Banking for Charities and NGOs Operating Internationally

Charities and non-governmental organisations occupy a paradoxical position in the banking system. They are often the most clearly legitimate and socially beneficial of all account holders — yet they face some of the most restrictive banking treatment of any sector, particularly when they operate in conflict-affected or developing countries.

Understanding why this happens, which banks are genuinely charity-friendly, and how to navigate the international payment challenges is essential for finance directors and trustees of internationally active organisations.

Why Banks Are Cautious About Charities

Banks are cautious about charities for a specific and well-documented regulatory reason: the FATF (Financial Action Task Force), the international standard-setter for anti-money laundering, has historically classified the non-profit sector as inherently high-risk for terrorist financing abuse. The FATF Recommendation 8 (revised 2016, further revised 2023 to narrow the risk focus) required banks to apply enhanced due diligence to non-profit organisations.

The concern is that charitable structures can be abused to divert funds to terrorist organisations — a real problem that has occurred in several documented cases. Banks, facing enormous AML compliance costs and regulatory penalties for failures, have responded to this risk by applying heightened scrutiny to charities or, in many cases, by simply declining to provide banking services.

The practical result is that:

• Charity account opening takes significantly longer than commercial account opening
• Banks ask extensive questions about programmes, beneficiaries, fund flows, and governance
• Some banks decline charities operating in "high-risk" jurisdictions regardless of the legitimacy of their work
• Charities in conflict zones (Sudan, DRC, Gaza, Myanmar, Afghanistan) have particular difficulty moving money to programme areas

The FATF itself acknowledged by 2020 that this blanket treatment of charities was excessive and issued guidance encouraging risk-based assessment rather than sector-wide elevation. The practical impact of this guidance on banks' day-to-day decisions has been partial.

UK Banks Most Suitable for Charities

Triodos Bank: a Dutch-founded ethical bank with UK operations. Triodos explicitly focuses on lending and banking for organisations with a positive social or environmental impact, including charities, social enterprises, and community organisations. Its due diligence is rigorous but mission-aligned — Triodos understands charitable structures and the sectors in which charities operate. Not the cheapest option but among the most understanding. Not suitable for commercial investment banking needs.

CAF Bank (Charities Aid Foundation): a bank specifically established to serve the charity sector. CAF Bank is owned by CAF, the UK's largest charity support organisation. Accounts are available to registered UK charities and CIOs (Charitable Incorporated Organisations). Products include current accounts, savings, and some lending. Strong understanding of charity governance requirements (multiple signatories, trustee approval processes). Not suitable for internationally active organisations with complex foreign exchange needs.

Co-operative Bank: historically charity-friendly and an early adopter of ethical banking in the UK. Has undergone significant ownership changes in recent years. Still maintains a charitable and social enterprise banking offer. Variable experience reported by charity finance directors in recent years.

Unity Trust Bank: a mutual bank originally established by trade unions; has expanded to serve the broader civil society sector including charities. Good reputation among small and medium charities. Not as widely known as mainstream banks but reportedly straightforward to deal with.

Santander: offers charity current accounts with no monthly fee for registered UK charities. A mainstream commercial bank that is more accessible than some others for charity account opening. Less specialist understanding than the dedicated charity banks.

Barclays and HSBC: have specialist charity banking teams within their commercial banking divisions. Better suited to larger charities (income above £1 million) with more complex needs. Smaller charities may find the standard corporate banking processes do not accommodate charitable governance requirements (multiple signatories, trustee resolutions).

The Charity Commission Requirements

All registered UK charities must maintain financial accounts that meet Charity Commission standards. Banking-related requirements include:

Charity bank account: the Charity Commission requires charities to maintain a bank account in the charity's name. Operating through a personal account of a trustee or officer is a regulatory failure (except for very small, unregistered charities).

Multiple signatories: the Charity Commission's governance guidance (Charity Governance Code) recommends that all bank accounts require a minimum of two authorised signatories for any transaction above a de minimis threshold. This is good governance rather than a legal requirement for smaller amounts, but failure to implement it exposes trustees to personal liability in the event of fraud. Banks offer dual-signatory controls on most business accounts.

Financial policy: charities should have a written reserves policy and financial control policy approved by trustees. The bank account structure should be consistent with the financial controls described in this policy.

Audit requirements: charities with gross income above £25,000 must have their accounts independently examined (where income exceeds £250,000, the independent examiner must be a member of an approved professional accountancy body); those with income above £1 million must be externally audited. Bank statements form part of the audit evidence.

International Programme Banking

The most significant banking challenge for internationally active NGOs is transferring money to programme countries — particularly those affected by conflict, sanctions, or financial instability.

The correspondent banking problem: as described in our guide on correspondent banking and derisking, major international banks have withdrawn correspondent banking relationships from many developing and conflict-affected countries. For a UK NGO trying to transfer money to a local partner in Yemen, South Sudan, or Haiti, the payment may face:

• Rejection by the UK bank's compliance system (flagged as high-risk jurisdiction)
• Rejection by an intermediate correspondent bank
• Delays of weeks while AML screening is conducted
• Seizure of funds under sanctions screening

The FATF humanitarian exemption: FATF Recommendation 8 includes an exemption for charitable operations that are providing genuine humanitarian relief in sanctioned or conflict-affected areas. This exemption allows banks to process payments that would otherwise be blocked, provided they have satisfied themselves of the humanitarian purpose. However, the exemption is not automatic and banks often err on the side of caution rather than applying it.

Practical alternatives for international programme banking:

Specialist humanitarian payment networks: organisations like SWIFT's humanitarian payment framework and bilateral arrangements with central banks in conflict zones provide channels that mainstream banks do not. Some international development banks (World Bank, regional development banks) have established payment channels for verified humanitarian organisations.

Local partner disbursement: rather than transferring money to programme areas directly, some NGOs establish local partner relationships where a credible local organisation receives the money and disburses within the country. This requires robust financial controls on the local partner but avoids the correspondent banking challenge.

Mobile money: M-Pesa in East Africa, Wave in Senegal and Burkina Faso, and similar mobile money platforms operate in many developing markets and allow receiving money from international NGOs via partner mobile money providers. The regulatory framework is different from traditional banking.

Currency and cash: in extremis, some humanitarian organisations operating in failed state environments have used cash or semi-formal money transfer channels (hawala). This carries operational risk but may be the only viable route in some contexts.

Multi-Donor Project Accounting

Many internationally funded NGOs receive grants from multiple institutional donors (FCDO, European Commission, USAID, UN agencies). Each donor typically requires:

• A dedicated project account (or a separately identifiable project code within the charity's accounts)
• Quarterly financial reports showing expenditure against budget
• Audit of project funds at year-end
• Return of unspent funds at project close

Managing multiple restricted grant accounts within a single bank relationship requires:

• Clear naming conventions for each account
• Regular reconciliation of the management accounts against the restricted fund positions
• Financial policies that prevent cross-contamination of restricted funds

Many mid-sized NGOs use multiple bank accounts (one per major programme or grant, plus an unrestricted operations account) rather than a single omnibus account, because this is easier to manage and audit.

The Lloyds Bank Foundation and Other Banking-Charity Intersections

Some UK banks have charitable giving programmes that provide grants to small and medium charities (Lloyds Bank Foundation, Barclays Community Finance, NatWest Social and Community Capital). Charities banking with these institutions may be eligible for non-repayable grants or subsidised loans. This should not be a primary factor in choosing a banking partner but is a consideration.

Governance and Trustee Considerations

From a trustee perspective, the choice of bank and the management of banking relationships are governance matters:

• Trustees are responsible for ensuring the charity's money is held safely (FSCS protection applies to most charity accounts as to other accounts — up to £120,000 per institution, the limit having risen from £85,000 on 1 December 2025)
• For charities holding large reserves, diversification across institutions is appropriate
• Trustees should approve the financial controls policy that determines bank account signatories and approval thresholds
• The finance trustee or treasurer should review bank statements regularly; where this function is outsourced to an executive, a trustee should conduct a periodic independent review

The information in this guide is for educational purposes only and reflects UK regulations and banking conditions as of mid-2026. Charity law, banking regulation, and international payment systems change. This does not constitute legal, financial, or regulatory advice. UK registered charities should seek advice from the Charity Commission, their auditors, and independent legal advisers on governance and financial management matters.

How Global Investments Can Help

Global Investments has relationships with HNW donors, family foundations, and impact investors operating in many of the international markets we cover. If you are involved in establishing or advising a charity or foundation with international investment or programme activities, we can help with financial structuring, international banking introductions, and the interaction between philanthropic giving and personal tax planning. Contact us to explore how charitable goals can be pursued within a broader wealth management strategy.