The amount of money charities collectively hold in their bank accounts might be small in comparison with the private sector, but it is not insignificant. According to a report from the charity and finance sector analysts Charity Financials, the top 5,000 charities in the UK hold almost £16bn in cash.
The report, Charity Banking Spotlight, examines the relationship between the top 5,000 charities and the 86 different banks they used in 2015, based on information available in charities' annual financial statements. To be among the top 5,000, charities require an income of more than £1.526m, expenditure exceeding £1.548m or total funds of more than £3.458m. Universities, independent schools and housing associations were excluded from the study.
The report says that, despite recent controversies in the banking sector, the charity sector is largely remaining loyal to the UK's largest banks, with two - Barclays and NatWest - accounting for more than 40 per cent of the charity market.
The report says that Barclays is the most popular bank among the top 5,000 charities, adding 17 clients in 2015 to reach a total of 1,029. NatWest had 1,026 clients in 2015, six less than in 2014. Barclays had 82 more charity clients than in 2011. The report was sponsored by Barclays, the top bank featured, but a spokesman for Charity Financials stresses that it had no influence over the report's findings.
David McHattie, head of charities at Barclays, says the bank's rapid improvement is down to having the right staff in place. "We have recruited high-calibre relationship directors with a mix of skills, including direct experience working in a charity as a fundraising director, professional qualifications in charity finance and cash management experience. This skill set enables us to ensure that we are able to meet each charity's needs even though they can often be very different."
The bank has also worked to address any ethical concerns charities might have about it: Barclays was one of number of banks fined over the Libor interest rate scandal.
"We run a strong citizenship programme that provides us with robust messaging to charities on ethics and how we behave and support our communities," McHattie says. "And we work to add value to charities beyond just the bank accounts.
"Ultimately, it's about conducting business with clients in such a way that we don't give them any reason to leave and, through that reputation, we give others reason to join us."
However, NatWest holds the most client cash, with £3.266bn. Richard Stacey, not-for-profit and education relationship manager at NatWest, says it offers "specialist sector support" to help charities meet their "business aspirations".
He adds: "We are now making things simple and straightforward so that banking with us is easy. This includes making quicker decisions on lending, cutting to five days the time that customers wait for an outcome, and removing barriers and improving processes for our staff."
The not-for-profit CAF Bank attracted the most new clients in 2015 - a total of 24. Peter Ostacchini, the chief executive of CAF Bank, says its success is partly because charities are "increasingly seeing the benefits of using not-for-profit banking services tailored to them".
But it appears that charities still stick with tried-and-trusted banking partners. The report says that 49.2 per cent of charities have been with their bank for more than a decade, and 7 per cent have stayed with the same bank for the 14 years Charity Financials has collected this data. The report advises that it is "generally good practice for charities to assess their advisers every four to five years".