As far as most banks and building societies appear to be concerned, charity begins elsewhere. They offer very poor deals to charities, clubs and associations, who are denied access to the top-paying accounts that are on offer to individuals.
The large High Street banks — Barclays, HSBC, Lloyds TSB and NatWest — all offer poor value accounts, where the rate is lucky to hit 3% before tax on easy access accounts — this compares with top rates of 5.5% or more available to personal account holders in the High Street. Lloyds TSB pays just 3% gross on balances up to £50,000 on its Business Instant Access Account, which is also aimed at clubs and charities. And charities earn 3.1% at best on balances up to £25,000 in Barclays Everyday Saver — including the bonus for limiting the number of withdrawals you make a year.
But there are better rates if you abandon the High Street and go for a bank account with one of the specialist players.
CAF Bank, the banking subsidiary of the Charities Aid Foundation, runs a current account — CAFcash — and savings account — CAFgold — both of which offer decent rates. The CAFgold account pays 4.97% before tax, while charities and clubs earn 4.20% on money in their current account. Mike Selman, senior operations manager at CAF Bank, says: ‘The High Street banks are our major competitors, but they are more interested in large charities. Our services are streamlined for smaller ones.
CAF Bank was originally set up to help these charities which did not have the clout to get good deals in the High Street. The accounts are open to groups registered by the Charities Commission for England and Wales or recognised by HM Revenue & Customs as charitable. CAF Bank account holders includes churches and scout groups, as well as some NHS trusts and Parent Teacher Associations (PTAs). And in the past couple of years, it has seen the number of PTAs using its service rise dramatically, while the overall number of customers has risen more than four-fold. The Charities Aid Foundation will also look through your constitution to help you find out if your organisation qualifies for the account. Interest is paid before tax is deducted to those who qualify.
Other savings accounts open to charities, clubs and associations which pay a decent rate of interest include: