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Expenditure Policies

Revised March 2010

 

As an IRS designated 401(c)(3) corporation, the Auburn University Foundation must adhere to certain expenditure rules and regulations to properly protect its status as a non-taxable entity enabling it to receive tax exempt donations for the benefit of Auburn University. Therefore, all expenditures must

  • Adhere to IRS guidelines
  • Be "ordinary and necessary"
  • Be for the benefit of Auburn University.

It is also important to note that the Auburn University Foundation, unlike Auburn University, is subject to sales taxes on its purchases.

The following is intended to provide guidance as to the types of allowable and unallowable expenditures related to the Auburn University Foundation. It is recognized that, from time to time, other types of expenditures not listed herein may arise for which the Foundation funding is requested. In all such cases, the three guiding principles noted above will determine the extent to which the Foundation can participate in funding.

     1. Airfare
     2. Alcohol
     3. Awards
     4. Business Cards, Name Tags, and Name Plates
     5. Cellular Phones
     6. Clothing
     7. Club Memberships
     8. Coffee Break and Refreshment Supplies
     9. Credit Cards
    10. Donations
    11. Entertainment
    12. Flowers, Invitations and Greeting Cards
    13. Gift Certificates
    14. Gifts to Donors or Prospective Donors
    15. Gifts to Employees
    16. Honorariums to Speakers or Volunteers
    17. Loans
    18. Office Supplies
    19. Political Contributions
    20. Processing Invoices
    21. Professional Services Contracts
    22. Relocation Costs
    23. Spouse Travel/Entertainment Expenses
    24. Staff Meals
    25. Tax
    26. Transportation for Groups
    27. Travel
    28. UPS and FedEx Procedures
    29. Vehicles
    30. Non-Reimbursable Expenses by the Foundation

1. Airfare

Airfare is covered under the Travel policy. The cost should be paid by the employee or charged to his/her credit card, and submitted for reimbursement through the travel reimbursement process. Reimbursement will only be made for the price of a coach ticket; upgrades to first class or business class will be at the expense of the employee.

2. Alcohol

The purchase of alcoholic beverages from AUF funds is allowable only when there is a documented business purpose. The quantity and the price should be reasonable.

Personal consumption of alcohol when traveling will be at the employee’s personal expense unless entertaining an official guest of the AU and/or the entities referenced above.

Since alcohol may not be provided to minors, alcohol purchases will not be approved for student functions.

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3. Awards

Awards to AU personnel will only be made under the terms of a formal award program. Guidelines may be established by a gift document or by an internal program document, but must meet the requirements of a transparent nomination process, availability to the entire group, and an independent selection committee. Whenever an award is made, the funds are to be transferred to the appropriate AU award fund for administration and reporting.

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4. Business Cards, Name Tags and Name Plates

Name tags (identification badges) are purchased when (1) a new employee is hired, (2) there is a change in an employee’s job assignment or (3) a name tag has been lost. Name plates are ordered when an employee is hired. Business cards are ordered when the employee is hired and can be reordered as necessary. Development staff members may order these items; however, the design and content is covered by AU Office of Communications and Marketing policies, and the Director of Development Communications or the Publications Specialist should be consulted for consistency with these guidelines. The cost will be borne by the appropriate budget for that individual and the approving signature of either the Director of Development Communications or the Publications Specialist must be on the invoice when presented for payment.

Badges are usually ordered from Ware’s Jewelers. Nameplates will vary, depending on the building in which the employee is located.

There is one contracted vendor for business cards and one for stationery and these must be ordered on-line by going to the OCM Letterhead/Stationery web page.

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5. Cellular Phones

Cellular phones will be provided to individuals who require them to conduct Foundation business. However, cellular telephones have been specifically included by the IRS as "listed property" which is subject to personal use. Cell phones provided to employees must be fully taxed to the employee with the exception of those calls the user substantiates as business. Substantiation of the business use every month is considered too burdensome, but restricting the phone exclusively for business use is considered inconvenient by many staff, who do not want to carry two phones. Therefore, the following alternative methods have been established for providing for the cost of the business use of cellular phones.

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6. Clothing

Appropriate attire for events attended by employees is the responsibility of the employee. The Foundation does not purchase or rent tuxedos, formal dresses, or other clothing for AU employees.

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7. Club Memberships

Membership in clubs that provide a setting for business meetings will be provided only to the President of AU, the Chancellor of AUM, and the VP for Development, the VC for Development, and the AVPs upon approval of the VP for Development. Memberships in these clubs are considered by the IRS as not necessary to the conduct of business; therefore, dues payments constitute taxable income to the member.

The cost of receptions, meals, and guest expenses incurred in these clubs are reimbursable by the Foundation in the same manner as other entertainment expenses upon the required substantiation for business entertainment: date, amount, name(s) and relationship of the guest, and business purpose of the meeting.

Late fees and finance charges incurred by any Club member are not payable by the Foundation.

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8. Coffee Break and Refreshment Supplies

The cost of coffee and/or filtered water in an employee lounge is payable from Foundation funds.

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9. Credit Cards

Personal credit cards are recommended for each DO to facilitate his/her travel and entertainment. Likewise, payment of the credit card statement is the responsibility of the DO. Requests for reimbursement are made by submission of the corresponding travel/expense report, including itemized receipts (not merely a credit card charge ticket). The original hotel statement, rental car contract, detailed restaurant charge ticket, etc. should still be attached to the reimbursement request.

Purchases, whenever possible, should be made using approved local vendors where the Foundation has charge accounts. The list is available at:

Each AVP has an AUF credit card which can be used to make reservations or order items for their area whenever the purchase cannot be accomplished using regular procedures. The credit card should be used only for exceptions. Since 1099 reporting requirements to the IRS may be involved, the AUF credit card should not be used for "services". When used, the receipt and all other required supporting documents should be given to the coordinator in charge of the card, including the Banner FOAPA to which the purchase is to be charged and the signature of the person responsible for that budget. Receipts are to be maintained by the support person in charge of the card, and should be reconciled with the statement at the end of the month when submitting it to Accounting for payment. Make certain to document the business purpose of the purchase and/or official guest names if a meal. This information must be included for the expense(s) to be paid. When the statement has been reconciled and the voucher prepared, the AVP or authorized signer must sign the voucher and forward it to Accounting for payment.

Absolutely no personal charges are to be made using this card.

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10. Donations

Donations cannot be made by AU to any outside agency/institution or other group. AUF’s incorporating documents only permit donations to AU or its supporting organizations. However, under the following limited circumstances, AUF makes payments to other charitable organizations without charitable intent:
  1. Contributions of up to $50 are allowable upon the death of an AU employee or friend if the family designates a qualified charity in lieu of flowers.
  2. A payment will be allowed to obtain admission to or purchase a table at a charitable event that is considered a necessary entertainment expense, even though the sponsoring organization designates a portion as charitable.

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11. Entertainment

Guest Meals:

Official guests of the University include donors and prospective donors. Meals will be reimbursed up to $90 per person, including reasonable costs for alcoholic beverages, supported by receipts. Gratuities of 15-18 per cent are appropriate - above 20% will not be reimbursed. Documentation must meet IRS requirements: i.e. the date; place and cost; the name of the person; his/her relationship to the University; and the nature of the "business" discussion that occurred during or immediately pre- or post-meal. In Development, this is generally satisfied by the filing of a contact report in addition to the expense documentation.

Tickets to Events:

  1. Tickets to AU sporting or campus events may be purchased for use in entertaining donors/prospects. The same documentation is required by the IRS as to date, place, cost, person and business nature of discussions that are required for meals. Tickets not used for entertaining donors may be sold to other donors who request them but should not be given as gifts (see policy on "Gifts to Donors").
  2. Tickets to non-AU events such as stage plays or concerts will not be used as cultivation tools due to the difficulty of conducting business conversations. Any exception to this policy requires the approval of the appropriate AVP.

Receptions:

Reasonable costs of receptions for University retirees having at least ten years of service, visiting scholars or guests, homecoming activities, donor events or other official University occasions may be paid from Foundation funds. Event budgets should have the approval of the appropriate AVP.

To be reimbursable, receptions at conferences not hosted by AU must demonstrate clear benefit to AU. An example of an allowable expense would be a reception for AU grads at a conference, as opposed to a reception for all attendees.

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12. Flowers, Invitations and Greeting Cards

Flowers for decorative purposes for official AU business functions, corsage/boutonnieres for retirement functions, or flowers for hospitalized (including births), ill or deceased employees/friends/donors of AU will be paid by the Foundation. Generally, the cost should not exceed $70 for the flowers. Any exception will require advanced approval from the appropriate AVP. Efforts should be coordinated so that duplicate flowers are not sent. Contributions of $50 are allowable if the family designates a qualified charity in lieu of flowers. Greeting cards for donors, prospects and friends are allowable, with appropriate explanation.

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13. Gift Certificates

AUF does not purchase gift certificates. Their use is deemed a cash payment to the recipient and entails W-2 and 1099 reporting that is not cost-effective. Therefore, vouchers for their purchase or claims for reimbursement for prior purchases will be denied.

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14. Gifts to Donors or Prospective Donors

In the cultivation, solicitation and stewardship process, it is understood that DOs will have meals with donors/prospective donors. These are covered by the Entertainment Policy. It is also anticipated that from time to time a memento of Auburn may be meaningful to the building of the relationship and/or their specific interest(s) in Auburn; however, no gifts are to be given to a donor/prospective donor as a means of gaining their financial support to Auburn University. Gift certificates are never allowable.

When preparing the voucher for a gift to a donor, the documentation submitted to Accounting should include the donor's name, nature of the relationship with AU, AUF or other related entity and the purpose or basis for the memento. Because a contact report should be generated any time a gift is provided to a donor, attaching a copy of this is the preferred method of documentation. This includes employees who make donations.

If a quantity of items are purchased for future use, they will be carried as inventory, and charged to the budget when distributed. It will be necessary to maintain records on the use of the items and submit it to Accounting no less than quarterly with a journal entry to record the budget charge.

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15. Gifts to Employees

Gifts may not be purchased for employees from University or AUF sources to reward exceptional service or for birthdays, weddings, non-retirement departures, etc. These must be funded by the individuals giving the gifts. The following are allowed:
  1. Items distributed at the annual employee recognition program in which length of service awards are funded by a Foundation grant.

  2. Retirement gifts for retirees with 10 or more years of service may be purchased with Foundation funds. These are to be appropriate for the length of service and position of the retiree. Generally, these should be in the range of 1/2 of 1% (.005) of the individual’s compensation, not to exceed $500 without the approval of the Executive VP of the Foundation.

  3. Holiday gifts are allowable that meet the following IRS guidelines:

    1. they must not be cash, or gift certificates that can be applied as cash,
    2. they must not exceed $25, and
    3. they must be given equally to all employees, not just selected employees.

    This would include such items as token ornaments given at a holiday function, a certificate for a turkey to be redeemed from a local grocer, etc.

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16. Honorariums to Speakers or Volunteers

Honorariums to speakers or volunteers can be funded from Foundation funds. When these expenses are incurred an IRS Form W-9 must be completed. A 1099 will be issued at year end if required by IRS regulations. Cash payments should be made direct to the service provider. They should be directed to the AU website to register as a vendor at the time their services are negotiated.

A letter or memorandum of understanding should be obtained to document the services to be provided and the agreed upon compensation. If the services are to exceed $2,500, a personal services contract should be executed.

Gifts to speakers or volunteers are considered taxable compensation and a W-9 should be obtained similar to that described above for gifts that exceed $600.

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17. Loans

Loans are not made to AU Employees.

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18. Office Supplies

The Office of Development may make purchases with either AU or AUF funds. When using AU Funds, you should refer to the AU website for the applicable rules. When using AUF funds, appropriate sales taxes should be applied.

Several businesses have accounts established for the AU Office of Development and AUF for use when purchasing from these vendors. The list is available at:

Credit cards and on-line ordering are available for Office Depot and Staples. An MBNA MasterCard is available for purchases when no other accounts exist. A credit card is held by each AVP and certain Directors for security and must be checked out for purchases. The credit card number is not to be used without notifying the responsible person.

When office supplies are purchased, the receipt(s) should be taped to a standard size piece of paper on which the purpose of the purchase, the BANNER FOAPA number to be charged, and approval by the DO/authorized signer for the FOAPA is indicated. Once the DO/authorized signer has approved the purchase, the document(s) should be returned to the appropriate AVP or Director for his/her approval. Once approved, the paperwork will be held by the AVP/Director’s support person to be reconciled with the month-end statement, at which time a voucher will be prepared and submitted for processing through Accounting. The card is not intended for routine purchases, so if it is noted that you need to requisition the card frequently for the same vendor, you should contact Accounting so that an account can be set up with that vendor.

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19. Political Contributions

A grant will be made to the Office of the President of Auburn University to assist with legislative relations and lobbying activities related to legislation that impacts the University. If requested, the Foundation will pay AU’s dues to lobbying coalitions that assist in securing funding for higher education.

Under no circumstances will AUF funds be used to attend events related to a candidate running for political office, or expended in any manner that could be construed as campaign-related.

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20. Processing Invoices

Process all billings promptly. Payments are processed by individual invoices, with the exception of credit cards. Vouchers should be prepared with at least one line for each invoice and forwarded to Accounting promptly for payment, supported by the following information:

  1. Original invoice
  2. All appropriate authorization signatures for payment
  3. FOAPA from which to pay, and activity code if applicable
  4. Business purpose of the expenditure
  5. List of official guests if for entertainment/official guest, including their relationship to AU and the business reason for their entertainment
  6. Name of the recipient if for a gift or memento

If billing is being split between two or more budgets, each person responsible for payment must sign and give the FOAPA. If you want to mail the payment personally, you may instruct Accounting to return the check to you by a notation on the voucher.

Vendor vouchers can be accessed on the Development Office intranet under "Forms/Accounting/Accounts Payable/Forms."

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21. Professional Services Contracts

Personal services for the benefit of AU or AUF may be paid from AUF funds. As this is subject to 1099 reporting, these expenditures must be paid direct to the provider of the services. Payments made by cash will not be reimbursed. Therefore, at the time of contracting for the services, the contractor should be directed to register as a vendor on the AU website.

A letter or memorandum of understanding should be obtained to document the services to be provided and the agreed upon compensation. If the services are to exceed $2,500, a personal services contract should be executed. Services provided to an AU unit that are to be paid from AUF funds may be documented with either an AU personal services contract or an AUF personal services contract.

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22. Relocation Costs

Payment of relocation costs for new faculty or staff may be funded by the Auburn University Foundation. It is preferred that the employee pay the costs and apply for reimbursement rather than requesting the Foundation to pay a third party direct. It is important to recognize that these are taxable to the employee and will be reported to the AU Payroll Office.

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23. Spouse Travel/Entertainment Expenses

Travel costs for spouses or children will not be reimbursed. There are occasions when a spouse may be requested by a Dean or an AVP to attend an entertainment event as an official guest. In accordance with IRS regulations, the value of the entertainment constitutes taxable income to the employee.

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24. Staff Meals

Meals for staff working through meal time at the request of their supervisor may be paid from Foundation funds, such as at a training event or when there is a deadline to be met. When only AU employees are involved, meals may be paid with Foundation funds only if the meals meet IRS guidelines for deductibility, i.e., a business discussion takes place in connection with the meal, the cost is reasonable in amount, and it satisfies the general rule that the meal setting is an appropriate place to discuss business.

Occasional morale building events such as a holiday party or family picnic are allowable if 1) infrequent, 2) non-discriminatory (includes all employees in the employee group) and 3) reasonable in cost. Reimbursement for events at employee homes may include clean-up costs or flowers for the specific event. General initial clean-up, lawn service, or decoration (such as seasonal decoration of a home) will not be reimbursed. Infrequent is defined as one or two events per year per employee group.

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25. Tax

Auburn University Foundation is subject to sales and use tax. When making purchases, always have the vendor add sales taxes. Because out-of-state vendors usually will not charge Alabama taxes, it is preferable to use in-state vendors whenever possible.

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26. Transportation for Groups

With the closing of the AU Motor Pool, Development staff or AU departments may, on occasion, need to obtain a vehicle for local use and/or regional trips. Departments should make decisions as to use of a personal vehicle, use of a state vehicle, rental of a vehicle from an outside firm, or purchase of an airline ticket, based on the most economical and efficient choice to the University. Contact the AU Office of Payment and Procurement Services for information regarding University contract providers of rental vehicles.

Payment can be handled in one of two ways: 1) the employee responsible for renting the vehicle charges the expense to their personal credit card and submits the cost for reimbursement via a travel voucher; or 2) the department can make arrangements for the cost of the rental to be billed to the department and paid via vendor voucher/invoice. Due to IRS 1099 reporting regulations, rentals cannot be charged to the AUF credit card or the University Purchasing Card.

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27. Travel

a. Transportation Costs:

Only transportation costs actually incurred are eligible for reimbursement.

  1. Transportation by personal vehicle is reimbursed at the allowable IRS mileage rate.

  2. Transportation by rental car is reimbursed at the actual cost of the rental contract, plus fuel. Collision insurance charges should be waived, as employees are covered by the University policy while traveling on University business. Auburn University has a letter that can be used as evidence of insurance. A printable copy is located on the Development Office intranet. Vehicles should be returned full of fuel to avoid excessive refueling charges. A mid-size sedan similar to the Taurus, Camry, Impala, etc. is an acceptable choice. If a large group is traveling together and desires only one vehicle, a larger vehicle may be approved by the appropriate AVP. The government rate is to be requested.

  3. Air travel should be at "coach" fares. Trips requiring air travel should be planned far enough in advance to take advantage of the reduced fares regularly offered. Every effort is to be made to keep air fare under $500. Fares in excess of $500 must be approved, in advance, by the appropriate AVP.

  4. IRS mileage is computed from office to destination. Therefore, the following standard mileages apply for trips to airports (one way):

    1. Atlanta – 100
    2. Birmingham – 132
    3. Columbus – 37
    4. Montgomery – 52

  5. Airport parking costs above $10/day will need approval in advance from the appropriate AVP.

  6. When employees are traveling to the same city or event, or on the same flights, efforts should be made to share transportation.

  7. Use of airport shuttle service is allowable when the cost is comparable to mileage charges.

  8. Cab fare is reimbursable when supported with a receipt.

b. Lodging:

Actual lodging costs (without tax) will be paid for room rates of $125 or less for in-state and $180 for out-of-state. The State rate should be requested when lodging in Alabama, and the government rate otherwise. Significant increases over these suggestions may be made only upon consultation with an AVP. If traveling to a high-cost area such as New York, San Diego, DC, etc., AVP approval must be obtained in advance to cover additional costs. If traveling to a convention or conference, convention rates would apply. Travel with Deans, which may be done per the Dean's preferences, should be reviewed with the appropriate AVP prior to the trip.

c. Travel Incidentals:

Certain miscellaneous expenses are no longer allowable when traveling overnight, as follows:
  1. When staying in a hotel, $5/per night will no longer be reimbursed for baggage, since this is included as part of the per diem portion of the travel allowance.

  2. Daily phone calls home will no longer be reimbursed. If no cellular phone is available, purchase of a phone card from Sam's or Wal-Mart is reimbursable.

  3. Mini-bar charges are not reimbursable.

  4. Charges for spa visits, movies in rooms and other similar activities are considered personal and will not be reimbursed.

d. Travel Meals:

Overnight travel:
Auburn University Foundation has elected a policy of reimbursing travel meals and incidentals expense (M&IE) for trips that include an overnight stay using the IRS "high/low" per diem rates for the continental United States ("CONUS"). This applies a standard rate of $52 for most locations, but applies $65 high cost as listed at:

www.irs.gov/pub/irs-pdf/p1542.pdf (refer to Table 2 on Pages 6-7)

If a donor is being entertained, refer to "Guest Meals" below for the applicable policy that applies when guests are present. Whenever a meal is reimbursed under the "Official Guest" policy, the daily per diem will be reduced by the amount shown in the following table for that meal.

Meals & Incidentals Expense $52 $65
Breakfast 8 11
Lunch 12 16
Dinner 27 33
Incidentals 5 5

Note that the M&IE per diem includes $5 daily for "incidentals" such as baggage handling.
Also, the following are not reimbursable.

  1. Breakfast on the day of departure unless the departure is before 6:00 a.m.
  2. Dinner on the day of return unless the arrival time is later than 7:00 p.m.
  3. Alcohol as part of a travel meal. Alcohol is only reimbursable when incurred in conjunction with entertainment of donors or prospects.

One-day travel:
The IRS does not allow a deduction for meals without an overnight stay, so any reimbursement of meals without an overnight stay will be included in the employee's wages. For trips not involving overnight stays and where there is no official guest, the meal per diem is $11.25 for trips of 6-12 hours and $30 for trips of 12 hours or more.

Travel for Donors/Prospects:
Foundation funds should not be used to pay for travel or lodging for donors/prospects.

In accordance with IRS regulations, travel and/or entertainment costs for spouses or children will not be reimbursed.

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28. UPS and FedEx Procedures

United Parcel Service and Federal Express priority shipping services are available for sending materials as deemed appropriate. When sending packages using either service, indicate the budget FOAPA in the "Sender’s name" line on all forms you use. Also, after sending the package, please provide a copy of the "Sender’s" copy (or send the original if you are not filing them) to Accounting to be reconciled with the month-end UPS or FedEx statement.

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29. Vehicles

At the discretion of the Vice President for Development, vehicle allowances may be provided to certain staff of the Office of Development. The allowance will be in accordance with Auburn University vehicle policies.

The allowance will be equal to 5% of the employee’s salary, with a minimum allowance of $4,000. It will be included on the employee’s Personnel Action Form and will, therefore, be paid monthly as part of the regular payroll process. The allowance will be fully taxable and subject to all payroll taxes, but it will not be part of the retirement base.

All costs associated with owning and maintaining a vehicle appropriate for business needs are the responsibility of the employee and will not be individually reimbursed. Travel expense (mileage), allowable under University policies, will be reimbursed to the employee at the prevailing IRS rate upon the submission to Development Accounting of the appropriate documentation of the trip, including the date, destination, number of miles, and business nature of the trip. Parking charges and tolls, incurred on an allowable trip, will also be reimbursable. Local area travel, car washes, and tickets for parking and moving violations will not be reimbursed.

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30. Non-Reimbursable Expenses by the Foundation

  1. Gifts of cash, including gift certificates, phone cards, etc. Expenditures for birthday or holiday gifts, except as described above. Gifts for baby showers, wedding showers, or costs related thereto.

  2. Meal and travel for spouses and children of employees.

  3. Upgrades of airline flights to first class or business class.

  4. Payments of scholarship or fellowship awards will generally not be funded from Foundation funds. In the unusual event that a dean/administrator requests such assistance, the funds requested, if approved, would be transferred to an Auburn University account and disbursed according to University policy and procedures. The funds would not be paid directly to a student from the Foundation.

  5. Contributions to other tax exempt or charitable organizations except Auburn University or another IRS 501 (c)(3) existing for the benefit of Auburn University are not allowable from Foundation funds. An exception to this general rule may occur when the payment is not made with donation intent, but for another of AU's needs, such as "in lieu of flowers" at a death, or to obtain admission to a dinner or other event when the cost is billed as partially charitable by the recipient.

  6. The Foundation will not fund any payments to a political campaign, political candidate, or fund raiser.

  7. The cost of renting tuxedos.

  8. Costs of ownership of vehicles, including car washes, automobile club memberships, deductibles and out of pocket costs related to accidents, parking fines, or insurance on rental car contracts.

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Last Updated: May 6, 2014