What Are the Best Banks for Nonprofits in 2023 and The Best Nonprofit Account Type?

The world is a better place with nonprofits. These organizations deliver value to both local communities and other countries. There are over 1.5 million nonprofits in the United States and approximately 10 million worldwide.

While the nonprofit's mission can vary, from environmental organizations to biotechnology, nonprofits share a common model of distributing profits to a cause, not shareholders or owners. The rules surrounding nonprofit financial operations differ slightly from those for corporations or SMBs.

For instance, nonprofits have tax-exempt status under Federal law, while for-profit businesses do not. Another difference between for-profit and nonprofit organizations is how they bank. When choosing the best bank for their organization, nonprofits must consider additional factors for account setup and operations than conventional companies to find the best fit for their needs.

Opening a bank account is a crucial step in structuring a nonprofit. They require the account to transact, receive donations, and apply for loans, all the keep their mission moving forward. The banking provider must meet the criteria necessary to assist the nonprofit with protecting its finances and managing its needs.

Bank accounts for nonprofit organizations make managing the following financial tasks easier for a nonprofit.

• Utilizing online banking facilities.
• Managing lines of credit.
• Tracking cash flow.
• Connecting to payment processors.
• Managing payrolls.
• Creating and storing financial reports.
• Filing annual returns with the Internal Revenue Service (IRS).

Finding the best bank account for nonprofits might be challenging. Many traditional banks don't offer this facility or have any experience working with nonprofits. Still, some credit unions and regional banks provide standard bank business accounts for nonprofits even if they don't cater specifically to "501c3 bank accounts."

The 501c3 bank account is a specific banking product designed for nonprofits. Banking services for nonprofits are typically heavy towards checking/transactional accounts and money market accounts, where the nonprofit receives services and special rates for higher transactional volumes and increased liquidity.

The cost of opening a nonprofit bank account can also vary, and we'll examine some of the opening balance deposits, transaction fees, and maintenance fees later in this post. It's crucial to choose the right banking partner from the get-go. Changing your bank a few years down the line can be a painful process for your organization, so it's important to decide what's the best option for your group now and set the groundwork early on.

Ensure your organizational goals align with your banking partner's mission and find a bank with exceptional customer service and perks. Like your organization, your banking partner should hold itself to a high corporate and social responsibility standard and help you adhere to nonprofit bank account rules.

Your banking partner must have an institutional code of ethics or social responsibility statement. These documents allow you to understand the banking partners standards and their position in the local and national community.

Many nonprofits work with smaller credit unions with a trusted local footprint. Typically, regional banks with ties to local markets and nonprofits invest more in the surrounding community than larger banking institutions.

Banking locally can assist with identifying local issues and networking with your community if that's important to your vision and mission. Otherwise, you can go with larger banks offering nationwide or even international banking facilities for your organization.

This post discusses what you need to know when you want to find a bank with good services for nonprofits. We'll unpack what nonprofits need to consider when looking for the best bank for nonprofits and the best account types. We'll also detail the banking options currently available that may provide the best fit for your group.‍

Choose the Best Commercial, Regional, Local, or Online Bank: Selecting the Type of Bank That's Right for You

Conventional small businesses and corporates have different needs from nonprofits. Each nonprofit may require a heavier focus on certain banking aspects than others, depending on the industry and money flows they use.

We curated this list of good banks for nonprofits, focusing on the core strengths of each nominee, and how they service nonprofits. Whether you’re an educational institution, church, wildlife fund, or charity organization, you’ll find the right banking partner for your nonprofit on this list.

Bluevine

Key Feature: No Banking Fees & Best APY

At a Glance

• Business Checking Account.
• No Monthly Fees.
• No limit on monthly transactions.
• APY: 2.0% on balances under $250,000.
• No limits on monthly free cash deposits/ $4.95 fee per deposit.

Founded in 2013 by entrepreneurs Moti Shatner, Eyal Lifshitz, and Nir Klar, Bluevine offers an online platform where small to medium-sized businesses can access financial products.

With headquarters in New Jersey, Bluevine is a virtual bank serving customers entirely online. The company has no physical branch locations. Bluevine doesn’t cater specifically to nonprofits but offers a business account with APR on credit facilities as low as 4.8%.

Nonprofits get an outstanding checking facility, with the best offering in this review on small business lines of credit. Bluevine Business Checking Accounts with balances under $250,000 earn 2.0% APY.

There are no monthly fees provided you receive $2,500 in donations through the account per month or spend $500 monthly using your debit card. There’s no opening deposit requirement or minimum balance, and it integrates with your accounting solutions like QuickBooks.

Bluevine is good for nonprofits receiving international donations. You have international payment options for 14 currencies in 32 countries.

The only place where Bluevine falls short is in the cash deposit department. Being a virtual bank, it doesn’t offer this facility. So, it partners with Green Dot retail locations. You can deposit at any Green Dot, but it will cost $4.95 per transaction. Bluevine charges third-party fees and $2.50 for out-of-network ATM withdrawals.

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Bluevine Features

• Interest-bearing checking accounts on balances >$250,000.
• Integration with Xero and QuickBooks.
• Excellent range of credit products.
• No monthly maintenance fees.
• No minimum deposit balance requirement.
• Free debit card replacement and two free checkbooks p/year.
• Connects with payment processors like PayPal and Stripe.

Bluevine Cons

• No options for money market, savings, or CD accounts.
• No physical branches.
• One debit card per account.

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Chase

Key Feature: Premium Checking Accounts for High-Volume Commercial Nonprofits

At a Glance

• Business Complete Banking Account.
• Monthly fee $15; can be waived.
• 20 Free Monthly Transactions.
• APY: N/A
• $5,000 per month free cash deposit limit.

JPMorgan Chase Bank has headquarters in New York City. Chase is a subsidiary of the commercial and consumer multinational financial services and banking holding company, JPMorgan Chase. The bank changed its branding from Chase Manhattan Bank during the 2000 merger with J.P. Morgan & Co.

Chase doesn't offer a nonprofit-specific account. However, nonprofits can open a premium business checking account that offers many advantages to nonprofits. It has solutions for nonprofits of all sizes, with the largest organizations receiving access to the Platinum Business Checking account for high-volume transactional management and a full range of support services.

The Business Complete Banking account is better for smaller nonprofits, with plenty of credit products to help you facilitate growth and manage operations. Depending on your nonprofit's requirements, Chase offers small-business-scale lending facilities or the largest commercial loans. Credit cards, lines of credit, commercial real estate loans, cash flow management, payments services, and merchant services like POS (Point of Sale) are available with Chase.

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Chase Features

• $300 deposit bonus for opening an account.
• Chase MobileⓇ app with built-in card acceptance via QuickAccept℠.
• Individually manage debit and ATM card settings by employee.
• View account balances, deposit checks, make transfers and pay bills, through the app.
• Integration with leading accounting software and QuickBooks.
• Free debit card.
• Other products include certificates of deposit (CDs), business savings, credit cards and lending products, collection services, and merchant services.

Chase Cons

• Limited free transactions.
• ATM fees not covered.
• Fee for cash deposits over $5,000 per statement period.

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Bank of America

Key Feature: Best Rewards & Nationwide Access

At a Glance

• Fundamentals Business Checking Accounts.
• Monthly fee $16; can be waived.
• 200 Free Monthly Transactions.
• APY: N/A.
• $7,500 monthly limit on free cash deposits.

The Bank of America Corporation (BofA) is a financial services holding company and multinational investment bank headquartered in Charlotte, North Carolina, and its investment banking headquarters in Manhattan.

Founded in San Francisco, California, BofA is one of the large national banks within the “Big Four” banks in the United States, ranking second after JPMorgan Chase. It also holds the title of the second-largest global bank by market capitalization.

BofA doesn’t offer a dedicated nonprofit business checking account. However, the Fundamentals Business Checking account is the best offering for nonprofits. You can get a waiver on monthly fees and up to $7,500 in monthly free cash deposits.

You don’t get as many free transactions as U.S. Bank or Truist. However, the bank has a bigger U.S. national footprint, with more branches in more cities than the other two.

The big advantage Bank of America has is its accounts are available across the U.S., compared to the other two banks, which are regionally limited. Large nonprofits can use the Business Advantage Relationship Banking account to handle high transaction volumes. Personal bank managers are available to assist you with setting up your account.

BofA banks also offer the best rewards program in the industry, with up to $500 cash back for qualifying transactions. You also get travel rewards and cash back for business credit card purchases. Earn 25% to 75% rewards on business credit cards and get APR up to 20% on Business Advantage savings accounts.

Nonprofit startups can benefit from the financial analysis provided by Merrill advisors, and there’s a range of CD.s, business savings, and lending products.

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Bank of America Features

• Ongoing rewards programs.
• Dashboard and digital tools to track financial performance.
• Mobile app access for depositing checks, viewing accounts, paying bills, and making transfers.
• ADP payroll services and credit card processing.
• Cash Flow Monitor tool integrates with payroll, accounting, and analytics apps.
• Monitor your nonprofits credit score through the app.
• Free debit card.
• Integration with TurboTax, QuickBooks, Expensify, and Zelle.
• Other products include CDs, business savings, credit cards and lending products, access to a licensed Merrill financial advisor.

Bank of America Cons

• $100 fee for cash deposits over the monthly allowance.
• No ATM fee coverage.
• $100 opening deposit.

Truist

Key Feature: Free Transactions & No Cash Deposit Fees

At a Glance

• Community Checking Accounts.
• No Monthly fees.
• 225 Free Monthly Transactions.
• APY: N/A.
• No limit on free cash deposits.

Launched in 2019, the Truist Financial Corporation resulted from a merger between SunTrust Banks and BB&T. It was the biggest banking merger since the GFC in 2007. Truist offers nonprofits its pioneering Community Checking Account, offering savings on deposits and transaction charges.

This account has no monthly or cash deposit fees, and you get 225 free transactions monthly, the highest of any on this list. It’s also the lowest priced for ancillary transactions at $0.35 each.

There are free online auto bill pay facilities and digital account management through mobile and online banking. Cash withdrawals are free from in-network ATMs, but there’s a $3 local and $5 international fee for using out-of-network ATMs.

The only real drawback with this bank is its service area. Truist regional bank services locations in the southeast, east, and the Great Lakes. It operates in 15 US states and Washington, D.C.

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Truist Account Features

• Free debit card (personalized).
• Online banking facilities with mobile app for real-time deposits, transfers, and account viewing.
• Employee Financial Wellness programs.
• Integrations with accounting tools like QuickBooks, Quicken, Zelle, and Truist Merchant Services.
• Other banking products include credit cards, business savings, loans, and insurance.

Truist Cons

• No APY on business savings accounts.
• Requires an opening deposit.
• Branches available in Washington, D.C. and 15 states.

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U.S. Bank

Key Feature: Good Bank for Fundraisers & Irregular Deposits

At a Glance

• Nonprofit Checking Account.
• No Monthly fees.
• 1,800 Annual Free Transactions.
• APY: 0.005%.
• $30,000 limit on free cash deposits or 300 transactions annually.

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U.S. Bancorp (stylized as us bancorp) is an American bank holding company based in Minneapolis, Minnesota, and incorporated in Delaware

It is the parent company of U.S. Bank National Association, and is the fifth largest banking institution in the United States

The company provides banking, investment, mortgage, trust, and payment services products to individuals, businesses, governmental entities, and other financial institutions.

It has 3,106 branches and 4,842 automated teller machines, primarily in the Western and Midwestern United States

For nonprofit organizations with large occasional fundraising events or inconsistent deposit and transaction schedules, U.S. Bank is a great choice for a nonprofit checking account, it has one of the best accounts for nonprofits on the market.

Unlike other providers on this list with monthly limits on free transactions and cash deposits, U.S. Bank has annual limits.

This makes its nonprofit business checking ideal for a business that might run large events a couple of times a year and therefore might not have a consistent amount of transactions month-to-month.

U.S. Bank offers up to 1,800 free transactions annually (average of 150 monthly).

You can deposit up to $30,000 in cash for free each year (average of $2,500 a month) or 300 transactions, whichever comes first.

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U.S. Bank Features

• Mobile app for sending and receiving money.
• Digital payment systems and invoices in online banking dashboard.
• Easy integration with credit card processors.
• Overdraft protection for your nonprofit.
• Free debit card.
• Integrations with U.S. Bank payment processing and QuickBooks.
• Other banking products include cash flow, lending, POS terminals, two business checking products.

U.S. Bank Cons

• Limited branch locations.
• Must apply in-branch to open an account.

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Wells Fargo

Key Feature: A Great Bank for Smaller Nonprofit Organizations

At a Glance

• Initiate Business Checking Account.
• Monthly fee $10; can be waived.
• 100 Free Monthly Transactions.
• APY: 0.005%.
• $5,000 per month free cash deposit limit

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Wells Fargo & Company is an American multinational financial services company with a significant global presence.

The company operates in 35 countries and serves over 70 million customers worldwide.

It is a systemically important financial institution according to the Financial Stability Board, and is considered one of the "Big Four Banks" in the United States

For small nonprofits with a limited number of monthly transactions, Wells Fargo and its Initiate Business Checking may be a great choice.

It is low-cost banking as long as you don’t exceed free transaction limits.

Additionally, if you have a minimum daily balance of at least $500 or an average ledger balance of $1,000, the $10 monthly fee is waived.

However, you are limited to just 100 free monthly transactions, and excess transactions are 50 cents each.

So, if you are a nonprofit that exceeds 100 monthly transactions regularly, you should consider Bank of America or Truist instead.

With more than 4,500 branches and 12,000 ATMs nationwide, Wells Fargo’s biggest advantage is accessibility.

It is also a full-service bank with business savings, CDs, business lending products, credit cards, and merchant services.

It even offers 24/7 fraud monitoring and zero-liability debit card protection.

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Wells Fargo Features

• Debit card with personalized nonprofit logo.
• Mobile and online banking facilities.
• Use the online dashboard or mobile app to pay bills, deposit checks, and view balances.
• Account fraud protection.
• Merchant services and POS solutions.
• Integrations with Clover and ADP.
• Other products include business savings accounts, CDs, credit cards and lending facilities, and merchant services.

Wells Fargo Cons

• 100 free transactions is low.
• Monthly fees.
• Opening deposit required.

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EverBank (formerly TIAA Bank)

Key Feature: Favorable APY & Elite Online Banking

At a Glance

• Nonprofit Checking Account.
• Monthly fee $14.95; can be waived.
• No limit on monthly transactions.
• APY: Up to 2.0%.

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EverBank is an American diversified financial services organization under the auspices of New York-based TIAA.

Based in Jacksonville, Florida, EverBank provides banking, mortgages, and investing services throughout the United States.

If you want to earn interest with your business checking regardless of account balance, EverBank is a great choice.

Its specific nonprofit business checking account earns interest from the first dollar with no cap on earnings.

However, it can be pricey.

You need at least $1,500 to open an account, and you must keep a minimum balance of $5,000 to waive the $14.95 monthly fee.

If you can easily meet these thresholds, the account is one of the best on this list.

Interest earnings are tiered, with the highest earnings for the highest balances.

You can earn 1.35% APY on balances up to $50,000, and 2.10% on balances above and including $50,000.

EverBank has fee-free ATM withdrawals from nearly 100,000 ATMs in its network.

It doesn’t charge out-of-network fees, but third-party operator fees may apply.

One drawback is its limited locations—EverBank has just nine branches in Florida.

Otherwise, it is an online-only bank.

If you don’t have access to one of those branches, you cannot make cash deposits, so nonprofits handling cash regularly should choose another option from this guide.

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EverBank Features

• Receive APY for cash balances.
• Bank online with no waiting at branches.
• Free debit card.
• Remote check deposits.
• Overdraft protection.
• Integration with accounting software like QuickBooks.
• Also offers CDs, and business money market accounts.
• Merchant services available.

EverBank Cons

• Requires a minimum $5,000 balance to waive the monthly fee.
• $1,500 opening deposit required.
• Nine branch locations in Florida.

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PNC Bank

Key Feature: Best for Internal Staff Banking Solutions

At a Glance

• Nonprofit Checking account.
• Monthly fee $5; can be waived.
• 150 Free Monthly Transactions.
• APY: N/A
• $5,000 per month free cash deposit limit.

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The PNC Financial Services Group, Inc. is an American bank holding company and financial services corporation based in Pittsburgh, Pennsylvania.

Its banking subsidiary, PNC Bank, operates in 27 states and the District of Columbia, with 2,629 branches and 9,523 ATMs.

PNC Bank is on the list of largest banks in the United States by assets and is one of the largest banks by number of branches, deposits, and number of ATMs

PNC Bank’s biggest perk with its Non-Profit Checking is access to financial wellness tools, including webinars and seminars.

This can be made available to your employees through WorkPlace Banking for Employees, a program that they have to sign up for.

To learn more about this, visit PNC’s WorkPlace Banking for Employees page.

As long as you have an average monthly collected balance of $500, the monthly maintenance fee of $5 is waived, and PNC waives the monthly maintenance fee for the first three months—regardless of balance.

You get up to $5,000 in free cash deposits each month and up to 150 free transactions.

PNC also offers business credit cards, business lending products, and merchant services to businesses that need them.

While geographically limited, like Truist and U.S. Bank, PNC Bank is more widely available than both banks.

Branches are available in 28 states and Washington, D.C.

If your nonprofit business is located in one of the areas listed above, you can get an account with PNC.

PNC Bank geographic limitations: PNC Bank requires a Non-Profit Checking account to be opened at a branch location, which are located in Washington, D.C., or one of 28 states

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PNC Bank Features

• Specifically caters to nonprofits.
• Mobile app and online banking.
• Employee financial wellness program and free employee banking.
• Free debit card and rewards program.
• Pay bills, deposit checks, and view balances online or through the mobile app.
• Integrates with Xero, QuickBooks, NetSuite, and Inntact.
• PNC Merchant Services® for in-person and ecommerce and solutions.
• Cash Flow Insight® tool helps you manage your cash flow.
• Other banking products including merchant services, credit cards, and lending products.

PNC Bank Cons

• No APY on account balances.
• High wiring fees.
• Bank locations in Washington, D.C. and 28 states.

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How to Choose a Bank for Your Nonprofit: What We Consider When Selecting a Bank for a Nonprofit Organization

When we looked at the criteria for good banks for nonprofits, we focused on fees and institutions offering specific accounts prioritizing lower costs for nonprofits. With the fast-paced nature of business, the bank must have an online presence, with digital solutions like mobile apps and online dashboards.

We analyzed how business accounts stacked up against competitor offerings when analyzing those institutions without specific nonprofit account offerings. The review aims to present the best financial institutions for nonprofit banking, with low fees, ease of banking access, and nonprofit-specific financial solutions.  

In this section, we'll unpack everything you need to look for when choosing the right nonprofit banking partner for your organization.

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The Best Bank Account for Nonprofits: Why Nonprofits Need Special Banking Services

Nonprofits differ from conventional businesses in terms of the money flows they receive through their accounts. Since they don't have tax-exempt status, they can't write off banking fees, making them a top concern for any nonprofit organization when selecting a banking partner.

Most nonprofits deal with high transactional volumes; therefore, reducing transaction fees is a must. Nonprofits can also benefit from corporate social responsibility initiatives with banking partners aligned with the same mission.

Nonprofits also have different business models and cash flow concerns than conventional businesses. So, they'll need to find a banking partner that focuses on the following financial services and banking products:

• Cash flow management – Proper cash flow management is critical to a nonprofit's operations, strategy, and planning. Failing to manage cash flow means eventual collapse. Look for banking partners with cash flow management tools built into the online banking dashboard.
• Variable income solutions – Most nonprofits collect revenue through donations. However, they could run thin for reasons varying from bad marketing to economic pain. Nonprofits need a banking partner with credit facilities to bridge their finances.
• Project funding – Nonprofits require an accounting structure providing accurate information on the source of all funds. Banking partners should provide accurate account transaction analysis through online banking portals.
• Grant management – Many nonprofits work with government or private grants. A nonprofit banking partner must provide tools to track all donations, transactions, and grant procedures and requirements effectively.

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The Benefits of Opening a Bank Account for Nonprofits

FDIC Insurance

The Federal Deposit Insurance Corporation insures bank deposits up to $250,000. Ensuring your banking partner has FDIC coverage removes the risk of total loss of funds from market anomalies and natural disasters.

Access to Banking Products

A bank account gives you access to various banking and financial products. You have several account options, savings and investment vehicles, and credit facilities. Get everything your nonprofit needs to apply for mortgages, loans, lines of credit, and merchant facilities.

Easy Banking

A bank account lets you transact on the move. Mobile apps and online banking allow for effortless transactions and account management from any location with an Internet connection.

Track Cash Flow

Create budgets, track spending, and monitor your balances using your monthly statements. Some platforms offer specialized cash flow management tools integrated into your dashboard.

Set Alerts & Notifications

Get alerted of activity on your account with custom notifications pushed to your mobile device. Get protection against fraud and manage your balances to avoid penalty fees.

Pay Bills on Your Device

Pay your monthly expenses using your banking app or online banking suite. Receive, check, and pay your bills online from your laptop, PC, or mobile device.

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General Banking for Nonprofits: What to Look for When Choosing Your Banking Partner

Along with the criteria we selected when qualifying the best institutions, there are a few other considerations to note when choosing your banking partner.

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Tip#1 – Select a Bank with Low Fees

We covered this early, but we can't stress it enough. A nonprofit's primary concern with choosing a banking partner is the fee schedules.

Banks offering specific nonprofit accounts, like business checking accounts for nonprofit groups, understand this need. Others will provide standard business banking accounts for nonprofits and waive many of the fees, such as the monthly maintenance fee.

Low cash deposit fees or free transactions per month are attractive considerations for nonprofits looking to save on banking expenses. Beware of cash deposit limits and the penalties or fees for exceeding monthly or annual thresholds.

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Tip #2 – Find a Banking Partner with Dedicated Nonprofit Facilities

Banks catering exclusively to nonprofits or offering dedicated nonprofit facilities and services should be a top consideration for selecting your banking partner. Many options in our review don't cater to nonprofits specifically, but they have excellent business account offerings suitable for nonprofits' banking needs.

Banks that deal with nonprofits exclusively or have dedicated nonprofit banking departments are more aware of the unique needs of these organizations and the banking services they need the most. PNC Bank, Truist, EverBank, and U.S. Bank are examples of nonprofit-specific banks mentioned in this review.

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Tip #3 – Do You Need Access to Local Branches?

A bank like Bluevine exists virtually, and there are no local branches. Smaller banks like Truist have limited locations and operate in select states. If you need access to physical branch locations for cash deposits, ensure your banking partner offers venues for these services near you.

For instance, churches need somewhere to deposit donations. Some nonprofits require relationship services with a personal banker to manage their finances or debt. Fully digital banking, like Bluevine, is only suitable for nonprofits that never handle cash and accept all donations and funds through electronic transfer.

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Tip #4 – Select a Bank with an Interest in Your Mission

Banks that solely deal with nonprofits or have departments handling nonprofit banking products should align with your mission and bolster your interests in achieving your goals. If part of your mission is to serve the local community, your banking partner should serve this common mission.

Credit unions and community banks offer a more personalized level of service, and they have community interests they fund and direct that could have similar goals to yours. Corporate social responsibility is more important than ever, allowing you to leverage your relationship with your bank to open new contacts in your network.

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Tip #5 – Earn Rate of Return (APY) on Cash Balances

Most banks don't offer annual percentage yield (APY) on the money in your transactional or savings accounts. Earning interest is a great way to offset your banking expenses at the end of the financial year.

Choosing a credit union as your banking partner usually entitles you to interest-yielding accounts. In contrast, commercial banking partners typically don't offer interest and have higher APR (Annual Percentage Rates) on credit facilities.

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Tip #6 – Digital Banking Access & Tools

A digital banking app and an online banking platform are must-have features in a nonprofit account. Your banking partner should offer a virtual baking platform at a minimum. The best online banks have dedicated dashboards with financial tools, calculators, and even services for checking your credit score.

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What are the Options for Nonprofit Banking Partners?

Where can nonprofits bank? What are the options to consider when choosing a bank that can help handle the challenges nonprofits face? There are three options to consider when choosing the right bank for your nonprofit, each with a different banking experience.  

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Local Banks

These institutions are one of the best choices for smaller nonprofits serving local communities or regional interests. They don't have the same staffing resources, liquidity, and financial strength as giants like BofA or Chase, but they have enough stability to remove failure risk.

The 2023 collapse of regional and local banks like SVB made investors and business owners aware of the hazard of banking with smaller boutique banking institutions. However, most of these smaller banks are financially strong and resilient to market shocks.

Local banks have regional networks and connections to other financial partners in your industry. They'll often be aligned with your community interests through their CSR initiatives and want to help you move forward.

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Credit Unions & Community Development Financial Institutions (CDFI)

Like your organization, a credit union shares the same model of being a not-for-profit institution. They have tax-exempt status, and they serve local or regional communities. One of the advantages of working with a CU as your banking partner is the reduced fees associated with credit union services.

Since CUs are nonprofits, they can afford to reduce their fees and rates to lower than regional or local banks. They're significantly more affordable on banking expenses than commercial giants like Chase. However, like local and regional banks, credit unions have geographical limits and don't serve all locations. You'll want to look around your area to find the one that best fits your requirements.

Community Development Financial Institutions are a hybrid of banks and credit unions with a strong focus on serving the local community. They'll often cater to organizations not accepted by larger commercial banks. They have the same benefits as credit unions, with lower fees and better rates.

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Commercial Banks

Many commercial banks, like Chase and BofA, are household names. Surprisingly, many of them don't offer dedicated nonprofit banking facilities. However, they have excellent business accounts with fee structures suitable for many nonprofits looking to extend their reach countrywide or internationally while keeping costs as low as possible.

In most cases, the banks waive monthly fees and reduce other banking costs. You also get the advantage of using ATM networks and a wide range of banking and credit products. If they have branches spread throughout the country, local branches allow you to build a relationship with your banker.

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Different Types of Accounts & Services for Nonprofits

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Nonprofit Checking Accounts – Transact, accept funds and ACH payments easily, order a debit card, set auto payments for bills, and access ATM withdrawals.

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Nonprofit Business Savings Accounts – Get an interest-bearing savings account and earn on your cash balances between transactions.

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Money Market Accounts – Debit cards and check-writing but with limits and higher interest rates than other account types.

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Credit Products – Credit cards and overdrafts to manage cash flow. Small loans for projects and low APR on credit facilities compared to conventional small business credit facilities.

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Do Nonprofits Need a Virtual Banking Partner?

Online banking is critical for nonprofits operating in the modern business environment. Mobile apps and online banking desktop clients are essential for ensuring fast transactions and optimal account management in real time. Here are some other advantages nonprofits gain from choosing the right online and mobile banking services:

• Lower Fees & Monthly Costs – Online banking has cheaper fees than banking in-branch. Virtual banks don't have physical locations to operate, reducing overhead for the company. They often pass these cost savings down to customers in the form of lower fees. For instance, online bank accounts don't require deposits, transactions, or monthly fees that conventional banks do.
• Fewer Account Restrictions – Most virtual banks have fewer limitations on where to bank, with everything available through the app or the online platform. However, they also have restrictions on cash deposits and other physical banking services to consider.
• Easy to Open – Virtual banks make opening bank accounts online in minutes easy. Complete your application, upload your supporting documents, and get approval in 24 to 72 hours, depending on the bank.
• Competitive Rates – Since virtual banks save on operating costs, they can also afford to offer higher APY rates on savings accounts and lower APR on credit products.

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A Step-by-Step Guide to Opening a Nonprofit Bank Account

If you're ready to open a bank account for your organization, here's a brief guideline to follow when opening your account. This is just general information, and each bank might have different requirements, depending on the banking partner you choose for your account.

However, you can expect the following process to apply as a minimum.

Step #1 – Gather the Necessary Documents to Open Your Bank Account

You'll need all your nonprofit documents and certifications when applying for your bank account. Typically, banks have the following minimum supporting document requirements.

• The articles of incorporation.
• List of officers.
• The organization's tax ID number.
• 501(3)(c) certificate.
• Government-issued photo ID, such as a passport or driver's license.

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Step #2 – Understand the IRS Rules for Nonprofits When Opening a Bank Account

While nonprofits are exempt from paying tax, they must comply with the IRS framework around this privilege and all document requirements. Ensure you have the following information from the IRS before applying for your bank account.

• Your 501(c)(3) or 501(c)(4) status from the IRS
• Your nonprofit's incorporation paperwork, letter of exemption from the IRS, tax ID number, and bylaws.
• Your Employer Identification Number (EIN).
• Your opening deposit.
• Form 990 (Despite tax-exempt status).

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Step #3 – Allocate Account Access

The board must select a treasurer responsible for maintaining the bank account. These officers sign checks and handle account affairs. Therefore, you'll need copies of their SSN and driver's license to give them access to the account.

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Step #4 – Fund the Initial Account Deposit

Some banks require an initial deposit to open your account. It mainly covers admin expenses and ensures they are not opening accounts for nothing. However, many banks in our review don't require an opening deposit. Depending on the institution, opening deposits can range between $100 to $1,500.

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Online vs. In-Person Applications: Which is More Efficient?

Online applications are fast and easy. However, many require you to finalize your account in a local branch. Some solely online banks, like Bluevine, need you to verify your information more specifically when applying.

Other banks with physical locations will require you to visit a local branch to finalize your account before activation. You can complete a full application in any branch, but most banks only allow you to complete a partial application online.

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What is the Best Bank Account or Credit Union Option for Nonprofits? – Key Takeaways

• Nonprofits should consider their banking partners and how they can optimize their position to lower annual banking expenses.
• Nonprofits have choices between commercial, regional, and local banking partners, credit unions, and Community Development Financial Institutions.
• Credit unions and regional banks will have geographical limitations on the clients they can serve.
• It's always better to go with a bank that offers dedicated services and accounts for nonprofits.
• Each banking partner has a different offer; choose the best flexibility for your organization's needs.
• Ensure you have the documents available to apply for a bank account.
• Apply online or in-branch.

Selecting a Bank Account for Your Nonprofit: Moving Forward

Once you find the best bank for your nonprofit, it's important that you continue keeping good financial records of your nonprofit's activities. Having the right software to keep track of your finances can be a huge asset in this. PayBee's user friendly online platform, for instance, automatically generates reports of your fundraising activities, which not only makes it easier to host successful fundraisers but also lets you know how much money you earn and the return on investment (ROI) for your activities.

To see how well PayBee can help, sign up for a free demo of our online platform. You'll be able to participate in a mock auction that shows how easy our software is to use. More importantly, you'll be able to chat with our experts who can answer any technical questions you have about how our platform is designed specifically for nonprofits and their banking needs. Sign up for a free demo today and discover for yourself how PayBee is a good choice for nonprofits seeking to improve their organization's finances.    

Resources & Further Reading for Nonprofits

https://www.wallacefoundation.org/knowledge-center/resources-for-financial-management/pages/governance.aspx

https://www.501commons.org/resources/tools-and-best-practices/financial-management

https://www.councilofnonprofits.org/running-nonprofit/administration-and-financial-management/financial-management

https://www.investopedia.com/terms/f/financial-statements.asp

https://pll.harvard.edu/course/nonprofit-financial-stewardship-concepts-and-techniques-strategic-management

https://www.bdo.com/industries/nonprofit-education

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