The church’s credit card bill arrives and you look at it with dread. It has so many charges on it, and you only have five receipts in the folder. You know you’ll have to pester and pursue to get the information you need from the staff—especially Pastor Doe, who never turns in information on time and often “forgets” that he has personal charges on the card as well.
Sound familiar? Some people believe accounting puts too many requirements on ministry, and that can also be the case with corporate credit cards. In most cases, though, these aren’t just random rules designed to make life difficult. Credit cards can be a helpful tool for the church staff, but they must be used properly and substantiation must be provided on time.
Sometimes staff members don’t have enough personal financial credit to use their own credit cards for significant purchases, and they want to use a corporate card. But church leadership, not the staff, should determine whether the church will use corporate credit cards and who will receive one. You also need to establish policies for how individual reporting will be monitored.The executive pastor or business administration team is typically responsible for ensuring that the church is compliant with tax and legal issues.
The required documentation should be very similar to what is expected for personal expense reimbursements. Simply keeping the credit card statement is not enough substantiation. Card users should provide receipts and an explanation of the ministry purpose. If the expense was for a meal, the explanation should include the names of the individuals present.
One concern with corporate credit cards is that the church is required to pay the bill on time, whether it has received all the information it needs from staff members or not. This removes responsibility from the individual and doesn’t provide as much incentive to be compliant. If your church uses corporate credit cards, you will need to consistently enforce your policies for obtaining supporting information. Many churches will even revoke credit cards for individuals who do not comply. This may be the only recourse a church has for staff members who consistently fail to provide the necessary information.
And just as you would have a superior approve an individual’s expense reimbursement, each expense on the credit card statement needs to be reviewed and approved by a supervisor. This protects both the church and the individual. If an employee, such as the senior pastor, does not have an immediate supervisor, someone on the governing board should periodically review this information.
You may run into cases of individuals making a personal purchase on the church credit card. This should be a very rare, unintentional occurrence. People certainly make honest mistakes and may grab the wrong card from their wallet. If it is an ongoing issue, however, you may want to consider removing credit card privileges for that person. Even if the amount is paid back, it adds an extra layer of recordkeeping and the individual benefits from the church’s credit until it is repaid. There is also a risk of the charge being missed and the individual not paying it back. Among other issues, this would create a taxable situation because the employee in essence received compensation.
If your church currently does not use a corporate credit card, consider the following:
- Do we really need one? Why?
- What policies do we need to have in place?
- Who will help enforce the policies so they are taken seriously?
If your church is having difficulties with your corporate credit card, consider these ideas:
- Reinforce the existing policies through email or in a staff meeting.
- Discuss concerns with leadership or the finance committee.
- Consider revoking access for problematic individuals.
Like any tool, a corporate credit card is only useful if it is used properly. Improper use of a church credit card can lead to frustration, inappropriate expenditures, and possibly even finance charges that wouldn’t have otherwise been incurred. With the right considerations and polices in place, maybe you won’t cringe the next time the bill arrives in the church office!