Small charities hit by closure of charity deposit account

Small charities are likely to be disproportionately affected by the closure of National Savings and Investments' deposit account for charities, according to experts.

The Treasurer’s Account, launched in 1996, currently has 932 account holders with a total of £61.3m invested. National Savings and Investments has stopped allowing charities to open new accounts and said that existing account holders will not be able to make any further transactions after 10 August 2007, except to close their account.

National Savings and Investments’ director of customer offers Peter Cornish said the account had been in decline since 2003. “Banks and building societies offer similar accounts for non-profit-making organisations so there are plenty of alternatives available in the market place,” he said.

Charity Finance Directors’ Group chief executive Keith Hickey said that the average investment in Treasurer’s Accounts is only about £60,000, so is small charities that are likely to be disproportionately affected. “Small charities will have to go through the administrative joys of setting up a new account, which is both time-consuming and admin-intensive,” he said.

He added that it was “always disappointing” when the choice for charities is reduced, but noted that some alternative accounts – such as the CAF Gold account – offer better rates than National Savings and Investments. The CAF Gold account currently pays a variable interest rate of 4.76 per cent on balances of £1,000 or more, compared with the 4.1 per cent paid by the Treasurer’s Account.

The Charities Aid Foundation’s senior manager of product development, Ron Green, also lamented the loss of choice. “The alternatives available are often accounts that do not offer competitive interest rates for charities,” he said. However, he added that charities hit by account closures may be able to find a new account with better interest rates. 

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