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Charities paid banks more than 2.3 million in negative interest

ERIXPHOTOBOOK.NL

NOS Newsyesterday, 05:08

  • Nik Wouters

    editor economics

  • Nik Wouters

    editor economics

Charities have paid millions last year to be able to store donor money at banks. The twenty largest charities involved more than 2.3 million euros that were paid in negative interest, according to an inventory by the NOS.

For the past year and a half, customers have had to pay interest to their bank above certain amounts, instead of receiving interest. The banks said they were forced to do so by the historically low interest rates. When the negative interest rate was introduced in 2020, charities warned about the consequences and asked for an exception.

Still, all funds had to pay. This also applies to Doctors Without Borders, which lost the most with 362,000 euros. “That is a lot of money, which we prefer not to pay to the banks,” says Thijs van Buuren of Doctors Without Borders. “Certainly not if you compare that to the billions in profits they made last year.”

The largest organizations annually raise more than 700 million euros in donor money. About 0.32 percent of that was spent on paying negative interest. “Money that should actually have gone to the work of the charities,” says Margreet Plug, director of Charity Netherlands.

According to her, the organizations have done everything to limit the damage. “By reaching agreements with your own bank, which eased the pain. Or by spreading assets over several banks, although that turned out to be difficult.”

Plan International, among others, opened several accounts, but still had to pay more than 40,000 euros in negative interest in the 2020-2021 financial year. Banks have now phased out the option to spread money across accounts.

War Child managed to make agreements with the bank and eventually paid almost 13,000 euros. “As a result, the interest costs have remained somewhat limited. That said, they remain painful costs,” says the spokesperson.

Unicef, the fifth largest fund in the Netherlands in terms of size, lost only 10,000 euros. According to a spokesperson, this was achieved by quickly transferring money from the Dutch accounts to the head office in New York.

invest 7 million

Some charities have started investing more to pay less negative interest. For example, Dierenbescherming has transferred 7 million to an investment account. That could not prevent that 73,000 euros in negative interest had to be paid.

But some charities have no choice but to keep their money in the bank because they want to react quickly in the event of a disaster. “It does not announce itself in advance,” says Van Buuren of Doctors Without Borders. “This way we can quickly free up money to take action.”

The end of negative interest rates now seems in sight, when tomorrow the European Central Bank raises interest rates for the first time in ten years. The major Dutch banks have announced that they will reduce negative interest rates in the near future.

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