How nonprofit organizations can benefit from business rewards credit cards

The right small-business card can help nonprofits save on many expenses, from fundraising events to travel and office supplies

Gina Ragusa
Personal Finance Writer
whose work has appeared in TheStreet, Mic and elsewhere

Best credit card for nonprofit organizations

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From purchasing supplies for a fundraising event to sending staff to provide aid, nonprofit organizations field many of the same expenses as any other business, just typically on a far tighter budget.

Because nonprofit organizations raise funds and receive grants and donations, most don’t have the financial resources as a company that has stockholders and makes money.

That’s when having a business rewards credit card can come in handy.

  • Nonprofit cardholders can use a rewards card to get discounted or free flights and hotel stays.
  • They can also earn cash back or points for spending in certain categories.

The right rewards business credit card can help a nonprofit do more good – but organizations have to be smart about which card to choose and how to best use it.

Here’s how nonprofit organizations can pick a business credit card wisely.

See related: 8 expenses you should never charge on a business credit card

1. Look for no fee, 0-percent APR rewards cards

For Practical Parenting for Teens, a startup nonprofit based out of Boca Raton, Florida, interest rates and fees took top priority when it came to deciding on a credit card.

“Credit card rewards can certainly help to pay for you to attend a conference, for instance, but if you are just starting out, finding a card with no fees and a 0-percent interest rate was more important to us,” said Cindy Osthuizien, co-founder and chief financial officer for Practical Parenting for Teens.

“Before we decided on a credit card, we checked out several options and went with The Blue BusinessSM Plus Card from American Express because it came with a 0-percent interest rate on any transfers or purchases [for the first 15 months],” Osthuizien said. The Blue Business Plus Card also comes with a variable APR of 13.24 percent to 21.24 percent.

Personal finance blogger Kyle Kroeger at Millionaire Mob agrees that a 0 percent APR can make the most sense for nonprofits, especially startups. “The money for the nonprofit may not come into play later, so a 0 percent rate can help them ride the wave during those initial months,” he said.

Nonprofit organizations should especially take interest rates into serious consideration as business credit card APRs can increase dramatically, unlike with consumer plastic, which is protected by the Credit CARD Act of 2009. A hefty rate and a large balance can spell trouble for a nonprofit on a shoestring budget.

See related: 8 steps to reducing credit card debt

Although a fee-free card with no APR is likely to be a top priority for organizations like Practical Parenting for Teens, it is possible to also get some rewards. For instance, the Blue Business Plus Card from American Express offers 2 points on every purchase, up to $50,000 a year, which can be recycled back into the business for travel, gift cards and more.

"Look for the rewards that serve your cause the best, and make sure it's the cause you're serving and not a board member's interests."

2. Identify where you spend the most money

Nonprofit organizations should also determine where most of the money is spent.

“Look for the rewards that serve your cause the best,” Randy Hawthorne, publisher and executive director for Nonprofit Hub, said. “And make sure it's the cause you're serving and not a board member's interests.”

For instance, if your nonprofit is based out of an office, a card like the SimplyCash® Plus Business Card from American Express is a big winner, Kroeger said.

This card offers:

  • No annual fee.
  • 5 percent cash back on the first $50,000 spent on office supplies and other business-related expenses like wireless phone services.
  • 3 percent back on the first $50,000 in a category of your choice from a list of eight, including U.S. gas stations, U.S. restaurants and airfare.
  • 0 percent introductory rate for the first 15 months with a variable APR of 14.24 percent to 21.24 percent.

3. Look for cards that fit your organization's spending patterns 

However, not all organizations spend money in a vacuum.

“Usage may vary by department in larger organizations,” said certified financial planner David Rae. “The fundraisers may spend lots of time wining and dining donors, leading to most spending being at restaurants. Administrative roles may spend more on things like office supplies and utilities.”

For organizers who entertain donors, the Bank of America Business Advantage Cash Rewards Mastercard may be something to consider.

This card offers:

  • No annual fee.
  • 0 percent introductory rate on purchases for the first nine billing cycles with a variable APR of 13.24 percent to 23.24 percent.
  • 2 percent cash back at restaurants, plus 3 percent cash back on gas and office supplies up to $250,000 a year.
  • $200 statement credit when after spending a minimum of $500 during the first 60 days.

For organizations that spend a lot of time in the field, the Chase Ink Business Preferred may be a good fit.

“I like it because it includes cellphone protection of up to $600,” Kroeger said. “So, if you have several employees on the card and their phone is lost or damaged, you are covered. The card has a $95 annual fee, but that [cellphone] coverage alone justifies the fee.”

This card offers:

  • 3 points per dollar spent on the first $150,000 on travel and other business expenses, such as shipping, internet, cable, phone services and advertising purchases each account anniversary year.
  • 80,000-point sign-up bonus after spending $5,000 during the first three months, which shakes out to about $1,000 that can be redeemed through Chase Ultimate Rewards travel portal.
Tip

Tip: If your nonprofit organization spends part of its budget entertaining donors, you can take advantage of your card's concierge service, cash back apps and loyalty programs to stack rewards. Read "Entertaining clients on a business credit card: Tips to do it right" to learn more.

4. Flat-rate cash back cards for nonprofits

If your organization doesn't spend on one specific category more than others, you might want to consider a flat-rate credit card.

Rae recommends the Chase Ink Business Unlimited because it has no annual fee and comes with a generous sign-up bonus.

  • Cardholders can earn unlimited 1.5 percent cash back on all purchases.
  • The card also comes with a $500 cash back bonus when $3,000 is spent during the first three months.

“It may not seem like much, but an extra half percent on all spending can really add up,” he said.

Another option is the Capital One Spark Cash for Business.

  • No annual fee for the first year, $95 thereafter. 
  • Unlimited 2 percent cash back on all purchases.
  • $500 sign-up bonus after spending $5,000 during the first three months of opening the account.

5. Have a business card money management plan in place

Regardless of card choice, nonprofits should also make sure they can pay credit card bills in full each month, especially for cards with a high interest rate.

Nonprofit managers should also pay close attention to who is using the card. Most business credit cards provide options to control amounts spent on the card by employees and allows the money manager to track spending.

To minimize confusion, “have a written expense policy approved by the board,” Kroeger said. And while some organizations reimburse employees for using their personal credit card for expenses, encourage employees to use the organization’s business rewards credit card for reward building instead.

For startup nonprofits, founders should also realize their personal credit is likely to be on the hook when they sign up for a business credit card, since the organization won’t have a credit history.

But whenever possible, keep personal credit history separate from business and stay on top of the nonprofit’s business credit score, which will determine future credit worthiness.

See related: 5 things you should know about business credit scores

Tip

Tip: If you or somebody in your organization still uses their personal card for work expenses, there are steps you can take to do it smartly. Avoiding using a debit card, keeping records of every expense and getting reimbursed as quickly as possible are just three of eight tips for using a personal credit card for business expenses.

6. Make sure the rewards are invested back in the organization

Although nonprofits can consider just about any business credit card, Kroeger offers this advice:

“Organizations that open a credit card with lavish rewards, may be scrutinized,” he said. “You aren’t going to need a card that offers airport lounge benefits, for instance. And cash back cards may come under scrutiny, too, so the organization will have to make sure the cash is being put back into the organization and not for personal benefit.”

Embezzlement is a risk in the nonprofit sector and credit cards can be the place for unscrupulous employees to do just that,” Hawthorne said. “As board members, make sure you have the correct internal controls in place to keep an eye on this behavior.”


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Updated: 12-15-2018