Recently, my mom fell and broke her arm. She ended up in the hospital and while we were there, she began telling me all these funny places that she had hidden her treasures and wanted to make sure I knew where to find them. I assured her that I had the information and that everything would be okay, which helped her focus her energy on getting well and having hope for the future. 

     Well, this conversation reminded me that, as nonprofit leaders, we often find unique ways to protect our “treasures” because the fundamental principle of cash management in a nonprofit is protection. So, I want to share with you today a little bit about the most important financial relationship a nonprofit has for its treasure, which is your banking partner. This is one of the key financial relationships in your ministry, and working with the right banking partner is going to be important for your overall health and financial stability.

     It's so important that a nonprofit establishes a solid relationship with a bank in which there is regular and ongoing communication. Your bank should be a trusted advisor that's on your team, not just a place to store your cash. We can think of our banking relationship a bit like a home security system for those we love and for the nonprofit that we cherish. 

8 Things to Ask When Choosing a Banking Partner for Your Nonprofit

1.  Fess and Charges

     This may look like account fees requiring you to maintain a certain monthly balance or a limited number of transactions. There may be transaction fees that are assessed based on the number of deposits, withdrawals, or transfers. Obviously, we want to minimize operating costs, so I recommend finding a banking partner who rewards and recognizes your work as a nonprofit and may reduce fees or compensate for the fact that you have a loan with them.

2.  Account Features

• Interest Rates: This includes interest rates on both your savings and investment accounts as well as offering competitive rates should you ever have to borrow money. 
•  Online Security Features: Additional features should protect the online and mobile banking experience. The level of security in online banking is incredibly important. It's one of the most vulnerable opportunities for fraud in nonprofits. For example, one specific security feature I recommend is for your bank to provide a second person verification tool in their account settings and/or user rights. This requires any money going out of the organization to be verified by a second person. This should include payments for payroll and any ACH payments to vendors. 
•  Reporting Tools: Be sure that the account features include solid reporting tools and detailed bank statements. The bank statements are still a very valuable tool in monitoring the activities of the nonprofit. Specifically, it is ideal that you still see images of your checks to ensure that the check that was written and recorded in your accounting software is legitimately the same one that went to the bank. This is just a very helpful tool in the back end review of financial transactions. 

3.  Customer Service Experience

     Your nonprofit should have a bank that will be supportive and willing to do things that they might not typically do for their other customers. One of my favorite banks in my community offers a service in which the customer can bring a locked bank bag to their branch for deposit, and only the bank has the key. This is so helpful because the nonprofit can use these locking bank bags when counting money in the presence of two people. After the money is counted, they put the deposit in and lock it in the presence of two people so that when it is transmitted (or carried) to the bank by that one person, they cannot tamper with it because only the bank has the key. So that's a great service that has made me really prefer that bank in my community. This is just one example of why you need to know your banker, have the ability to contact them to discuss concerns, and have the type of relationship in which they are truly a part of your financial team. 

4.  Experience With Nonprofits

     Ideally, you want a bank that has experience with nonprofits. In a smaller community, this may be less common than in a larger community, where some banks differentiate themselves specifically by their nonprofit relationships. Banks who have experience with nonprofit customers typically have a better understanding of the unique needs of a nonprofit, such as restricted funds and the important criteria nonprofits use to manage investments. These banks may even offer some discounts on merchant card processing fees and transaction fees. 

       I love it when a local bank is committed to supporting their community through their local nonprofits. I’ve seen some really awesome situations where banks have taken the opportunity to give back  to the community. Banks like this stand out to me as options for nonprofits to strongly consider. 

5.  Reputation & Stability

     Don’t forget to look at the bank’s reputation and their financial stability.

Is this a strong bank with strong financial standing? You’ll want to know that your funds are secure. Also, look into their reputation in your community, especially among other nonprofits. 

6.  Banking Product Availability

     What kind of banking products do they offer? If you find yourself in a situation where you may need to take a loan or you have excess cash and you need to manage it according to your nonprofit’s investment plan, It would be great to know that the banks that you're considering actually offer products within those departments to help meet your potential needs. 

7.  Compliance & Reporting

     Yes, I am always talking about compliance and reporting, but there are so many aspects of compliance and reporting for nonprofits, including donor tracking and reporting. You’ll want to make sure you have really good tools that can help you reconcile financial records to banking records. Anything that could simplify your auditing and reporting requirements should be considered a “plus” for that bank.

8.  Integration Options

     Consider whether the bank offers software integrations to give you greater accuracy and efficiency. For example, consider the deposit side of things. Nonprofits collect many donations and have to have detailed transaction records of each one. In my experience, I’ve seen many situations where the bank did not offer any integration with the nonprofit’s software, leaving the nonprofit to manually enter the checks they've received into both their donor software system, and then again as bank deposits. The redundancy of having to enter these separately in those two systems can take a lot of time that could be better spent working on something else. It also creates an unnecessary opportunity for errors, which ultimately impacts your overall accuracy and efficiency.

     If your nonprofit is just starting, hopefully this is a great list to help you think about when visiting with banks to discover which one is the best for you. Or, if you've been banking with a bank for a while and things just haven't been feeling right, I hope this list will help you identify the priorities that you'd like to see improved as you begin to look for a new partner in your banking relationship. 

     If you are using online banking in your nonprofit, I want to remind you that this can be risky business. I only touched on it briefly above, but if you’d like to dive deeper into managing the risks of online banking for nonprofits, check out this post next!