To ensure your foundation’s travel expenses comply with IRS regulations, Exponent Philanthropy recommends adopting a clear travel and expense reimbursement policy that:
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Encourages cost-effective travel choices.
The IRS requires that foundation travel expenses not be “lavish or extravagant.” Trustees and staff should opt for reasonable transportation and lodging. -
Defines eligible travel activities and sets limits.
Your policy should specify which types of activities are reimbursable—such as board meetings, site visits, or conferences—and outline any limits on the number of trips per year. -
Clarifies which expenses are and aren’t reimbursable.
For example, the foundation may cover coach airfare but not first-class, or allow reimbursement for meals but not alcoholic beverages. -
Applies the policy uniformly to all representatives of the foundation.
The policy should apply to anyone incurring expenses on the foundation’s behalf—but not their spouses, dependents, or other family members. The foundation cannot legally reimburse travel for these “disqualified persons” unless they are also conducting official foundation business. -
Outlines required documentation and approval processes.
Specify what documentation is needed (e.g., itemized phone bills for long-distance board calls) and who is responsible for reviewing and approving reimbursement requests.
As an alternative to reimbursing actual expenses, the IRS permits foundations to use per diem allowances for meals and lodging to simplify recordkeeping.
Keep in mind that special rules may apply to certain expenses, such as car allowances, security costs, and international travel. Always consult your foundation’s attorney when drafting or updating your travel reimbursement policy.
Disclaimer: While we pride ourselves on our advice, please realize Exponent Philanthropy is not a law or accounting firm. This information contained in this Q&A is being provided for informational purposes only and not as part of an attorney-client relationship. The information is not a substitute for expert legal, tax or other professional advice tailored to your specific circumstances, and may not be relied upon for the purposes of avoiding any penalties that may be imposed under the Internal Revenue Code. It is our advice that you seek independent counsel, for any tax, accounting or legal issues you may have, related to matters that are of a material concern to you or your organization.
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