How to Open a Non-Profit Bank Account

by Josie Myers; Updated September 26, 2017
Banks usually work with nonprofits to set up low-to-no-fee accounts

Nonprofit groups of all sizes and purposes are eligible to open low-to-no-fee checking accounts with most banks. There are two basic types of nonprofits: incorporated and informal. The process around obtaining a checking account will vary depending on which type of nonprofit group you are a part of. Brand new nonprofit organizations must begin the process of incorporating before obtaining a bank account. Small clubs and informal nonprofits have much less work to do.

Items you will need

  • EIN number
  • Bylaws (optional)
  • Articles of Incorporation (optional)

Incorporated Nonprofits

Step 1

Draft bylaws for your organization. These documents will lay out the structure and purpose of the group, including operating procedures, membership types, and officer titles and duties.

Step 2

Use the bylaws to file Articles of Incorporation with your state. A modest fee usually is associated with this application. The state will respond to establish your organization as an incorporated entity.

Step 3

Obtain an EIN number from the IRS using the fictitious name of your organization as approved by your Secretary of State. Be sure to fill in the purpose of your organization as nonprofit.

Step 4

Use the EIN number from the IRS to open a bank account. Shop your local banks to find the best offer for nonprofits. Some banks will offer virtually free accounts, while others will only offer standard business accounts. Be sure to check minimum balance requirements and interest-earning potential.

Step 5

After the bank account is established, the organization can then begin to pursue nonprofit status with the IRS, usually under the guidance of a nonprofit lawyer.

Informal Nonprofits

Step 1

Request an EIN number from the IRS using the name of your organization. There is a designation on the application "for banking purposes only" that is usually used by small nonprofits and community clubs.

Step 2

Research banks to find one that will give you the best benefits. Most banks give small clubs and groups many of the same benefits as incorporated organizations. Some even have a special designation for groups that benefit the local community. Look for a high-interest checking account or a low-to-no-fee account.

Step 3

After you receive your EIN number from the IRS, use it to open a bank account in the organization's name.

Warnings

  • Small groups must keep their gross receipts under $5,000 a year or must incorporate. If you plan on having a larger income, you should look into incorporation.

    Do not file for nonprofit status with the IRS until you have established a checking account record. Showing your good record-keeping skills will encourage your approval.

About the Author

Josie Myers has been a freelance writer and tutor since 2008. A mother of three, she was a pre-kindergarten teacher for seven years, is a Pennsylvania-certified tree tender and served as director of parks in her local municipality. Myers holds a Bachelor of Arts in music and business from Mansfield University and a Master of Arts in English from West Chester University.

Photo Credits