Nonprofits can and should have savings accounts, but they work differently than personal accounts
Yes, a nonprofit can have a savings account. In fact, most nonprofits need one. A nonprofit savings account holds money the organization receives through donations, grants, and program revenue. The account belongs to the organization itself, not to any individual board member or staff person, and the money in it is restricted — it cannot be used for personal expenses or transferred to someone's personal bank account.
The key difference from a personal savings account is that a nonprofit account is held in the organization's legal name, requires multiple people to authorize withdrawals, and must be tracked and reported to the IRS and your state. The money in the account is considered the nonprofit's unrestricted assets (money the organization can spend however it needs) or restricted assets (money a donor gave for a specific purpose). Both types can sit in a savings account while the organization decides how to use them.
Key Takeaways
- A nonprofit savings account must be opened in the organization's legal name, not in a staff member's or board member's personal name.
- Most banks require a nonprofit to provide its EIN (Employer Identification Number), articles of incorporation, and a board resolution authorizing the account before opening one.
- At least two people must sign off on withdrawals from a nonprofit savings account to prevent fraud and misuse of funds.
- Money in a nonprofit savings account must be tracked separately from operating funds and reported to the IRS on Form 990 or Form 990-N, depending on the organization's size.
What documents you need to open a nonprofit savings account
Banks treat nonprofit accounts differently from personal accounts because the money belongs to the organization, not to an individual. Before opening an account, the bank will ask for several documents that prove the nonprofit exists and is authorized to hold money.
You will need your EIN (Employer Identification Number), which the IRS issues to nonprofits the same way it issues Social Security numbers to individuals. If your nonprofit does not have an EIN yet, you can request one free from the IRS website or by mail. You will also need your articles of incorporation — the legal document filed with your state that officially creates the nonprofit — and a board resolution that authorizes specific people to open and manage the account. Some banks also ask for the nonprofit's bylaws and a list of board members with their titles.
The bank may also ask for a personal ID from the person opening the account, even though the account belongs to the organization. This is standard practice and does not mean the account is personal — it is simply how the bank verifies that someone with authority is making the request.
Who can access the account and how withdrawals work
A nonprofit savings account cannot be controlled by one person alone. Most banks require at least two authorized signers — usually board members or the executive director and treasurer — before money can be withdrawn. This is called dual control and it is a safeguard against theft or misuse of funds.
When the nonprofit needs to withdraw money, both signers must approve the transaction. Some organizations set up online banking so that one person initiates a withdrawal and the second person approves it through the bank's system. Others require both signatures on a check. The specific process depends on what the bank offers and what the nonprofit's board decides in its bylaws or policies.
If a signer leaves the organization, the nonprofit must notify the bank immediately and update the authorized signers. Leaving an old signer on the account after they have left the organization is a serious compliance problem and can open the nonprofit to fraud.
How much money a nonprofit should keep in savings
There is no legal minimum or maximum for how much a nonprofit can keep in a savings account. However, nonprofits are expected to spend money on their mission, not hoard it. The IRS looks at how much money a nonprofit accumulates over time, and organizations that sit on large reserves without a clear plan can lose their tax-exempt status.
Most nonprofit experts recommend keeping three to six months of operating expenses in a savings account as an emergency fund. If your nonprofit spends $100,000 a year on programs and staff, you might keep $25,000 to $50,000 in savings. This covers unexpected costs — a staff member leaving suddenly, a building repair, a drop in donations — without forcing the organization to shut down programs.
If your nonprofit receives a large grant or donation and wants to save it for a future project, that money can sit in savings as long as the board documents why it is being held and when it will be spent. This is called a board-designated reserve and it must be reported separately on the nonprofit's financial statements and tax forms.
How nonprofit savings accounts are reported to the IRS
Every nonprofit must report its savings account balance and all other assets to the IRS each year. If your nonprofit has gross receipts of $50,000 or more, you file Form 990 or Form 990-EZ, which includes a detailed balance sheet showing how much money is in savings, how much is in checking, and how much is owed to creditors. If your nonprofit is very small (under $50,000 in annual revenue), you file Form 990-N, which is a simple electronic notice that does not require detailed financial information.
Your state may also require annual financial reporting. Some states ask nonprofits to file a copy of the Form 990 with the state attorney general's office. Others have their own state-specific forms. Check with your state's nonprofit division or attorney general's office to find out what you owe.
The nonprofit must also keep detailed records of every deposit and withdrawal from the savings account. These records are called bank reconciliations and they prove that the money in the account matches what the nonprofit's accounting system says should be there. If the IRS audits the nonprofit, these records will be the first thing they ask to see.
Banks that work with nonprofits and what to expect
Most banks offer nonprofit savings accounts, but some have special programs designed for nonprofits with lower fees or better interest rates. Community banks and credit unions often have nonprofit specialists who understand the compliance requirements and can walk you through the process. National banks like Bank of America, Wells Fargo, and Chase also offer nonprofit accounts, though the process may be more automated and less personal.
When you call a bank to open a nonprofit account, ask if they have a nonprofit banking program. If they do, they can often waive monthly fees or offer higher interest rates on savings. Some banks also offer free or discounted business services like wire transfers or merchant processing, which can save a nonprofit money over time.
Be prepared for the bank to take one to two weeks to process the account opening. They will need time to verify your EIN with the IRS, review your articles of incorporation, and set up the dual-signature requirement. Once the account is open, you can deposit money immediately, but the bank may hold large deposits for a few business days before the funds are available to withdraw.
What happens if a nonprofit closes or loses its tax-exempt status
If a nonprofit dissolves or closes, the money in its savings account does not disappear or go to the bank. Instead, the nonprofit's bylaws or state law determine where the money goes. Most nonprofits are required to transfer remaining assets to another nonprofit with a similar mission. This is called asset dissolution and it must be documented and reported to the state.
If a nonprofit loses its tax-exempt status because it stopped filing required forms or violated IRS rules, the savings account still belongs to the organization. However, the organization is no longer a nonprofit in the eyes of the law, and the money may be subject to taxes. The IRS will send notice of the status change, and the organization should consult a tax professional about what happens next.
Frequently Asked Questions
Can a board member or staff person put nonprofit money in their personal savings account?
No. Money belonging to the nonprofit must stay in the nonprofit's account. Putting organizational money in a personal account — even temporarily — is considered theft or embezzlement, regardless of intent. If someone needs to be reimbursed for a purchase they made with personal money, the nonprofit should reimburse them by check from the nonprofit account, not by having them keep the money.
Does a nonprofit savings account earn interest?
Yes, most nonprofit savings accounts earn interest, though the rate varies by bank and by how much money is in the account. Interest earned on a nonprofit savings account is considered income and must be reported on the nonprofit's tax forms. Some banks offer higher interest rates for nonprofit accounts or for accounts with larger balances, so it is worth comparing rates before choosing a bank.
What if the nonprofit needs to access the savings account quickly in an emergency?
Money in a savings account can usually be transferred to the nonprofit's checking account within one business day, so it is available for emergencies. Some nonprofits keep a small amount in checking for day-to-day expenses and move money from savings to checking as needed. This setup gives the organization quick access to funds while keeping most of the money earning interest in savings.
Can a nonprofit have multiple savings accounts?
Yes. Some nonprofits open separate savings accounts for different purposes — one for the emergency fund, one for a building project, one for an endowment. Each account must be in the nonprofit's name, tracked separately in the accounting system, and reported to the IRS. Multiple accounts can make it easier to organize money by purpose, but they also require more record-keeping and bank fees.
What if the nonprofit receives a restricted donation that must be saved for a specific purpose?
The money can stay in the savings account as long as the nonprofit tracks it separately and does not spend it on anything else. The nonprofit's accounting system should show that the money is restricted — meaning it can only be used for the purpose the donor specified. When the nonprofit is ready to spend the money on that purpose, it moves the funds from savings to checking and records the expense in the accounting system.