From managing cash flows to navigating tax-exempt regulations, banking plays an important role in the financial well-being of any nonprofit organization. So, when a nonprofit is looking to choose a bank, there are several factors to consider.
Realize that cash is not always necessary to secure credit or a loan. A common misconception is that nonprofits need cash to secure a loan. The right bank can outline potential alternatives to help secure the needed funding, while recognizing that personal guarantees may not be an option with a nonprofit.
Be treated like a for-profit business with nonprofit pricing. Nonprofits are in the business of asking for funding 24/7, so even nominal fees can add up and impact the bottom line. It’s imperative that the bank recognize this and work with the nonprofit on options to minimize fees, while maximizing earnings and efficiencies.
Find a bank that is relationship-focused. Because many nonprofits are traditionally deposit-only customers, many banks don’t invest in creating relationships with them like they do with other business clients that can have more complex needs. A nonoprofit should make sure the bank it chooses values building relationships with nonprofit clients and will take the time with each to understand the mission and the value it brings to the community.
Select a bank that supports the financial goals and cause. A bank should be supportive of the nonprofit’s business planning needs and also support its mission. An ideal bank will also connect the nonprofit with other bank clients looking to become involved in the sector that nonprofit serves.
Kate Hickman is senior vice president with Alliance Bank of Arizona