What happens to charities deposits when their banks fail?
When a bank fails and the FDIC seizes possession, most people know that individuals are insured by the government up to $100,000. There are exceptions for joint accounts and retirement accounts... but the people who usually get screwed by businesses that have large sums of money on deposit.
The Charities Aid Foundation (CAF) in the UK is worried that charities would that have their funds in a bank that fails would be ruined.
The Charities Aid Foundation has written to Chancellor Alistair Darling and the Financial Services Authority requesting full compensation for charities if they lose money in bank failures.CAF has asked for the proposal of full compensation for charities to be included in an FSA consultation on compensation limits, which will take place in the autumn.
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I just had lunch with a friend who is the Exec. Dir. of a major local nonprofit. He spent the morning running around to local banks moving money to make sure that the organization didn't have too much money in any one bank.
Also, a great by product of this work was that he found out that one of his current banks (where he had excess deposits) was years behind in its records for the organization. If there had been a failure, even getting the insured amount may have been complicated because a former (and now deceased) board member was on the account as a signer.
So reviewing both your account levels and making sure than your banking resolutions are updated with all your banks is a good idea.
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