Let us first distinguish between different cases of hachnasat orchim.
If one’s guest is poor enough to deserve receiving tzedaka, then the expense of hosting him is no less a legitimate use of tzedaka than any other.[2]
Hachnasat orchim also applies when one hosts people of means.[3] However, one should not presume that all instances of hospitality fulfill (in the most complete manner) the mitzva of hachnasat orchim. The Terumat HaDeshen[4] proposes that the mitzva of hachnasat orchim, whose fulfillment justifies utilizing certain halachic leniencies, applies to a guest who is away from home and sleeps at the host’s residence. However, as the Beit Yosef[5] says, inviting neighborhood friends over is not a mitzva at all.
Let’s put things in perspective. Maintaining good relations with friends and neighbors is certainly a crucial part of a healthy Jewish lifestyle. To illustrate with an extreme example, a wife can demand a divorce from her husband if he forbids her to lend household items to neighbors because this harms her relationship with them.[6] Nevertheless, just as giving birthday presents to one’s family is neither tzedaka nor a mitzva, the same is true regarding investing in friendships, even though the practice is commendable. (Hosting local people specifically because they are lonely seems to resemble hosting those from out of town who need a place to stay or eat. Further details and analysis are beyond our present scope.)
How should expenses be covered when one hosts in a manner in which he fulfills the mitzva of hachnasat orchim but not of tzedaka – for example, when he hosts a guest from out of town who is not poor? The gemara[7] says that gemilut chasadim[8] can be achieved through one’s body and through his resources, and the Yerushalmi[9] says that the amount of one’s responsibility can total up to a maximum of a fifth of his resources. Although this seems to imply that one must use his own money for gemilut chasadim, the examples that Rashi[10] and the Meiri[11] give for using resources regard loans of money and objects, cases in which one is reimbursed. Therefore that which you read in our book, that mitzvot of chesed, including hachnasat orchim, do not fundamentally require one to spend money, is not contradicted. In fact, therefore, even if a host requests that the guest share in the expenses, he still fulfills the basic mitzva of hachnasat orchim.[12]
On the other hand, a Jew is encouraged to provide his guest with respectable food,[13] and the expected norm is to not request a reimbursement. The money the host outlays is part of the normal fulfillment of a mitzva, and the question at hand is therefore whether tzedaka money may be used for that purpose.[14] Indeed, Acharonim discuss whether one can take money from his ma’aser kesafim fund[15] to spend on a mitzva. The classic use of ma’aser funds is for supporting the poor.[16] According to some (including the simple reading of the Rama), one may not use such funds for other mitzvot. However, distinctions are proposed. The Be’er HaGolah[17] says one may use the money to perform a mitzva in which he is not obligated. The Shach[18] cites authorities who say that if there is a mitzva (apparently, a voluntary one) that one can perform only if he uses tzedaka funds, he may do so. The Chatam Sofer[19] limits such leniencies to one who accepted the practice of giving ma’aser kesafim with the proviso that he could use the funds for such mitzvot.
In summary, one has the right to accept the practice of separating ma’aser kesafim on the condition that expenses incurred by hosting those in need – in a manner that goes beyond the standard call of duty – are included in his fund’s use. Otherwise, he should follow the lead of Avraham Avinu and cover the costs of hosting for the sake of the mitzva.