Travel Policies for Grant-Funded Programs: Federal Requirements and Best Practices

Why Travel Policies Matter for Grant-Funded Organizations

Travel is a common and often necessary expense in grant-funded programs. Staff may need to attend conferences, conduct site visits, participate in required grantee meetings, or travel to partner locations for program delivery. However, travel costs charged to federal grants are subject to specific requirements that go beyond what most organizations include in their standard travel policies. An organization that fails to align its travel practices with federal rules risks disallowed costs, audit findings, and strained relationships with funders.

The Uniform Guidance at 2 CFR 200.475 establishes the general framework for travel costs charged to federal awards. Travel costs are allowable when they are reasonable, necessary for the performance of the grant, and consistent with the organization's written travel policy. That last point is critical: your organization must have a written travel policy, and the policy must be applied consistently to all travelers regardless of the funding source.

Federal Per Diem and Lodging Rates

One of the most important rules governing grant-funded travel is the requirement to use federal per diem rates unless your organization has a written policy that establishes different rates applied consistently to all travel. The General Services Administration publishes per diem rates for all locations within the continental United States, updated annually. These rates set maximum allowable amounts for lodging and meals and incidental expenses.

• Lodging rates: Vary by location and season. High-cost cities like Washington, D.C., New York, and San Francisco have significantly higher allowable rates than rural areas.
• Meals and incidental expenses (M&IE): Set at tiered rates based on location. The M&IE rate covers breakfast, lunch, dinner, and incidental expenses such as tips and transportation between lodging and meal locations.
• First and last day of travel: Federal rules typically allow 75 percent of the M&IE rate on the first and last day of travel.

For travel outside the continental United States, the Department of State and the Department of Defense set per diem rates for foreign and non-foreign overseas locations, respectively. Alaska, Hawaii, and U.S. territories use rates published by the Department of Defense.

When Your Organization's Rates Differ

If your organization's travel policy allows reimbursement rates that exceed federal per diem, you may still use your policy, but the excess above the federal rate cannot be charged to the grant. This means you either absorb the difference from non-federal funds or adjust your policy to align with federal rates for grant-funded travel. Many organizations find it simplest to adopt federal rates as their standard to avoid this complexity.

The Fly America Act

Any air travel funded by a federal grant must comply with the Fly America Act, which requires the use of U.S. flag air carriers for all federally funded international travel. This requirement applies even when a foreign carrier offers a lower fare or more convenient routing. Exceptions exist under Open Skies agreements with certain countries and in specific circumstances such as when no U.S. carrier service is available or when the use of a U.S. carrier would extend travel time by 24 hours or more.

Violations of the Fly America Act result in the entire airfare being disallowed, not just the difference between the U.S. carrier fare and the foreign carrier fare. This makes it one of the most financially significant compliance requirements in grant-funded travel. Always verify carrier eligibility before booking international flights.

Documentation Requirements

Every travel expense charged to a federal grant must be supported by adequate documentation. At a minimum, your travel files should contain:

• Travel authorization: Pre-approval documentation showing that the travel was authorized before it occurred, including the purpose, destination, dates, and estimated costs.
• Receipts: Original receipts for lodging, airfare, rental cars, and any other expenses above your organization's receipt threshold. Many organizations require receipts for all expenses over $25.
• Per diem calculations: Documentation showing how meal and incidental reimbursements were calculated, including any reductions for provided meals.
• Conference or meeting agendas: Evidence that the travel purpose was legitimate and related to grant activities.
• Expense report: A completed travel expense report reconciling authorized amounts against actual expenditures.

Understanding how travel costs fit within the broader cost principles framework is essential for compliance. Our guide on grant budget fundamentals and federal cost principles provides the foundational context you need.

Building a Compliant Travel Policy

If your organization does not have a written travel policy, creating one should be an immediate priority. A compliant policy should address authorization procedures, allowable modes of transportation, reimbursement rates, receipt requirements, advance payment procedures, and the process for handling exceptions. The policy should apply to all organizational travel regardless of funding source, as inconsistent application is itself a compliance issue.

Key elements to include in your policy:

• Advance approval process: Define who must authorize travel and what information the authorization must contain.
• Transportation standards: Specify when air travel is permitted versus ground transportation, and establish rules for the use of personal vehicles including mileage reimbursement rates.
• Lodging standards: Set maximum lodging rates or adopt the GSA per diem schedule by reference.
• Meal reimbursement: Define whether you use per diem, actual expense, or a hybrid approach for meals.
• Timely submission: Require expense reports within a defined period after travel, typically 30 days.

For guidance on the federal application processes that often establish travel budgets and expectations, review our article on the federal grant application process.

Common Travel Compliance Pitfalls

Auditors frequently cite travel-related findings that could easily be avoided with proper policies and training. These include charging luxury hotel upgrades to the grant, failing to document the business purpose of travel, exceeding per diem rates without justification, neglecting Fly America Act requirements, and reimbursing alcohol as part of meal costs. Alcohol is explicitly unallowable under federal grants regardless of the circumstances.

Training staff on travel requirements before they travel, rather than correcting errors after the fact, is the most cost-effective compliance strategy available. For a comprehensive view of post-award compliance obligations including travel, see our guide on post-award grant management and compliance.

Learn more about grant writing strategies at Subthesis.

Develop Your Grant Management Expertise

Travel compliance is one of many operational areas where grant professionals need specialized knowledge. The Complete Grant Architect course covers travel policies, procurement, financial reporting, and every other aspect of managing federal awards successfully. Enroll today and gain the practical skills to keep your organization compliant and your programs fully funded.