How Many Bank Accounts Should a Church Have?

Use them to manage an asset – not to keep a second set of books

How many bank accounts should a church have?

One? Five? Ten?  How can we know?

Shouldn’t a church have a separate account for every restricted purpose?

Or should it?

Every church has a duty to responsibly manage cash that it has accepted for particular purposes.  For example, cash that is accepted specifically for a new building must be spent on such a project and not spent on the general operations of the church.

Most churches understand this and work hard to honor the restrictions associated with those donations.  A very common technique used to manage these spending restrictions is to open a bank account for each such “fund”.

Creating bank accounts for each restricted fund is a sub-optimal solution to safe-guard against misspending restricted funds.  Consider the down side of a long list of bank accounts:

  • The list of bank accounts becomes a “second set of books”.  Leaders look to the bank balances as true statements of the balance of each fund. 

    • But over time, managing the bank balances becomes a dizzying exercise in making deposits, followed by bank transfers as fund programs get underway.  The bank accounts fall behind the activity and are not a trustworthy bookkeeping system.

    • When the Treasurer’s fund accounting reports from the accounting system contain different balances than the bank balances, leaders do not know which “set of books” to believe.  And before long, no one believes either set of books, and credibility is destroyed.

  • Every asset owned by a church must be optimally managed.  Just as the church building must be managed with cleaning and maintenance, cash is an asset that should be managed with no less care and intensity.  Idle cash should be aggregated into one or two accounts to maximize the interest income that idle cash balances can earn. 

But how will the leaders know what can be spent?

Proper fund accounting is not difficult using commercially available software. 

  • Some expensive church accounting programs have it built into the software code. 

  • Others, like the inexpensive QuickBooks Online (available for nonprofits for$50 per year from, can be easily configured to do simple fund accounting. 

  • In both cases the cash balance is shown in two components on the Balance Sheet.

    • “Designated/Restricted Cash” appears as one component.  It is the sum of all restricted and designated funds.  This is the amount of money that must not be spent on operations.

    • “Undesignated Cash” appears as the second component and represents the amount of cash available for normal church operations. 

With reliable accounting reporting established, bank accounts can be used to optimally manage the church’s cash asset.  Wisdom Over Wealth is available to assist in the Chart of Accounts modifications needed to get the monthly reports described above.

In short, let the accountant/bookkeeper do the bookkeeping – and use bank accounts to turn idle cash into an income producing asset.