The Don’t Tell the Donor Blog had a chilling link to a New York Times article.
Here’s a quote from the article:
About 30 nonprofit agencies that held several accounts at Freedom, each with less than $100,000, lost money because the F.D.I.C. considers the multiple accounts of a single depositor as a single account. The Fort Greene Senior Citizens Council, for example, had 24 separate accounts totaling $316,000. The F.D.I.C. reimbursed $100,000, leaving the council with a deficit of $216,000. [emphasis added]
This isn’t meant to panic you. And I’m not a financial advisor, nor have I played one on TV.
But if you were told that your nonprofit would be FDIC insured with multiple accounts at the same bank, you may do well to check with your own financial advisors.
Marc – So very true! Exec. Directors and Boards should be cognizant of how their funds are treated by the FDIC.
Dealing with a similar issue with a local nonprofit – they had concerns about the funds deposited at a certain bank that is in headlines this week. The Exec. Director and Finance Committee went to bank to move funds to another bank.
They found out that the account executive had not submitted account-signatory paperwork to add the new ExecDir and remove the prior ExecDir. Then the bank refused to even speak with the current ExecDir, despite having the Board Chairman with her.
Don’t even ask how the bank justifies letting 5 months of checks go thru with unauthorized signatures – we just don’t want to go there!
Luckily, the former ExecDir left on good terms, and raced back to Atlanta to go to the bank and complete the paperwork in the presence of a bank executive.
Lesson learned: ALWAYS check that paperwork is properly completed and submitted – such things should take no more than 48 hours to process.
Not having access to your funds is only slightly better than having your funds whisked away due to FDIC rules on maximum-insured-amounts.
Kate Lee: WOW! Thanks for sharing this.
Who would’ve thought that it all could hinge on a bank employees’ not following through?