Nonprofit Quick Tip: Credit Card Policy

CPAs & Advisors

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During a nonprofit’s day-to-day operations, various instances will require a credit card to be used, including payment for travel and emergency purposes, and for convenience in running programs smoothly. Additionally, many organizations are looking at credit cards to enroll in auto-pay and receive various rewards that benefit the organization.

Ensure that your nonprofit has adopted and is staying up to date with its credit card policy. Following are a few things to consider:

    • Who should have a credit card? – Is it just the Executive Director? Program staff? Try to strike a balance between having too many credit cards, yet still providing easy access for those who need to use one.
    • What should be bought on a credit card? – Travel, business meals, emergency supplies and online bill-pay are reasonable. However, avoid making unnecessary small purchases that would be better managed in bulk.
    • What are the limits? – Set reasonable limits for each credit card. Monitor use to ensure that the limits are ‘right-sized.’
    • How will the cards be secured? – Ensure that any shared cards are locked away, and establish a procedure for revoking a card once an employee leaves. Do not use a debit card as that allows a fraudster to have unlimited access to your bank account.
    • What type of support is needed for the purchases? – All items must have a detailed receipt (including meals). How will staff be held liable for missing documentation? What are the repercussions of multiple instances of missing support? Is there a limit for not needing a receipt?
      • A simple tip is to take a photo of receipts and then email them to the appropriate staff collecting receipts.
    • Who is approving purchases? – If a card is shared, there should be some sort of check in/out process, and purchases should be approved in advance. All statements should be reviewed and approved by management. No one should review their own statement, which may mean that a board member reviews the Executive Director’s purchases.
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