What type of bank account should a nonprofit have?

Nonprofit organizations can and do use regular bank accounts to conduct their operations, receive donations and pay vendors. While charities can use regular business bank accounts, many banks offer special nonprofit accounts with discounted fees and other perks to help charitable organizations carry out their missions. Nonprofits need to consider several factors when determining the best bank account for their organization.

Minimum Balances

Many nonprofits operate on a cyclical basis and have wide variations in their account balances. Some organizations are flush during the holidays but not in the summer, while others receive a high percentage of donations at the end of the month but struggle during the middle. Banks have different policies on minimum balances that must be maintained for the account holder to avoid additional fees on checking and savings accounts. Nonprofits should investigate minimum balance requirements to ensure they meet the needs of the organization. Some banks may waive minimum balance requirements on nonprofit accounts.

Fees

In addition to minimum balance fees, banks can charge fees for monthly maintenance, coin counting, check writing, automatic teller machine use and numerous other services. These charges can add up to a significant monthly sum for a nonprofit organization. Charities should consider fee policies when choosing a financial institution. Ask whether the bank would be willing to waive some fees on a nonprofit account.

Credit Card Processing

If your organization will be processing credit cards online or in person, ask banks for their fee schedules and average processing time. Your nonprofit will want to shop around for rates and make sure the bank does not take an inordinate amount of time to move money into your account.

Interest Rate

Nonprofit organizations that carry significant sums in money market or savings accounts can shop around for the best interest rates offered by local, national and online banks. Rates offered on checking, savings and money market accounts can vary widely among financial institutions.

Convenience

Branch and ATM locations, office hours and ease of online banking are all important considerations when determining a banking partner for a nonprofit organization. Nonprofit employees will want to make sure that depositing gifts and making payments to vendors is easy, convenient and secure.

Philanthropic Support

Many banks are major charitable givers. Nonprofits are wise to consider potential financial support from banks when determining which institution to use. Smaller regional banks often offer the chance for stronger personal relationships and thus more sponsorship gifts to the organization, but these gifts can sometimes be outweighed by higher fees or more restrictive rules.

References

Writer Bio

Joe Garecht is an entrepreneur, author and speaker. He is the founder of two consulting firms, as well as two retail service businesses. As a consultant to nonprofit organizations, Garecht has raised in excess of $25 million. Garecht is a graduate of Rutgers University, where he earned a B.A. in political science.

Image Credit

Ryan McVay/Photodisc/Getty Images

What is Nonprofit Business Checking?

Ideal for your unique banking needs, this business checking account offers no monthly maintenance or balance fees with a minimum $100 opening balance1.

Nonprofit Checking Features

• 1800 free transactions annually2
• $30,000 free cash deposits or 300 free cash transaction, whichever comes first, annually3
• Option to earn interest (today’s rates4)
• Conveniently access your funds with a U.S. Bank Business Debit Card

Open a Nonprofit Checking account online

Have these documents ready:

1

Your Employer Identification Number (EIN) or tax ID number

2

A charter, Articles of Organization, or a similar legal document showing when your company was formed and the officers of your organization

3

Government-issued photo ID and Social Security numbers for anyone authorized to make transactions on behalf of your organization

Compare Top Business Banks

Check out our roundup of best banks for small businesses and compare offers to find the right bank for you.

The best banks for nonprofit organizations offer a free or low-fee business checking account, access to credit and ample online tools that help streamline your operations. We scoured our top-rated business accounts to find those with features and services tailored to nonprofit organizations.

LendingClub: Best online bank for nonprofits

LendingClub is a top-rated online bank that offers traditional business solutions with a few added perks. The bank’s Tailored Business Checking account, for example, offers unlimited ATM fee rebates and 1% cash back on some debit card purchases.

at LendingClub Bank, Member FDIC

Business checking

• $10 monthly fee, waived with an average monthly balance of $500 or more.

• Unlimited fee-free transactions and cash deposits (through ATM).

• Free ATM access worldwide. Unlimited rebates for fees charged by other banks when you use their ATMs.

• Account earns 1.50% APY on balances up to $100,000 and 0.10% APY on all balances after that.

• Unlimited 1% cash back on online and signature-based credit transactions made with your debit card — provided you maintain an average monthly balance of $500 or more.

• Access to Autobooks — an invoicing and online payment software that allows you to create and send invoices, accept payments, generate reports and reconcile transactions for accounting.

Additional services

• Business credit cards, including SBA loans, equipment financing and commercial real estate loans.

• Business loans through Accion Opportunity Fund.

• Merchant services and cash management solutions.

U.S. Bank: Best brick-and-mortar bank for nonprofits

U.S. Bank’s free nonprofit business checking account includes an annual bucket of free transactions and cash deposits, plus merchant services to help your organization accept donations online. The bank also offers a nonprofit business credit card that does not require a personal guarantor.

at U.S. Bank, Member FDIC

Business checking

• Open your account online, in person or over the phone.

• Free nonprofit business checking includes 1,800 fee-free transactions and 300 free cash deposits per year.

• A nonprofit account earns interest, but the rate is minimal (APY of 0.005% as of this writing).

• Minimum opening deposit of $100.

• Credit card payment processing (subject to approval, additional fees apply).

Additional services

• More than 2,000 branches across 26 states.

• Business credit cards, including the U.S. Bank Mastercard Community Card, which does not require a personal guarantor.

• Business savings and money market accounts.

• Business lending program that includes term loans, real estate loans, equipment financing and business lines of credit.

Bluevine: Best non-bank option for nonprofits

Bluevine technically isn’t a bank — it’s a financial technology company — but its high-yield business checking and business lending options could be a great fit for digital-savvy nonprofit organizations. Rest assured, all deposit accounts are FDIC insured up to $250,000.

at Bluevine, Deposits are FDIC Insured

Business checking

• No monthly service fee, overdraft fees or minimum opening deposit.

• APY: Earn 2.00% interest on account balances up to and including $100,000. Terms apply..

• Unlimited fee-free transactions.

• Cash deposits available at Green Dot locations, fees ($4.95 per deposit) and deposit limits apply.

• No ATM fees at more than 37,000 MoneyPass ATMs nationwide.

Additional services

• Business lines of credit available.

Fifth Third Bank: Best regional bank for nonprofits

Fifth Third Bank’s Business Standard Checking account typically carries an $11 monthly service fee, but that charge is waived for nonprofit organizations. The regional bank operates more than 1,200 retail branches in 11 states, and customers have access to roughly 50,000 fee-free ATMs across the country.

Business checking

• No monthly fee for nonprofit organizations.

• 250 fee-free transactions and up to $5,000 in free cash deposits per month.

• No minimum balance or opening deposit requirement.

Additional services

• Business lending program that includes term loans, real estate loans and business lines of credit.

• Business savings and money market accounts.

• Discounted payroll services through Paycor.

Community banks, credit unions and CDFIs

Localized nonprofit organizations may find a better fit with a community bank or credit union. These financial institutions typically offer business banking and lending services, but may be better aligned with your organization's mission than a national bank or for-profit financial institution. Credit unions, for example, are also not-for-profit organizations.

Nonprofit organizations may also want to seek out Community Development Financial Institutions, or CDFIs. These banks and credit unions have a strong community focus and serve people who are often not served by mainstream banking institutions.

How to choose a bank for your nonprofit

Consider the following factors when choosing a bank for your nonprofit:

• Fees: Look for a bank that offers a free business checking account or has a specialized option designed for nonprofit organizations.

• Accessibility: This can look different for every organization. Some nonprofits need online tools that help streamline operations. Others prioritize in-person banking and need easy branch access.

• Additional services: Business checking accounts are often the foundation of a business banking relationship, but as your organization grows you may need other business accounts to build savings, access credit or process donations and payments.

• Values: Consider a bank’s business activities, community outreach and philanthropic interests that align with your organization's mission and values.

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