Authorized Check-Signers
Chapter 4 discussed the need to maintain a clear separation of responsibilities among the board officers. Similarly, maintaining a basic system of checks and balances within a small nonprofit is easily handled by determining who will be authorized to conduct bank business on behalf of the organization.
Although there are no hard rules in this area, common practice suggests it is best to limit the check-signers to the board president, the board treasurer, and one other person. That individual may be a trusted volunteer or the lead person required to draw funds in the course of a major project.
The other check-signer can rotate as necessary, and there may be extended periods when no one has that position. When the organization gets large enough to have an operations manager or director, that person will customarily become a check-signer simply to facilitate his responsibilities.
Presigned ChecksNo one will officially recommend keeping a small number of presigned checks, but it is a common practice, especially in small organizations run by volunteers. The purpose, as the term suggests, is to have a few checks that already have one signature and only need the second signature to make the check legal.
Your home bank, the actual bank building where you opened the account, maintains a file of signature cards. These cards contain all the signatures for every account opened at that bank. Due to recent changes in overall security, a new person must accompany the person already authorized to complete the process. Faxed or e-mailed signatures will not suffice.
If your account only requires one signature, then you are able to use a check immediately. It just isn't possible to predict when an emergency will arise that requires immediate access to the checking account. If one signer is out of town or otherwise unavailable, having that check kept in a safe location known to very few people will make all the difference.
Check LimitsOn a similar track, the bank or credit union may be able to establish a maximum amount any one check can draw. The bank can print this number on every check or attach a notice to your account.
ATM CardsMost banks that offer business accounts will also offer an ATM card to the business. Use these cards as you use your personal debit cards.
As with check-signing, your group must decide who will have the access code and use the ATM card. There are generally built-in limits on withdrawals to lessen the chance of mischief, but be sure to verify this with your bank.
As a group, decide if you are comfortable having only one signature on every check or if you will require two. This is not to question any person's integrity; it's about what is best for the organization as a whole. An alternative is to require one signature for amounts up to a certain level and two signatures above that level. Banks will always work with you on these details if you ask.
