6 Questions For Your Banker

The bandit Willie Sutton was famous for saying he robbed banks because that’s where the money was kept. Nonprofits probably don’t need the firepower Sutton was packing. That doesn’t mean getting the cash is going to be easy.

And, there are lots of banks with cash. You shouldn’t just walk into any old savings and loan. You need both answers and the truth. Here’s what you should be getting answers about the place your organization’s money spends the night.

Is the bank secure? 

Too big to fail is not always the case. Banks fail all the time. Nonprofits managers are asking questions about a bank’s financial security since the economic downturn. Ensuring that the bank is strong and checking for Federal Depositors Insurance Corporation (FDIC) insurance isn’t being pushy. It’s doing your due diligence to make sure your funds are protected. 

How will you partner with my organization? 

A bank shouldn’t just be an institution where you store your money. Your organization deserves a partner. A banker should never be too busy for you. Walk away if you try to make an appointment and believe you aren’t given time and sound advice.  

What do you do within the community?

You should ask about partnerships with the larger community. Thing about people, the planet and profit. Finding a bank that incorporates your mission values, such as sustainability or community objectives, with secure financial strategies would be a win-win.  

What can I do so my organization has some sort of financial predictability? 

No matter how predictable you think donations and grants can be, there is always room for unpredictability as the last few years have shown. It is typically recommended nonprofits maintain three years of operating expenses in a portfolio designed for near-term cash needs.   

How can exchange rates impact our work as an organization? 

Many nonprofit managers are looking beyond their own backyards to make the world a better place. With these global missions comes the need to understand how currency will impact the work. Currencies are ever fluctuating based on global markets. It doesn’t matter whether you work in areas that use the dollar or the Tanzanian shilling. Currency is a moving target. It would also be prudent to know what the historical range of the currency is against the dollar.   

What should I know about lines of credit? 

Lines of credit should be used for temporary timing differences in the borrower’s cash cycle. If you receive payments monthly, as one would in a point of service nonprofit, and you have payroll twice per month, then you should I would need a line approximate to half of you monthly budget.