How to Establish a Donations Account at the Bank

Setting up a donations account through your bank can be a good way to collect a substantial sum of money donated by a number of people for a specific individual or family. For example, donation accounts can provide much-needed relief for people dealing with mounting medical bills. There could be any number of reasons to set up a donation account. And while each bank is a little different, there are some basic guidelines to follow.

• 1

  Select the right person to own the account. Typically the person setting up a donation account does not own the account and entrusts the funds in the account directly to the intended recipient. If the intended recipient is a child, seriously ill or otherwise incapacitated, then a trusted person--a parent, for example--may be selected to become the authorized signer of the account on the recipient's behalf. The personal documents of the trusted person will be needed.

• 2

  Visit your local bank branch and ask to speak to a manager. Explain the situation to the manager and your intentions for the donation account. This will enable the manager to be as helpful as possible in giving you the best type of account. The manager might ask you further questions about the matter or request further documentation in a bid to avoid people who set up donation accounts with the aim of taking the money for themselves.

• 3

  Provide the bank with your personal documents and the personal documents of the planned recipient (and/or authorized signer) of the donation account, including the social security number, ensuring access to the account. The bank may also require consent or acknowledgement from the intended recipient of the account.

• 4

  Ask for donations. Ensure you give people the correct information about the account in order for them to be able to successfully pay money in. Anyone can pay money to a donations account, which is set up in a similar way to a personal account.

• 5

  Inform your donors that their contributions will not be tax deductible. Although the donations are of a charitable nature, the IRS does not consider donations to individuals to be gifts.