Savvy non-profit executives delegate responsibilities to allow them to focus on more important leadership issues. Should the delegation of responsibilities include allowing certain employees to make purchases by using a credit card owned by the nonprofit?
The answer is yes, if your nonprofit has established a credit card usage policy that prevents abuse. If you do not have a credit card usage policy for your nonprofit, we offer a few tips to help you create one for every employee.
Not every member of your nonprofit team should receive authorization for using the organization’s credit cards. Typically, nonprofits issue organization credit cards to leaders such as executive directors, office managers, and program directors. Employees responsible for ordering supplies also might receive authorization to use one of the organization’s credit cards.
Clearly Defined Rules
Outside of emphasizing the obvious that employees cannot use the organization’s credit cards for personal expenses, you have to clearly define the rules for using credit cards to buy items related to the operation of your nonprofit. You write into a usage policy the guidelines for using your nonprofit’s credit cards for travel and entertainment expenses, as well as expenses related to the operation of your organization.
Employees Must Gain Approval
Managers should get involved during every stage of the credit card usage process, which includes the stage called approval. You should require every employee who is authorized to use your nonprofit’s credit cards to gain preapproval for any charge made by using a credit card. Write into your credit card usage policy the consequences of making unauthorized purchases, which should include making the employee pay for unauthorized purchases, as well as the associated interest and late fees.
Craft a Written Agreement
You can establish all the right rules for credit card usage and still discover unauthorized purchases because your nonprofit has not created a written credit card use agreement. The credit card agreement should include a section that describes who has authorization, who receives credit card perks, and what happens when employees violate the credit card usage policy.
Work with an attorney to craft a legally sound credit card usage policy.
Instructions for Submitting Expense Reports
Any employee who travels as a representative of your nonprofit should submit an expense report after a trip is over. You can use a software app to generate a template for an expense report. To promote their missions, many nonprofits send representatives to seminars and conferences located out of town. Make sure to approve expenses that are only directly related to an employee’s travel costs. You want a detailed description of every expense, as well as copies of receipts that demonstrate the cost and the purpose of each purchase.
When you establish a comprehensive credit card usage policy, you hold members of your team accountable for making unauthorized purchases. Holding employees accountable helps you lower the costs of operating a nonprofit organization.