Chapters are required to maintain a banking account in which to store chapter funds. A banking account should be the first order of business for new chapters.
Selecting a Bank
Obviously, there are many options to choose from when it comes to selecting a financial institution to deposit chapter monies. Most often, the best choice is a locally owned and operated bank for several reasons:
- Locally owned banks typically offer free banking services to non-profit entities with most of the features available to business customers.
- Some banks can become active partners with a chapter. For example, one bank offered a chapter the opportunity to include inserts in customer statements to advertise special events. This can be a very useful partnership.
- Community support is often critical to the success of a chapter. By patronizing a local business, the chapter can help to foster a relationship in the community.
While some larger institutions may offer broader services, a local bank can become a strong partner in helping the chapter succeed. Features such as free business checking, online access to accounts and a free check/debit card are all important features available with most local banks. However, even if they are not available, a chapter may benefit more from being with a local bank than a larger institution.
Setting Up the Account
As a chapter organization of Friends of Georgia State Parks & Historic Sites, bank accounts must be set up correctly in order for the chapter to qualify as part of the 501(c)(3) organization. The name on the account should be as follows: Friends of Georgia State Parks & Historic Sites DBA Friends of [chapter]. The DBA (Doing Business As) designation indicates that the chapter is a part of the larger organization.
Typically, a chapter will want at least two officers listed as signers on the account. At a minimum, the President and the Treasurer should be listed as signers. The chapter may choose to add other chapter leaders as needed. Of course, access to chapter funds brings responsibility and, as such, it may be wise to limit access to a few key individuals.
A check/debit card can be extremely helpful for a chapter that needs to make purchases online or pay for purchases with a credit card. However, just like cash, the card should be kept secure at all times and purchases made against it should be tracked for auditing and security purposes.
In addition to a standard, business checking account, a chapter may find the need to open additional accounts. As long as the naming convention and signature authority guidelines are followed, a chapter may open as many accounts as are deemed necessary by its leadership.
For example, a chapter raising funds for a long-term project may consider creating a savings account into which deposits are made for the purpose of reserving them for the project. While managing a second account can mean more paperwork and administration for the treasurer, it can also be a good way for a chapter to manage special funds for specific programs or projects.
One such additional account that may be useful for a chapter is a savings or investment account. Interest from low-risk securities or savings accounts can provide an additional stream of income for a chapter even if it is a small one. Many banks now offer short term CD’s or flexible investment accounts that allow access to monies in a short time frame while providing a reasonable interest rate.
While no one savings instrument is perfect for every chapter, some guiding questions may help the chapter select the right one.
- How long does the money need to be invested before a return is generated? Short-term investments yield very low returns and longer terms generally yield higher returns. It is important to understand the term information.
- What happens if the money is needed urgently? Some investments must remain invested for a certain period and can be subject to early withdrawal penalties if taken out early.
- What is the process for adding money to the investment? Some investments are fixed and cannot be added to or changed while others allow quarterly or monthly deposits to be added to the account.
- Is the gain worth the trouble, risk and cost? Some short-term investments may be more trouble than they are worth.
Deciding to invest chapter money is a big decision. Good information in advance can make the process much easier. Many bank managers will be willing to sit down with chapter leaders to discuss the options and to help guide the chapter to a wise investment choice.