Charity Banking Spotlight report March 2016 with foreword_Layout 1 18/03/2016 11:39 Page 1 Charity Banking Spotlight report March 2016 with foreword_Layout 1 18/03/2016 11:39 Page 2

Charity Banking Spotlight

Contents

2 Introduction

3 Banking spotlight report

4 The most popular

5 Top 25 banks used by the top 5,000 charities

6 Banks listed by client cash

8 Banks used by the top 100 charities

9 Longevity of contracts

10 The value of charity cash

11 Top charities by cash

Produced by Slack Communications for Charity Financials

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Charity Banking Spotlight

Introduction

Barclays are delighted to sponsor this Spotlight Banking Report.

2016 has brought fresh pressures that charities are having to address. But, tough times demand innovative approaches, and charities are embracing creative commercialisation fuelled by diversity of ideas, to support their main charitable cause.

With efficiency at a premium, we believe there is an increasingly rational case for consolidation within the sector. The benefits of bringing two back offices together for example can provide significant advantages, and help a charity leverage its brand wider, reaching more beneficiaries and we expect to see more mergers in 2016.

The digital agenda is also set to drive major change within the sector. The increasing influence of social media presents a huge opportunity to charities. Whilst it has been used very effectively for individual campaigns, the charity that can find the way to harness the power of social media for regular donations will be a market leader and drive significant change in fundraising.

We hope this Spotlight Report will be a tool that allows you to benchmark your , and consider how they support the growth of your charity.

Barclays are committed to working with the Charities and Not-for-Profit sector to make a real difference to people’s lives. Our dedicated Charities team are focused solely on providing banking services and solutions to charities across the UK. As part of this, we invest heavily in innovation and thought leadership to enhance the quality of the overall sector offering for the better.

We hope you enjoy the report and welcome you to contact me with any questions you might have.

David McHattie Head of Charities Team Tel: 0207 116 4898 Email: [email protected]

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Charity Banking Spotlight

Banking spotlight report

This report brings news that Barclays has overtaken NatWest as the most used bank by the top 5,000 charities. Barclays increased its number of clients by 17 while NatWest increased by six, as eight of the top ten banks recorded increases.

Elsewhere:

n CAF Bank gained the most clients, up 24, while the Co-operative Bank lost the most, shedding 21;

n Among the top 100 charities, Barclays has the most clients with 32, well ahead of HSBC with 15;

n Some 58% of the top 5,000 charities have been with their bank for a decade or more;

n The cash held by the top 5,000 charities increased by 1.9% on the previous year’s figure;

n The charity with the most borrowing is Aston Student Villages with £169.5m. Methodology

Charity Financials records the names of all the advisers employed to provide services to the top 5,000 charities. These include auditors, investment managers, banks and legal advisers, as well as any others mentioned within charities’ annual financial statements.

By recording the names of the advisers listed by each charity every year, we have identified when changes take place, the length of time relationships exist for, and how often charities make such changes. Background to the top 5,000 charities

To be included in Charity Financials’ top 5,000 charities, an organisation must have either an annual income greater than £1.526m, annual expenditure greater than £1.548m, or total funds/net assets greater than £3.458m. Only one of these criteria needs to be met. Some organisations are excluded despite having charitable status, namely independent schools, universities and housing associations.

Those organisations which are included are a varied group, both in terms of size and activity. Some focus on local services while others are involved in complex international projects. Some exist to provide funding to other organisations. One thing they have in common is that they all need some form of banking service provider.

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Charity Banking Spotlight

The most popular banks

Barclays overtakes NatWest to become the market-leader

After a couple of years narrowing the gap with NatWest, Barclays has become the market leader as the most popular bank among the top 5,000 charities in the UK. Barclays now has 1,029 clients compared to 1,026 for NatWest. NatWest has consistently had over a thousand clients for each year over the past five years but Barclays has grown its client base from 947 in 2011 to 1,029 in 2015 and has therefore become the most popular charity bank.

Among the new clients belonging to Barclays are the Guide Dogs for the Blind Association, Alexandra Palace and Park and Diabetes UK.

Meanwhile NatWest lost some clients allowing Barclays to take the top spot. Among them were Ashgate Hospice, Northampton Theatres Trust and the Springboard Sunderland Trust which now bank with Barclays.

Figure 1: Top 10 banks used by the top 5,000 charities

Market share (%) Top banks used by top 5,000 charities: Market share (%) 20.58 Figure 1 20.52 0 5 10 15 20 25 13.38 12.04 Barclays 20.58 10.76 6.2 NatWest 20.52 5.54 5.04Lloyds Bank Corporate Markets 13.38 3.54 2.04 HSBC Bank PLC 12.04

Royal Group plc, The 10.76

CAF Bank Ltd 6.2

Bank of Scotland Corporate 5.54

The Co-operative Bank plc 5.04

Coutts & Co 3.54

Unity Trust Bank PLC 2.0

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Charity Banking Spotlight

Figure 2: Top 25 banks used by the top 5,000 charities

Previous Rank rank Bank 2015 2014 2013 2012 2011 12Barclays1,029 1,012 977 953 947 21NatWest 1,026 1,032 1,028 1,040 1,033 33Lloyds Bank Corporate Markets 669 683 680 674 675 44HSBC Bank PLC 602 602 590 586 568 55Royal Bank of Scotland Group plc, The 538 517 503 499 503 67CAF Bank Ltd 310 286 274 267 258 78Bank of Scotland Corporate 277 263 234 248 238 86The Co-operative Bank plc 252 273 279 258 246 99Coutts & Co 177 177 171 168 162 10 10 PLC 102 102 96 84 79 11 11 PLC 99 86 75 67 59 12 12 Santander UK PLC 83 80 71 63 43 13 13 C Hoare & Co 63 59 55 48 42 14 14 Allied Irish Bank (GB) 5253515264 15 16 Scottish Widows Bank PLC 50 50 43 29 11 16 15 CCLA 48 50 51 31 11 17 18 Triodos Bank 4739333029 18 17 PLC 45 46 46 40 41 19 19 Child & Co 23 24 24 25 25 20 20 17 20 20 21 26 21 21 1515273533 22 - TSB 147311 23 25 Close Brothers Limited 13 11 9 5 3 24 23 Citibank 1211952 25 22 Bank (CI) Limited 11 13 12 11 10

Barclays success can be seen in figure 2 by examining the number of clients they had in 2011 and comparing to the number they currently have. With an increase of 82 clients they have made strides in their client base. Despite Barclays’ long term success, the biggest annual net increase in clients was at CAF Bank, up by 24 following the addition of charities like Manchester and District Home for Lost Dogs and York Conservation Trust. There was also a strong performance from RBS, up 21 with the addition of the General Medical Council and the Education and Training Foundation.

Figure 3: Banks with biggest net client increases

Total clients Number Net rank Bank of clients Change 6 CAF Bank Ltd 310 24 5 Group plc, The 538 21 1 Barclays1,029 17 7 Bank of Scotland Corporate 277 14 11 99 13

The Co-operative Bank has lost the most clients since last year, down by 21, probably as a result of its well-publicised financial problems. Its losses include the UK Biobank, the Retired Greyhound Trust and the Lifeline Project.

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Charity Banking Spotlight

Figure 4: Banks with biggest net client decreases

Total clients Number of Rank Bank clients Net change 8 The Co-operative Bank plc 252 -21 3 Corporate Markets 669 -14 2 NatWest 1,026 -6 20 Bank of Ireland 17 -3 26 Investec Bank (UK) Limited 10 -3

In total, 86 banks are used by the top 5,000 charities down one from the 87 reported last year, and the top 10 banks provide services for 4,307 of them.

Banks by client cash

HSBC increases cash levels by £331.7m

Figure 5 shows which banks hold the most cash on behalf of the top 5,000 charities. Where any charity uses more than one bank, the value of the cash has been divided equally between each banking organisation .

The biggest increase in cash held was at HSBC, up £331.7m, while Barclays added £90.8m. NatWest decreased cash by £102.5m due to ceasing to work with big clients such as the Brandon Trust, the Becht Family Charitable Trust and the General Medical Council.

Figure 5: Top 10 banks by charity cash held (£m)

Client cash Client cash Client cash Client cash Client cash Bank 2015 (£m) 2014 (£m) 2013 (£m) 2012 (£m) 2011 (£m) NatWest 3,266.130 3,368.593 3,357.761 2,994.424 2,189.557 Barclays 2,759.036 2,668.203 2,276.256 2,135.052 2,183.421 HSBC Bank PLC 2,168.029 1,836.352 1,786.329 2,272.101 1,458.530 Lloyds Bank Corporate Markets 1,584.917 1,553.941 1,473.143 1,396.431 1,415.495 Royal Bank of Scotland Group plc, The 1,174.210 1,111.178 1,199.999 1,278.156 1,222.021 & Co 576.717 657.992 506.447 556.402 469.723 Bank of Scotland Corporate 487.823 454.885 444.775 418.461 482.838 The Co-operative Bank plc 428.375 477.613 517.308 658.342 525.959 Child & Co 307.415 337.458 202.571 115.803 51.043 CAF Bank Ltd 243.014 227.082 236.265 209.529 209.008

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Charity Banking Spotlight

Figure 6 shows the largest charities which made a change to their banking provision in their most recent accounts, ranked by the amount of cash they hold.

Figure 6: Largest charities (by cash) to appoint a new bank in the most recent year

Cash at Other banks currently used and Organisation bank or in New bank Banks no longer used years in contract () hand Government Banking Barclays (2); Lloyds Bank British Library The 42.683 - Service Corporate Markets (10) CAF Bank Ltd (3); Nationwide Building Society (2); Scottish People's Health Trust 30.424 Close Brothers Limited Widows Bank PLC (1); The Co- - operative Bank plc (3); Virgin Money (1) Royal Bank of Scotland General Medical Council 25.333 NatWest Group plc Royal Bank of Scotland Group plc Imperial College Trust 23.946 Santander UK PLC Allied Irish Bank (GB) The (7) Forster Foundation CIO The 21.829 Rothschild - Design Museum The 21.764 Barclays NatWest (7) - Barclays (4); Lloyds Bank Corporate Markets (7); Royal Bank of Scotland Group plc The (6); HSBC; Nationwide Building Skills for Care 19.045 Santander UK PLC (5); The Co- - Society operative Bank plc (4); Unity Trust Bank PLC (5); Yorkshire Bank PLC (3) Diabetes UK 18.76 Barclays NatWest (10) - Associated Board of the Royal Barclays (13); Santander UK PLC 15.919 Lloyds TSB - Schools of Music The (2) Barclays (10);; Royal Bank of Scotland Group plc The (6); Nuffield Health 13.8 HSBC Bank PLC - Santander UK PLC (6); Siemens Bank GmgH (1) Cater Allen Private Bank (4); Close Lloyds Bank Corporate Royal Society of Chemistry 13.252 C Hoare & Co Brothers Limited (4); NatWest (10) Markets

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Charity Banking Spotlight

Banks used by the top 100 charities

32 of the top 100 charities are with Barclays

Looking at the largest 100 charities by income, the most popular bank used by this group is Barclays, with 32 clients. HSBC is second with 15 and the Royal Bank of Scotland Group has 14.

Figure 7: Banks used by the top 100 charities

The top 100 charities (by income) and the banks they use 0 5 10 15 20 25 30 35

Barclays 32

HSBC Bank PLC 15

Royal Bank of Scotland Group plc, The 14

NatWest 13

Lloyds Bank Corporate Markets 13

Coutts & Co 5

Standard Chartered Bank (CI) Limited 4

The Co-operative Bank plc 4

Standard Bank Plc 2

Reliance Bank Limited 2

Allied Irish Bank (GB) 2

Bank of Scotland Corporate 2

C Hoare & Co 1

Ecobank 1

Government Banking Service 1

Nationwide Building Society 1

Santander UK PLC 1

Siemens Bank GmgH 1

Adam & Company PLC 1

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Charity Banking Spotlight

Longevity of contracts

49.2% have been with their bank for a decade

The Charity Financials database holds data on the banks used by charities for each year over the past 14. Figure 6 shows that 7% of client relationships have existed over the whole period, with nearly half (49%) lasting a decade or more. It is generally good practice for charities to assess their advisers every four to five years.

Please note that for those charities with very few years in their current relationship, this could be because they are new organisations rather than because they have switched from one bank to another.

Notable charities which have been with their bank for at least 13 years are Oxfam GB, which is with RBS, the British Heart Foundation (Barclays), and the International Planned Parenthood Federation (Barclays).

Figure 8: Longevity of current charity/bank relationships

Number of Years with cuurent bank Longevity of banking client relationships 319 1 5.383966 1200339 2 5.721519 339 3 5.721519

1000309 4 5.21519 334 5 5.637131

541 6 9.130802 1004 800285 7 4.810127 relationships 257 8 4.337553

client 286 9 4.827004

600 699 335 10 5.654008

440 11 7.42616 charity 541

400 of

699 12 11.79747 440

er

1004 13 16.94515

m

339 339 335 334 319 u 200437 14 7.375527309 286 285 N 116 257 5925 0 12345678910111213 Number of years relationship has existed

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Charity Banking Spotlight

The value of charity cash

Charity cash levels increase by 7.6%

Collectively, the top 5,000 charities hold current cash assets worth £15.8bn – a figure which has risen in the latest period following two successive years of decline where it fell from £16.9bn to £15.5bn (see figure 7).

This cash referred to in this section is exclusive of the cash contained in fixed assets, which is earmarked for investment purposes.

Figure 9: Total cash held by the top 5,000 charities (£m)

Cash (£bn) 17.50

17.00

16.50 16.90 (£bn)

16.63

cash 16.00

of

alue 15.98

V 15.50

15.79

15.00 15.50

14.50 2011 2012 2013 2014 2015 Year

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Charity Banking Spotlight

Top charities by cash

CAF is the sector’s biggest cash holder

Figure 10 shows the top 25 charities by cash held along with and the banks they use. It also displays the number of years the relationship has existed for according to our database. Heading the list is the Wellcome Trust followed by the Charities Aid Foundation and the Children’s Investment Fund Foundation.

Figure 10: The charity sector's largest cash holders

Cash at Fixed bank or in Charity Cash hand Total Cash Banks Wellcome Trust 875.100 59.800 934.900 HSBC Bank PLC (14) Charities Aid Foundation 28.108 736.769 764.877 NatWest (4) Children's Investment Fund Foundation 0 680.224 680.224 HSBC Bank PLC (6) The Church Commissioners for England 0 501.200 501.200 NatWest (6) Gatsby Charitable Foundation The 0 215.491 215.491 Child & Co (7) British Council The 0 157.712 157.712 HSBC Bank PLC (10) Salvation Army Trust 0 133.042 133.042 Limited (13) Peabody Trust 0 114.017 114.017 Coutts & Co (9) Nesta 0 101.745 101.745 Lloyds Bank Corporate Markets (3) National Trust The 47.926 48.743 96.669 Barclays (12) Jisc 0 93.655 93.655 Lloyds Bank Corporate Markets (3) British Heart Foundation 3.500 87.200 90.700 Barclays (14) Royal Bank of Scotland Group plc The Oxfam GB 2.500 85.900 88.400 (14) Royal Bank of Scotland Group plc The General Medical Council 60.000 25.333 85.333 (1) Save the Children 1.558 80.603 82.161 NatWest (6) BHP Billiton 0 79.470 79.470 Bank of America (5) Nursing & Midwifery Council 0 76.662 76.662 HSBC Bank PLC (11) Royal British Legion The 0 75.092 75.092 Lloyds Bank Corporate Markets (9) Barclays (6); Ecobank (3); Standard Save the Children International 0 68.908 68.908 Bank Plc (3); Standard Chartered Bank (CI) Limited (5) Monument Trust The 5.000 58.841 63.841 Child & Co (6) International Planned Parenthood 0 60.403 60.403 Barclays (13) Federation Barclays (11); Standard Chartered Marie Stopes International 0.327 58.989 59.316 Bank (CI) Limited (5) Leverhulme Trust The 42.001 16.381 58.382 Barclays (13) NatWest (1); The Co-operative Bank Big Local Trust 55.694 2.173 57.867 plc (3) Salvation Army Social Work Trust The 0 57.318 57.318 Reliance Bank Limited (13)

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Charity Banking Spotlight

Meanwhile, figure 11 shows the charities with the most bank loans, mortgages and overdrafts. Aston Student Villages tops the list with £169.5m, a figure that has increased from £98.2m in 2010. The charity, which has a most recent annual income of £16.7m, delivered a statement of defaults to Bank of Scotland in 2014 after a revaluation of its properties found them to be worth less than its liabilities.

Figure 11: Top charity borrowers

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Charity Banking Spotlight

Needs define relationships

All charitable organisations need a deposit or current account to hold the cash necessary for day-to-day operations. The top 5,000 are such a varied group that the range of banking needs will vary tremendously. These needs will determine which bank will be used, following an examination of the services each bank provides. Smaller organisation may only require a current account, whereas larger organisations with global operations will have many other requirements.

Figure 12: Factors influencing bank selection

It is good practice for charities to regularly review their banking arrangements to ensure they are getting the best service at competitive rates. If a charity is unhappy with its bank and believes it may get a better deal elsewhere, this should be investigated to ensure the organisation is maximising the potential of its income. Switching banks is no longer as complex or laborious as it used to be thanks to modern banking facilities which have removed the need to complete lots of paperwork.

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Charity Banking Spotlight

Please click the following links for details of the services the most popular banks offer to charities.

Barclays

NatWest

Lloyds

HSBC

Royal Bank of Scotland

Co-operative Bank

CAF Bank

Bank of Scotland

Coutts & Co

Unity Trust

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Charity Banking Spotlight

New Charity Benchmarking Reports

Charity Benchmarking Reports are designed to save you time preparing your performance strategy so you can effectively compare your financial performance against your peers. Just choose up to 10 of your peers within the top 5000 UK charities and we’ll: t Run comparisons on individual income streams and calculate growth rates t Use costs to calculate net returns looking at yearly change and long term averages t Include key financial ratios e.g. net asset cover and asset turnover t Send your completed report in a simple excel format within 3 to 5 days

For more information contact: Download a sample report Call: Alex McKenna 0207 324 2350 Email: [email protected]

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