Corporate gift-giving done right

By: Neal Ysart

ONE of the busiest periods for organizations is the yearend holidays due to the volume of corporate gifts that need to be purchased and distributed. While an established practice in many jurisdictions, including the Philippines, corporate gift-giving can be a tricky exercise if concerned parties play fast and loose with the rules or, worse, are not aware of the regulations at all.

There is no shortage, for example, of public officials who have found themselves in hot water for accepting lavish gifts, even from personalities with no pending transactions with their offices. Just this month, the US Supreme Court released its first formal code of conduct governing the ethical behavior of its justices following a stream of exposés on the extravagant gifts and trips certain justices received from wealthy benefactors. In the Philippines, a justice with the anti-graft court was dismissed after he was found to have accepted excessive favors from a private citizen.

While the rules around gift-giving are more relaxed in the private sector, it is no less plagued with similar problems of impropriety. One international trade association representing the pharmaceutical industry forbade prescription drug makers from giving gifts or "goodies" to health care professionals after it found that these companies were handing out increasingly elaborate and expensive holiday gifts that could be construed as bribes.

Despite these issues, corporate gift-giving remains an important component of professional relationship-building and is, in fact, growing as an industry. According to a Forbes estimate, the corporate gift market is worth $242 billion as an industry, compared to $125 billion before the Covid-19 pandemic. One study ties this growth to the increasing popularity of remote work, which has reduced the amount of face time among workers and business contacts. In this environment, a thoughtful gift given on the right occasion becomes more important in strengthening bonds or establishing connections.

Here are some best practices in corporate gift-giving to help make sure your thoughtfulness remains within the bounds of professional courtesy.

Maintain a gifts register for recording gifts, event invitations and responses. Use this repository to record gifts that are given, received and even those that the organization declines to accept. The same goes for event invitations. For organizations with a global footprint, including the jurisdiction is relevant since there are varying rules around gift-giving/entertaining across territories. The idea behind this register is to have a complete picture of the organization's gifts and hospitality record, making it easier to monitor compliance and reduce liability risk.

Set clear monetary thresholds for gifts and establish an authorization procedure. Business leaders along with compliance officers should set clear parameters around gifts that workers can receive and give and then ensure that these rules are communicated consistently to all concerned parties. A corporate policy should also be established for instances when a gift may exceed the threshold so that employees know how to act and who to approach for authorization.

Avoid offering money, favors, inappropriate gifts, or promises that may influence business decisions. These types of presents can easily be misconstrued as bribery, designed to influence business or official decisions. If company-branded merchandise is not a suitable gift, consider making a donation to a cause the recipient is passionate about or giving a shareable item the primary contact's entire team can enjoy.

Ensure gift-giving adheres strictly to anti-bribery and corruption laws. As mentioned earlier, different territories have different laws regarding gifts and hospitality. In the Philippines, for example, Republic Act 6713 prohibits public officials from receiving gifts unless they are of nominal value. Certain industries, such as the pharmaceutical industry, also have very stringent guidelines around who can give and receive gifts and the allowable value of those gifts. Some companies publish their codes of business conduct online, making it easier for those looking to give gifts to color inside the lines, so to speak, when doing so.

Provide training on gifts and hospitality risks. Conducting regular training sessions on the organization's gifts and hospitality policy can go a long way toward ensuring compliance. This is particularly relevant for workers who regularly interact with public officials, again keeping in mind that there are different laws across jurisdictions. There are certain countries, for example, where public officials are not allowed to accept any gift, even if it is of insignificant value.

While corporate gift-giving has its risks, these considerations shouldn't stop executives from extending the courtesy as a show of gratitude, to build rapport with a business contact, or to celebrate shared achievements. By establishing clear and consistent policies around the practice and ensuring that everyone adheres to the rules, organizations can safely and cheerfully hand out presents to valued business partners, especially during this festive season.

As published in The Manila Times on 27 November 2023. The author is the Forensic Leader at Deloitte Philippines.