20 Nov How To Protect Your Non-Profit’s Credit Cards From Misuse
A hypothetical non-profit staffer named Britney had maxed out her personal credit cards. So, when her car needed repairs, she reached for her employer’s card. She reasoned that she would come up with the money to pay the bill before her boss ever saw a statement. Britney did not come up with the money. But lucky for her, her boss did not review the card statement that month. When Britney needed to buy holiday gifts, she reached for her work card again — and again. By the time her boss finally noticed the illicit charges, Britney had spent more than $5,000.
This kind of credit card misuse or fraud is more common in non-profits than you may think. But if you write and enforce a strong card use policy at your organization, you can help prevent Britney’s and her boss’ mistakes.
Who needs one?
Your policy should start with who has the right to a card. Non-profits commonly issue cards to their executive directors, program directors, and office managers (or other employees responsible for buying supplies). Before issuing a card to other staffers, consider whether they really need it. Most can pay out of pocket and submit reimbursement requests. However, if employees travel or entertain donors regularly on your non-profit’s behalf, it may make sense to give them cards.
Just ensure that cardholders understand the rules. Explicitly say (even if it seems obvious) that they cannot use the card for personal expenses, and list prohibited uses such as cash advances and electronic cash transfers, as well as charges over a specified amount. State that reimbursement for returns of goods or services must be credited directly to the card account. Employees should never accept cash or refunds directly.
What is management’s role?
Manager involvement is essential to helping prevent credit card abuse. Require employees to seek preapproval prior to incurring any credit card charge. Stress that unauthorized purchases (and related late fees and interest) will become the employee’s responsibility. Employees should be required to provide documentation (such as itemized receipts) to their authorizing supervisor for review.
Supervisors need to indicate their approval of the charges by a signature and date on the receipts or on a standardized expense form. Your accounting department should reconcile monthly credit card statements, and the statements should be reviewed by an executive or board member.
How do you enforce it?
Make sure staffers understand the possible consequences of violating your credit card policy, including employment termination and criminal prosecution. To make sure there is no misunderstanding, require employees to acknowledge that they have read the policy and agree to follow it in writing before they receive a card.