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Don’t leave home without it – Travel policies for nonprofit volunteers and employees

Sometime people want to combine business and pleasure when making summer travel plans. Nonprofit organization volunteer board members and employees must be careful to comply with the organization’s rules about reimbursement of travel expenses. But first, the organization must have a written travel policy in place. Having a clearly defined travel and expense reimbursement policy keeps expenses transparent and legitimate in the eyes of those reviewing the organization. For best practices, expense reimbursement policies need to:

  1. Establish guidelines for types of expense reimbursement (transportation/lodging/meals, etc)
  2. Define examples of appropriate and inappropriate expenses
  3. State that cost-effectiveness is an expectation for travel on behalf of the organization
  4. Explain exceptions to the policy, such as no reimbursement policies for first-class travel
  5. Detail documentation requirements such as receipts, accurate and timely records
  6. Identify that expense reimbursement is for the person representing the organization only, not for spouses, dependents, or traveling companions (unless they have a role in the organization)
  7. State that cost-effectiveness is an expectation for travel on behalf of the organization
  8. Apply the same rules for all board members, officers, and key employees

Form 990 asks questions about travel expenses and reimbursements. If a person representing the organization incurs excessive or unsubstantiated expenses the excess should not be reimbursed. However, if for some reason, the organization pays the excess to an employee, the amount is reported on the Form 990 and should be treated as compensation to be reported on a Form W-2.

Salmon Sims Thomas specializes in tax, audit, and consulting for nonprofit organizations. For questions about creating or enforcing a travel expense policy, please contact a Salmon Sims Thomas tax advisor.