Charities missing out on £75 million in interest, says Alliance & Leicester
Howard Lake | 5 September 2004 | News
Charities and non-profit organisations are missing out on more than £75 million in interest simply because they have not shopped around for the best deal on their deposit accounts, claims Alliance & Leicester Commercial Bank (ALCB).
Research commissioned by the bank found that one in three (31%) organisations with a deposit account automatically opened the account with their existing bank without researching the market for the best deal. With an average of £45,000 held in charities and non-profits’ deposit accounts, “not shopping around for the most competitive rate is costing these organisations substantial amounts in lost interest” argues the bank.
Not all organisations even have a deposit account for their surplus funds: indeed, only 39% do so according to the research.
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Alex Smith, Head of Deposit Accounts at Alliance & Leicester Commercial Bank said: “It is disappointing that organisations continue to settle for raw deals, and especially surprising in the voluntary sector where it is vital that funds work as hard as possible. It is very easy to switch deposit account providers and I hope that these findings encourage more charities and non-profit organisations to open an account, which rewards their surplus funds.
“Getting the best deal is not about haggling with your bank; it’s about finding out what is available in the marketplace.”
Alliance & Leicester Commercial Bank has put together some tips on how organisations can make the most out of their deposit funds:
- Don’t assume that current account providers will be able to offer the best deal, shop around and look beyond the traditional high street banks.
- Work out a sensible notice period and the minimum deposit amount you can comfortably live with before you begin your search to avoid confusion when comparing the relative pros and cons of different accounts.
- Be sure to pick an account that will offer a sound long-term investment, preferably with interest rates that track base rates.
- It is important to choose a deposit account provider who will not charge a fee to access deposits quickly to ensure the flexibility of invested funds.
- Comparison tables provide a quick and easy-to-use guide to the best deposit accounts in the market. Financial data providers such as Business Moneyfacts are a good place to start in the search for the right account.
ALCB of course point out that they offer competitive banking products for charities and non-profit organisations such as the Community 30 Day notice account and Community Instant Reserve.
The research involved a survey of 242 charity/non-profit treasurers in the UK, conducted by Continental Research telephone survey/TNS BusinessLine telephone survey in January 2004. It found that the average charity or non-profit organisation misses out on £400 a year in interest. The figure of £75 million was reached by multiplying this figure with the number of charities in England and Wales registered at the Charity Commission at 31 March 2004 (188,739).
About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.