“How many bank accounts should our nonprofit have?”

It’s a question I hear often—and the honest answer is that there’s no one-size-fits-all number. The right setup depends on your size, complexity, and internal controls. But after 3 decades serving as a CPA, nonprofit CFO, and now a fractional CFO for churches and nonprofits, I can tell you this:

There are clear principles that apply to every organization, no matter how small or large.

When setting up bank accounts, there are really two goals we’re trying to accomplish:

• Simplify the accounting so it’s easy to see what’s happening and what has already happened
• Protect the organization’s financial resources and reduce risk

With those goals in mind, here’s a practical framework I consistently recommend for nonprofits that are growing and whose accounting is becoming increasingly complex.

The Expense (Payables) Account

The first account most nonprofits need is an expense account, sometimes called a payables account.

This is where all outgoing transactions happen—checks, ACH payments, and credit card payments. Ideally, this account is funded weekly based on what is scheduled to be paid during that period.

Separating expenses into a dedicated account makes it easier to review activity, reconcile transactions, and quickly spot anything that doesn’t look right. It also supports stronger internal controls by creating clearer lines of responsibility.

The Payroll Account

The second account is a payroll account.

Payroll is usually the largest expense in a nonprofit, and it often deserves its own lane. Separating payroll allows for confidentiality, cleaner reporting, and greater transparency for board review.

This structure also supports a best practice I strongly recommend: the person processing transactions should not be the same person reviewing them. That separation creates accountability and helps protect both the organization and the people serving it.

The Deposit Account

The third account I recommend is a deposit account.

All incoming funds—donations, program revenue, grants, and other receipts—should flow into this account first. When all deposits land in one place, trends become easier to see and questions become easier to answer.

With payroll and expenses clearly defined, leadership can quickly see how much of the remaining balance is available for savings, reserves, or future planning.

This is also where more strategic conversations can begin about how cash is stewarded beyond basic operations.

A Word About FDIC Insurance and Risk

One important clarification that’s often misunderstood:

FDIC insurance is per entity, per bank, not per account.

That means opening multiple accounts at the same bank does not increase your insurance coverage. If your organization maintains balances above $250,000, that risk needs to be addressed intentionally—through policy, structure, and the right financial tools.

This is also where having the right banking relationship becomes critical.

Why Your Banking Relationship Matters

Bank accounts shouldn’t be set up in isolation. They should be part of a broader strategy that includes internal controls, financial policies, and a banking partner who understands nonprofits.

Depending on your bank, there may be options available—such as insured cash sweep products or other tools—that help protect larger balances while keeping funds accessible. Those options often only come to light through a proactive, relational conversation with your banker.

If this post has raised questions not just about how many bank accounts you have, but where you bank and why, I encourage you to read this related post next:

4 Must-Haves When Choosing a Bank for Your Nonprofit

Choosing the right bank is about more than convenience. It’s about finding a partner who can support your mission, protect your resources, and grow with you over time.

Strong financial systems don’t happen by accident.
They’re built intentionally—one wise decision at a time.