How to write a nonprofit credit card policy in 6 steps
- Why your nonprofit needs a credit card policy
- Can a nonprofit organization get a credit card?
- How to write a nonprofit credit card policy
- Best practices for managing nonprofit credit cards
- Get the Ramp business credit card for your nonprofit
Nonprofits do a lot of good for the world and have several financial protections that other businesses don't have. These entities have tax exemption status, receive USPS discounts, and can access more grants.
It's normal for nonprofits to access business grants and loans when they need extra money, but what about credit cards? Here's how nonprofit organization leaders can approach getting a business credit card and how to build a policy that keeps spending accountable.
Why your nonprofit needs a credit card policy
A nonprofit credit card policy is a formal document outlining the rules for using company-issued credit cards. Without one, you're leaving your organization open to misuse, audit headaches, and eroded donor confidence.
- Prevent unauthorized spending: Clear guidelines that define acceptable purchases stop misuse before it happens. When employees know exactly what's allowed, gray areas disappear.
- Maintain donor trust: Donors want to know their contributions are managed responsibly. A transparent spending policy shows that every dollar is tracked and accounted for.
- Simplify audits: Standardized documentation requirements make the audit process smoother and less time-consuming. When every transaction has a receipt and a business purpose on file, your auditors will thank you.
- Meet federal compliance requirements: A written policy helps you meet IRS and grant-related requirements for financial oversight, which is especially important if you receive federal funding
A nonprofit credit card policy isn't optional. It's essential for protecting your organization, your donors, and your mission.
Can a nonprofit organization get a credit card?
Nonprofit organizations can get business credit cards. These cards let nonprofits access additional capital, and many financial institutions offering these cards also offer auto-generated reports.
A business credit card can help nonprofit organizations with tax planning, and these cards also come with great perks. You can get cashback or points on every purchase that can further support your nonprofit's mission.
Most major issuers offer credit cards for nonprofit organizations, and the application typically requires an Employer Identification Number (EIN) and organizational documents. You'll generally choose from 3 types:
- Business credit cards: The standard option for most nonprofits, offering rewards and flexible credit limits
- Corporate cards: Better for larger organizations that need to issue cards to multiple cardholders with centralized controls
- Prepaid or debit cards: A good alternative if your organization has a limited credit history. If you go this route, you'll also want a nonprofit debit card policy with similar spending rules.
Nonprofits can leverage credit cards as a smart financial tool to maximize resources and simplify expense management.
How to write a nonprofit credit card policy
Every nonprofit needs a credit card policy. This set of rules can prevent credit card misuse and detect illegitimate purchases before they become more common. These are the key components to keep in mind when crafting yours.
1. Define authorized and unauthorized purchases
Your policy should clearly spell out which types of purchases are allowed and which are off-limits. For instance, you shouldn't allow employees to use your business credit card for a cash advance or for personal purchases. The policy should also mention that any refunds get processed as credit instead of cash.
A simple table makes this easy for cardholders to reference:
| Authorized purchases | Unauthorized purchases |
|---|---|
| Office supplies | Personal items |
| Program materials | Cash advances |
| Approved travel expenses | Gift cards |
| Vendor payments | Alcohol (unless board-approved) |
2. Set spending limits and approval thresholds
Employees shouldn't have the ability to splurge with their business credit cards. You can use built-in controls to limit the size of a card's balance at any given point. Set different spending limits for different types of employees. Some workers have more financial responsibilities than others and should have their limits adjusted accordingly.
Your policy should address 3 types of limits:
- Per-transaction limits: Cap individual purchases based on typical spending needs for each role
- Monthly spending caps: Prevent budget overruns by setting a ceiling on total monthly charges per card
- Pre-approval thresholds: Define a dollar amount above which purchases require manager sign-off before the transaction is made
3. Determine who receives a nonprofit credit card
Not everyone in a nonprofit organization needs a business credit card. You should determine which levels of seniority should have access to a credit card. These controls can reduce the likelihood of unauthorized spending.
For employees who only make occasional purchases, consider using a single organizational card with controlled access rather than issuing individual cards.
4. Establish documentation and receipt requirements
Every transaction needs a paper trail. Your policy should require cardholders to submit an itemized receipt and a clear business purpose for each purchase within a set timeframe—30 days is a common standard.
Be explicit about what happens when receipts go missing. Many nonprofits hold the cardholder personally responsible for undocumented charges. This creates a strong incentive to stay on top of submissions.
5. Create an employee cardholder agreement
Before handing out any cards, have each employee sign a cardholder agreement. This document should include:
- An acknowledgment that the employee has read and understands the policy
- A statement of personal liability for any misuse
- A clause requiring the card's return upon termination or role change
Having a signed agreement on file protects your organization and removes any ambiguity about expectations.
6. Outline consequences for policy violations
A nonprofit credit card policy should clearly state what happens when someone breaks the rules. Escalating consequences give you flexibility while serving as a strong deterrent:
- Verbal or written warning for a first offense
- Card revocation for repeated violations
- Repayment requirements for unauthorized purchases
- Termination for severe or repeated misuse
When employees know the stakes up front, they're far more likely to follow the rules.
Best practices for managing nonprofit credit cards
Writing a policy is the first step. Enforcing it consistently is what actually protects your organization. These practices can help you reduce administrative burden and improve control over day-to-day spending.
Automate expense tracking
Manual receipt collection and expense categorization eat up hours every month. Automated tools can capture receipts, categorize expenses, and flag missing documentation without anyone chasing down paper slips. This also cuts down on data entry errors that create headaches at reconciliation time.
Implement real-time spending controls
Modern card platforms let you enforce your policy automatically. You can set card-level controls that block certain merchant categories or decline transactions that exceed pre-set limits right at the point of sale. This means policy violations are stopped before they happen, not caught after the fact.
Integrate with accounting software
Syncing card transactions directly to your accounting system—whether that's QuickBooks, NetSuite, or another platform—eliminates manual reconciliation work. Direct integrations keep your financial records accurate and up to date without the double-entry busywork.
Get the Ramp business credit card for your nonprofit
Ramp helps small businesses and nonprofits streamline their expense management and lets you give business credit cards to your workers. You can give out corporate business credit cards without any additional costs while saving an average of 5% through Ramp's expense-reducing features.
Ramp's business credit cards don't come with any interest or annual fees. Plus, you may be eligible for a higher credit limit than with a traditional credit card. Nonprofit owners also won't have to worry about any foreign transaction fees. You can review auto-generated reports of card transactions and set spending limits for each employee's card.
Sign up for a Ramp business credit card and start earning cashback for your nonprofit.
FAQs
A debit card policy governs cards linked directly to your bank account, while a credit card policy covers cards with a credit line. Both policies should include similar spending rules, documentation requirements, and consequences for misuse.
Business credit cards work well for smaller nonprofits, while corporate cards offer better controls and reporting for larger organizations with multiple cardholders. Your choice depends on the size of your team and how many people need card access.
Nonprofits typically charge program-related expenses, office supplies, travel, and vendor payments. Your policy should define exactly which categories are approved for your organization. Nonprofits must spend more money on program-related activities than administrative costs, and they're also allowed to donate to other charities.
Yes, nonprofits pay standard credit card fees. Some cards charge an annual fee while others have costs like foreign transaction fees and cash advance fees. Some processors offer discounted rates for 501(c)(3) organizations, and choosing a card with no annual fees can help stretch your budget further.
Nonprofit companies have credit scores just like any other business. 501(c)(3) charity organizations can improve their credit scores with on-time credit card payments and responsible usage. Under the FICO Small Business Scoring Service, each company has a business credit score ranging from 0 to 300. You can typically get 7(a) SBA loans with a 140 FICO SBSS score, but some banks may only work with you if you have a 160 score. Intelliscore Plus from Experian ranges from 300 to 850 while Dun & Bradstreet's credit score ranges from 0–100. In any case, a higher score helps you qualify for more loans and better financing terms.
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