To bank or not to bank, that’s the reality for some voluntary sector organisations

Banks are supposed to provide essential services that enable voluntary and community groups to run their organisations, deliver vital services, and safeguard money received from donors, grants and fundraising. However, the reality is that many of these services are increasingly unavailable or unsuited to the sector’s needs.

In my first year working for SCVO, I was surprised to discover how opaque the banking system is for voluntary and community organisations. Charities are facing an increase in fees for basic transactions, misleading and inconsistent information within and across branches, and a push towards online banking and cashless systems without the provision of adequate services to make that transition possible. Even basic financial needs, such as finding and opening a suitable bank account, depositing cash with ease, and being able to change trustee account signatories, are not being met.

OSCR revealed in 2021 that banking issues were a key impact of Covid on the sector in Scotland. New charities struggled to identify and open suitable accounts, which prevented many from being able to apply for or be awarded grants at a crucial time. The reduction of service hours and local branch closures also presented a significant challenge particularly when many online banking services do not offer dual authorisation – a fundamental requirement for most organisations in the sector.

Charities are now increasingly reporting unavailable or unsuitable banking services, poor customer service, and the inability to access online banking designed for voluntary sector needs. Over half of Scotland’s bank branches have closed since 2015, and there are no branches in 11 parliamentary constituencies across the UK, including Glasgow North East.

The banking landscape is only becoming harder for voluntary organisations to navigate, and we must see banks remedy this to support good governance of voluntary organisations and charitable money. That’s why I was pleased to see UK Finance launch a new Community Banking Project to address and work through some of these issues.

Voluntary sector representative organisations across the UK and a broad cross-section of banking providers were invited to take part in the project in 2021. SCVO joined as the Scottish partner to ensure the needs of our sector were represented and advocated for, though we are keen to ensure others in Scotland can engage with this work.

Phase one of the project began in July and was an exercise in identifying the scope of the problem at hand and understanding how to work together across sectors towards potential solutions. Third sector and banking partners were consulted separately over a series of workshops to identify the pain points for each sector in the banking process.

These workshops quickly revealed an underlying problem; the financial sector did not understand the needs of charities or the role of trustees and volunteers and had not taken any accountability or action for the pain points identified. It was only when charity and banking partners were allowed to participate in a joint conversation that the project was able to establish a shared recognition of issues.

The solutions identified at the end of phase one in November include five tools proposed by UK Finance to address different issues with finding, opening and maintaining an account, and eight industry steps identified by charities for the financial sector to improve on. I was relieved to hear an acknowledgement from banks that there was room for improvement in the provision of their services to the voluntary sector.

These solutions are not perfect, but they are underlined by a commitment to co-design with cooperation on any tools and solutions for the next stage. Overall, this has been a welcome opportunity to work collaboratively to address banking challenges. UK Finance is currently completing the design, planning and cost proposals for phase two of the project, which will begin in March this year.

SCVO has worked closely with other third sector partners involved in the project, including our sister councils NCVO and WCVA, to coordinate our messaging and influencing efforts. There is power in charity and voluntary sector organisations working collaboratively to ensure a shared voice on key issues, and our collective advocacy on this issue has enabled us to push for more accountability and better solutions.

Financial inclusion and access to banking services cannot be achieved without banking being easy for everyone, and that includes voluntary organisations. The sector’s access to banking issues are widespread and deep-rooted, and SCVO understands more work is to be done to get this right; we’ll continue to press for change in this area for as long as it takes.  

Does your organisation have experience of the UK banking system that you’d like to share? There is an opportunity for more stakeholders in Scotland to get involved with the Community Banking Project. Please get in touch with me if you would like to help SCVO better understand the issue, or for more information on how to participate: kyrstie.brown@scvo.scot