BROWN UNIVERSITY
Business Meals and Hospitality Policy
Revised, April2006
Changes in red below
Responsible Office: Controller's Office
Issue Date: August 2002
The University, in its normal conduct, incurs varied expenses that contribute to and support the educational, community and service missions of the institution. The policy that follows has been developed to establish guidance on the circumstances and appropriateness of incurring costs relative to business meals, alcoholic beverages, gifts and courtesies to employees and visitors, business entertainment expenses and employee morale events.
As with any University expense, the costs incurred are expected to be reasonable and necessary in nature, be authorized by appropriate individuals and be consistent with the missions of the University and the conditions specified by external sources, when applicable.
The purpose of this policy is to provide general guidelines for identifying appropriate University business expenses relative to meals, courtesies, hospitality, entertainment, and employee functions and events.
This policy identifies how and when these expenses may be charged to various University accounts in order to ensure the proper use of University resources and the compliance with federal and other external regulations. It further provides a means to document the business purpose of the activity in accordance with proper tax and accounting guidelines.
With the exception of Section D, relating to alcoholic beverages, on-campus faculty-student events inherent to the academic programs at Brown, e.g. departmental lectures, colloquia, are exempt from the requirements of this policy.
Related Documents
See University Travel Policy for expenses incurred while traveling away from Brown, on University business, including the handling of business meals with colleagues while on travel.
All University funds - including gifts, grants, and contracts, shall be used in a reasonable and prudent manner and only for activities related to Brown's primary mission of education, research and public service. University funds shall not be used for purposes that are personal in nature or that do not have a clear business purpose.
In all instances identified below, faculty and staff must adhere to restrictions on the use of federally sponsored funds for payment of these activities. In most cases, these expenses are not allowable as charges to federal grants and contracts. The Office of Sponsored Projects can provide further information on the charging of grant and contract funds.
Faculty, staff and students may be reimbursed for approved, necessary and reasonable business meal expenditures.
Business meals are those taken with business associates, university guests, job applicants, professional colleagues, or donors, during which University business discussions take place. Whenever possible, such meetings should take place in the University Faculty Club or other University facilities. Business meals are also those taken with other employees when, to ensure privacy and confidentiality, business must be conducted off campus. When authorized by the department head, business meals may also be taken for the purpose of employee recognition or reward.
Business meal expenses should follow the guidelines set forth in the Annual Spending Guidelines found in the Controller's web page. The Business Meals & Hospitality Form must be attached for reimbursement requests that exceed $50.
Expenses not allowable:
Meals taken between two or more employees without a clear business purpose, which ordinarily could be conducted during normal working hours, are not reimbursable from any University funding source. The cost of such meals should be borne by the employees.
Expenses incurred in relation to the following events are considered to be personal in nature and therefore not reimbursable. Such events include parties or meals for birthdays, weddings, births, showers, administrative professional's day, or parties not sponsored by the department and made available to all employees of the department.
Gifts:
University departments may incur an expense, in the form of a gift, on behalf of an employee or an employee's immediate family, for the following events:
a) Recognition of a long-term employee leaving a department or retiring from the University. A general guideline is $10.00 for every year of service. Such gifts should not exceed $400, the maximum non-taxable limit established by the IRS, for gifts of recognition to long-term employees.
b) Illness of an employee or student, requiring hospitalization.
c) The death of an employee or an employee's immediate family member. Memorial gifts made on behalf of an employee may include flowers or a donation to a charitable organization. In such cases Brown University should be acknowledged as the sender, e.g., "from all your friends and colleagues at (University department)." In the case of a donation to a charity, the notation should indicate the donation is from the University department. A recommended limit for this gift is $75.00.
Gifts in recognition of employee work-related achievement or years of service are allowable as provided through official recognition programs authorized by the Human Resources Department. Any exception to this policy must be granted at the senior officer level.
Holiday gifts for faculty, staff, students and volunteers are unallowable.
Gifts to honor an individual for personal reasons other than those indicated above (e.g. birthday, wedding, baby shower, housewarming, promotion, etc.) may not be charged to University accounts. Personal contributions among colleagues should be the method of providing such gifts.
Prizes and Awards:
Prizes and awards, including raffle prizes received by employees are taxable and must be reported as additional earnings if their value exceeds the following dollar thresholds:
- Cash or gift certificates/gift cards of any amount (the IRS considers gift certificates to be equivalent to cash).
- Gifts or awards of tangible personal property with a value greater than $100 (gifts and awards of tangible personal property less than $100 are considered “de minimus”).
The source of funds for purchase of the above described prizes and awards should be general unrestricted departmental funds, used only at the discretion of the department head. Restricted funds, such as grants and contracts, and gifts must not be used for such purpose.
Raffles and games of chance:
Operating raffles and other games of chance is strictly forbidden by the State of Rhode Island unless licensed by the Division of the State Police. While educational organizations are eligible to obtain a license for such events, it is required that all proceeds of charges for admission or participation in such games, after expenses, must be applied exclusively for charitable or educational purposes.
Donations to Other Charitable Organizations:
The University is classified by the IRS as a tax-exempt charitable organization. As such, donations made by the University to other charitable organizations (with the exception of memorial gifts stated above) should be done under extraordinary circumstances only. Payments to such organizations must include documentation explaining the nature of the donation, and the relationship to Brown University. All such payment requests must be approved at the senior officer level.
Hospitality:
Refreshments provided at university or departmental business activities such as staff meetings, committee meetings, business presentations, or in honor of University guests are allowable. Such expenses should be kept to a reasonable level of cost and occurrence.
The purchase of bottled water for reception areas where there is public traffic (employees, students, visitors) is allowable.
Temporary parking permits purchased for visitors through the University's Parking Office are allowable, however payment or reimbursement of parking tickets, even if incurred during the course of University business, is unallowable.
Certain functions and events are considered business entertainment if they are intended to provide hospitality to individuals outside the University when considered necessary and customary in furthering the University's interests.
Some examples of business entertainment may include:
- receptions for University guests and visitors,
- alumni reunions or similar alumni events,
- entertaining donors or prospective donors,
- welcoming receptions for parents and students
Valid entertainment expenses are those incurred for business entertaining at which food and beverages, catering services, banquet facilities, decorations and musical groups may be used or present.
In planning entertainment for guests of the University, all efforts should be made to keep costs to a reasonable level in relation to the nature of the event. In keeping with the University's 'Brown First' policy, departments are required to arrange such events through Brown Dining or the Faculty Club
In no event may alcoholic beverages be offered or served to minors.
The use of alcoholic beverages while in the conduct of University business should be kept to a minimum. In no instance may alcoholic beverages be charged to federally funded grants or contracts, either directly or indirectly.
All University-sponsored events held on campus, at which alcoholic beverages are served, require that either Brown Dining or the Faculty Club (or their approved substitute) be engaged for the purpose of providing and serving these beverages.
Serving alcoholic beverages at a University event held off campus , such as in an employee's private home, is strongly discouraged. In such instances where alcoholic beverages are to be available, the sponsor of the event must complete and have approved the Statement of Responsibility for Alcoholic Beverages form, to be attached to the request for reimbursement.
E. Employee Events
Expenses associated with employee business events, (e.g. receptions, open houses, retreats) complementary to the department's mission and goals, or that foster a sense of community among faculty, staff and students are allowable. Expenses would normally include food and beverages, facility rental and catering services.
Expenses associated with personal events, (e.g. birth of a child, wedding, anniversary, birthday, etc.) are not allowable. Costs for such events should be borne by the participants or by management personally on behalf of the participants.
Annual holiday parties and summer picnics are allowable provided they are reasonable in scope and available to all employees within the department. While such events play an important role in our university community, it is also important that fiscal responsibility be a priority in planning these events. The current spending guideline for such events is $40 per person per fiscal year.
Approval for such events must be authorized by a senior officer, or by his/her authorized representative.
F. Documentation & Authorization
The University's Business Meals and Hospitality Form should accompany request for the payment of business meals and hospitality expenses if in excess of $50. This form is designed to meet the IRS requirements for documenting business expenses, namely to provide a record of the time, location, participants and business purpose of the activity.
The University host must complete the form entitled "Statement of Responsibility for Alcoholic Beverages for Brown University-sponsored Functions" and submit prior to the event, as an attachment to the purchase requisition, if Brown Dining, the Faculty Club, or other authorized catering vendor will not be used to provide and serve alcoholic beverages.
Expenditures for business meals, gifts, employee meetings, and business entertainment shall be approved by the department head or his/her authorized representative(s) only. Reimbursement directly to the department head must be approved by the supervisor, or authorized representative of the supervisor.
Expenditures for department-wide employee morale or business entertainment events (e.g. holiday parties, summer picnics, receptions, retreats) must be authorized by a senior officer, or his/her authorized representative.
The Controller and/or Purchasing Office have the authority to question, or request additional information concerning the business purpose, support documentation or reasonableness of the expense. A member of the staff in these offices may request approval by a senior officer.
For all expenses listed in this policy, use the following accounting sub-codes:
3210 - Business meals. Reimbursement for business lunches, dinners, etc., incurred by an employee at a local restaurant.
3220 - Gifts & hospitality. Direct payment or reimbursement for gifts of flowers, donations, employee achievement, etc., in accordance with this policy.
3230 - Food and provisions. Direct payment or reimbursement for food and/or provisions (not provided by Brown Dining or Faculty Club).
For business events processed through Brown Dining and the Faculty Club, use codes 6710 and 6720, respectively.
Exceptions to any of the provisions stated in this policy required written documentation and approval. A memorandum or related document justifying the request for exception must be approved by the senior officer for the department making the request, and submitted to the Controller’s Office prior to any reimbursement or payment. A senior officer is defined as an officer that reports directly to the president. When approved, all documentation must be presented to the Controller's Office, Box J.