Learn how to craft a strong business purpose and discover what allowable and unallowable expenses are considered here at UC Berkeley
Writing a Clear Business Purpose
A business purpose is a statement that justifies an expense, including the intended goal or outcome of purchasing the requested materials. The business purpose should ultimately explain how the university and your program benefit from any expense. Provide a clear and thorough business purpose for your entertainment event. To craft a comprehensive business purpose, answer the “5 W’s” in your business purpose statement:
Who? - Which unit/office is the request on behalf of?
What? - What type of materials/event/project is being requested?
When? When is the event/project the request is associated with taking place?
Where? - Where will the materials that are being requested be used?
Why? - Why is this purchase necessary? How does it support the University’s mission?
More details about writing a Business Purpose
Allowable Expenses
Allowable expenses include:
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Business Meeting Hospitality
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The University may pay for or reimburse expenses for meals or light refreshments provided in connection with business meetings involving University employees:
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If the expense occur infrequently
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If the expenses benefit the University and are reasonable and appropriate to the purpose and nature of the business meeting
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Programmatic Activities
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Academic-based activities that occur on an infrequent basis
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Student orientation programs, commencement exercises, and similar activities
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Student government meetings, association meetings, or other student meetings
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Continuing educational programs
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Activities that serve refreshments as a crucial part of the program (e.g., blood donation events that offer juice and cookies to blood donors)
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Location volunteers and research subjects
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Employee-Morale Building Activities*
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The University may pay for or reimburse costs for meals or light refreshments associated with official employee morale-building and appreciation activities that serve a University business purpose. Examples of such occasions include a gathering to honor a departing employee who is retiring or who is separating from employment with the University after at least 5 years of service, employee recognition receptions, annual faculty/staff picnics, new employee receptions, and holiday gatherings.
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On-the-Job Meals
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The University may provide meals to certain employees during work hours as a non-taxable benefit to the employee. The cost is not treated as taxable income when the University requires the employee to be on site in connection with a University business purpose. For example, a meal may be provided for the benefit of the University when an employee is required to stay on-premises during his or her entire work shift either because the person is required to work during that period or is on-call.
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Entertainment-Related Expenses
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Prospective Donors, Employees, and Student Appointees
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Visitors, Guests, and Volunteers
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Spouse/Partner of a University Guest or University Host*
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Cash Contributions included in a Fundraiser Fee*
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Meals provided to students
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Quantity Purchases
NOTE: * denotes Exceptional Expenses, which requires Division Approval
Unallowable Expenses
Some entertainment expenditures cannot be reimbursed because of the nature of the event or expenditure. These unallowable expenditures are detailed below.
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Entertainment expenses that are lavish or extravagant under the circumstances
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Expenses that represent additional taxable income to an employee or student under IRS regulations(link is external)(link is external)
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Monetary contributions to a political campaign or candidate
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Entertainment expenses for:
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Employee birthdays
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Weddings
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Anniversaries
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Farewell gatherings (excluding retirement or an employee with at least 5 years of service)
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The purchase of property or services for personal use or for a non-business reason
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Expenditures using restricted funds that are not permitted under the terms governing those funds
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When two or more employees choose to go to lunch together to continue their business as an incidental part of the meal, when the meal is reciprocal in nature or when the meeting could have been scheduled during regular business hours.
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Business meals that are frequent or occur on a routine basis, such as light refreshments provided at weekly departmental staff meetings. This type of expenditure is treated as taxable income by the IRS.