HOSPITALITY EXPENSE POLICY SUPPLEMENT

ALLOWABILITY OF CLUB MEMBERSHIPS, SPOUSE EXPENSES AND OTHER EXPENSES INCURRED IN DONOR DEVELOPMENT AND FACULTY RECRUITMENT ACTIVITIES

Campus Club Memberships

EXPENSE TYPE	EXPENSES INCURRED IN RELATION TO:	ALLOWABLE EXPENSE?	CONDITIONS FOR ALLOWABILITY	ALLOWABLE SOURCE OF FUNDS
Departmental Membership Expenses Annual dues (exception to general rule) Incremental usage expenses (meals, room rentals, etc)	Development / Donor relations activities Faculty/Staff recruitment & retention All other university non-sponsored activities	YES	Must be used ONLY for bona fide, mission-related University business – no personal use may be charged to U of M.	Nonsponsored Public Funds Nonsponsored Private Funds (Restricted non-sponsored gifts)
Personal Memberships – Annual dues / Membership fee	Any function or activity	NO for any function or activity	N/A	N/A
Personal Memberships – Incremental usage expenses -meals, room rentals, etc.	Development / Donor relations activities Faculty/Staff recruitment & retention All other university non-sponsored activities	YES, if expense is for a bona fide business purpose	Must be supported by adequate documentation that substantiates the business purpose of the expense. (See Footnote A)	Nonsponsored Public Funds Nonsponsored Private Funds (Restricted non-sponsored gifts )

Other Social / Athletic Clubs

Employee Spouse, Partner, or Guest Expenses

Other Entertainment & Hospitality Expenses

EXPENSE TYPE	EXPENSES INCURRED IN RELATION TO:	ALLOWABLE EXPENSE?	CONDITIONS FOR ALLOWABILITY	ALLOWABLE SOURCE OF FUNDS
Green fees and related golf outing expenses	Development / Donor relations activities	YES, if expense is for a bona fide business purpose NO if for personal use.	Reasonable, prudent, occasional, and moderate expenses (See Footnote C). Must be supported by adequate documentation that substantiates the business purpose of the expense(See Footnote A).	Nonsponsored Private Funds (Restricted non-sponsored gifts)
Valet parking	Development / Donor relations activities	YES, if expense is in connection with a bona fide business purpose NO if for personal use.	Reasonable, prudent and moderate expenses (See Footnote C). Must be supported by adequate documentation that substantiates the business purpose of the expense (See Footnote A).	Nonsponsored Private Funds (Restricted non-sponsored gifts)

Footnotes

1. Documentation that is required for Internal Revenue Service allowability of the expense includes:
   
   1. Amount of expense
   2. Location and date of expense
   3. Number of attendees and their business relationship to the University or the person requesting authorization of the expense (alumni, donor, occupation or titles, etc).
   4. For entertainment expenses, the nature of the business discussion or activity must be documented, and whether the entertainment was directly before or after a business discussion.
2. Some contractual exceptions may currently exist for a limited number of employees. In these instances, the University Tax Director and the Office of the General Counsel will meet with the affected employees to obtain tax and policy conformity.
3. $45 to $75 per person should be used as a guideline for defining reasonable or moderate expenditures in the footnoted situations, with a maximum upper limit of $75 per person. See below for instructions on how to obtain approved exceptions to the $75 upper limit. Also note that the University defines “de minimus” for Internal Revenue Service tax compliance as the value of noncash benefits provided to or on behalf of employees that do not exceed $75. Payments to employees exceeding $75 may, in certain circumstances, be considered taxable income to the receiving employee.
4. This policy revision applies to employee reimbursements, purchasing card expenditures, vendor payments, and any other form used to obligate University assets in relation to the activities and expenses covered by the supplement.

Procedures for Obtaining Exceptions

1. Exceptions to the allowability or reimbursement of any expenses outlined within this supplement to the Hospitality policy should be sent to the University Controller. Exceptions will be approved or denied by the University’s Chief Financial Officer and the Chief of Staff to the President.
   
2. Exceptions to the $75 per person upper limit may be approved by the “next level” up of approval authority (for example, a dean must approve an exception for expense approval that is requested by a department head).