How do healthcare industry policies on gift giving and entertainment stack up against other organizations? A recent survey conducted by the Heath Care Compliance Association (HCCA) and the Society of Corporate Compliance and Ethics (SCCE) found that healthcare organizations have the most restrictive policies, while nonprofits generally are more restrictive than for profits, and publicly traded companies had the least restrictive policies. According to the results of the June 2012 survey, organization gift giving and entertainment policies have not changed in three years despite increased scrutiny of corporate behavior, including the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), the commercial bribery provisions of the UK Bribery Act, and increased enforcement of the Foreign Corruption Practices Act (FCPA).
SCCE and HCCA initially fielded a survey to the compliance community in 2009 to determine the level of acceptable business entertainment and gift giving. According to the results of the 2009 survey, organizations are ” fairly restrictive of the gifts employees can give and receive, as well as how they can entertain.” Sixty-three percent (63%) either ban gifts to employees or require that they be modest or less than $50, according to the survey findings.
Specifically, the survey elicited the following responses on organizations policies on gift giving and receiving and entertainment:
- Policies on receiving gifts. Overall, respondents reported that their organizations are very restrictive in the gifts they allow employees to receive. Twenty-two (22%) percent of the respondents reported a ban on receiving gifts, while another 26 percent set gift limits of less than $50 and 15 percent require gifts to be modest. Four percent (4%) had no policy. Of publicly traded companies, only 9 percent of respondents reported that they had a no gift policy, while 29 percent of nonprofits reported a no gifts allowed policy. Twenty-eight percent (28%) of respondents from the healthcare industry report a policy that bans employees from receiving gifts. The healthcare industry responses to the 2012 survey represent an increase of eight percent over the 2009 survey responses.
- Policies on giving gifts. Twenty-eight percent (28%) of the respondents reported that their organizations ban the giving of gifts. Healthcare and nonprofit organizations’ policies were the most restrictive. Thirty-eight percent (38%) of healthcare respondents 38 and 37 percent of nonprofit respondents reported a ban on gift giving. Of the nonhealth companies, 12 percent reported a policy of no gift giving, while 16 percent of publicly traded companies reported a policy of no gift giving.
- Employee entertainment. Twenty-three percent (23%) of all respondents reported that their organizations’ policy does not allow them to be entertained. Thirty percent (30 percent) of nonprofit and healthcare respondents reported a policy that does not allow employee entertainment. Thirty-two percent (32%) of the respondents reported that their policies allowed “modest” entertainment without stating a specific dollar amount. Only eight percent reported that more than $100 in entertainment was explicitly allowed.
- Entertainment of customers and others. Twenty-two (22%) of all respondents reported they were not allowed to entertain customers and others. Sixteen percent of privately held companies and 10 percent of publicly held companies reported reported they were not allowed to entertain customers and other parties. Forty percent of publicly traded companies allowed modest entertainment up from 25 percent in 2009, 14 percent allowed entertainment of $101 or moe, and 7 percent reported entertainment of more than 300. Twenty-nine percent of both healthcare and nonprofit reported entertainment allowance of more than $300.
The survey showed that overall 65 percent of respondents tend to calculate gift giving on a per gift or event basis and that most companies keep their gift giving policies fairly constant. Publicly traded companies were more likely to follow this policy (73%), while healthcare organizations were less likely than others to follow this policy (59%).
HCCA and SCCE concluded among other things that (1) although there was little change in the three years since the first survey, as scrutiny increases, organizations may have to revisit their policies sooner rather than later; and (2) although calculating gift and entertainment limits on a per event basis may be popular, it may be risky business because while each gift may be modest, the total value may be considerable over time and may catch the attention of regulators, shareholders and others. ”Business decisions should be based on what is good for the company and not on personal gain. Personal gifts interfere with this objective. Banning gifts is good business practice, ” Roy Snell, Chief Executive Officer of SCCE and HCCA said.
SCCE and HCCA are nonprofit professional membership organizations composed of compliance and ethics professionals.