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Charities are leaving billions of pounds in donations in business accounts paying little interest. But there is an alternative Charity trustees looking for a savings account that will pay a reasonable rate of interest, have a tough job on their hands. Few high street institutions offer special banking arrangements for charities, often leaving them with little choice but to keep their cash reserves in standard “business” accounts earning miserable rates – the average instant-access charity savings rate on the high street is just 0.022%. There are a number of higher-paying accounts on the market available to charities, but it is not always easy to track them down. While the internet abounds with “best buy” tables, the big-name online comparison websites don’t tend to publish similar information for charities. Guardian Money was told this week by the trustee of a small charity that benefits young people in Mozambique: “We’ve been very disappointed with our high street bank charity account. It’s classed as a business account and the interest is pitiful. But I haven’t a clue where to find out about accounts that might pay us a better rate.” Aiming to fill this gap is Fair Investment Company , a savings, investment and pension intermediary. A spokesperson for the company says: “We’ve talked to charities to find out what sort of accounts they want and have then gone to providers to try and secure deals that will suit those needs. “Our online table contains accounts – some of which are exclusively offered through us as an intermediary – which we think offer the best opportunities for charities under a range of terms, from instant access to three years.” Currently on Fair Investment’s table are three, two and one-year fixed-term deposit accounts from Cater Allen private bank (part of the Santander Group) paying fixed rates of 3.6%, 3.05% and 2.55% respectively on minimum deposits of £50,000. It is also promoting 18- and nine-month bonds for charities from Welsh building society Principality, paying fixed rates of 2.6% and 2.55% on a minimum investment of £10,000, available exclusively through Fair Investment. Last in its current batch of deals is a range of variable-rate charity deposit accounts from Scottish Widows Bank, including a seven-day notice account paying 1.6% on balances of £500-£49,999 and 1.85% on over £50,000, and an instant-access account paying 1.25% on £500- £49,999 and 1.5% on over £50,000. “We think they are good deals for charities, they are easy to set up, easy to use and the institutions behind them are financially strong, but the service is still a work in progress,” adds the spokesperson. “We are looking to develop it further and that includes deals with ethical banks, for example.” Fair Investment does not pretend to be covering the whole of the charity account market, nor does it claim always to feature the highest-paying accounts. It is also open about the fact that it is only promoting deals with providers who pay it some kind of commission for bringing charity customers to their door. “But it does offer some attractive rates, some of which are not available elsewhere, and is a useful place to start for charities who haven’t the manpower to do extensive research.” Richard Pendlebury is director at Emmaus Bristol, a charity that provides a home and work for formerly homeless and disadvantaged people by re-using household items in a social enterprise. He says he would recommend the Fair Investment service to other charities who are getting a poor deal. “Interest rates had been declining for some time until our deposits were yielding virtually nothing – less than 0.5% at the time,” he says. “It was brought into sharp focus when we received a substantial legacy and realised we were going to earn practically no interest.” The charity’s bank couldn’t offer any help and Pendlebury’s own research turned up nothing better until he came across Fair Investment. Through it, Emmaus secured an instant-access deal paying (then) 3%, six times better than the rate it was earning at the time. “It is important to maximise income for the use of beneficiaries – in fact it is the duty of trustees to manage the assets effectively – and, thanks to this service, we have managed to make donations go a lot further,” Pendlebury says. If charities want a look at what is available across the wider market, they can get one-off help from independent data provider Moneyfacts. While it normally only publishes free online comparison tables aimed at consumers and charges for business data (which includes information on savings accounts open to charities), it will email a selection of the best-paying charity accounts to individual trustees who make contact via the email form on its website at moneyfacts.co.uk . Is your charity protected? Is your charity/club/association covered by the Financial Services Compensation Scheme (FSCS) if the bank or building society it holds money with fails? If a bank or building society authorised by the Financial Services Association (FSA) is unable to pay back deposits held with it, the FSCS can pay up to the compensation limit (currently £85,000) of an eligible depositor’s claim, per authorised institution. The FSCS protects private individuals and some small businesses. Whether a charity is covered depends on how it is constituted. There is no requirement for charities to be established by way of a particular structure or form. According to the Charities Act 2006, a “charity” is simply an institution established for charitable purposes only, which is subject to the control of the High Court in the exercise of its jurisdiction with respect to charities. There are as many permutations of charitable structures as there are types of legal personality. As charities are not specifically provided for in the FSCS’s eligibility rules, their eligibility will be determined by their structure and legal personality. For example, a charity can be constituted as a limited company. A limited company would be treated as having a claim, and hence protection in its own right up to the limit, if it fell within the definition of a “small company”. It qualifies as a “small company” if it fulfils two of the following three criteria: • it has a turnover of not more than £6.5m; • it has a balance sheet total of not more than £3.26m; and • it has not more than 50 employees. Charitable giving Banks and building societies Consumer affairs Charities Voluntary sector Jill Papworth guardian.co.uk