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Self-Interested Giving

To many authors, the only motivation for giving is self-interest, or as Firth (1983) would have it, "indebtedness
engineering." Bourdieu (1977) and Levi-Strauss (1965) agree that gift-giving is simply an exchange in which non-
functional attributes are given relatively greater weight, with the "payoff' consisting mostly of social recognition.
Scholars in the area of gift-giving have suggested several benefits self-interested givers may desire:

1. to establish wealth and status (or more generally, achieving goodwill by impressing receivers with gifts) (Belshaw
1965, Veblen 1926);

2. as a correlate of (1), the desire to advance one's consumption scale (Chase 1984, based on Douglas and
Isherwood 1979);

3. to reinforce relationships that are highly valued, but insecure (Caplow 1982, 1984);

4. to garner the social recognition as a philanthropist one may achieve through giving (Kerton 1971);

5. to ingratiate one's self with the receiver, in part by extending one's self into the other's life through a gift (Sartre
1943, Belk 1988);

6. the lessening of guilt for not achieving the ideal of brotherhood to man (Barnett, 1 954)

Gifts and Bribes


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2. Markkula Center for Applied Ethics
3. Focus Areas
4. Government Ethics
5. Government Ethics Resources
6. What is Government Ethics?
7. Gifts and Bribes

Judy Nadler and Miriam Schulman


These materials were prepared for the Markkula Center for Applied Ethics program in
Government Ethics by Senior Fellow Judy Nadler and Communications Director Miriam
Schulman. The Center provides training in local government ethics for public officials.
For more information, contact Hana Callaghan.
What are gifts and bribes?
What do gifts and bribes have to do with ethics?
What ethical dilemmas do gifts and bribes present?
Resources on gifts and bribes
What are gifts and bribes?
Defining gifts and bribes may seem like a simple-minded activity, but, try posing the
question another way, and you will see why this is an important issue in government
ethics: What is the difference between a gift and a bribe? A gift is something of value
given without the expectation of return; a bribe is the same thing given in the hope of
influence or benefit.
Because it is often impossible to determine the expectation of the giver, all federal,
state, and local officials, both elected and appointed, are governed by rules restricting
gifts. In some cases, gifts over a certain amount are disallowed; in others, they must
simply be reported. These rules can vary significantly from locality to locality, indicating
disparities in each legislature's understanding of when a gift becomes a bribe.
Gifts and bribes can be actual items, or they can be tickets to a sporting event, travel,
rounds of golf, or restaurant meals.

In this context, it is well for government officials to remember the old saying, "There's no
such thing as a free lunch," or even a free pencil. While many scoff at the idea that a
pencil or notepad from a developer may influence political decision making, one
question needs to be answered: Why does the developer go to the trouble and expense
of making these items?
To answer, we can look at analogous experience from another field. E. Haavi Morreim
has studied the influence of drug company marketing on physicians' prescribing habits.
Her observation: When you ask doctors whether this kind of drug marketing is effective,
the answer is always the same: "It doesn't influence me at all. They're not going to buy
my soul with a laser pointer." The truth is…this kind of advertising is crucial to sales. A
doctor is not going to prescribe something he or she has never heard of, and it's the
drug representative's job to get the products' names in front of the physicians."
Similarly, a member of the zoning commission who has been keeping a notepad from
XYZ Builders next to his phone will remember the company when XYZ brings a matter
before the commission. While no one is suggesting legislation that would prevent
doctors or government officials from accepting inexpensive doodads, ethical politicians
will recognize that any gift from someone with business before him or her is intended to
exert an influence.

What do gifts and bribes have to do with ethics?


Political decisions are supposed to be made on the merits of the case, not based on
whether or not the decision maker has received a lovely case of wine from one of the
parties. This is a simple matter of fairness. When decision makers take gifts, even if
their votes are not influenced, they give the appearance of being on the take, which
undermines public confidence in government.
What ethical dilemmas do gifts and bribes present?
People do not go into government work to make a lot of money. Especially at the local
level, elected officials may receive only token payment for the number of hours they put
into the job. In this context, it is tempting to say that tickets to the local performing arts
center or sporting arena are well-deserved perks of office. Some even argue that
attending such events is part of the job and crucial to understanding the experience of
citizens who use these venues.
On the other side, such gifts may well influence officials when they need to determine
whether the performing arts center should expand or whether the arena can add retail
outlets that local businesses oppose. Also, such gifts can create a slippery slope, with
officials coming to expect VIP treatment and making local businesses feel coerced into
offering it so that they can receive a fair hearing.
By the same token, it is incumbent upon businesses to comply with government
regulations on gift giving. While it may be common in the private sector to acknowledge
important customers with extravagant holiday gifts, this practice is disallowed in the
public sphere; the gravel company that tries to reward the mayor of a city that has made
a big purchase with 10 pounds of expensive chocolate simply puts the mayor in the
awkward position of returning the gift.

The Ethical Dilemma in


Business Gifts: Giving or
Bribery?
 Published on July 16, 2014
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Karl Smith (MPA) - TheNetworkingGuy
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Sports events, entertainment and gifts have always


been used to leverage business relationships, says Karl Smith who is set
woo audiences at a two-day live sales events in Harare and Bulawayo –
Zimbabwe during the first week of September 2014.

The premise of giving gifts is an ancient way to express gratitude,


appreciation and love. Giving in itself is fairly innocuous and it is based
upon the philosophy of reciprocity which is commonly articulated by
phrases such as “what goes around comes around" or “what you sow,
you will reap”. While gifts are often given as a gesture of goodwill,
overly generous business gifts tend to put pressure on the recipient to
extend more than just goodwill to the giver. Thus, not surprisingly, the
line between sincere giving and bribery is becoming increasingly
distorted.

The topic of bribery has a long history, and bribery seems to be an arena
in which our moral views are changing. John T. Noonan, a lawyer and
historian of moral ideas, traces the history of thought on bribery from
3000 B.C. to the present. He finds that moral concepts change: "Moral
concepts found enshrined in traditions do not stay the same. They
undergo transformation. They are subject to investigation and criticism.
They expand, shrink or disappear." Bribery is increasingly viewed with
intolerance throughout the world. In fact, in virtually every country in
the world bribery is a shameful act. Those who accept bribes do not
speak publicly of their bribes anywhere.

Gifts, even those of nominal value, can create the perception of undue
influence. So what are gifts and bribes? Defining gifts and bribes may
seem like a simple-minded activity, but, try posing the question another
way and you will see why this is an important issue in business and
professional ethics: What is the difference between a gift and a bribe? A
gift is something of value given without the expectation of return; a
bribe is the same thing given in the hope of influence or benefit. Gifts
and bribes can be monetary, actual items or they can be tickets to a
sporting event, entertainment, travel, rounds of golf or restaurant meals.

Even if we agree that giving to bribe or coerce someone into influencing


a decision or outcome is wrong, it is increasingly difficult to decide
where to draw the line between permissible and impermissible actions.
Sometimes accepting these gifts and amenities may be a proper part of a
business relationship. In some situations, however, accepting them may
be a serious breach of business and professional ethics, and perhaps even
a violation of the law.

Policies and practices on handling gifts and invitations to special events


vary from company to company. For some the potential harm to an
organisation's credibility is not worth the risk and they ban all gifts to
employees, excluding personal gifts from friends and family. Other
organisations accept gifts, but when received, donate them to a non-
profit organisation. Then there are some organisations where gifts
received must be declared and it is maintained in registers. In other
organisations, unsolicited gifts are shared with all employees. If
everyone benefits equally, it may lessen the perception that the gift was
intended to influence the action of a single employee.

Clearly, it is unethical and in some instances illegal to accept gifts or


invitations to any event where the intent is to buy favour. Recognizing
that business is often conducted at social events and paying your own
way to attend an event is not always feasible, some individuals do accept
invitations to social events when the overall purpose is to further the
company's interests. Others attend only those business-related social
functions when they or their company or local office can pay for the cost
of attendance because it is in the interest of maintaining good business
relationships to participate.

South Africa has gone a long way to address the distorted line between
corporate giving and bribery. To this end, the Prevention and Combating
of Corrupt Activities Act 12 of 2004 came into effect and replaced the
Corruption Act of 1992. The Act extends its application from the offices
of corrupt public officials to the private sector and other entities. The
Act clearly criminalises specific “gratification” including the demanding
of, agreeing to or the offering of monetary and non-monetary gifts.
Failure to report corrupt activities carries a maximum penalty of 10
years' imprisonment.

The following questions may serve as guidance in considering your


company’s approach to the subject:

 Does your company have a code of conduct or policy on gifts and


attendance at work-related social events to guide employees? Is it
clear and appropriate?
 Does the code of conduct or policy follow international and South
African best practice, and has it been drafted with a clear
understanding of the Prevention and Combating of Corrupt
Activities Act 12 of 2004?
 Are there other ways to acknowledge the worth of employees
without subjecting them to potentially embarrassing headlines?
 Will your attendance at an event be viewed favourably by your
colleagues, other vendors, stakeholders, shareholders of the
company or general public?
 Is the gift you or your employee may accept worth the headline
that it may generate?
 Does your company have a training or awareness or mentoring
programme to equip staff at all levels with an inside-out approach
to ethics, based on values and principles? An inside-out approach
will help staff to debate and understand the importance of ethical
behaviour from a personal and organisational perspective.

The giving of gifts or doing favours to influence outcomes and without


transparency of your intent ultimately undermines trust in business
relationships - whether it is in your company or outside, says Smith. If
you are the gift-giver, find out what gift-giving policies your target
companies have. When dealing with organisations from different
countries, find out what their gift-giving customs are. Find out what it is
that they would appreciate and value and what might be offensive. You
will show that a lot of thought went into the gift. Gifts that would remind
the recipient of your country would be valued. Find out what it says in
the code of ethics of your target organisation or profession.

There are codes of ethics for auditors, accountants, doctors, lawyers,


government officials, pharmaceutical companies, journalists and most
other professions. You will avoid embarrassment and unnecessary
expense by researching what these are. You work hard to establish
credibility and trust among your colleagues, the other businesses with
whom you do business, and most importantly - with your shareholders.
Credibility and trust in the practices of your business are built around
accountability and appearances. If accepting a gift or attending an event
at some else's largess undermines your credibility or creates the
appearance of impropriety, don't do it!
When does gifting become corruption? The custom of giving gifts
exist in many societies. All ethnic groups in Malaysia practise it.
However, the differences between a gift and a bribe are:

1. A gift is given without the expectation of something in return.


 Gifts are given openly and the generosity of the giver is publicised. Hence, everyone knows
what has been given.
 Traditionally, gifts are shared with the community. This is especially in small tribal
communities where for instance, meat etc is shared out amongst the families.
 I believe the British government (as well as others) have an official policy or formula
regarding the acceptance of gifts - that they should not exceed a certain value etc.
 Gifts must be declared by the receiver as well as the giver. In other words, the public should
know about them.
 There must be no link between the job or business of the giver and the portfolio of the
receiver. It would be highly irregular for someone in the motor trade for instance to give
something to the minister for trade.

It is not difficult to differentiate between gifts and bribes. We should


not hide behind customary practices and disguise bribes as gifts.

The ethics of giving and receiving corporate gifts can be confusing, and require care
and attention to cultural sensitivities

The end of year festive season can have an impact on business life beyond office parties
and time off work. Ethics and compliance specialists may dread this time of year, as the
subject of gifts and hospitality bring up a number of ethical challenges. You may feel like the
office Grinch dictating that gifts and hospitality cannot be given or accepted.

There is no doubt that the giving and accepting of gifts and hospitality has an important role
in facilitating business relationships and practice. A meal out with a supplier can help build a
relationship; a pen with your firm’s name on it can remind a customer of you when they
need a quote.

At times however, the line between what constitutes a gift or hospitality and what constitutes
a bribe, can be unclear and the acceptance of gifts, services and hospitality can leave an
organisation vulnerable to accusations of unethical, or even unlawful conduct.
When is a gift not a gift? First, consider what the point of the gift or hospitality is. Is it to
influence a relationship or induce improper conduct? Or is it simply a token of thanks?

What’s the expectation?


It goes without saying that if the aim is to create an expectation of a “favourable” act in
return for the gift or hospitality, then it probably isn’t a gift.

Timing is also of key importance. Are you on the brink of closing a large deal with a
customer that if secured, would increase your end of year bonus by a not insignificant
amount? Or are you being offered a gift shortly before or during a tendering process? It is
not just giving but also the accepting of gifts and hospitality that is punishable under the UK
Bribery Act.

Consider the appropriateness of the gift and whether it is proportional to the level of the
recipient. If a middle manager seeking a new job offers centre court Wimbledon tickets to a
senior manager in another company, would that be considered appropriate or proportional?
Common sense would suggest not.

What constitutes a “lavish” gift or hospitality can be difficult to judge. For example, the
duties of senior staff may require them to attend or sponsor events where hospitality is
generous. What may seem minor to a senior manager could be significantly more valuable
to a junior employee. Sometimes, the exact value of a gift or hospitality can be hard to
determine. There are also cross cultural considerations; a gift valued at £20 may be
considered as low value in the UK, but could be considered as lavish in some less
developed economies.

Pick the person


Who is the gift for? Giving gifts or hospitality to certain persons, for example public officials,
is often construed as a facilitation payment and arouses suspicions. However, definitions of
what constitutes a public official can vary. In many countries, it can be difficult to tell the
difference between an employee in a state owned enterprise and a member of the
government who is also working within the state owned company.

A principle sometimes applied to determine what is an appropriate level of gift giving or


hospitality is that of reciprocity, ie if I accept an offer, am I able to offer the equivalent in
value in return? For example: “If my supplier offers me tickets to the theatre, would I be able
to reciprocate?” If the answer is “no”, then it may be seen as an attempt to buy favour and it
is advisable not to accept.
How can companies support staff? Many companies take a zero tolerance approach to gift
and hospitality giving and receiving. However, this isn’t always the most practical approach
and can mean employees find themselves in awkward situations having to publically decline
the gift or hospitality.

This is particularly true for employees of multinational companies operating in countries


where gift giving is an important cultural tradition and instrumental in building professional
relationships such as the giving of red envelopes for Chinese new year. Some companies
have opted not to implement a global blanket ban, but rather they have set out locally
determined limits for the value of gifts and hospitality that may be given or received.

Additional policies might be put in place when it comes to public officials, such as lowering
the value limit on gifts/hospitality or requiring employees to obtain management approval,
regardless of the value.

Clear policy
Employees need guidance on the company’s protocol on giving or accepting gifts or
hospitality. This includes seeking approval from their line manager or someone more senior,
recording it in a gifts and hospitality register. Sometimes gifts of a high value might be
required be donated to charity or to the company. Gifts of high value can then be auctioned
at the end of the year to raise funds for charity, for example.

Guidance is usually found in a company’s code of ethics or gift and hospitality policy. This
will outline the company’s position on gifts and hospitality, what constitutes gift giving and
hospitality and set out good practice for employees. A gifts and hospitality policy needs to
be consistent with all other aspects of an organisation’s ethics programme in encouraging
high standards of honesty and integrity in decision-making and behaviour.

So, there’s no need to be a Grinch. Communicate your gifts and hospitality policy to
employees and others you do business with; encourage employees to consider the ethical
implications before giving and receiving gifts; and offer additional support for those who
work in cultures with different gift-giving norms.

This will save both sides embarrassment and, potentially, your organisation’s reputation.