Getting the most from any professional relationship starts with the approach. Do you view your banker as a vendor or a business partner? While Request for Proposals (RFPs) with selection criteria is used when reviewing banking partners, nothing can take the place of actually meeting the banking team in person. It’s imperative that management feel comfortable with the customer service team and that the culture of the bank is consistent with the organization’s culture.
Some organizations believe it’s better to use one large bank so they can leverage the relationship, especially when trying to offset account fees with the account balances. An organization's accounting staff often supports that decision as it reduces the number of bank reconciliations required, which facilitates closing the month-end in a timely manner. Other organizations like to use multiple banks, as it allows them to expand their reach in supporting their constituency as well as to take advantage of developing additional banking partnerships, while limiting the risk of uninsured balances. Having a secondary relationship with another financial institution also lays the groundwork for making a change if it should ever become necessary.
Additionally, not-for-profit entities may invest in companies, organizations, or funds with the intention of generating a measureable, beneficial social or environmental impact while receiving a financial return. This is known as impact investing. A simple way to participate in impact investing is for an organization to put reserves in a local bank that could use the infusion of funds to better support development in a specific geographic area.
Many organizations hope, and some expect, their professional service providers will become donors. Competition among fundraising organizations for these types of relationships can be intense. While it’s always a good idea to ask your professional service providers to sponsor events, there are other types of support to consider, including in-kind donations for auctions, in-kind office furniture, use of bank staff as a volunteer group, having banking experts provide training to organizational constituents, and the list goes on. The better the bank knows the organization and the longer the relationship, the better the support and the more creative they can be in leveraging the relationship.
Here are the top three tips to get the most from banking relationships:
- Take the opportunity to meet with the customer relationship manager and key bank staff that service your account(s). Knowing who your contacts are can eliminate the runaround that you might get without those connections and expedite problem resolutions.
- Consider connecting, on an annual basis, with the banking team to review your accounts to ensure the organization is maximizing returns and taking advantage of any new products, services or technologies being offered.
- Stay in touch with the banking team throughout the year so they are aware of current and future plans and issues of concern. This is especially important for small nonprofit organizations that may be using a bank to manage their investment portfolio to ensure that cash is readily available.
How and where your organization chooses to bank is one thing. How the organization partners and values the relationship is another. Organizations should take the opportunity to review their existing banking relationships in order to maximize the value of those relationships into the future.
We want to hear from you! How do you manage your organization's banking relationships? Email NFPSection@aicpa.org. Or share your thoughts in the AICPA Not-for-Profit Section's members-only LinkedIn group.