Odds-n-Ends . Volume 08 | Issue 04

6 Dangers of Church Credit Cards

Written by Keith Hamilton
www.lifeway.com

The phone call came late one evening. It was not the time but the details of the call that bothered Steve Jones. Steve was the chairman of his church’s budget and finance committee. The call was from the church treasurer. The treasurer had some bad news. Recently, the pastor of this small country church had resigned to take another church. However, before the pastor’s departure, he had made some questionable credit card charges on the church’s credit card. Steve was heart-broken over the allegations. He loved his former pastor and he could not understand how something like this could have happen.

It is difficult for the church to operate without its own church credit card. Many churches pay for business expenses by a church credit card. Likewise, if handled properly, the church credit card raises less of a concern with the IRS in handling church-ministry expenses. However, many churches do not realize the dangers of church credit cards. The following church credit card perils should alert churches to potential risk of church credit cards. Once a church realizes the potential risk, then the church can respond by taking the appropriate steps to avoid these common dangers.

1. Credit card charge receipts are not given to the church.
The credit card statement will not count as receipt for IRS record-keeping requirements. If the person making the charge does not provide a receipt, then the treasurer should report the credit card charge as taxable income to that person. The receipt should be provided within 60 days of the credit card charge for church business expenditures. A short note taped to the church credit card could remind the user the importance of keeping receipts. The note could be as simple as, “Receipts are required for all credit card charges.” The note could even be more direct, “If receipts are not saved, then the charge will become taxable income to the user.”

2. Personal charges are made accidentally or intentionally on the church credit card.
A personal credit card charge on the church credit card creates a serious tax problem with the IRS. In extreme cases, personal purchases on the church credit card could involve not only civil penalties, but criminal charges being filed against the person. If personal charges are made, the church should be immediately reimbursed for the amount charged or the credit card charge will be deducted from the next employee’s paycheck. Personal charges should never be made on the church credit card.

3. The church credit card is used for the convenience of church members or employees.
The church credit card should be used for items purchased in the normal course of daily business operations. Charges could include items like office supplies, special on-line orders, fuel charges on church-owned vehicles, or large ticket items. The church credit card should be used for the convenience of the church, not the church members or employees. Expenses associated with an employee accountable reimbursement plan should be reimbursed by a monthly reimbursement check. Likewise, church members should be reimbursed by a check for out-of-pocket ministry expenses.

4. The church has not developed church credit card expenditure policies.
Clear policies for church credit card expenditures should be outlined to avoid any misunderstanding or misuse of the church credit cards. Each person authorized to use the church credit card should sign a statement acknowledging his agreement to adhere to the terms of the church credit card policy.

5. Credit card purchases bypass the church’s purchase order system.
Sometimes, it is more convenient to charge a purchase on the church credit card than to wait for a church check to be written. This practice is okay unless the church’s purchase order system is bypassed by the credit card purchase. Churches need to be sure even credit card purchases are subject to the church’s purchase order approval process.

6. The church credit card is not handled as securely as a personal credit card.
The same preventative and protective measures should be followed for the church credit card as a personal credit card. If fraud occurred, then the church credit card company should be notified immediately after discovering the problem.

Church credit cards are a ministry tool in the 21st century. Like any tool, they should be used wisely and carefully. Churches not only have a legal obligation to make sure the credit cards are handled properly and ethically, but morally the church must do everything possible so the cause of Christ is not harmed by church credit card abuse.


About Dr. Hamilton
Keith Hamilton, D.Ed.Min, CFP, CRPC is with the Georgia Baptist Convention. He has written several publications on establishing church designated funds, managing your household finances, and protecting your church and ministry from identity theft.