Managers reap benefits from giving presents to their teams: Recipients may feel a morale boost and increased motivation to improve productivity. It may be only a modest gesture, but they are more likely to apply their best efforts when they feel valued.
Gift policies and principles
Many firms codify an official gifting policy with a uniform set of rules to follow. What is appropriate and what is prohibited? Corporate policies normally state from whom and in what circumstances an employee may accept a gift. Other protocols are based on a commonsense approach to office relationships and how to avoid embarrassment.
The standard rule is that gifts should flow down the supervisory line — in other words, no apple for the teacher! The rationale behind this guideline is that it protects employees from ever feeling pressure to buy something for the boss. On the other side, companies need to discourage any situation where a superior might feel obligated to respond with favoritism. Group gifts are an exception, so it is acceptable for the entire team to chip in.
Another general rule is to avoid giving overly personal items, such as perfume and jewelry. That said, many bosses do give their direct reports small clothing items such as scarves and gloves. And unless you know a recipient’s particular taste, it is advisable to avoid anything scented, even candles.
Other principles should be obvious. If you are gifting to a team, never leave out anyone and make sure each gift has comparable value. However, what should you, as a manager, do if one of your team members gives you a small present before Christmas, for instance? Accept it graciously, but in early December of next year gently remind all your employees that you prefer them to direct any gifts to their own friends and families.
Compiling a gift list
There are many ways for managers to express generosity without breaking office taboos. First, a few don’ts:
- Do not exceed any prescribed set amounts.
- Be careful about alcohol: Many abstain because of health or religious reasons.
- Very inexpensive or thoughtless gifts can be offensive. Do not buy candy from the newsstand on the corner.
- Do not give cash (unless it’s part of a formal bonus program), but gift cards and certificates are permissible.
- Do not pressure fellow team members to contribute to group gifts.
- Avoid donations to controversial charities.
- Company swag? No, no, no!
A list of suitable gifts includes:
- Flowers and plants.
- Food and wine (if no religious sensitivities).
- Event tickets.
- Meals.
- Books.
- Travel vouchers.
- Subscriptions.
- Electronic gadgets, such as noise-canceling headphones.
- Picture frames.
- Desk accessories, such as paperweights, calendars, pen sets and monogrammed mugs.
- Fruit-of-the-month club memberships.
- Gift cards — ideally matched to employees’ individual interests.
When you present your gift, remember that wrapping paper and a note add a personal touch. Give it to the person but let him or her know it is unnecessary to open it on the spot.
Tax deductions
Donors can take tax deductions for their gifts. Be careful, though, that your generosity does not end up making an employee liable for declaring or paying tax. Any gift, from a bonus to a gift card, counts as income. Yet even the hard-hearted IRS has carved out some exceptions: If the gift is occasional rather than regular and of little monetary value, it is classified as a “de minimis fringe benefit.” Alternatively, an award of less than $400 for outstanding work can also escape the tax net, but the rules are complex and rigid. Notes the IRS: “Cash is generally intended as a wage, and usually provides no administrative burden to account for. Cash therefore cannot be a de minimis fringe benefit.”
Although the IRS limits tax donors’ tax deductions to $25 per item, business entertaining has more latitude, at a 50% deduction. Incentive gifts can also be written off. For example, travel or equipment awarded to your best-performing salesperson might qualify. Again, IRS rules are subtle, so consult a qualified tax adviser about the tax implications of any gift.
We welcome the opportunity to put our accounting expertise to work for you. To learn more about how our firm can help advance your success, don’t hesitate to contact Kathy Corcoran at (302) 254-8240.
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