Is Your Cash Working Hard Enough? A Guide for Charity Treasurers

Many charities hold a significant proportion of their reserves in current accounts or low-interest deposit facilities. This is often not the result of a deliberate decision — it is the result of no decision, or of an arrangement that was put in place years ago and never revisited. In an environment where interest rates have shifted significantly, this default position has become increasingly costly.

The interest rate shift

The Bank of England base rate moved substantially over the period from 2022 to 2025, reaching levels not seen in over a decade. For charities holding cash reserves, this created both an opportunity and an accountability question: were your arrangements updated to capture the improved returns available, and if not, why not?

Many charities, in practice, did not update their banking arrangements during this period. Operational bank accounts and legacy deposit facilities continued as before, while the interest rates available on accessible cash — through notice accounts, term deposits, and cash management platforms — increased materially. The difference between what these charities earned and what they could have earned represents a real cost to their beneficiaries.

“Cash management is one of the simplest areas in which a charity can improve its financial position — and one of the most commonly overlooked. The improvements available rarely require any meaningful increase in risk.”

What a cash management review covers

A structured review of your charity’s cash management looks at several things. First, the total cash position — how much is held, in which accounts, and on what terms. Second, the cashflow profile — how much needs to be accessible at short notice, how much could be placed on notice terms, and whether any portion could be committed to a longer-term deposit without creating operational difficulty. Third, the current rates being earned versus what is available in the market for equivalent risk and accessibility.

For most charities, this analysis identifies a meaningful improvement — not through taking more risk, but through better matching the deployment of cash to its actual operational requirements.

The governance dimension

Cash management is not only a financial issue — it is a governance one. Trustees have a duty to ensure that the charity’s funds are invested prudently. Where significant cash is being held in low-interest accounts when better returns are available on equivalent terms, trustees may be failing to discharge this duty — not through any deliberate choice, but through the absence of a structured review process.

Adena Street includes cash management review as part of its financial guidance service for charities. For organisations without an investment portfolio, it is often the starting point for an engagement — and frequently the area where the most immediate improvement can be delivered.