Non-profit organizations play an important role in society. These are charitable companies that are focused on advancing social causes, caring for people who are less fortunate, and other noble causes. By contrast, for-profit companies are businesses that work to make profits. Non profit organizations also need to make purchases in order to get their jobs done. Non profit debit cards and non profit credit cards are a great way to help facilitate this.
As of 2016, there were 1,571,056 non-profit organizations in the U.S. This number was an increase over the 954,476 non-profit organizations that existed in the U.S. in 2013.
There are several reasons why organizations might want to consider non-profit debit cards as a better alternative to non profit credit cards for improved spending controls and reduced risks of fraud.
While non-profit organizations are exempt from taxes, they still operate in a similar manner to other businesses. Non-profit companies have to keep control of their expenses and be able to make purchases when they are needed to keep their organizations running smoothly. Non profit credit cards are credit cards that are designed for non-profit organizations. The organizations can let their employees use the non profit credit cards to make payments or purchases on their behalf.
Non profit credit cards can incur interest charges and are susceptible to thefts and fraud. Employees may make personal purchases on a nonprofit credit card, and hackers may run up the balances if they gain access to the cards. Non profit debit cards may have features that make them a better choice for tax-exempt organizations.
Non profit debit cards are designed with the needs of charitable organizations in mind. These cards are linked to an organization’s existing debit accounts. When employees use the non profit debit cards to make purchases or payments, the costs are subtracted from the organization’s existing account balances.
Since they are not non profit credit cards, purchases made using non profit debit cards do not incur interest. It is also easier to see the spending that is happening at your company since you can check your account and see the transactions as they are made. Some debit cards for non-profits have expansive spending control and expense management features, allowing organizations to track and control their expenses.
Non profit prepaid cards are cards that can be used at businesses that accept debit or credit cards. Some non profit prepaid cards are co-branded to be used at specific retailers while other might be able to be used anywhere.
Companies can purchase a prepaid non-profit card in the amounts that they choose. They can decide how much money will be allocated to the cards. Employees who are given a prepaid card for non-profits will be limited to the amount that is available on the card. A prepaid card for non profits is not directly linked to an account or a credit line, so employees won’t be able to use the cards to gain access to the organization’s money or accounts.
Non-profits have to apply and credit-qualify to get credit cards. If the organizations have not been operating for very long, they might have trouble getting approved for nonprofit business credit cards, however.
Non profit business credit cards may also charge high annual fees, transaction fees, and high rates of interest. Non profit business credit cards may be targeted for internal or external thefts.
A credit card for non profits is linked to an organization’s revolving line of credit, and the amount that can be spent is whatever is available on the credit limit. However, using a business non-profit credit card is a safer alternative to using cash or checks because the cards have more protections.
It is important for non-profit companies to understand the different types of non profit fraud that can happen so that they can take steps to prevent not for profit fraud from occurring. Common types of non profit fraud may include the following:
There are numerous examples of non profit fraud that have been reported in the media. In one case, a woman who worked for Northern Children’s Services in Philadelphia, Pennsylvania embezzled more than $600,000 in funds that were meant to provide needed services to children by creating fraudulent invoices and pocketing the money.
In an example of payroll fraud, the chief operating officer of Somerville Homeless in Massachusetts embezzled $108,000 over one-and-one-half years by brazenly adding additional money to his paychecks.
When non-profit companies are victims of fraud, 25 percent of them never recover and are forced to close down. Smaller non-profits are more susceptible to suffering permanent damage than are larger organizations. Non profit fraud prevention can help to prevent nonprofit fraud. Fraud prevention for non-profits may include strong policies and controls to help to identify and prevent fraud. In the examples given here, the fraud schemes could have been prevented with better controls.
There are several key differences between non profit credit cards vs. non profit debit cards. Non-profit credit cards are linked to revolving lines of credit. Purchases that are made with the cards are added to the existing balances and may incur interest charges.
The advantages of non profit credit cards include the ability to make purchases when they are needed. Credit cards may also help companies when they need additional funds to fill a gap in funding. The disadvantages of non profit credit cards include the following:
There are several advantages of non profit debit cards, including the following:
The disadvantages of non profit debit cards include that they do not provide you with money when your company is short on funds. However, they offer greater transparency into the spending that occurs.
Accounting for non profits involves the processes and programs that your organization has in place to track your expenses, reconcile your accounts, and to make certain that your funds are being spent properly. Non profit accounting practices must include modern strategies to help them to prevent losses and to make certain that they are able to continue operating. Good accounting practices can help to grow your non profit.
In addition to tracking regular business expenses, non profit accounting must also track such things as grant funding and expenses related to the grants that the organization has received. Non-profit accounting must also keep track of such things as Medicaid and Medicare billing to ensure that fraud does not occur. Accounting for non-profits is vital for the health of a charitable organization. Good accounting practices can lend greater transparency into the spending that happens in an organization.
Non profit management includes the policies and payment systems that your organization uses. Some companies rely on reimbursement systems in which the companies rely on employees to make purchases on their behalf. The employees then submit expense reports to request reimbursement.
To grow your non profit and to exercise better non profit management, it is important for you to track expenses carefully. You can grow your non-profit and improve your non profit management by getting rid of reimbursements.
Employees may submit personal expenses and claim that they are business-related expenses. This can lead to losses from fraud. By switching your payment systems away from reimbursements and choosing debit cards instead, you can grow your non profit, improve your non profit management, and exercise a greater degree of internal control.
Church credit cards are a type of credit card for churches. Like credit cards for non-profits, they can be difficult to get because there isn’t an owner to guarantee the card balances. Church credit cards also add to the debt of churches. Since churches try to help their parishioners to live free from debt, using church credit cards may go against the principles of churches.
A good alternative to a credit card is a church debit card. Unlike a credit card for churches, a church debit card does not add to a church’s debt. The church instead uses its own money to make payments and purchases. Church leaders can learn about good stewardship with church debit and credit cards by attending a church conference and learning about ways to prevent fraud.
It is difficult for many parishioners to believe that church fraud is a real problem. People tend to trust others with whom they attend church. However, church fraud is a huge problem.
According to Brotherhood Mutual, ecclesiastical fraud is growing at an annual rate of 6 percent, and fraud in churches is expected to reach $80 billion by 2025. Churches need to be aware of the problem of church fraud and implement tight expense controls to prevent it from happening.
Religious organization credit cards are credit cards that are issued to religious organizations. Religious organziation credit cards can be used to make purchases from merchants and suppliers that accept credit cards. However, religious organization credit cards add to the organization’s debt and may incur interest and other fees.
When purchases are made with credit cards for religious organizations or mosque credit cards, the costs are added to the existing debt balances on the cards. If they are not paid in full before the end of the month, they will incur interest charges.
Religious organization debit cards are linked to the organization’s own accounts. When purchases are made with debit cards for religious organizations, the money is subtracted from the account balances.
There are several best practices for good church expense management. Expense management for churches should begin with a clearly defined expense policy and training. Churches should also not allow one employee to have total control over any aspect of the church expense management. They should have a minimum of two people responsible for checking each other’s work when they are handling donations, paying bills, or reconciling accounts.
Getting rid of petty cash funds, reimbursements, and check writing can help to manage expenses. When churches switch to debit cards for their payment systems, they can prevent their employees from accessing their cash and exercise tight controls over all of the spending that occurs.
Bento for Business offers Visa debit cards that have extensive controls and non profit expense management features. Your organization is able to control when, where, and how the debit cards can be used. The non profit expense debit cards are better than credit cards for non profit expense management because they lend greater transparency and allow you to exercise more control.
Credit cards for non profit expense management cannot be turned off remotely. By contrast, managing non profit expenses with the non profit expense debit cards from Bento is simpler. Managing non profit expenses with the cards includes the ability to turn cards on or off whenever you want, and you can set limits by the day or week. Unlike non profit credit cards, the non profit debit cards also allow you to set restrictions so that they can only be used to make purchases from your preferred vendors. These features make the cards much better than non profit expense management credit cards.
Bento for Business was created by finance industry professionals who have a keen understanding of the issues that are faced by non-profit organizations and for-profit businesses. The company has focused on helping businesses to gain better control of their spending, to prevent fraud, and to improve expense management with its Bento for Business Visa debit cards instead of offering non profit expense management credit cards.
Bento has amassed thousands of satisfied business customers throughout the U.S. and has received many favorable ratings. The company has earned a five out of five rating on Capterra and has been profiled by such publications as the Wall Street Journal and Forbes.
Bento has affordable plans to fit businesses of all sizes, and it offers a free 60-day trial so that your organization can determine if the cards are right for you. To learn more about how Bento might benefit your organization, call us today at 866.290.4134.
Applying does NOT affect your credit score!*This is not a credit card.
Banking services provided by The Bancorp Bank, Member FDIC. This Card is issued by The Bancorp Bank pursuant to a license from Visa U.S.A Inc. and may be used everywhere Visa® debit cards are accepted.