Banks make not-for-profits clear ‘hurdles’ that are ‘onerous’, study finds

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1 year Ago

Banks make not-for-profits clear ‘hurdles’ that are ‘onerous’, study finds

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The effort and time smaller community and social organisations are taking to get their banking affairs in order is “onerous”, the report found.
Photo: Anna Sargent / RNZ

Small and medium sized not-for-profit organisations are facing “real issues” in accessing and using bank services and products, according to a new report.

The Better Banking report by Community Networks Aotearoa said banks appeared to be “underestimating” non-profit groups’ fiscal activity and their need for functional banking systems.

It said the effort and time smaller community and social organisations were taking to get their banking affairs in order was “onerous”.

“The hurdles that these organisations have to routinely overcome when they do their banking is tying up hours and hours that should be being used for the impact they do in our society,” the report said.

It said when organisations wanted to carry out activities such as opening a new account or accessing funds in accounts, the processes were not straightforward.

Organisations frequently encountered bank personnel who did not understand legal structures of not-for-profits and gave incorrect information, the report said.

The executive officer of Community Networks Aotearoa, Ros Rice, said a major issue was banks making it difficult for organisations to comply with anti-money laundering and countering terrorism financing laws.

For example, she described the potential issues if 10 organisations had to come together to work on a collaborative project.

“The bank insists due to anti-money laundering legislation, that every single trustee of each of those [10] groups – because they want to open a special account just for this collaborative project – has to go into the bank,” Rice said.

“It means 70 trustees before they can open one bank account, have to go to banks proving their identity,” she said.

Rice felt such requirements were “over the top”.

She said the sector understood why banks needed to be careful with risk.

Another issue was paperwork which would get lodged with banks and would end up lost, the report said.

The report said most organisations ended up completing their banking tasks “though sheer grit, determination, and herculean perseverance”, or thanks to “golden unicorn” staff who understood not-for-profits.