Our church has an employee who also works for another nonprofit organization. He frequently uses our church credit card to make purchases for this other nonprofit, which later reimburses the church. Is this considered a legal practice?
It is certainly not a good practice to allow an employee to use the church credit card to make purchases for others who use church as their banker. It might violate your credit card agreement (you would have to read the really fine print), but it is probably not illegal. It could be illegal if the church has a sales tax exemption and the other organization does not so that the “church purchase” allows the other organization to avoid paying sales tax on the items. You ought to ask this employee directly why he is doing it and, if you are uncomfortable (as you probably should be), tell him to stop or take away his credit card.
This behavior is not a good practice for any organization. After working as a Mortgage Underwriter, Case Manager for the SBA, and Tax Preparer, I would not allow this behavior to continue. If there was ever an audit of the expenses for the organization, this could cause additional problems. Guidelines for any non-profit are there for sound reasons.