7th October 2013

How frequently should a charity put their full banking out to tender and what considerations should be included?

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7th October 2013

How frequently should a charity put their full banking out to tender and what considerations should be included?


Example question and answer provided by panel member, Richard Knight, Senior Corporate Manager, The Co-operative Bank – Nov 2012

There is no specific requirement for a tender policy but, it is good practice for the trustees (usually Risk and Audit Committee) to build a formal process into their governance procedures to tender every 5 years at least.  The considerations should include the following:

  • Financial Strength – This should go beyond ratings which in themselves, are a very narrow measurement.  Other aspects need investigation such as Core Tier One Capital, but particularly the ratio of customer assets to customer liabilities on the balance sheet.  This latter measurement gives an excellent indication of a banks financial prudency
  • Ethical fit – Increasingly trustees and charity managers are seeking an ethical fit with their banking provider especially in the light of recent exposures and disclosures.  A recent survey saw this aspect rise from 7th place in importance ranking to slot 4
  • Specialist Team – Any tender should include a requirement to have a charity relationship managed by a dedicated charity team.  Additionally seek evidence around track record by that relationship team.  What other involvement do they have in the sector and can they assist your own organisation’s networking opportunities
  • Testimonials – Always seek three relevant and recent testimonials as part of the tender submission
  • Invitation to tender process – If there is no previous record of seeking a tender there are specialist providers – in the sector – who will undertake the process alongside trustees and managers and, whilst there is a cost, this is nearly always more than recovered in the savings that can be enjoyed by changing bank provider