In this blog, we explore how you can create an effective purchasing policy for your church or charity, including its communication and implementation.
There are practical questions:
- How do you decide whether expenditure is reasonable?
- What do you do if someone loses a receipt?
- Should purchases require pre-approval?
- Is additional approval required for larger purchases?
- How do you overcome issues associated with credit and debit cards?
You may also have strategic questions:
- How can we reduce unnecessary costs?
- Are we following regulatory compliance?
- Which volunteer expenses should we cover?
- What guidance should we give around ethical procurement?
Making time to write and implement your church or charity’s purchasing policy can help bring clarity on these questions.
In this article:
Why have a purchasing policy?
The aim of having a purchasing policy is to bring clarity, consistency, integrity and transparency to the process of making purchases and claiming expenses:
- It will provide staff and volunteers with helpful expectations.
- It will help ensure that your church’s or charity’s money is used wisely.
- It will provide accountability for staff and volunteers.
Having an effective purchasing policy is an important step in having good financial governance. It provides clear guidance about what staff and volunteers can spend your organisation’s money on. It can also help overcome common issues like people not recording purchases in a timely way and lost receipts.
How churches and charities manage money is of great importance. Managing money well demands a trustworthy team, good processes, and transparent administration.
What policies should my church or charity have?
Purchasing policy
All churches and charities should have a purchasing policy. If you don’t already have a policy in place or you are looking for ideas, here is an example purchasing policy that you can download for free and adapt for your organisation:
Purchasing Policy – FREE DOWNLOAD
Card holder policy
If your organisation has credit or debit cards, then a cardholder policy is also a must. Credit cards and debit cards that are used well provide an efficient way for churches and charities to make purchases. And they avoid staff being out of pocket. However, if you do not manage them properly they can cause issues such as purchases not having receipts, cards being used for personal purchases, and staff overspending budgets.
If you don’t already have a policy in place, here is an example card holder policy that you can download for free and adapt for your organisation:
Card Holder Policy – FREE DOWNLOAD
Staff and volunteer expenses policy
You also need and expenses policy for staff and volunteers that claim expenses such as resources, travel, accommodation or meals. This will provide clarity as to what expenditure amounts the organisation considers reasonable to cover.
We haven’t provided an example policy for staff and volunteer expenses, as different organisations can have very different expenses policies. We would however recommend that when writing an expenses policy, you check the HMRC expense limits. Be aware that expenses paid outside of the HMRC limits are classed as an ’employee benefit’ and must be reported to HMRC.
For example, the current maximum mileage rate set by HMRC is 45p per mile. Therefore, if your expenses policy states that employees can claim 50p per mile (e.g. 45p per mile + additional passenger subsidy of 5p per mile), then you need to declare this to HMRC in your payroll submissions. The money paid will be classed as taxable income for the employee (rather than as non-taxable, as most expenses typically would be).
Top tips for creating a useful policy
1. Keep it simple
A good purchasing policy should typically be 1 to 2 pages in length. If it’s any longer than this, staff and volunteers are unlikely to read it. And they almost certainly won’t remember it, and therefore won’t follow it!
When writing your purchasing policy, start by asking yourself what the 4 or 5 key points are that really matter. What will make the most difference if people were to follow this policy?
In our example purchasing policy, we’ve kept things simple. It’s one page with 4 clear sections so that it’s easy for all staff and volunteers to read and follow.
2. Make it specific
Try to avoid ambiguity by being as specific and as clear as possible when writing your purchasing policy. At the same time, take care to ensure that your policy is workable. You don’t want to end up adding additional tasks for staff and volunteers.
In our example purchasing policy, you can see how you can adapt the approval process for smaller and larger purchases. The process for larger purchases requires additional detail. The approval process for smaller purchases is much simpler.
Your policies need to enable you to provide clarity and guidelines that are helpful, but at the same time workable.
3. Consider ethical procurement
Your policy should support the overall values of your organisation, which includes ethical considerations. The policy you write can help your staff and volunteers make purchases and choices that line up with the wider goals of your organisation.
Some areas where you may wish to give direction or limits in your policy include:
- honest and transparent trading – including tax payments
- fair labour practices – which protect workers’ rights
- environmental sustainability – influencing transport choices, the material of products you buy and the environmental impact and record of any supplier
For example, organisations may choose to avoid purchasing from companies like Amazon, as Ethical Consumer estimates that Amazon’s ‘aggressive’ corporation tax avoidance cost the UK public purse approximately £575 million in 2024.
Implementing your policy
You will get the most benefit from your policy by getting staff and volunteers to read and agree to the purchasing policy you create.
We’d recommend you ensure all staff and volunteers who make purchases on behalf of your church or charity (whether expense claims, card purchases, or contract suppliers charged through invoices) sign a copy of your purchasing policy before they can submit purchases.
This provides clarity and removes the possibility of ambiguity and miscommunication. It also provides a helpful reference point if a person doesn’t follow the policy they have agreed to.
ExpensePlus features that support transparency
ExpensePlus can help you implement your purchasing policy and process expenses and payments quickly and with transparency. The following features can help organisations:
- entereing purchases – each user can enter their own expenses quickly and easily
- receipt check – upload receipts for each purchase
- receipt check – ExpensePlus tracks the number of lost receipts in the past 3 months per user
- approvals – budget holders view and approve each purchase
- approvals – can be customised so that larger purchases require secondary approval
- business card purchases – require retrospective receipt check and approval
- financial reports – enable finance staff to keep a good overview including mileage
- supplier breakdown – use search purchases to analyse which suppliers are used and by whom
ExpensePlus is a cloud-based fund accounting software package designed for churches and charities. ExpensePlus makes managing fund accounts simple and straightforward. It’s used by hundreds of charities and churches across the UK and is rated 4.8 stars (out of 5) on Google with over 900 user reviews.
