Appendix 5. Nonprofit Organization FAQS: Giving and Receiving Gifts

Frequently Asked Questions About Giving and Receiving Gifts

It is essential that [ORGANIZATION] fulfills its Mission and its commitment to integrity in the delivery of services. For this reason, employees, volunteers, and others who are in the direct control of [ORGANIZATION], and members of the [ORGANIZATION’s] Governing Board; and Foundation Boards (collectively referred to as workforce members) of [ORGANIZATION] and our family of organizations must maintain impartial and appropriate relationships and not partake in activities that present a real or perceived conflict.

To avoid actual or perceived conflict, workforce members must avoid accepting gifts or other items of value, including, but not limited to, meals, tickets to events, special favors, loans, discounts, free services, tips, and gratuities. Remember, cash and cash equivalents, such as a gift card, are never to be accepted unless it comes from within [ORGANIZATION] or our affiliates (e.g., from your supervisor or HR).

The purpose of these FAQs is to provide workforce members consistent guidance on giving and receiving of gifts while fulfilling the [ORGANIZATION’s] Mission.

Gifts from within [ORGANIZATION]

What is the difference between a tangible gift, a voucher, and a gift of cash or cash equivalent? Are gifts to workforce members’ taxable if reimbursed or paid directly by [ORGANIZATION]?

Tangible items or gifts for a specific item such as a cafeteria meal voucher, turkey, a haircut, or a fruit platter, up to $75, are not considered taxable to the workforce member.

Tangible items or gifts over $75 are taxable to the workforce member and will be reported as compensation to the employee on the employee’s W2 unless the employee has declined to accept the item.

Because gift certificates or gift cards are considered gifts of cash equivalent and are not tangible items, these items will always be taxable to the employee regardless of value when given by [ORGANIZATION].

For gifts of cash or cash equivalent provided by [ORGANIZATION], payroll must be notified for taxation purposes.

When contacting payroll, provide the following information:

Employee ID #
Full name
Home department
Charge to department if different than home department
Amount of gift card and/or value of gift

Can a unit provide a meal voucher or gift card to workforce members as a token of recognition (i.e., upon completion of mandatory training)?

Yes; however, gift cards or gift certificates of any amount provided to workforce members from within [ORGANIZATION] will be taxable to the employee. An occasional meal voucher in conjunction with a planned event is allowable but should generally be avoided.

Our unit provides all of its employees with a gift certificate for a turkey or ham during the holidays. Is this included as income to the employees?

No. Since it would be impractical for the unit to physically hand out a turkey or ham to each employee, it is permissible to provide a gift voucher specifically for such items. A gift voucher redeemable for a specific item, or just 2 in this case (a turkey or a ham), is considered a gift of property, not a gift of cash or a cash equivalent, and therefore not reportable as taxable income to the employee.

However, if the unit were to provide a gift certificate to local grocery stores for, say, $25, allowing the employee to select the holiday meal of their choice, the gift certificate would be considered a cash equivalent and would be reportable as taxable income to the employee.

Are workforce members allowed to accept gifts purchased by their managers from the manager’s personal account?

Yes, workforce members are allowed to accept gifts from their manager and there are no tax implications to the workforce member if the gift is not purchased with [ORGANIZATION] funds.

Are workforce members allowed to purchase gifts for other workforce members?

Yes, workforce members are allowed to exchange gifts. This can include gift cards as they are not taxed by [ORGANIZATION] payroll when paid for out-of-pocket by the workforce member not using [ORGANIZATION] funds. This means the person providing the gift card must not request to be reimbursed by [ORGANIZATION].

Gifts from the Community, Vendors, or Other Parties

Are workforce members allowed to accept a gift card/gift certificate from a customer, customer’s families, or other parties?

Generally, no. A gift card, or gift certificate, is considered a gift of cash and is not a tangible item. In the event that a gift card or gift certificate cannot be declined, or returned to the giver, the item must be forwarded to a foundation or employee assistance program.

Are workforce members allowed to accept a non-cash/cash equivalent gift from a customer, customer’s family, or other parties?

According to the [ORGANIZATION] Code of Conduct and [ORGANIZATION] Conflicts of Interest Policy, workforce members may accept nonmonetary gifts valued at less than $100, such as an occasional consumable gift (e.g., meal, fruit basket) if shared among workforce members within the department. These gifts and services from the community are not considered income, nor are they taxable to the employees. Nominal gifts such as pens and mugs may also be accepted.

Can workforce members accept perishable food items?

Perishable food items given by community members and community food establishments (i.e.: [RESTAURANT] offers to drop off 50 meals for employees, local restaurant offered to cater lunch) do not present compliance issues. However, before accepting these food items, local policies or procedures must be reviewed as they relate to:

Pest control issues
Potential foodborne illness issues

Are workforce members allowed to accept a prize or award from a vendor drawing?

[ORGANIZATION] does allow workforce members to accept a prize or award from a bona fide competition held in public, such as a random drawing at a conference or training session. Workforce members are prohibited from participating in drawings that cannot be verified as random (e.g., drawing via email entry).

Can research programs accept gifts from outside companies?

In addition to the vendor policy, the code of conduct and to other applicable laws, the Conflicts of Interest in Research Policy ([ORGANIZATION] policy number ###) , applies to this scenario. Even if individually the amount spent doesn’t constitute a “significant financial interest,” such activities could be seen as impairments to objectivity. It is important for [ORGANIZATION] employees, individually and as an [ORGANIZATION] to strive to maintain independence and avoid situations where even the appearance of a conflict might exist.

Vendor Interactions Policy

How does our Vendor Interactions Policy (policy number ###) apply to speaking engagements for our employees, while on PTO and receiving an honorarium?

Expectations are the same for ALL [ORGANIZATION] employees.

Paid speaking engagements made on an employee’s own time are similar to a second job and differ from speaking engagements at association conferences where the employee’s expenses are reimbursed.

The concern arises when the presentation is on behalf of or paid by a vendor that [ORGANIZATION] uses or would consider using. The conflict of interest policy challenges us to avoid an appearance of impropriety. If an employee is asked to speak by an existing [ORGANIZATION] vendor or prospective vendor because he/she is an [ORGANIZATION] employee, the individual is benefiting from this [ORGANIZATION’s] not-for-profit status and the speaking engagement should generally be declined. For those with influence or authority to choose a product or service, it likely would be a conflict of interest, and the speaking engagement should be avoided.

In all cases where the speaking engagement is permitted, and approved by the individual’s supervisor, the honorarium should be commensurate with the value of the work provided. The vendor interactions policy provides additional guidance related to the purpose of the speech. If the talk is educational (as at a professional association meeting), then it is usually acceptable. In no case should we endorse products or services.

For our employees, the managers are strongly encouraged to review all of our applicable policies and approve/disapprove of the speaking engagement. When unsure, it should be referred to our compliance team. In all cases, the honorarium paid should be reported on the annual conflicts of interest disclosure form. The $100 limit set in the Vendor Interactions Policy would not apply in these circumstances as any honorarium received would be a fair market value payment in exchange for services rendered (as discussed above). Workforce members should always check policies to determine if there is a more stringent employment or other policy to be followed within a specific geography of the organization.

How do the Gifts and Vendor Interactions Policy (policy number ###) apply to gifts that an agent/broker may give to a workforce member?

A workforce member may accept a nonmonetary gift if it is not cash or a cash equivalent item such as a gift card. The $100 limit does apply. However, it is recommended that management discourage the practice of gifts between agents/brokers and workforce members.

Fundraising and Charitable Events

Can workforce members solicit cash contributions or fundraise for things like department holiday parties? Is it ok if contributors submit the funds through the foundation?

Generally speaking, the answer is no. Employees, whether through the foundation or otherwise, should not solicit cash contributions from anyone with whom we do business (vendors, agents, brokers, etc.) for the purpose of department parties. [ORGANIZATION] facilitated fundraising for aligned community causes may be incorporated into existing initiatives from time to time upon approval of the foundation. Solicitations must be carefully coordinated to prevent potential damage to image and mission. It is very important that foundation leaders can provide consultation on any proposals due to IRS tax donation regulations as well. Please be sure to check with the foundation’s administrative director as well for any local policies that may apply. Vendors requesting to contribute should be connected with the foundation to learn more about how the vendor might support the organization.

Can a workforce member accept an invitation by a vendor sponsoring an [ORGANIZATION]-hosted charitable event such as a holiday festival?

Given the important mission- and business-related role served by [ORGANIZATION]-sponsored charitable events (i.e., where the event is hosted by [ORGANIZATION] and the funds raised by the event will benefit an organization exclusively), [ORGANIZATION] employees may attend these types of events as a guest of a third party (including vendors) without making a required donation to [ORGANIZATION] or an [ORGANIZATION]-related foundation (voluntary donations are encouraged). Employees accepting such invitations should disclose participation on the annual conflicts of interest disclosure form and attendance should be approved in advance by the employee’s immediate supervisor.

Can workforce members accept an invitation by a vendor to a non-[ORGANIZATION] hosted charitable event such as a cancer survivorship dinner?

Meals may be provided when offered in conjunction with a legitimate education function, and when they are reasonable and modest ($50 or less). The structure of vendor presentations, if included, should consist of content that is commercially unbiased, objective, and scientific and should not be a marketing opportunity for any vendor. Promotional activities, to the extent that they may occur, need to be separate from the content of the education. If a cancer survivorship dinner exceeds the recommended amount of $50 or less, it would be inappropriate to attend this event.

Even if individually the amount spent doesn’t constitute a “significant financial interest,” such activities could be seen as impairments to objectivity.

De Minimis Benefits and Gifts of Nominal Value

What is a de minimis benefit?

The IRS defines a de minimis benefit as one for which, considering its value and the frequency with which it is provided, is so small as to make accounting for it unreasonable or impractical. An essential element of a de minimis benefit is that it is occasional or unusual in frequency.

Consumable items such as fruit baskets, chocolates, or coffee are generally considered de minimis. Non-cash prizes can be excluded from taxable income if the value is de minimis, such as a T-shirt.

An infrequent meal voucher to enable employees to stay on the premises for the employer’s convenience (such as our orientation days or trainings) is acceptable. A lunch/café voucher provided by [ORGANIZATION]could qualify as a de minimis benefit.

Cash is generally intended as a wage and therefore cannot be a de minimis fringe benefit. Gift certificates that are redeemable for general merchandise or have a cash equivalent value are not de minimis benefits and are taxable.

For more information visit: https://www.irs.gov/government-entities/federal-state-local-governments/de-minimis-fringe-benefits

Are gifts that have been donated to us that are then given to employees’ taxable income to the employee if over the de minimis threshold? What is the value attributed to a donated gift?

Yes, these items would be considered taxable income to the employee receiving the gift. Income tax would be calculated based on the face value or market value of the item regardless of the amount it cost you to obtain the item.

We provide productivity awards to employees for achieving certain productivity goals. The value of these awards exceeds the de minimis threshold. The award is given as part of a meaningful presentation. Would this award be considered taxable income to the employee?

Yes, productivity awards over the de minimis threshold would be considered taxable income to the employee. The only employee achievement awards that are excludable from income is an item of tangible personal property given to an employee for length of service or safety achievement, awarded as part of a meaningful presentation, and not otherwise payment of compensation.

Can workforce members offer customers gift certificates or some other gift of nominal value?

Yes, the Department of Health & Human Services, Office of Inspector General (OIG) has issued guidance suggesting that it is appropriate for inexpensive items or services to be provided to customers. The OIG defines inexpensive as having a retail value of no more than $15 per item or $75 in the aggregate per patient on an annual basis, and the gift cannot be in the form of cash or cash equivalents. ‘‘Cash equivalents’’ are defined as items convertible to cash (such as a check) or that can be used like cash (such as a Mastercard or Visa debit card, but not a gift card that can be redeemed only at certain stores or for a certain purpose, like a gasoline gift card). So Visa or Mastercard debit cards are NOT allowable, but provision of a store card (that generally cannot be converted to cash) would be acceptable so long as the guidelines for remuneration levels are applied. Any such gifts provided to patients must be tracked ahead of the purchase by the ministry/facility to assure the $75 cap is not exceeded.

There is an exception that a gift card is allowed for the purpose of customer service recovery under the following conditions:

The individual gift cards will have a value not exceeding $15;
The cards will be redeemable at specific vendors that do not sell items or services paid for by federal programs;
The cards cannot be redeemed for cash or for items or services provided by [ORGANIZATION]; and
The gift card should not be linked in any way to the provision of services.

[ORGANIZATION] has a system for tracking the issuance of the cards, for the purpose of ensuring that individual beneficiaries do not receive multiple cards having an aggregate value in excess of $75 in one year.

If the above conditions are met, the OIG states that the “gift card is considered nominal in value and will not constitute cash or a cash equivalent.” The intent of providing a gift or gift card cannot be to entice a person to utilize [ORGANIZATION’s] services.