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Nonprofits, ranging widely from churches to research institutes, are united by a unique financial characteristic: They don’t distribute profits to private owners or shareholders. Instead, their financial responsibilities are related to funding their cause.
Nonprofit organizations are different from small businesses. Under federal law, nonprofits are tax exempt, while small businesses aren’t. However, nonprofits still participate in a number of business-like activities, including collecting revenue, applying for loans and purchasing resources. A nonprofit needs a bank account to meet these various financial needs and protect its finances.
Nonprofit organizers might be wondering where they should open an account, what type of account features they’ll need and how nonprofit accounts can benefit them. Bank accounts for small businesses and nonprofits tend to offer similar features, though some banks are more experienced with nonprofits and can better aid their needs.
Here’s what you’ll need to find the best account for your nonprofit and understand how it serves the organization.
- Nonprofits need a bank account to protect their finances, and, when choosing a bank, should consider features such as minimal fees, high yield, digital banking tools and values alignment.
- Some banks and credit unions offer accounts specifically tailored to nonprofits, while others offer general business accounts that may be a good fit.
- Having a nonprofit bank account can give the organization leverage when seeking out donors and lenders, and help protect its tax-exempt status.
How to choose a nonprofit bank account
The best bank account for your nonprofit may offer attractive features such as minimal fees, a debit card, a high yield and enough free transactions to meet your needs. Other factors some may find important include ample online banking options or the availability of branches.
Consider the following when shopping around for the right bank:
- Monthly service fees: You may want to find an account that either doesn’t charge maintenance fees or makes them easy to avoid, such as by maintaining a set minimum balance.
- Rate of return: A competitive annual percentage yield (APY) ensures that any funds not immediately used are still generating returns. You’ll often find higher rates at online banks and credit unions than at traditional brick-and-mortar banks.
- Branches: For nonprofits that need in-person services, such as for cash donations or financial advising, look for a bank that maintains nearby branches.
- Digital banking tools: With many nonprofits increasingly operating online and using digital platforms for donations, a full suite of digital banking features through the bank’s website and app can be invaluable.
- Nonprofit financial institutions: If you’re part of a nonprofit that serves a local community, you may find that not-for-profit financial institutions in the same neighborhood — such as credit unions — are best equipped to meet your organization’s banking needs.
- Values: Because nonprofits typically stand for specific causes, it may be important to bank with institutions that align with their values, whether that be environmental consciousness or a political aim.
Best bank accounts for nonprofits
Some banks and credit unions offer accounts specifically tailored to nonprofit organizations, while others offer general business accounts that may be a good fit for some nonprofits. While there are some savings accounts made for nonprofits, most nonprofit accounts are checking or money market accounts, which allow for more transactions and increased liquidity of funds.
Our selection of the top bank accounts for nonprofits are:
- Best overall: U.S. Bank Nonprofit Business Checking
- Best for small nonprofits: Citizens Bank Clearly Better Business Checking
- Best online bank: Axos Non-Profit Money Market
- Best regional bank: Truist Community Checking
- Best brick-and-mortar bank: Wells Fargo Initiate Business Checking Account
- Best socially conscious bank: Amalgamated Bank Small Business Checking
- Best checking for a high APY: LendingClub Tailored Checking
- Best credit union: United Federal Credit Union Non-profit Checking
The chart below provides a breakdown of what each account has to offer.
|Bank account||Monthly fee||Minimum balance||Transaction limits||Features|
|*Note: To join United Federal Credit Union, you must either live near one of its branches in Arkansas, Indiana, Michigan, Nevada, North Carolina or Ohio; or work for or be retired from one of its over 900 corporate members.|
|U.S. Bank Nonprofit Business Checking||None||$100||1,800 free transactions per year; $0.50 per additional transaction||Earns 0.005 percent APY on all balances, comes with business debit card|
|Citizens Bank Clearly Better Business Checking||None||None||200 free transactions per month; $0.50 per additional transaction||Comes with a business debit card|
|Axos Bank Non-Profit Money Market||$5 if monthly balance falls below $2,500||$1,000||25 free transactions per month; $0.30 per additional transaction||Earns 0.2 percent APY, comes with 50 free checks, unlimited domestic ATM reimbursements|
|PNC Bank Non-Profit Checking||$5 with no maintenance fee for the first 3 months||$100 minimum opening deposit||150 free transactions per month; $0.50 per additional transaction||Comes with a Visa business debit card|
|Truist Community Checking||None||$100 minimum opening deposit||225 free transactions per month; $0.35 per additional transaction||Comes with a business debit card, unlimited free cash deposits|
|Wells Fargo Initiate Business Checking Account||$10 for minimum daily balances under $500 or average ledger balances under $1,000; otherwise $0||$25 minimum opening deposit||100 free transactions per month; $0.50 per additional transaction||Access to around 4,900 U.S. branches and dedicated small business customer support, comes with a debit card|
|Amalgamated Bank Small Business Checking||$18 if monthly balance falls below $1,500; otherwise $0||None||200 free transactions total; $0.25 per additional transaction||Comes with a business debit Mastercard, supports Amalgamated Bank’s commitment to sustainability and investing in social causes|
|LendingClub Tailored Checking||$0 for balances of $500 or more; $10 for balances below $500||$500 to avoid monthly maintenance fees||$10,000 in incoming and $10,000 in outgoing transactions each day||1.5 percent APY on balances up to $100,000 and 0.10 percent APY on portion of the balance that is $100,000 and greater, unlimited domestic ATM reimbursements, 1 percent cash back on qualifying debit card purchases|
|United Federal Credit Union Non-profit Checking*||None||None||1,000 free transactions per month; $0.35 per additional transaction||Comes with Visa debit card, five free foreign ATM transactions per month|
Benefits of opening a bank account for your nonprofit
Although nonprofit organizations are labeled as exempt by the IRS, they still deal with finances in several crucial ways, including:
- Collecting revenue
- Applying for loans and funding
- Paying vendors and staff
- Purchasing commercial property
- Protecting funds
- Maintaining cash reserves
These are all financial activities for which you’ll likely need a bank account. A bank account that’s designed for nonprofits will come with the features you need to manage cash flow, protect collected money, prepare for emergencies and lend the organization greater professionalism.
It can be important to bank with an institution that has experience working with nonprofits and can address the needs specific to them. For example, banks well-suited for nonprofits can help the organization apply for tax-exempt loans and other funding. The bank may also provide a line of credit for the nonprofit to help protect against overdrafts and make purchases when extra cash is needed.
Having the nonprofit’s name attached to a business bank account or nonprofit bank account adds to its professionalism and credibility. Most nonprofits’ revenue (60.8 percent in 2021) comes from public support. An account under its own name will give the nonprofit leverage when it comes to seeking out donors and lenders, who can write out checks to the nonprofit, rather than to an individual.
While nonprofits are different from small businesses, they still require access to capital that in some cases may depend on whether or not the organization has a professional bank account to make its transactions.
Lastly, a nonprofit bank account is a way to stay organized. It allows you to better organize finances by keeping personal transactions separate from the nonprofit’s transactions. You’ll be able to easily track expenses and donations without mixing up the transactions with personal ones. This is important when it comes to maintaining the nonprofit’s tax-exempt status and reporting deposits to the IRS. Plus, you can always get an accurate view of the nonprofit’s financial status by checking up on its account regularly.
Managing a nonprofit often comes with a heavy load of responsibilities, so finding the right bank is important in order to manage the organization’s finances efficiently. The best bank account for nonprofits may be one that charges no maintenance fees, pays a competitive APY, offers a debit card and provides a high enough limit on free monthly transactions.