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Hospitality and Other Special Expenses

Responsible University Officer(s):

  • Associate Vice President and Controller

Policy Owner(s):

  • Associate Vice President and Controller

Policy contact(s):

Date Revised:

Feb 14, 2013

Effective Date:

Jun 1, 1995


Employees who incur or approve expenses for hospitality, alcoholic beverages, entertainment, and other special expenses must exercise prudent judgment to ensure that the expenses are for legitimate University business and comply with the Expense Allowability Grid, regardless of funding source.

If a proposed expenditure is not specifically addressed in the Expense Allowability Grid, it may still be allowable. In those cases, the following principles should guide employee decision-making:

  • The expenses must be reasonable, allowable, and allocable under governing laws, regulations, and University policy,
  • The purpose for the expenses must directly support the University’s mission of teaching, research, and outreach;
  • The expenses may not create, maintain, or increase the value of a personal asset, or be personal in nature.

Departments, colleges, system campuses and units may interpret and apply this policy more restrictively where budget, reputation, prior patterns of behavior, or other risk factors are a consideration.  However, system campuses, departments and colleges are not allowed to establish their own separate policies in lieu of this University-wide policy.

Employees must provide all requested justification and documentation for hospitality and special expenses.

Exceptions should be infrequent.  Departments may request an exception from the University Controller in those situations where special circumstances exist.  If an exception is not obtained in advance and the expense is determined to be unallowable, the expense may not be reimbursed, and may be deemed taxable income to the employee, in accordance with guidance published by the Internal Revenue Service regarding “accountable plans”.

Applicability of this Policy to Student Groups

Campus Life Program organizations that occasionally raise funds for charitable organizations or activities may continue to do so without being in violation of this policy, so long as the student organizations use the appropriate accounting procedures required for the University’s financial systems, and obtain any necessary approvals from the appropriate advisors.

Hospitality Expenses Incurred While Traveling

This policy also applies to employees incurring hospitality expenses while traveling on University business. Due to the higher expense limits for certain hospitality expenses, employees may not use this policy to circumvent travel per diem limits. Employees are assumed to be in “travel” status for purposes of reimbursement unless a clear case for hospitality status can be made. Employees cannot be reimbursed for both a hospitality meal and the per diem for the same meal. (See Administrative Policy: Traveling on University Business).

Expenses for Alcoholic Beverages

Expenses for the purchase, use or consumption of alcoholic beverages are permitted under the following conditions:

  • The activity or event for which the expense is incurred must have a legitimate University business purpose (e.g., faculty recruitment or donor relations activities)
  • The alcoholic beverages must be paid for with University non-sponsored private funds only, and they must be allowable on the intended source of funds. See University Fund Types.
  • The expenditure and the circumstances for the consumption of alcoholic beverages must not jeopardize the University’s reputation, or the health and welfare of those involved.

Alcoholic beverage sales and/or service on University owned or operated property by University and non-University entities is covered in Administrative Policy: Alcoholic Beverage Sales and Service and Venue Liquor Licensing.


To comply with federal and state law, to comply with Internal Revenue Service guidance regarding expense reimbursements made pursuant to “accountable plans”, and to satisfy restrictions imposed by funding agencies.  As a public institution, the University must demonstrate appropriate use of funds entrusted to it by various constituencies and assure that special expense do not personally benefit University employees.






Primary Contact(s) Michael Volna 612-625-9529
Allowable Costs University Financial Helpline 612-624-1617  
Taxability of Employee Recognition Awards University Tax Department 612-624-1053
Reporting Taxable Awards Human Resources Helpline (4-UOHR) 612-624-8647 (4-UOHR)
Greater Minnesota: 1-800-756-2363


See Fund Types for funds included in definition. See Hospitality, Alcoholic Beverages, and Other Special Expenses Allowability Grid for Expense Allowability by Expenditure Type.

The amount of expense for goods or services which can be charged to (or allocated to) a particular unit, activity or function because the goods or services provide a commensurate benefit to that unit, activity or function.
An expense is allowable when it is acceptable to charge it to a particular source of funds. Expenses may be deemed allowable by law or regulation; by external parties such as donors or sponsors; or by the University, when the financial or reputational risk associated with a particular expense falls within the University’s tolerance level.
Authorized or Official University Event
Events or activities which have been planned or approved by a University department head, dean, or central official, and which are consistent with or support the University’s mission of teaching, research, and public service.
De minimis Fringe Benefit
For tax purposes, a de minimis fringe benefit qualifying for tax-free treatment is a benefit that is so small as to make accounting for it unreasonable or administratively impracticable. Both the frequency and value of the benefit must be considered; the benefit must be occasional or unusual in frequency and the value must be less than $100.  A qualifying de minimis fringe benefit must be either property or a service and cannot be cash or a cash equivalent. A gift card or gift certificate that is considered to be a cash equivalent item is never excludable from income as a de minimis fringe benefit. See Appendix University Employee Recognition Awards for further guidance.
An activity conducted to generate a positive reputation for the University, convey goodwill to internal or external audiences, celebrate or recognize accomplishments.  The Internal Revenue Service and U.S. Department of the Treasury define certain hospitality expenses as business entertainment.
Non-Current Funds
Those funds used for activities which are not part of the “current operations” of the University. Non-current funds include loan, endowment, plant and agency funds. For purposes of this policy, agency fund expenditures are subject to approval by the constituency the funds are being held on behalf of. See funds included in this fund type at University Fund Types appendix.

Non-Sponsored Funds
Funds available for use on activities that are not externally-sponsored research. For a list of non-sponsored funds numbers, see funds included in this fund type.
Private Funds
Those received from individuals or external entities primarily through gifts. Funds cannot be considered private if they have been received from activities that are part of the University’s primary mission (teaching, research, outreach). Private funds include gifts from University recognized foundations, individuals, business and industry, and unrelated foundations. See funds included in this fund type.
Public Funds
Those received from “public” sources, such as students, governmental entities, or taxpayers, and which are intended to support the primary mission of the University. As such, public funds should be used in a manner which would withstand the test of public scrutiny. Public funds include federal and state appropriations, tuition and fees, income generated from external sales activities, and all sponsored research funds. See funds included in this fund type. 
Special Expenses
Expenses of an unusual or infrequent nature which are not normally associated with the conduct of teaching, research or outreach. Special expenses may be allowable and reimbursed if it can be shown that there is a direct benefit to the University for having incurred the expense, either by supporting its mission or by improving its reputation with the public.

Sponsored Funds
Money received by the University from an external party to fund a sponsored project. Sponsored projects are governed by specific terms and conditions, and are separately budgeted and accounted for in accordance with OMB Uniform Guidance, University policies governing sponsored projects, and/or the terms of the sponsoring entity. Sponsored funds may include money received to fund grants, contracts, and cooperative agreements for research, training, and other public service activities.


Internal Audit
If inappropriate expenditures are suspected or identified while conducting an audit or investigation, Internal Audit will refer the incident(s) to the Office of the Controller for evaluation and a final determination. The Controller may require the authorizing administrative unit to recover the expenditure from the individual involved or to report the amounts to Payroll Services for inclusion in the employee’s taxable income that will be reported to the Internal Revenue Service.
Document expenses via PeopleSoft EFS forms, or using the Forms provided with the policy (or equivalent) when necessary. Correctly code the expenditure(s) so that expenses that are considered "unallowable" from a OMB Uniform Guidance cost perspective are identified. Departments and approvers are responsible for making sure that hospitality, alcoholic beverage, and other special expenses are documented in accordance with appropriate standards. See procedure Documenting Hospitality, Alcoholic Beverage, and Other Special Expenses, and the job aid Transaction Justification and Documentation Standards for all Non-Sponsored and Sponsored Transactions.
University Controller
Provide guidance and assistance to departments in evaluating and determining the allowability of expenses in various situations. Grant exceptions to the policy in situations where one is allowed and requested.
University Chief Financial Officer
Grant exceptions to the policy in situations where the Controller has deferred the exception, or the requesting unit has asked for confirmation of a decision by the Controller.



December 2014 - References to A-21 changed to OMB Uniform Guidance in Definitions and Responsibilities.
February 2013 - Minor Revision, Comprehensive Review: Removes the policy language on the sales and service of alcoholic beverages. These requirements now reside in the new Administrative Policy: Alcoholic Beverage Sales and Service, and Venue Liquor Licensing. Title changed to "Hospitality and Other Special Expenses" to reflect this change.
March 2011 - Comprehensive Review: Expands the policy to cover hospitality expenses incurred while in travel status; selling or serving alcohol on University property; and applicability of the policy to student groups who raise funds for outreach or charity. Clarifies departmental responsibilities, especially as it relates to tax compliance. Combines multiple appendices into one Allowability Matrix. Enhances the definitions and FAQ sections of the policy.
November 2004 - Updated Procedure - Purchasing Alcohol with University Funds. Added a checklist: Acknowledgement of Laws and University Standards Relatedto Serving Alcohol to the Application to Serve Alcoholic Beverages at an On-Campus Event Form. Responsibilities and Special Situations section updated. Processing of these applications is now the responsibility of Risk Management and Insurance rather than the President's Office.
July 2003 - Added Hospitality Expense Supplement, Allowability of Club Memberships, Spouse Expenses and Other Expenses Incurred in Donor Development and Faculty Recruitment Activities. The Expense Allowability Chart was updated to reflect these changes.
September 2002 - Personal memberships in social, non-professional organizations are no longer allowed, regardless of funding source. Any allowable expenditure of flowers, gifts or awards is limited to $75. Clarified definition of memorial gifts. Added more examples of non-allowable expenses.
March 2002 - Application to Serve Alcohol on Campus form was made into a fillable pdf document. Fund numbers updated.
February 2000 - Added Special Situation for Fleet Services charging vehicle fines to departmental accounts. Updated Expense Allowability Chart.
October 1999 -Added FAQ on employee recognition
June 1995
Hospitality and Special Expenses, July 1990, May 1991
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