Private foundations are permitted to pay for or reimburse ordinary and necessary expenses incurred in carrying out their activities, including the costs of travel by trustees. Your board can state its reimbursement policy clearly and in writing, and include the following:
- Require that travel on behalf of the foundation be undertaken in a cost-effective manner. The law requires that these expenses not be "lavish or extravagant;"
- State that the policy should be adhered to by anyone traveling or incurring expenses on behalf of the organization (for example, trustees, officers, employees, consultants, volunteers, etc.);
- State that expenses are reimbursable only if they are directly related to the foundation's work—and not personal activities;
- List what is—and what is not—reimbursable. For example, a foundation might pay for transportation, lodging and meals, but not pay for first-class travel;
- Describe the documentation required to receive reimbursement (i.e. itemized phone bills for long-distance board calls), and who will approve requests for reimbursement;
- State that the foundation will not pay for nor reimburse travel or out-of-pocket expenses for spouses, dependents or others, unless they, too, are conducting business for the foundation.
Using Per Diem Allowances: As an alternative to reimbursing for travel expenses, the IRS permits the use of an optional method—"per diem allowances" for meals and lodging expenses, in lieu of actual expenses. (See the U.S. GSA per diem rates
). The use of per diem allowances is intended to simplify the burden of keeping detailed records.