“But I consider the client a friend, and I’ve been giving him gifts paid for by the company for ten years now.  I have to, or we might lose his business. The whole industry gives these kinds of gifts.  This limit for reimbursement is ridiculous!”  The foregoing conversation is a real one that I had with a sales manager.  Details have been changed to protect the clueless.

 We all know that we need a good gifts and charitable donations policy.  Many of the highest profile bribery prosecutions, in the U.S. and abroad have dealt with gifts, hospitality, third-party travel, and charitable contributions violations.  Excessive gifts or charitable contributions meant to influence a decision-maker for an unfair business advantage can cause havoc, as well as violations of the FCPA, UK Bribery Act, and local law. 

 Many compliance officers struggle when putting together a gifts and charitable donations policy.  What are best practices?  What is normal?  What is excessive?  And most importantly, what is defensible to a prosecutor? 

 We at Spark Compliance have researched this issue often.  We constantly give advice and write such policies for our clients.  To help you with this task, we’ve compiled benchmarking and best practices for gifts and charitable donations.  Previously we wrote about best practices relating to entertainment and third-party travel policies.  You can read that post HERE.

 Benchmarking Your Gifts Policy

Many companies set the threshold amount for gifts at $50.00.  A survey of Fortune 500 companies showed that more than 90 percent of the respondents set gift limits at $250 or less, with more than 65 percent reporting gift limits of $100 or less.

 Additionally, in most companies with which we have consulted, pre-approval by compliance or legal is required for all gifts to government officials. 

 In many companies, Internal Audit performs spot-checks of gifts receipts to ensure the process was properly followed. 

Best Practices for Gifts Policies

  A gift policy should: 

Gifts above a certain threshold should require pre-approval (see benchmarking above).  The pre-approval process should require that the following information be disclosed:

Benchmarking you Charitable Contribution Policy

Most major companies require compliance or legal department approval for contributions over $1000 to charitable contributions.  

Many companies also divide the world into regions based on risk.  For example, one of our clients allows charitable donations under $2500 to be given with little scrutiny throughout Europe, Australia, New Zealand, the United States, and Canada.  For the rest of the world, similar due diligence is required for charitable donations under $1000.  Charitable contributions above these amounts require higher due diligence regardless of location.

Nearly all companies Spark Compliance has consulted for have tracking policies for charitable contributions. 

Best Practices for Charitable Donations

Establish a due diligence process to confirm that:

Ensure that your policy:

Should you wish for a review of your gifts and charitable donations policy, please contact info@sparkcompliance.com.  This post is co-written by Spark Compliance’s CEO Kristy Grant-Hart and East Coast Vice President Ramsey Kazem.