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1 Charity Banking Spotlight report Feb 2015 with foreword_layout 1 26/02/ :01 Page 1 Powered by Bi-annual Report February 2015

2 Contents Introduction Banking spotlight report Needs define relationships The most popular banks Banks listed by client cash Banks used by the top 100 charities Longevity of contracts The value of charity cash Top charities by cash Produced by Slack Communications for Charity Financials 1

3 Introduction Barclays are delighted to sponsor this Spotlight Banking Report. The charities and not-for-profit sector continues to see a breadth and depth of services that continue to change and evolve, despite the challenging environment, and we ve seen a range of success last year and into this new year. There has been a resilience amongst the sector and this is something we expect to continue through 2015 and the next few years. We re also seeing the sector evolve to embrace mobile payments and we expect this to be a growth area for the sector over the coming years. Charities will continually need to reflect on their mobile payment strategies so that they can benefit from donors who are choosing this as their preferred donation channel. We hope this Spotlight Report will be a tool that allows you to benchmark and celebrate your success but also to compliment your strategy and tactical plans. We remain committed to working with the Charities and Not-for-Profit sector to make a real difference to people s lives. Our dedicated Charities team are focussed solely on providing banking services and solutions to charities across the UK. As part of this, we invest heavily in innovation and thought leadership to change the quality of the sector s overall offering for the better. We hope you enjoy the report and welcome you to contact me with any questions you might have. David McHattie Head of Charities Team Tel: david.mchattie@barclays.com 2

4 Banking spotlight report This report examines the banks used by the largest 5,000 charities, as defined by the Charity Financials database. It assesses the value of current asset cash these organisations hold, which banks they use, and how long they have been with those banks. The report details numerous interesting insights, including: n n n n NatWest is the most popular bank among the top 5,000 charities with 1,049 clients, meaning it has a 21.0% share. It is followed in the ranking by Barclays (1,005 clients) and Lloyds (679 clients); Among the top 100 charities, Barclays has the most clients with 29, well ahead of Lloyds which has 16; Some 43% of the top 5,000 charities have been with their bank for a decade or more; These charities have 17.4bn in current asset cash up by 6.1% on the previous year s figure of 16.4bn. Methodology Charity Financials records the names of all the advisers employed to provide services to the top 5,000 charities. These include auditors, investment managers, banks and legal advisers, as well as any others mentioned within charities annual financial statements. By recording the names of the advisers listed by each charity every year, we have identified when changes take place, the length of time relationships exist for, and how often charities make such changes. Background to the top 5,000 charities To be included in Charity Financials top 5,000 charities, an organisation must have either an annual income greater than 1.6m, annual expenditure greater than 1.56m, or total funds/net assets greater than 3.2m. Only one of these criteria needs to be met. Some organisations are excluded despite having charitable status, namely independent schools, universities and housing associations. Those organisations which are included are a varied group, both in terms of size and activity. Some focus on local services while others are involved in complex international projects. Some exist to provide funding to other organisations. One thing they have in common is that they all need some form of banking service provider. 3

5 Needs define relationships All charitable organisations need a deposit or current account to hold the cash necessary for day-to-day operations. The top 5,000 are such a varied group that the range of banking needs will vary tremendously. These needs will determine which bank will be used, following an examination of the services each bank provides. Smaller organisation may only require a current account, whereas larger organisations with global operations will have many other requirements. Figure 1: Factors influencing bank selection It is good practice for charities to regularly review their banking arrangements to ensure they are getting the best service at competitive rates. If a charity is unhappy with its bank and believes it may get a better deal elsewhere, this should be investigated to ensure the organisation is maximising the potential of its income. Switching banks is no longer as complex or laborious as it used to be thanks to modern banking facilities which have removed the need to complete lots of paperwork. 4

6 The most popular banks NatWest holds 20% of the market Figure 2 shows the 10 most popular banking institutions used by the top 5,000 charities. The top 10 banks provide services for 4,302 charitable organisations, representing 86% of the population. In total, 87 banks are used, ranging from those with just one client, such as the National Bank of Pakistan or Birmingham Mid-shires, up to NatWest, which is the largest with more than 1,000 charity clients. NatWest s number of clients has risen slightly over the last five years, increasing from 1,034 in 2010 to 1,049 in 2014 (see figure 5). Following NatWest is Barclays with 1,005 clients, the firm having increased its client base by 50 since After Barclays comes Lloyds with 679, HSBC with 610, the Royal Bank of Scotland Group with 521, the Co-operative Bank with 285 and CAF Bank with 283. Figure 2: Top 10 banks used by the top 5,000 charities 5

7 Some firms have moved up the rankings over the last five years. Scottish Widows is up from four clients to 46, while Close Brothers, despite being primarily an investment firm, has increased its banking clientbase from two to 11. Other notable increases include Santander moving from 26 to 76 clients, Clydesdale Bank going from 42 to 80, and C Hoare & Co increasing from 37 to 57. Figure 3: Top 25 banks by number of clients

8 Banks listed by client cash NatWest holds 3.5bn of charity cash Figure 4 shows which banks hold the most cash on behalf of the top 5,000 charities. Where any charity uses more than one bank, the value of the cash has been divided equally between each banking organisation. Figure 4: Banks listed by clients cash 7

9 Banks used by the top 100 charities 29 of the top 100 charities are with Barclays Looking at the largest 100 charities by income, we can identify that the most popular bank used by this group is Barclays, with 29 clients. Lloyds is second with 16, RBS has 13 and HSBC has 12. Figure 5: Banks used by the top 100 charities 8

10 Longevity of contracts 43% have been with their bank for a decade The Charity Financials database holds data on the banks used by charities for each year over the past 12. Figure 6 shows that nearly a fifth of banking relationships (18.3%) have existed over the whole period, with 43% lasting a decade or more. It is generally good practice for charities to assess their advisers every four to five years, and this may explain the drop in the number of relationships ending after the fifth year. Please note that for those charities with very few years in their current relationship, this could be because they are new organisations rather than because they have switched from one bank to another. Figure 6: Longevity of current charity/bank relationships 9

11 The value of charity cash Charity cash levels increase by 6.1% The Charity Financials database records the value of cash held at banks or in hand for all of the top 5,000 charities, as extracted from their balance sheet statements. Collectively, they hold current assets worth 17.4bn a figure which has generally risen over the past five years (see figure 7). Indeed, this figure rose by 6.1% between 2013 and This cash is exclusive of the cash contained in fixed assets, which is earmarked for investment purposes. Figure 7: The aggregate value of current asset cash for the top 5,000 charities 10

12 Top charities by cash CAF is the sector s biggest cash holder Figure 8 shows the top 25 charities by cash and the banks they use. It also displays the number of years the relationship has existed for according to our database. As a provider of banking services itself, it is perhaps no surprise that the Charities Aid Foundation heads the list. Figure 8: Top charities by cash 11

13 Please click the following links for details of the services the most popular banks offer to charities. NatWest Barclays Lloyds HSBC Royal Bank of Scotland Co-operative Bank CAF Bank Bank of Scotland Coutts & Co Unity Trust 12

14 The data for the Charity Banking Spotlight was extracted from Charity Financials. Charity Financials is the only fully interactive online database tool containing financial data on over 160,000 UK charities, offering you a complete financial view of UK charities. A subscription to Charity Financials enables you to compare and benchmark your charity against other charities, conduct trends, peer group and sector analysis and view detailed financial data for the UK s Top 5,000 charities, as well as create dynamic reports in minutes. To request a no-obligation online demonstration today and see how Charity Financials can help your charity, contact: Alex McKenna Tel: Alex.McKenna@Wilmington.co.uk 2015 Charity Financials a division of Wilmington Publishing & Information Ltd, part of the Wilmington Group PLC. Wilmington Publishing & Information is a limited company registered in England & Wales. Registered office: 6-14 Underwood Street, London, N1 7JQ. Company Registration number: VAT NO.GB