Top 4 Reasons Debit Cards Don’t Work for Nonprofits

Nonprofit finances are a balancing act. Managing current cash flow, with expected donations and projected expenses, all while factoring in unexpected costs is a tedious task – especially when your organization is using debit cards.

Just like for-profit businesses, non-profit organizations need to make purchases that advance their impact on the communities and causes they serve. Here at Charity Charge, we’ve heard countless stories first-hand from our customers about the pains of nonprofit debit cards.

We’ve put together the top four reasons debit cards simply do not work for nonprofits.

1. Increased Risk of Money Loss

Just like with personal purchases, using debit cards for daily purchases drastically increases the odds of your funds being stolen. Unlike credit cards, if a debit card is stolen, funds withdrawn or used instantly come out an organization’s bank account.

Once this happens, debit protections are limited and missing money can be difficult to recover.

Using a nonprofit credit card is the best way to protect your bank account and put a buffer between your nonprofit’s hard-earned funds and theft. 

2. Spending Limitations

Nonprofits are always pushing to expand impact and services, which requires funding. However, using debit cards, puts a limit on that expansion.

Most development teams record a large amount of donations received during the Holiday season or month of an organizations biggest gala or fundraising event.

These busier seasons often raise a massive percentage of the yearly budget.

While this is great for bringing in cash flow at the fourth quarter, what about the rest of the year?

If a nonprofit is only using a debit card, this limits them to spending only what they have currently in the bank, which can be especially harmful in certain months like the “summer slump.

A credit card enables you to pace spending based on your nonprofit’s projected annual budget and to use funds when the organization needs it most. 

Reasons Debit Cards Don’t Work for Nonprofits

3. Lack of Benefits

One of the biggest reasons we see nonprofits leave debit cards behind is the lack of rewards and benefits. Many of our customers switched to our credit card as a way to earn 1% cash back towards their organization.

We spoke with Executive Director of Impact Network, Reshma Patel, who said,

“It is such a treat to see funds going to Impact Network! I love that our business card is helping to support our students and giving back to the cause we have invested so much time and energy into.”

During the credit card evaluation process, It is also important to look at the discounts associated. For instance, our discount program includes more than 200 vendors, such as FedEx, Enterprise, and Staples.

At the end of the day, debit cards limit the money your nonprofit could save and revenue it could earn. 

4. Difficult to use company wide

As nonprofit organizations grow, so do the number of company cards needed for individual departments and employees. However, the more debit cards given out, the higher the risk of theft and the harder it is to keep track of spending.

When evaluating credit cards, make sure to look for a card that offers advanced expense management, which includes built-in online expense reporting and employee card limits.

If you’re a nonprofit leader with a growth mindset, credit cards provide a safer, scalable solution that is much easier to track and set parameters on.

We believe that doing good shouldn’t be a financial burden. Learn more about our business credit card for nonprofits today.

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