It’s that time of year when gifts among friends are common. If those friends are in private firms or public agencies, however, those gifts can cost both parties their careers. Even the appearance of impropriety can create a public relations nightmare. Firms must act in compliance with applicable gift-giving laws, which vary depending on the branch of government or particular agency.
Often, holiday parties and gifts are seen as tokens of friendship rather than attempts at influencing decisions. However, some firms try to evade spending restrictions by taking full advantage of “friendship exemptions” and dividing bills for gifts among several people to stay under spending caps. With increased scrutiny of government expenditures, what might have been considered acceptable in the past could lead to criticism, contracting constraints, and criminal charges.
While most professional service firms do not try to get around gift limits, many are unaware of gift-giving rules or how the rules are changing. Few companies have well-established compliance mechanisms. Here are some tips for establishing in-house policies:
- Learn the laws and monitor changes. It may not be okay to pay an official an honorarium, but it may be acceptable to invite a public official to speak and donate the honorarium to the official’s charity of choice. The Department of Justice has information on what is and is not acceptable for government employees to accept.
- Recognize the difference in rules for executive, legislative, and administrative agencies. Misapplying limits may jeopardize a firm’s credibility and the official’s reputation.
- Communicate limits to those performing public relations for the firm, including consultants.
- Develop a compliance mentality. Implement audit systems and make sure internal groups are not in charge of policing themselves.
- Design an internal compliance coding system for government relations expenditures to track everything sent over the holidays, ensuring that annual spending limits are not exceeded.