3 things to know when opening up a non profit bank account

3 Things to Know When Opening a Non-Profit Bank Account


A bank account for any organization is a must-have, and non-profits are no exception. Even though non-profits are given the status of “exempt organization” by the IRS, it doesn’t mean they don’t need to do business. A non-profit needs financial services such as a non-profit bank account in order to collect revenues, pay vendors, and invest in operations to achieve their missions. Still there are essential differences between an opening non-profit bank account versus a regular bank account, and there are rules non-profits should keep in mind to protect their status as a non-profit and ensure the bank, the government, and donors that their processes are on the up and up. Here are three things to keep in mind.

You must be a non-profit

For traditional accounts, banks are required to validate the account’s “beneficial owner” to ensure that the account is owned by a real person or entity. Non-profit organizations are exempt from that rule. However, they must present proof that they are a non-profit, and the bank will still do proper due diligence to validate who is opening the account. Based on this, to open a non-profit bank account, the organization must present their incorporation paperwork, their IRS tax identification number, and the IRS letter of Exempt Status. Some banks may have additional requirements, such as the minutes of the last meeting or the election of officers signed by the organization’s secretary. It is also important to not create issues or misgivings with the bank about who is opening the account. Having internal processes so there is consistency in officers and signatures can help.

Two signatures are a good idea

Opening a corporate bank account often requires a dual signature on checks. This means two authorized signers must endorse any checks over a certain value. Non-profits are exempt from this rule as well. Still, it is an opportunity to check your bookkeeping and bylaws and take the opportunity to add similar rules to your processes. For example, it is a good policy to ensure that the person who handles the finances for your non-profit is not the same person who signs the checks. There should also always be two people to count and verify deposits. Further, if large expenditures or regular budget items are approved at a board meeting, they should be recorded in the meeting notes and minutes. These types of practices can provide protection for your non-profit bank account and assure the bank that you are operating in line with solid business standards.

Great bookkeeping matters

In order to prevent crimes and safeguard banking practices, banks are required to complete an IRS “Report of Cash Payments over $10,000 Received in a Trade or Business” any time they receive deposits of more than $10,000 in a single transaction or through two more related transactions. This rule applies to all businesses, including non-profits, as it might be common for non-profits to hold large fundraisers or get large checks from major donors. While these reports are often made and filed without incident, if there’s ever an issue it is important for a non-profit’s internal documentation to match what is reported to the IRS. It is great to get large donations, but what you present to the bank, to the IRS, and in your bookkeeping and board minutes should all tell the same story. Not having a consistent or accurate can raise red flags with the bank and can put your non-profit status in jeopardy.

Banking systems for all businesses are important tools, and for non-profits they are just as essential. In addition, a lot of banks have programs and services available specifically for non-profit organization, such as waived monthly fees. Opening a non-profit bank account is a first step for non-profits in organizing their efforts and achieving their missions. And, it creates a paper trail for the bank and IRS that your non-profit is legitimate, honest, and legal when it comes to reporting income and expenditures. To learn more about the right financial products for your organization, contact your local team at M C Bank.


Go to Top


We are here to help you!

Visit Us

Email Us

Important Info

Routing Number: 065400483

Contact our Main Office at 985-384-2100