Hospitality and entertainment expenses occur only when non-employees are present and integral to the purpose of the event. Hospitality and entertainment of non-employees includes donor and alumni relations and recruitment of students, faculty or staff, visiting lecturers, representatives of research organizations, visitors from other universities, guests invited to assist in the development of new programs (unpaid consultants), and business and community leaders.
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 (PDF), 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 in conjunction with the unit’s Chief Financial Manager:
- 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; and
- The expenses may not create, maintain, or increase the value of a personal asset, or be personal in nature.
Campuses, colleges, and vice presidential units may interpret and apply this policy more restrictively where budget, reputation, prior patterns of behavior, or other risk factors are a consideration. Campuses, colleges, and vice presidential units are not allowed to establish their own separate policies in lieu of this University-wide policy.
Exceptions should be infrequent and must route through the unit’s Chief Financial Manager and if needed, must be escalated to the University Controller for final approval. If an exception is determined to be unallowable, the expense may not be reimbursed.
Activities or events that are attended by only University faculty and staff, should refer to Administrative Policy: Business Expenses.
External research sponsors may have more or less restrictive rules than the University. Hospitality and entertainment expenses on sponsored funds should follow the most restrictive applicable policy (University policy or sponsor rules). However, if the sponsor has given prior written approval, expenses generally not allowed on non-sponsored funds may be allowed on sponsored funds.
Hospitality and entertainment expenses are typically unallowable on sponsored projects. "Unallowable" expenditures for Sponsored Projects include (applicable account codes in parentheses):
- Advertising to promote University products or services (720701)
- Alcoholic beverages (720702)
- Entertainment (720703)
See also Examples of Unallowable Costs for a complete list of these types of expenditures.
All hospitality and entertainment expenses must be documented to include:
- The purpose of the meeting or event
- Location and date
- Number and type (alumni, donor, etc.) of attendees
- The expected cost of the meal per planned number of attendees
Employees must provide all requested justification and documentation for hospitality and entertainment expenses within 60 days of incurring the expense. Employees must process expenses incurred near the end of the fiscal year in accordance with the year-end accounting calendar or before the end date of the grant, depending on which deadline is sooner to ensure reporting in the correct accounting period.
Campuses, colleges, and vice presidential units may receive requests not meeting the requirements for documenting and requesting reimbursements in a timely manner. Hospitality and entertainment expense reimbursement requests which are not adequately documented in accordance with Administrative Policy: Processing, Documenting, and Approving Financial and Accounting Transactions, or are not submitted within 60 days, should be denied. In rare circumstances, there may be reimbursements which cannot meet the requirements for adequate documentation or submission within 60 days, due to legitimate extenuating circumstances which impaired employee from meeting the requirements. In those situations, after consultation between the employee's unit and the Chief Financial Manager for the campus, college, or vice presidential unit, the reimbursement may be approved, and the rationale for determining that the circumstances warranted approving the request must be documented.
Dollar limits within the Expense Allowability Grid include all associated charges (food, beverages, taxes, tips, etc.), excluding room rental fees. Total expenses must be calculated based on the planned number of attendees and must be well documented in advance, despite actual attendance.
Meal limits (per meal event) for hospitality and entertainment of non-employees must not exceed $100 per attendee. Exceptions must route through the unit’s Chief Financial Manager. Chief Financial Managers may approve exceptions up to 10% over the $100 threshold, all other exceptions must be escalated to the University Controller for final approval.
Meals for individuals invited as visitors to contribute to the intellectual life of the university community are allowable. Normally such visitors will deliver a seminar, colloquium talk, or other lecture (or performance in the case of creative activity) for the benefit of the University faculty, staff and/or students. The number of University faculty, staff and/or students accompanying a visitor for a meal should be no more than four or be commensurate with the purpose of the meal and/or networking opportunity expected from attending.
Budgets for special events that have extraordinary significance and importance to the University’s mission with set up fees and other associated costs may be reviewed and approved by the Chief Financial Manager prior to the event. Any events that are held at an individual’s home must follow the policy and applicable limits.
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 should be moderately priced and paid for with University non-sponsored private funds only, and they must be allowable on the intended source of funds. See Chart of Accounts, Fund
- 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.
Activities or events where alcohol will be served and are attended by only University faculty and staff, must refer to Administrative Policy: Business Expenses.
Tips should not exceed 20%.
- In some cases, tips on meals may exceed 20% when there is an automatic gratuity charged for a large group.
- Tips on delivery of items such as food, flowers, etc. should be reasonable, and in most cases should be less than 20%. Delivery and services charges should be deducted when tips are calculated.
- Tips may be rounded up to the nearest whole dollar.
Hospitality and Entertainment Expenses Incurred While Traveling
This policy also applies to employees incurring hospitality or entertainment expenses while traveling on University business. Due to the higher expense limits for certain hospitality and entertainment 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.
Applicability of this Policy to Students
If meetings or events include both students and employees, and are for the purpose of student recruitment, this policy must be followed. Students are not required to be part of one of the formal groups listed below in order for this policy to apply. See also Special Situations for Intercollegiate Athletics.
Campus Life Programs
Campus Life Program (CLP) groups must follow all University policies. As a part of a University department, CLP’s may occasionally raise funds for charitable organizations or activities and must use the appropriate accounting procedures required by the University or the University of Minnesota Foundation.
Registered Student Organizations
Registered Student Organization (RSO) groups must follow all University policies. As a separate legal entity from the University, these groups may occasionally raise funds for charitable organizations or activities based on the specific legal status of the organization and should follow any registered student group process in doing so on campus. The University of Minnesota Foundation does not accept gifts for RSO’s.
Special Situations for Intercollegiate Athletics (all campuses)
All situations and expenses must follow NCAA Rules.
- Food/meal expenses for student athletes are exempt from this policy.
- Events that include student athletes, student recruits and their parents, and University staff who may be in attendance are considered recruiting events and must follow the limits set in this policy. Occasionally family members of University staff may also be present at these events and with proper justification their expenses would also be allowable.
- Recruiting, student athlete team building, and personal development expenses, other than meals, may be based on industry standards and departmental funding capacity.
- Student athlete only events (the non-food/meal portion) must follow the engagement/recognition section of Administrative Policy: Business Expenses.
Reason for Policy
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 expenses do not personally benefit University employees.