Bank accounts-help needed
Mark Ritter/RR (ritterme@STNY.LRUN.COM)
Sun, 28 Jun 1998 21:21:19 -0500
This question has (at least) two interpretations. I'll answer both.
(1) In my opinion, it is reasonable for a bank to charge extra if YOU
(the unit committee) require two signatures on EACH CHECK. This is like
saying that YOU (the committee) don't completely trust the person who has
custody of the unit's checkbook and require the bank to help keep this
person honest. It is more work for the bank to check for this and
reject/return checks that have only one signature. If you can find a
bank that will do this for free, that's great. However, it is a hassle
to change banks, and there's no guarantee that the bank you change to
won't change it's policy next month.
(2) It also makes sense for the bank to require at least two signatures
on the ACCOUNT. And it makes sense for YOU (the unit committee) to
require two (or more) signatures on the ACCOUNT. You'll understand why if
you've ever been through the hassle of being a member of an organization
whose treasurer is the only signatory on the account, and the treasurer
dies of a heart attack, and then spent two years with your funds tied up
while you get the necessary resolutions and court orders to get your new
treasurer's name on the account. The legal fees pretty much wiped out the
account. (It *can* be done in one day, for free, if you get a cooperative
bank officer. Or the deceased has a cooperative executor. It can be done
quickly - weeks or months instead of years - if you get a cooperative judge
or an attorney who knows how to find the right cooperative people. We were
unlucky on all counts.)
So, I recommend keeping life simple.
(a) Let the unit treasurer keep the unit account in the same bank as the
treasurer's personal accounts. This makes it more convenient for the
treasurer to make deposits and handle other unit business, which makes it
easier for the committee to get someone to be the treasurer. Most banks
(in my area at least) still give free checking accounts to not-for-profit
organizations, as long as only a single signature is required on each
check. (Use a little common business sense on this. Make sure you know
ALL the consequences before you make changes. What is "free checking"?
Monthly account charge? Per check charge? Blank check printings?
What terms will you get if you change banks now and want to change back?
But don't rely on that ... it's subject to change.)
(b) Have two (or more) signatures on the account. Either one can
authorize changes to the account. I.e. - add an additional signatory,
remove a signatory, or change the mailing address on the account.
(c) If you feel you need it, have 3 (or more) authorized signatures
on the account, with any combination of 2 signatures authorized to
make changes on the account. I.E. - any two signatures are needed
to add an additional signatory or to remove a signatory, or to change
the mailing address for the account. (I have no objection to this, but
feel it's usually unnecessary.) There's usually no charge for this
form of 2 signature requirement.
NOTE: If you only have two authorized signatures, only one of them should
(d) Require only a single signature on each check.
(e) Separate the responsibilities for the account. Most of the
organizations that I've been associated with (scout units, church groups,
other clubs) have the treasurer's name and mailing address for the bank
statements, but the treasurer does not have custody of the checkbook.
The unit leader (SM, advisor, minister, or president) has custody of the
checkbook, and writes most of the checks. The unit leader usually
collects all income and gives it to the treasurer for deposit.
(f) Two of the non-scout organizations I've been a member of have
required the posting of a bond for the treasurer and unit leader, paid
for as an organization expense.
(g) Establish unit policy (bylaws or standing rules or whatever) that
require prior committee approval for any expense over a set limit ($25 or
$100 perhaps) and prohibit the custodian of the checkbook from signing
checks made payable to himself/herself in any amount. The policy should
require a periodic (at least annual) "audit" of the account by the full
committee, and the committee should exercise this responsibility.
I do know of one instance where a registered leader of a scout unit (I can't and
won't call him a scout leader) wrote several checks against the unit account
with insufficient funds to cover them, who ultimately cleaned out the account
and left town. He was his own treasurer, and the overdraft notices and
statements were all mailed to him. I don't know whether or not two signatures
were required on the account; his wife was his committee chairman and may have
been an authorized signatory too. Even with this experience, I don't recommend
the hassles of requiring two signatures on each check; but do recommend keeping
the checkbook at the account statements at two different mailing addresses. If
you aren't happy with that, go the bond route rather than the two signature route.
(This didn't happen in my unit, but my unit at the time was the recipient of two
of his bad checks.)
Mark Ritter -RitterME@Juno.Com - Committee Member
Ship 90 - The SSS North Star - New Milford PA
Terry Howerton Sakima Group, Inc. SCOUTER Magazine Kansas City