Charities should be given the right to ensure they have access to a basic bank account in line with some other European countries, a new report says.
The Landscape of Debanking within Muslim Charities and its Impact on Charitable Activities, published today by the Muslim Charities Forum with support from the University of Aberdeen, says member organisations have been significantly affected by the negative effects of derisking practices by banks, involving the withdrawal of banking services.
“It is evident that counter-terrorism policies and global risk frameworks disproportionately affect Muslim-led charities, and there is a clear link between these frameworks and the financial difficulties these organisations face,” the report says.
“The findings suggest that structural Islamophobia plays a role in exacerbating these challenges, given the disproportionate impact on Muslim charities.
“While Muslim-led charities share common challenges with the wider sector, such as bureaucratic hurdles and operational inefficiencies, the intersection of these sectoral issues with additional scrutiny and financial exclusion intensifies their difficulties.”
The report calls for the government to introduce a legal right to basic banking services for charities, as is the case in several other European countries, and work towards promoting “greater collaboration between regulators, banks and charities to ensure that all parties work towards a common goal of financial inclusion”.
The report also says banks should improve transparency and communication with charities, ensuring that decisions to restrict services or close accounts are justified and clearly explained.
They should also provide training to staff to better understand the unique needs of the charitable sector.
“Banks are also encouraged to enhance training on anti-racism and bias reduction as part of their equality, diversity and inclusion efforts, aiming to improve decision-making processes and avoid stereotyping or perpetuating racial and Islamophobic biases,” the report says.