any 12 months that make sense for your charity.

Legal requirements – Unincorporated Associations

Those with an annual turnover of less than £10,000 must keep proper financial records but do not need to submit them to the Charity Commission. They do have to submit an annual update of gross income and expenditure and any change of details of the charity or the trustees.

Those with an annual turnover of more than £10,000 must submit their annual financial situation to the Charity Commission.

Those with an annual turnover of more than £25,000 must have their accounts independently examined and submit them to the Charity Commission.

Unincorporated charities with an income of less than £250,000 can submit a simple ‘receipts and payments’ account.

Legal requirements – Charitable Incorporated Organisations (CIOs)

All Charitable Incorporated Organisations (CIOs) must submit annual accounts to the Charity Commission, even if their income is zero.

The accounts must be in an income and expenditure (accruals) format with a balance sheet, a statement of financial activities and explanatory notes.

But the accounts don’t need to be independently examined until your charity’s annual income is more than £25,000

The independent examiner:

  • Should be an individual who has no day-to-day involvement in the administration of the charity and has no connection with the charity trustees.
  • Doesn’t need to be a professional accountant or qualified independent examiner if your charity’s gross income is less than £250,000 per year.
  • Must follow the Charity Commission’s directions and guidance on independent examination.

NCVO’s legal compliance checklist contains a list of legal requirements that need to be covered by most charities and voluntary organisations.