Do I need a separate bank account for fundraising activities?

When individuals, community groups, charities or small businesses start raising money for a specific cause, one of the first practical questions that comes up is whether a separate bank account is needed. I have seen people run fundraising activity through personal accounts, business accounts or shared committee accounts, often without realising the impact on transparency, tax, reporting or trust. In my opinion this is one of the most overlooked areas of fundraising and it can cause unnecessary complications later.

This guide explains clearly when you need a separate account, why it matters, who benefits from having one, and the legal or practical considerations that apply in the UK. Whether you are raising money for your child’s sports team, a charitable project, a local community cause or a limited company running fundraising events, this article walks you through everything you need to know.

Understanding what counts as fundraising activity

Fundraising refers to any organised effort to collect money for a purpose that is not personal income. Examples include:

• Charity events

• Sponsored challenges

• Community group fundraising

• School PTA collections

• Sports club fundraising

• GoFundMe or online donation pages

• Temporary fundraising for emergencies or one off causes

Fundraising is different from trading activity because the intention behind the money is specific and usually public. In my opinion this is why the way you handle the money matters so much. You need to be able to show that donations were used as intended and not mixed with personal or unrelated income.

Do you legally need a separate bank account?

The answer depends on your structure. There is no single rule that applies to every situation, so below is a breakdown of the UK positions.

If you are a registered charity

A registered charity must keep proper financial records. While the law does not explicitly say you must have a separate bank account, charities are expected to keep funds clearly separate from personal money. In practice this means a dedicated charity bank account is essential. In my opinion it is near impossible to meet governance expectations without one.

If you are part of a community group or club

Community groups, sports teams and committees do not legally have to open a separate account, but most funders, donors and grant providers expect it. For example if your club applies for local authority funding or a lottery grant, you will almost always be asked for a group bank account in the club’s name.

If you are fundraising as an individual

If you are raising money for a cause but the funds are passing through your hands, a separate account is not legally required. However using your personal account can make things messy. Donors may question transparency if fundraising money is mixed with your day to day transactions.

In my opinion it is better to create a dedicated account or use a controlled online fundraising platform that keeps donation flows separate.

If you are a limited company running fundraising events

A limited company can hold fundraising money through its business account, but it must be accounted for separately because the money is not business income. Mixing fundraising revenue with trading revenue can create problems with accounts, corporation tax and bookkeeping.

I strongly recommend using a separate account or at least a ring fenced sub account to keep fundraising income completely separate from sales or service income.

Why having a separate bank account is usually the best option

Even when the law does not force you to open a separate account, doing so is almost always beneficial. Based on my experience supporting individuals and organisations, the advantages are clear.

1. Transparency and donor trust

When money is raised publicly, donors expect accountability. A separate fundraising account makes it easy to show:

• How much money has been collected

• Where it has been spent

• Which payments relate to fundraising rather than personal or business use

Transparency builds trust which often increases future donations.

2. Cleaner bookkeeping

If you keep fundraising income in your personal account you will spend time explaining which transactions belong to you and which belong to the cause. This becomes stressful, especially if the activity lasts several months.

A separate account removes this confusion.

3. Easier reporting

Many fundraising causes require reporting, for example:

• Grant providers

• Charity committees

• Event sponsors

• School or club boards

A clean, separate account gives you a tidy audit trail with no additional admin.

4. Helps avoid tax problems

Fundraising money is not personal income. If it flows into your personal bank account it may look like income to HMRC. You would then have to provide evidence that it is not taxable.

In my opinion a separate account removes that risk entirely.

5. Better shared control

If you are part of a group, having a single group account with multiple signatories avoids any individual having full control. This reduces disputes and increases accountability.

How to decide whether you need a separate account

Here are the questions I ask people when advising them.

Will other people donate to you?

If yes, separate the funds. Donors want clarity.

Will other people be involved in managing the money?

If yes, a group or dual signatory account is essential.

Will the activity continue for more than a few weeks?

If it is ongoing rather than a one day event, a separate account is sensible.

Will you claim Gift Aid?

Gift Aid requires accurate tracking. A separate account makes it easier.

Will the funds be used for a charitable or community purpose?

If yes, separate accounts help reduce risk and improve governance.

Will the funds pass through a limited company?

If yes, separating fundraising from trading income avoids tax and accounting confusion.

In my opinion if you answered yes to any of these questions, you need a dedicated account.

What type of account should you open?

For personal fundraisers

Open a second personal account just for the fundraising activity, or use a fundraising platform that holds the money separately before releasing it.

For community groups

Open a community or treasurer account with dual signatories.

For charities

Open a charity bank account in the name of the charity.

For limited companies

Open a separate business account or a designated sub account used only for fundraising activity.

Should GoFundMe or JustGiving replace a bank account?

Platforms like GoFundMe, JustGiving or Crowdfunder can hold money temporarily, but they do not replace the need for a separate account if you plan to receive funds outside the platform or pay expenses directly.

These platforms:

• Collect donations

• Deduct fees

• Transfer the final amount to your bank

If you want full financial control and easy reporting, a separate account remains the better choice.

What happens if you do not separate your fundraising money?

In my experience most problems appear months later rather than immediately. Here are common issues people face:

Confusion over spending

When fundraising money is mixed with personal spending it becomes difficult to prove what was spent where.

HMRC questions

If large amounts enter your personal account without explanation HMRC may treat this as income until proven otherwise.

Disagreements within groups

Sports teams, committees and clubs often fall out over unclear finances.

Loss of donor confidence

If supporters ask for updates and you cannot provide a clean record, trust is lost quickly.

Problems during grant applications

Many grant providers will only fund groups with dedicated accounts.

In my opinion the risks far outweigh the small inconvenience of opening a separate account.

Real world examples

Example 1: A school PTA

The PTA collects money throughout the year. If the treasurer holds all funds personally, the school cannot audit them and parents may worry. A group account with two signatories solves this.

Example 2: A GoFundMe for medical treatment

A person raises £15,000 for a family member. The funds go to their personal account. Later the bank queries unusual transactions and the organiser struggles to explain the flow. A dedicated account would have provided a clean trail.

Example 3: A limited company holding charity raffles

A shop runs fundraising raffles for a local hospice. The money enters the business account. At year end the accountant must separate business income from fundraising receipts which wastes time and risks misreporting. A sub account avoids this.

Example 4: A football team raising money for new kits

The coach collects cash and bank transfers into a personal account. Parents later question the balance. A simple treasurer account would have prevented this.

Tax considerations you need to know

Are fundraising donations taxable?

Donations are not taxable if the money is not income for your personal benefit or for business profit.

What if the money enters your business account?

If you run a limited company and fundraising money enters the business account, you must record it distinctly. It is not taxable as long as it is passed to the intended cause, but you must show a clear audit trail.

Gift Aid

If you want to claim Gift Aid the fundraising must meet specific rules including donor declarations. Separate accounts make this process cleaner.

Practical tips when setting up your fundraising account

Use dual signatories

For committees, two signatories reduce risk.

Keep receipts

Even for fundraising events, receipts help prove correct spending.

Use clear transaction descriptions

Label everything. It saves time later.

Keep it simple

Use the account only for fundraising. Do not mix it with anything else.

Provide updates

Transparency builds trust and helps raise more money.

In my opinion: my direct advice

If I am completely honest, I believe almost every fundraising activity should have a separate account. It protects you, satisfies donors, avoids tax confusion, and makes reporting easier. Even if your fundraiser is small, the clarity it gives you is worth the effort.

The only time I would not bother is when:

• It is a tiny, one day fundraiser

• You are collecting small amounts of cash

• Money is immediately passed to the cause without any holding period

Anything larger than that deserves its own account.

Final thoughts

Fundraising is built on trust and purpose. When people give you money for a specific cause they want reassurance that the money is handled properly and used as intended. A separate bank account is one of the simplest and most effective tools to provide that reassurance.

In my opinion the question is not whether you are required to have a separate account. The real question is whether you want clean records, reduced risk, and full confidence in the fundraising process. In almost all cases the answer is yes.