Charities lost millions to banks charging negative savings interest

Negative interest rates banks imposed on savings accounts over the past 18 months cost Dutch charities about 2.3 million euros, NOS reports.

Doctors Without Borders lost the most, paying 362,000 euros in negative interest. “That is a lot of money, which we would have preferred not to pay to the banks,” Thijs van Buuren of Doctors Without Borders said to the broadcaster. “Certainly not if you compare that to the billions in profits they made last year.”

The Salvation Army paid 301,000 euros in negative interest over the past 18 months, the Red Cross 250,000 euros, KWF Cancer Fund 231,000 euros, and KiKa 238,273 euros.

The largest charities annually raise over 700 million euros in donations. About 0.32 percent went to negative interest. “Money that should actually have gone to the charities’ work,” Margreet Plug, director of Goede Doelen Nederland, said to the broadcasters. Charities tried to limit the damage. “By reaching agreements with their bank, which eased the pain. Or by spreading assets over several banks, although that turned out to be difficult.”

Plan International opened several bank accounts but still had to pay over 40,000 euros in negative interest in the 2020-2021 financial year. War Child managed to make agreements with its bank and paid 13,000 euros in negative interest. “As a result, the costs remained somewhat limited. That said, they remain painful,” a spokesperson said. Unicef only paid 10,000 euros in negative interest by quickly transferring money from the Dutch accounts to its head office in New York.

Some charities tried to dodge the negative interest by investing more of their money. But others need quick access to their funds if disaster strikes.

Rabobank told NOS that it takes charities’ character into account. “To meet their social contribution, more generous agreements could and can be made. this is always tailor-made. It goes without saying that Rabobank is looking for ways to ensure that the interest rate policy of the European Central Bank affects charities as little as possible.”

ING said that it does not distinguish between customers on interest payments. ABN Amro said that exceptions would be unfair to other customers.

Negative interest rates on savings may soon be a thing of the past in the Netherlands. The ECB will raise interest rates for the first time in a decade on Thursday. Various banks already announced they would reduce negative interest rates in response.