Nonprofit Purchasing Policy: 4 Considerations to Make

When you’re working to enhance communities and improve the quality of life for the people you serve, every dollar matters in the nonprofit space. Not only is every dollar important, but it also needs to be tracked diligently. Because nonprofit organizations in the United States spend funds raised publicly, they’re closely monitored and heavily regulated. Being compliant involves adhering to stringent purchasing guidelines, including strict vendor selection and clear-cut payment terms.

This level of accountability should come as no surprise. Nonprofits play a vital role in our communities, and it’s their responsibility to ensure that spending practices support their mission and contribute to the public good. Clear documentation and consistent processes are essential parts of responsible spending and broader nonprofit procurement operations.

A strong purchasing policy supports long-term sustainability and keeps your organization transparent to the public and your stakeholders.

In this blog, we outline the four key considerations you need to make when writing a nonprofit purchasing policy so you can create a clear, concise, and practical rulebook that minimizes the risk of non-compliance and reduces rogue spending.

Nonprofit procurement benchmarks and key challenges

Procurement across the nonprofit sector is under pressure. Budgets are tightening, reporting requirements are growing more complex, and teams are expected to move faster with fewer resources. For organizations managing multiple grants, programs, and funders, these pressures compound quickly — and small process issues can become major gaps in compliance or visibility.

Recent nonprofit procurement benchmark data shows:

• 6.45 hours — median requisition-to-PO cycle time
• 64.68 hours — average AP processing time
• 47.64% — percent of spend through catalogs (meaning nearly half of spend is still manual)
• $12,069 — average spend per vendor, indicating fragmented supplier networks

These numbers highlight why a clear purchasing policy is essential: it creates consistency, speeds up approvals, and prevents waste.

Together, these numbers reveal a system stretched thin. Slow approvals, manual processes, and decentralized purchasing make it harder to control spend — and harder for teams to stay compliant. A clear, well-documented purchasing policy helps establish consistency, reduce delays, and minimize waste.

To understand how your organization compares, our nonprofit procurement benchmark snapshot offers helpful context. Sector-wide issues—such as fragmented purchasing, slow cycle times, and heavy AP workloads—are explored further in our nonprofit procurement insights article.

For non-profits, operational pressure is only half the story. It is important to know that procurement standards themselves shift over time — especially federal purchasing thresholds. Because these limits change through ongoing rulemaking, nonprofits must keep their purchasing policies up to date to avoid compliance gaps.

Uniform Guidance, as outlined by the U.S. Office of Management and Budget (OMB), remains the standard for regulatory compliance in the nonprofit space. Under Uniform Guidance, spend management rules apply to all federal awards and contracts that use government capital to obtain goods and services supporting a nonprofit’s mission.

These regulations evolve year over year, and understanding them is essential for responsible purchasing.

Here are the five basic procurement methods:

Micro-purchase: Purchases that do not exceed the micro-purchase threshold (generally $10,000) and do not require competitive quotes. For construction-related purchases subject to Davis-Bacon, the threshold is $2,000.

Simplified acquisition: Purchases above the micro-purchase threshold but below the Simplified Acquisition Threshold ($250,000), where informal procurement methods may be used. Quotes must be obtained from an adequate number of qualified sources.

Sealed bids: Purchases over $250,000 requiring formal solicitation. A fixed-price contract is awarded to the lowest responsible bidder.

Competitive proposals: Used for purchases exceeding $250,000 when sealed bids aren’t appropriate. Evaluation is based on the most advantageous proposal.

Noncompetitive procurement: Also known as sole-source procurement, allowed only in specific cases (single-source availability, emergencies, agency approval, or inadequate competition).

With these procurement methods in mind, here are four ways to strengthen your nonprofit’s purchasing policy.