Having good clear, policies and procedures in place is critical for any organization and non-profits are no exception. These policies provide clarity for staff, fiscal management guidance and protection, and assurance to grantors and donors that your organization makes every attempt to be good stewards of funds.
There are a number of policies needed for comprehensive and strong financial management, but we will start with Expense Reimbursement. Whether your employees are traveling or purchasing items for your fundraiser, having a policy in place will provide guidance to determine if the expenses will be reimbursed by the company.
Though your policy may vary by your type of organization, there are some “musts” that need to be in every policy. Your policy should:
- Be well-communicated and accessible to all employees.
- Be followed and enforced.
- Require receipts.
- Identify staff to approve expense reports prior to reimbursement.
- Require that requests for reimbursement be submitted within a reasonable period of time.
- Necessitate documentation that shows the purpose of the expense.
- Align with IRS rules for an accountable plan.
- Employees are typically reimbursed when they pay or incur expenses on behalf of their employer. But, unless those reimbursements are made in compliance with federal regulations, they are treated as wages to the employee. The consequences: the employer may owe payroll taxes on amounts reimbursed; the employee may be required to treat the funds as taxable income.
Samples and other helpful sites:
- Society for Human Resource Management – Expense Reimbursement: Employee Business Expense Reports Policy
- Compass Point’s Guide to Fiscal Policies and Procedures (see page 12)
- Sample Travel Reimbursement Policy via the National Council of Nonprofits