How to Choose a Bank for Your Nonprofit

Every nonprofit needs a bank account. But more than that, each nonprofit needs a banking partner — whether you’re taking your first donation or financing a new building.

That was my takeaway when I spoke with half a dozen bankers, bookkeepers and industry professionals to choose the best banks for nonprofits. Nonprofits need an institution that will offer good advice, useful software and alignment with your mission.

Here’s how to find that bank.

Your nonprofit will likely start with a business checking account. This is where payments will come from and where donations and grants will land. That means it needs to support whatever medium your donors and grantors prefer.

Do you take cash donations? It’s common for brick-and-mortar banks to charge a fee after you deposit between $2,000 and $5,000 per month. If you’ll often exceed that, consider Capital One, which charges no fees for cash deposits at ATMs. Avoid online banks, which tend to charge for every cash deposit or allow them only at ATMs, not with tellers.

Do you frequently receive major gifts or grants via wire transfers? Look for a bank with no fees on incoming wires. Free wires are most common at online banks, like Relay and American Express. A handful of credit unions offer this perk, too.

Lastly, do you take credit card donations? A bank with built-in merchant services might offer cheaper processing rates or other ways to save. U.S. Bank merchant services, for instance, lets nonprofits ask donors if they’ll cover payment processing costs.

As a good steward of your organization’s funds, try to avoid fees on your day-to-day banking activity. Some banks, like Truist, offer business checking accounts that charge nonprofits fewer fees or have higher limits.

Look at the nonprofit account schedule of fees. If there’s no nonprofit account, look at the business checking account’s fee schedule. Check on your prospective bank’s fees and limits for:

If you already have an accountant or bookkeeper, get their input on your search. Make sure your bank will sync with the accounting software they use so it’s easy to close your books each month.

If you plan to monitor cash flow yourself, consider banking with a fintech company with built-in spend management software. Relay and Mercury both have sophisticated platforms for keeping an eye on revenue and expenses.

Beyond that, ask your board of directors for introductions to any bankers they know and trust. That may lead you to someone more likely to be invested in your community or your organizational mission.

Local and regional banks often make grants, too. If your board members have experience in local charity circles, they may be able to give you insight into those programs. That includes whether you need to be a customer of the bank to apply.

As you narrow your search, meet with a banker at the one or two institutions you’re most interested in. Get a sense of whether they’re invested in your mission and if they’ll be a good source of information when you need it.

Use this time to ask specific questions, like:

Ask if they can give you a demo of their online banking platform, too. The more intuitive it feels, the less reluctant you’ll be to log in and take care of your financial tasks right away.

To put that in perspective, if you deposit $50,000 into an account with 4% APY, you’ll earn more than $2,000 in interest over a year.

It’s harder to access money in most savings and business money market accounts. You’ll generally have to transfer funds to your checking account before you can spend them. That can take several days. (Some savings vehicles come with debit cards and/or checks, but not all.)