Gift Giving Etiquette for Businesses

Introduction

Corporate gifting is part of the organizational culture that expresses appreciation and gratitude towards customers, clients, partners, and employees. In addition, this practice aims to foster stronger relationships with the recipient. Recognition and acknowledgment of all the organization’s partners are critical in the overall growth of the organization. Gifts don’t have to be lavish, and even the smallest gift often conveys respect and value. Timing of the gift is essential; otherwise, it may be construed as a bribe. Different organizations have different rules to be followed when it comes to gifting

Corporate Gifting Trends and Statistics

Corporate gifting is a practice that organizations use to establish a point of connection with customers, workers, and even prospects through a gift. Whether you are paying for an air ticket or concert ticket for them or giving something physical and tangible, or even an ecard, it’s all part of the corporate gifting. According to Forbes, corporate gifting is estimated to reach $242 billion in 2021 and is anticipated to increase significantly at a compound annual rate (CAGR) of 8.1% in 2024. In comparison, personal gifting is expected to increase by a compound annual growth rate of only 6%. It is estimated about 60% of all corporate gifts will be spent on partners and clients, while about 40% will be spent on internal employees, particularly for recognition and awards. Most organizations reported that their budget for gifts went up due to COVID. Organizations spent anywhere between $25 and $125 on corporate gifts and some are in the range of between $75 and $100

Psychology of Corporate Gifting

A gift is often designed to appreciate the employee’s hard work or to thank the clients for their support. The gift creates a positive response from the receiver towards the company and triggers the endowment effect. It is a feeling of ownership of the item that makes the receiver associate meaning and value with the gift. Therefore corporate gifting is a valuable strategy for employee satisfaction and customer acquisitions. Often, there is a strong psychological connection to gifting that can create a positive outcome for any organization, resulting in developing customer and employee loyalty. There is every reason why recognition and gratitude have become a priority in most workplaces and businesses because they create positive results.

• Brands and Clients Due to corporate gifting, the reciprocity theory will come into play because the recipient is often more likely to respond to the inquiries of the company. After all, the organization has taken the first step of gifting. The value attached to the gift affects the feelings and thoughts of the recipient towards the company, creating a positive brand association. It will make the clients realize their services are valued and encourage them to continue their services and even be brand ambassadors.
• Partners and Suppliers A well-thought gift program can support potential partners and suppliers. In addition, corporate gifts will go a long way in fostering close relationships with your partners and suppliers.
• Employees The company should give gifts to employees as an appreciation for their dedication and hard work. The organization gifting their employees are reported to have higher levels of retention and staff loyalty.Research indicates that over 57% of workers feel special and valued when they receive appreciation. The impact would be huge if they received a personalized and nicely branded gift.
• PR and Media PR and Media gifting describe the items or services offered to a person or system of influence, hoping that they reciprocate by sharing their experience with a specific audience. The two are gifted for the following reasons:
  • Increase Sales through the Influencer Campaigns
  • Enhance customer engagements
  • Increase marketing exposure
  • It offers cost-effective advertisements

Forms of Gifts

• Token of Appreciation Showing your employees or suppliers that you care about them is crucial if you need more healthy engagement. The good news is, it shouldn’t cost you much to pass such gratitude. The term ‘token of appreciation is common in workplaces. Small gifts or something catchy like cards can do.
  1. Gifts vs. Incentives Typically incentives are awards given for achieving a targeted level of activity, such as achieving sales quotas, good attendance, or attaining safety improvements. On the other hand, gifts are spontaneous and are not given as part of any arranged understanding between the recipient and the giver. The recipient of the gift does not set goals in anticipation to receive a reward.
  2. Gifts vs. Bribe Generally, gifts are offered as a gesture of goodwill. It is something given without expecting something in return. On the other hand, a bribe is given to influence the recipient or anticipate a benefit. Both the bribes and gifts can be monetary or any tangible item of value. A bribe is a serious breach of professional and business ethics and a violation of the law.
• Charitable Gifts
  1. Donation Any gift idea may have a downside. Some organizations have strict rules on gifting, and before giving out any gift, you have to know if the receiving company has policies on gifts. Some organizations, especially those in medical fields, insurance, financial services, and retail, prohibit gifts. Similarly, if ethics or other issues may stop you from giving a gift, you can consider donating it to your recipient’s favorite cause.
  2. Sponsorship Sponsorship is an agreement between the company and a nonprofit organization where the two entities benefit. For instance, a company may give donations to a nonprofit organization’s event in exchange for including the company’s logo or name in the event’s materials or naming rights. Corporate sponsorship may also include in-kind donations.

Gift Giving Compliance Laws & Ethics

• Is it Tax Deductible?Gifts are tax-deductible, and you can deduct part or all of the costs and are subject to certain limitations.
  • You can deduct a maximum of $25 of the cost of gifts you give to each person during the year.
  • Any gift categorized as either a gift or as entertainment is typically considered entertainment and cannot be deducted.
  • You also need to have records to show the details of the amount spent on the gift and the business purpose.
  1. Tangible Gifts According to the IRS, tangible gifts are tax-deductible. These are gifts given in the course of business or trade. Cash gifts, entertainment gifts, and gift cards do not qualify as tangible and are not tax-deductible.
  2. Traditional giftsTraditional gifts refer to gifts that can fit into two categories. They could be items such as a gift basket or a pen set.
  3. Direct Gifts Direct gifts refer to the gifts given directly to the employee or a customer.
  4. Indirect GiftsIndirect gifts are gifts for that person’s family. For example, this could be a gift sent to the client’s or employee’s spouse—the recipient matters when the IRS calculates the amount you are allowed to deduct for taxes.
• Gifting RestrictionsSome industries have stringent rules on giving and reporting gifts. For instance, there are certain gifts that are not accepted in the financial services industry.
  1. Gifts for Government Employees Government employees are not allowed to accept gifts from prohibited sources. Also, gifts given due to their official position are not allowed. However, they can receive a gift in situations where the value is less than $20 and a total of $50 from one source in a year. Government employees are expected to report when gifts from one source exceed $415 in one year. If the individual gift is less than $166, they do not meet the threshold.
  2. Company Internal Policies You need to find out the company’s internal policy on gift-giving. Some organizations like multinationals, auditing firms, and banks have stringent rules on receiving gifts. The best approach is to ask affront about the gift-giving culture in the company. Do not assume your intentions will always be understood, or your gift will always be welcomed.

Gift Giving Etiquette

• How much to spend Deciding on the amount to spend on each gift can be a challenging task. However, deciding on the amount to spend on employees would largely depend on what you can afford. Some organizations give employees gifts that range between $15 and $75. For executives, the gift would typically be more expensive compared to junior staff. It also varies from one organization to another.Buying gifts for clients and other partners outside your organization, you need to be more cautious. So organizations have strict limits on what they are allowed to accept as gifts. Therefore, when dealing with outsider partners, you have to ensure you do not exceed their limits with gifts. If the leadership outlines guidelines, always ensure you do not spend beyond those limits.
• How much to spend Gifting at the wrong time could easily send the wrong message and could be mistaken as a bribe. For instance, it’s not appropriate to gift in the middle of the bidding process even if your intentions were sincere. The recipient may find it unethical and feel obligated to turn down the gift.
• Presentation Always take time to prepare the gift by wrapping it nicely. Also, compose a personal handwritten card. The card can be as important as the gift because your message to the receiver conveys your sincerity.
• Customizing For many organizations, customizing gifts by adding the company’s logo keeps the company’s name in the recipient’s mind. If the gift is a practical item used every day, like a calendar, tote bag, or coffee mug, this translates to daily advertising.
• Logistics You can arrange a dinner to hand it over as a surprise. Alternatively, you can mail it, and this will reduce the feelings of obligation on the recipient. Depending on the relationship, the gift can be shipped to the recipient’s home to add a personal touch. This can be ideal when commemorating a personal occasion such as a birthday.
• Cheat Sheet Gifts can be categorized into three generally acceptable gifts, generally unacceptable gifts and unacceptable gifts (bribes)

What to Gift

Giving business gifts is a wise idea to motivate your employees, customers, executives, and partners. Here are only a few of the typical corporate gifts :

• Bags and tots
• Drinkwater gifts
• Gift sets
• Pen gifts
• Personalized gifts
• Foods and beverages

Gift-giving pros

• A display of gratitude
• Enhance stronger relationships
• Opens new business doors
• Motivate stakeholders

Gift-giving cons

• It could be construed as a bribery
• Some gifts can be costly
• It’s just for business, not lifelong friendship

Conclusion

Gift-giving is a great strategy to enhance performance and also establish good business relationships. Before you choose a gift for any party, it’s essential you first confirm the rules that govern gifting in their organization or the industry. It is crucial to give gifts in ways that wouldn’t create awkward situations or offend your clients, customers, or suppliers. Before you shop for gifts for your employees, colleagues, or clients keep in mind the business gift-giving etiquette.