Banking for the Community Sector

The following provides you with some general information to assist you in making banking decisions for your organisation.  In addition, suggestions regarding preparations for approaching banking organisations on various services relevant to the community sector are also included.

Corporate Social Responsibility

If values matter to your organisation, ask your bank, credit union or building society the following questions:

• How they invest your money? 
• Do they have a responsible investment policy? 
• Is your money used to finance businesses or projects that conflict with your own personal or organisation’s values? 
• Do they invest your money responsibly, securely and in ways that build stronger communities, help protect the environment and at the same time provide a competitive rate of return on your investment? 
• Do they produce a Sustainability Report? 
• Are they signatories to the United Nation’s Global Compact on corporate social responsibility, Principles for Responsible Investment and Environmental Program for financial institutions on sustainable development?

Whether your money is in an everyday transaction account, savings account or term deposit, you and your organisation will want to feel assured it is invested safely, responsibly, for performance and in ways that also help protect our planet as well as the people who depend on it. Investing your organisation’s money responsibly is the right thing to do. 

Customer Owned Banking institutions exist for their customers.

Find out more at www.abacus.org.au/ or www.comesbacktoyou.com.au

Banks in Australia – find out more at www.bankers.asn.au

Cannex or Infochoice

For pricing comparisons, you can visit two sites that specialise in summarising product and price information across most financial institutions in Australia.

• CANSTAR CANNEX data - www.canstar.com.au
• InfoChoice www.infochoice.com.au

Security

Did you know that all Authorised Deposit-taking Institutions (ADI’s) are regulated in the same way by the Australian Prudential Regulatory Authority? Authorised Deposit-taking Institutions (ADI’s) are corporations which are authorised under the Banking Act 1959 . ADIs include banks, building societies and credit unions. All ADIs are subject to the same Prudential Standards but the use of the names 'bank', 'building society' and 'credit union' is subject to corporations meeting certain criteria.

For a full list of ADI’s please visit www.apra.gov.au/ADI/ADIList.cfm

For more information about the way ADI’s are regulated please visit www.apra.gov.au/adi

Day-to-day Transactional Banking

When considering where to bank you should think about all the activities you need to perform. 

Basic facilities offered by your financial institution should include:

• An high interest account tailored for community organisations
• Interest rates calculated on daily balances 
• Online-dual signature access
• Batch processing from MYOB and similar systems
• Secure systems
• Special consideration on exemption of fees
• Merchant facilities so you can accept credit card or eftpos payments (online too)
• Petty Cash availability
• Deposit systems
• Access to a personal banker or community banking manager

Growing your Asset Base

Commercial loans 

Preparations prior to contacting your financial institution for most forms of borrowings are similar and include:

• Provide the financial institution with a written request on Company letterhead and signed by two authorised parties
• Provide the last two years’ financials statements
• Provide a full 12 month cash flow forecasts detailing all prospective funds coming in and out
• Provide evidence of supporting funds from Government agencies which are specific to this proposed project
• Provide evidence of specific incomes that will be generated by this project
• Understand what fees associated with obtaining a commercial loan, including ongoing fees.

Lines of Credit

• Provide the financial institution with a written request on Company letterhead and signed by two authorised parties (usually Directors).
• Provide the last two years’ financial statements
• Provide a full 12 month cash flow forecasts detailing all prospective funds coming in and out
• Provide evidence of supporting funds from Government agencies which are specific to this proposed project
• Provide evidence of specific incomes that will be generated by this project

Opening Accounts

A business or association account is opened in a similar fashion to that of an individual.

The business account is registered in the name of the business and is verified by way of a Certificate of Incorporation or Articles of Association.

The following information may also be required in order to open a business or organisation account including:

• The full name of the company as registered by ASIC 
• The full address of the company’s registered office
• The full address of the company’s principal place of business, if any
• The full name and address of each beneficial owner of a proprietary or private company 
• The ACN issued to the company 
• Whether the company is registered by ASIC as a proprietary or public company; and 
• If the company is registered as a proprietary company, the name of each Director of the company.

In addition, each signatory to the account must have their identity verified. As per a personal account, identification includes documents such as a passport, birth certificate, drivers licence, Medicare card and other bank/credit union/building society accounts.

The business or association can determine the appropriate operating method for the account e.g. two to sign or more (this means all cheque and withdrawals need to be signed by at least two parties).

Signatories can be updated if staff leave employment or are terminated. Generally, a change to signatory form” is completed which includes the previous signatory and the new signatory’s details, include identification verification.

Some features to consider when weighing up banking facilities include:

• Access to chequing accounts (with or without an Overdraft)
• Monthly fees (sometimes fees charged on business accounts can be excessive)
• Access to Internet Banking (including exporting to popular accounting software packages)
• Provision for Corporate Cards
• Access to investment accounts such as Term Deposits.

Value Add from your Financial Institution

Are there any additional subtle benefits available through a connection with your banking organisation? 

• Will your senior executives receive the occasional invitation to events connected with professional development or business networking?

• Are there professional information available regarding financial management responsibilities for your Board members?

• Is there the possibility of other partnership/ event sharing/ or co-promotion which might be mutually advantageous?

Information provided is of a general nature.  All organisations should consider their own particular situation before making any decisions including consideration of terms and conditions before deciding whether to apply for products from a financial institution.