Small charities are being forced into poor financial practices, such as keeping cash at home and using their personal accounts, due to lack of access to banking services.

The closure of branches, lack of online services and limited opening hours are disproportionately hitting small charities, which are often based in rural and small towns where many cuts in the banking sector are taking place.

Cuts are forcing some to use “poor practice” and “workarounds” to manage their charity’s finances, according to a survey of charity representatives.

Poor practice includes paying cash into personal accounts and then writing a cheque to the charity’s account, as well as keeping cash at home until there is enough for a bank to accept a deposit.

Other corners being cut include removing dual authorisation to access online banking swiftly and to keep funds for specific projects in a charity’s main account, despite rules in place to ensure this is in a separate account.

Such workarounds were reported by 38 respondents.

“These are high-risk strategies for any organisation, and it is worrying that some charities feel they must engage in poor financial governance to enable access to the banking services they need,” said the Civil Society Group, the coalition of charity sector leaders that has carried out the survey, which includes the Charity Finance Group (CFG) and the National Council for Voluntary Organisations (NCVO).

The group is calling on the banking sector to work with charities to solve poor access issues and to better understand their banking needs.

For example, nearly two thirds of charities (64%) would prefer to bank online to improve their access to services. But many can not as they are unable to have dual signatories online. In addition, there is no provision for online banking for some accounts.

As a result, 57% of respondents say they do not bank online.

Banks treating charity accounts as if they are business accounts is another challenge charities face.

“Our survey respondents told us, loud and clear, that changes to charity bank accounts and services have increased the challenges being faced when they are trying to look after their charity’s cash,” said Clare Mills, policy and communications director at the CFG.

“We’d all heard the anecdotes or read the stories about charities facing issues with banking services, but this survey provides the data needed to take the issues to the banking sector.”

NCVO policy and insight manager Sam Mercadante added: “This survey has driven home the enormity of the banking challenges that charities face.

“We heard over 1,200 stories, behind each of which is a person or group of people who are trying to do the best for their community but are finding their every path blocked.

“One person told us, “I just find it all very confusing and emotional,” and that has really stuck with me.”

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