It isn’t personal. It's business.
![It isn’t personal. It's business.](https://christiesaas.com/blogs/image/personal-or-business.jpg)
When a non-profit is just getting started, or perhaps, when a non-profit is a bit smaller in operations, it might not have all the tools a more established organization has put into place. From computers and printers to credit cards and accounts, it can be tricky to know whether the organization should own everything or expect volunteers and employees to fill in the gaps.
When a non-profit is new, office operations are complicated.
I want to share a cautionary story that I recently learned. A smaller non-profit contracted services from a part-time executive director. They provided the computer and expected all software to be purchased in the organization’s name. However, they didn’t have a business credit card and expected the executive director to purchase the software using her own credit card, providing reimbursement as needed. The practice worked well until the executive director retired and the new employee didn’t update the payment method. Six months went by, and as multiple software renewals came up, they were automatically charged to the previous ED’s credit card.
Now the former executive director and the non-profit are in a battle. The former ED demands reimbursement for the charges and wants the billing information updated. The organization’s new ED, with very limited computer knowledge, doesn’t know how to update the payment method for all the accounts and in her panic, does nothing. Nothing is happening and each side is blaming the other for not handling the situation correctly. Meanwhile, charges continue to accumulate on the former ED’s credit card.
Perhaps you had the same thought I did when I learned of this situation. Simply cancel the credit card and problem solved. The former executive director did exactly that, she immediately cancelled her card, and was shocked to learn that if the charges were set-up to automatically renew each year, the expense would continue to be charged to her credit card, even if the card had been cancelled. Even more frustrating, those renewal charges would continue year after year until the date the card expires – even if the card had been cancelled.
Is it fraud?
I’m no expert on credit cards. Perhaps there are credit cards that work differently. Cards that truly do stop automatic payments if the card is cancelled. Perhaps there is something more this credit card company could be doing. Can the former ED claim that the charges are fraud? After all, she did set them up herself and agreed to the annual renewal.
When a non-profit doesn’t have a corporate credit card, and let’s be honest, most do not, who pays for the items that renew automatically? Perhaps the solution might be found in business accounts vs. personal accounts.
If the organization doesn’t have a credit card, can they expect purchases to be made in their name? In this situation, if the former executive director had purchased personal accounts, she could have simply closed the accounts and the new employee would have purchased her own personal accounts. There might have been some minor annoyances in the switch-over, but zero risk of unwanted charges being made to the former ED.
If the organization insists the software purchases are made in the business name, can they expect an employee to use a personal credit card to pay for those charges? In this scenario, if the former executive director refused to use her own credit card, and instead insisted the organization use a business card, the renewals would have continued well after her retirement without any impact personally.
Protect yourself.
I don’t have a solution to share this week. In fact, I am deeply grateful that all the automatic renewals for my own non-profit are set-up under a business name and business credit card. I can’t imagine what this retired executive director must be experiencing from an organization she helped to build for over a decade. It must be a very sad experience and I suspect there will be expensive lawyers in her future.
What can be done if you find yourself in this sort of situation? It doesn’t matter how wonderful your non-profit employer is. It doesn’t matter how strong the relationship is between the board and the executive director. It doesn’t matter if the ED is years and years away from retirement. In the end, an executive director needs to protect herself. It might be a legal agreement. It might be all accounts under her personal name. It might be the organization does the work and gets a corporate credit card. After all, it isn’t personal, this is business.
Your turn.
Your turn. What would you do in this situation? How are the automatic expenses handled at your organization? Are you protected? I want to know! Please use the form on the side of the page to let me know, ..or send me an email, ..or message me on socials.
-Christie
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Hi, I'm Christie. I help executive directors develop the systems and processes needed to run a non-profit.
I learned early in my career, there is no non-profit school. Browsing the internet for resources from big-city experts doesn’t provide practical solutions to balance the budget, write a work plan, or conduct an employee evaluation. Leadership development tips don’t really resonate when you are also taking out the recycling and cleaning the washroom.
I created ChristieSaas.com so non-profit leaders never need to wonder how to do the job – no matter how big or small that job is.
I have been the executive director of small-team, small-budget, non-profits for 20+ years. My experience isn’t theory. It is the real, operational, and practical solutions I use every day.
I love my work and I want to help you love yours too.
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