Bank accounts for collections are not subject to strict regulations

Banks do not have specific processes or regulations regarding accounts used for fundraising – usually verification of the identity of account holders is enough.

Local bank president and CEO Susan Chapman Plumb said the main regulation for such an account is “Know Your Customer.”

“(KYC) only requires us to verify that the account is opened by a nonprofit or any corporation, we have to verify who is the beneficial owner of that account, which means in the case of a corporation or an LLC that controls that corporation, so it really the only ordinance in effect,” Chapman Plumb said.

An organization wishing to set up an account for a specific fundraiser will need to provide its organizational documents and bylaws, while an LLC will need to provide an operating agreement that outlines who can control the money.

“Many times a corporation will pass a resolution authorizing certain individuals to transact business on behalf of the corporation because those individuals may change, so when that changes, the board will pass a resolution authorizing certain individuals,” Chapman Plumb said.

Chapman Plumb said fundraising accounts can be set up as either a savings account or a checking account, with most specifying it as the latter. Fundraising situations can vary which account will be used, as Chapman Plumb gave the example of a savings account set up to raise money for college tuition for a minor.

Banks may not have specific criteria for fundraising, but some organizations or nonprofits, such as public schools, must follow certain regulations.

Sabrina Garner, Tahlequah Public Schools’ assistant treasurer and charging officer, said schools are required to have checking accounts set up for the bills, but the superintendent and Garner are the only people who have access to the account with board approval.

Garner said schools must follow their own policies and procedures compared to other organizations and nonprofits.

TPS Superintendent Tanya Jones said the district has a financial manual approved by the board of education over the summer that includes fundraising procedures. Jones said the fundraiser does not have his or her own bank account with a third-party bank because it is merely a sub-action account within the actual bank account.

“We have a bank account and here we keep separate books for all the subaccounts that are part of that account,” Jones said. “You put everything into one account and let’s say you have $100 in your account, but you might have 10 fundraisers that total that $100, so we keep an internal ledger that tracks every dollar donated to a specific account or funds raised to a specific account.”

Fundraising accounts, Chapman Plumb said, aren’t very common because they can most often be run online through apps like GoFundMe.

Chapman Plumb said it urges potential donors to always exercise caution, especially when dealing with online formats. Chapman Plumb said that if a complaint is filed with a bank, the group contacts authorities immediately, but if an online donation is made, the person may have difficulty filing a complaint and getting a refund.

“There aren’t really any banking regulations that require us to take specific action when someone claims it’s a fundraising account, so I would just urge people to be careful when donating and just check that they know exactly , what they donate to.” Chapman Plumb said.