# Finance

**Introduction**

Banking is a critical component of running a non-profit organization. Proper banking practices ensure financial transparency, accountability, and security—all of which are essential for maintaining donor trust and adhering to legal compliance. This section will cover the importance of setting up non-profit banking early, what to look for in a banking partner, free or low-cost resources, and actionable steps to manage finances effectively while protecting your mission.

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**Why Banking is Important for Non-Profits**

1. **Transparency and Accountability**: A dedicated non-profit bank account ensures clear separation between personal and organizational funds, making audits and donor reporting easier.
2. **Legal Compliance**: Many jurisdictions require non-profits to maintain specific financial records and processes to retain tax-exempt status.
3. **Financial Security**: A well-structured banking setup protects against fraud and ensures funds are used solely for mission-driven purposes.
4. **Operational Efficiency**: Simplified payment systems, automated deposits, and reporting tools streamline financial management.

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**When to Set Up Banking for Your Non-Profit**

* **Before Accepting Donations**: Open a non-profit bank account as soon as your organization is formally established and receives its EIN (Employer Identification Number) from the IRS (or equivalent tax authority).
* **As Early as Possible**: Even if you’re in the early planning stages, having a dedicated bank account helps separate personal and organizational finances.

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**What to Look for in a Banking Partner**

1. **Non-Profit-Friendly Services**:
   * Look for banks that specialize in non-profits or offer low/no-cost accounts specifically for tax-exempt organizations.
2. **Low or No Fees**:
   * Many banks waive monthly maintenance fees for non-profits.
3. **Online Banking Features**:
   * Ensure the bank offers robust digital tools, such as online account management, automated transactions, and reporting features.
4. **Community Support**:
   * Some local banks or credit unions offer grants or community partnership programs for non-profits.
5. **Fraud Protection**:
   * Look for features such as transaction monitoring, two-factor authentication, and secure card controls.

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**Recommended Banks for Non-Profits**

1. **Free or Low-Cost National Banks**:
   * **Chase for Non-Profits**: Offers fee waivers and access to non-profit-specific resources.
   * **Bank of America Non-Profit Checking**: Low fees with robust online tools.
   * **US Bank Non-Profit Accounts**: No maintenance fees and online reporting tools for small non-profits.
2. **Credit Unions**:
   * Credit unions often have lower fees and personalized services for local non-profits. Look for options like **Affinity Federal Credit Union** or **BECU**.
3. **Community Banks**:
   * Many community banks provide tailored services, financial literacy workshops, and grant programs for non-profits.
4. **Online-Only Options**:
   * **Bluevine**: No fees, high-interest savings, and online banking.
   * **Novo**: Tailored for small organizations, with no fees and built-in tools for managing expenses.

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**Free and Affordable Tools for Financial Management**

1. **QuickBooks Online (Non-Profit Edition)**: Affordable accounting software with free trials for tracking income, expenses, and donations.
2. **Wave**: A free option for small non-profits, offering invoicing, income tracking, and basic accounting tools.
3. **PayPal for Non-Profits**: Enables easy donation processing with discounted transaction rates for registered non-profits.
4. **Google Sheets or Excel**: Cost-effective tools for small-scale budgeting and financial tracking.
5. **Stripe**: For secure payment processing with customizable donation forms.

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**Setting Up and Managing Non-Profit Finances**

**Step 1: Open a Dedicated Non-Profit Bank Account**

* Ensure the account is in the organization’s legal name and includes all authorized signatories.
* Bring documentation, such as your EIN, tax-exempt determination letter, and organization bylaws.

**Step 2: Establish Financial Policies**

* Develop written policies for managing funds, approving expenses, and authorizing payments.
* Use dual-signature requirements for checks or large transactions to increase oversight.

**Step 3: Implement a Budget**

* Create an annual budget to allocate resources to key areas like programs, staff, and operational costs.
* Use free templates from platforms like **Candid** or **Nonprofit Finance Fund**.

**Step 4: Monitor and Report Regularly**

* Use banking tools or accounting software to generate monthly reports for your board and stakeholders.
* Reconcile your accounts monthly to ensure accuracy and prevent errors.

**Step 5: Set Up Secure Donation Systems**

* Use platforms like **Givebutter** or **Classy** to process online donations while ensuring funds are directly deposited into your non-profit account.
* Avoid handling cash unless absolutely necessary—use checks or digital payments for accountability.

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**Protecting Your Mission Through Financial Oversight**

1. **Preventing Fraud**:
   * Use multi-factor authentication and limit account access to authorized individuals.
   * Regularly audit your accounts and transactions to detect irregularities early.
2. **Building Donor Confidence**:
   * Transparent financial practices reassure donors that their contributions are being used responsibly.
   * Provide clear and accessible financial statements to build long-term trust.
3. **Strengthening Your Reputation**:
   * A non-profit with strong financial management practices is more likely to secure grants, partnerships, and major gifts.

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**Free Resources for Financial Education and Compliance**

1. **Candid (formerly Foundation Center)**: Offers free resources and templates for budgeting and financial reporting.
2. **Nonprofit Finance Fund**: Provides financial education and free tools to improve non-profit financial health.
3. **IRS Non-Profit Resources**: Includes free guides for tax compliance and financial record-keeping.
4. **Pro Bono Accounting Support**: Many local CPA firms or organizations like **Catchafire** provide free financial advice or auditing services for small non-profits.
5. **National Council of Nonprofits**: Offers free webinars and guides on managing non-profit finances.

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**Simple Advice to Begin**

Start by opening a dedicated non-profit bank account as soon as your organization is established. Choose a bank that supports non-profits, with low fees and accessible tools. Set up basic financial policies, track every transaction, and ensure complete separation between personal and organizational finances. Financial transparency and diligence are key to protecting your mission and building trust.
