Have a policy for accepting gifts
Many of us are aware of the strict policies that employees of public sector entities, large corporates and charitable services must follow when offered a gift by a client or customer. They have the responsibility of fairness and transparency to ensure continued public confidence in their organisations.
In much of the private sector, however, accepting a gift from a client can be a somewhat grey area, or may not be addressed with a company policy. We provide some insights into the pitfalls of accepting client gifts and what to consider when preparing a gifting policy for your business.
What is a gift?
A gift is something given willingly to someone else – without payment. A bit like a birthday present but in a business sense. The gift could be money, items or an act of service.
Conflicts of interest arising from business gifts are not always immediately apparent, as gifts are a one-way transaction. They can be a form of thanks, but accepting them from clients or customers can lead to potential ethical problems, legal risks or expectations of future behaviour.
Perceptions
You may have received a Christmas gift basket, bottle of wine or box of chocolates from a client as acknowledgement for your hard work over the year or for a project. Or your business may have a long-standing relationship with a client who offers more high-value items such as seats to a rugby game or a weekend away at a client’s holiday home.
Although a gift may not cloud your judgement, what might your competitors, market participants, regulators or prospects think? Gifts can be perceived differently in many circumstances and gifting can sometimes be misconstrued, resulting in a market perception of bias in the way you conduct business. Whether that perception is accurate is not the point, once an idea is in mind it can be difficult to ease any concerns long-term.
Legal
Legal pitfalls in accepting a client’s gift could lead to serious consequences, and action may be taken in response. Some issues to be aware of include:
- Bribery
- Misconduct, and/or
- Breach of fiduciary duty.
Policy
A gift acceptance policy can be tailored for the specific nature of your business. It should provide guidance for a range of situations and clearly define what is considered a gift, any value thresholds that apply and set out a framework for reporting any gifts. Reporting can encourage openness and accountability for your team.
The policy could advise on behaviour around declining gifts that meet certain criteria, such as those with a high value that could be seen as a bribe. Accepting gifts can sometimes be unavoidable because it is culturally inappropriate to do so, or it might weaken the relationship. Having a clear policy gives employees an ability to navigate tricky situations with professionalism, integrity and transparency – and not to hurt the feelings of the person making the gift.
Building and maintaining strong relationships with your clients is the strength of your business. When a client offers a gift, it’s often their way to show their appreciation for your hard work and dedication. While accepting a gift can foster goodwill (and it can be difficult to refuse), it’s important for businesses to prioritise clarity and fairness through clear policies.
If you need help with drafting a gift acceptance policy, please don’t hesitate to contact us.
