Gifts, benefits and hospitality

The way in which a board handles gifts and hospitality offered to its members has serious implications for the trust placed in the governance of the entity concerned. When a board member is offered gifts or hospitality, careful judgement is needed in light of the entity’s roles and responsibilities.

There will always be a public perception of influence or personal benefit if gifts, benefits, or hospitality are accepted. It is critical to maintaining public confidence that the integrity and motivations of all board members are not called into question. 

Chief executives of statutory Crown entities and Secretaries and chief executives of the Public Service regularly disclose their expenses to provide transparency and accountability for their discretionary expenditure. Publishing clear and detailed disclosures is integral to building and maintaining the public’s trust and confidence in the Public Service. 

Te Kawa Mataaho | Public Service Commission has issued Model Standards for Gifts, Benefits and Expenses here 

Crown entities all have different constituencies and influences. A single prescriptive policy on gifts, benefits and hospitality for board members is impracticable. Gifts, benefits or hospitality may be offered for various reasons including a token of appreciation, as part of a ceremonial occasion, or as an attempt to exercise influence. While the best way of avoiding any perception of influence would be to refuse all offers of gifts and hospitality this may be unworkable in practice. However, regardless of who is in attendance, any offers that are not directly related to fulfilling the obligations of the entity should be declined.  

Every board should have a set of principles to inform members’ decisions about gifts, benefits and hospitality, and to promote transparency and consistency of approach. 

Principles  

• Board members should not accept gifts, benefits or hospitality that would, or might reasonably be seen to, compromise their integrity by placing them under any obligation to a third party.  
• Members must always be aware of the public perception that can result from their accepting gifts or hospitality. They must never solicit favours for themselves or others. 
• Gifts should be declined unless they are of nominal value, their acceptance complies with internal policies or other relevant standards and fulfil the obligations of the role 
• Timing and frequency are relevant. Offers of gifts or hospitality, even if of limited monetary value, may be of concern if offered repeatedly and/or at times when they could be seen to influence or reinforce a particular decision or action. 
• The commercial influence that a gift or benefit may represent is important.  

Practice 

The exercise of judgement and common sense will usually determine whether an offer of hospitality or a gift should be accepted. Useful tests could be to consider how Parliament, the media, competing suppliers and the wider public might interpret its acceptance; the reasons that may be behind the offer, how the member would justify accepting the offer, and how it might affect trust and confidence in the Public Service.

Board members should carefully consider the timing and frequency of gifts, benefits and hospitality. For instance: 

• extra vigilance is needed at a time when an entity is negotiating for purchases or services 
• while a small gift from an individual or organisation may be acceptable, if offered regularly, it could be seen as an attempt to build up influence with the board member. 

In respect of hospitality, careful judgement must be exercised. Board members should satisfy themselves that:  

• it is not too frequent or elaborate, given the nature of the relationship, or 

• it is not part of a pattern of invitations from one organisation which, taken together, could be considered excessive. 

All Crown entity boards must have in place a clear and well-understood internal policy on accepting and offering gifts, hospitality or other benefits, and how they will be recorded and executed. Critical elements of any policy and practice are: 

• open and transparent practices in relation to gifts that enhance trust and confidence in the Public Service, and reduce any misplaced speculation 
• board members must not solicit gifts, benefits and hospitality from, or on behalf of, anyone under any circumstances 

• board members are not to accept gifts,benefits and hsopitality from anyone, or on behalf of anyone, who could benefit from influencing them or the entity 
• an agreed approach to the value of gifts, benefits or hospitality that board members  accept, and the practice to be followed regarding the use of benefits in kind (eg. air points) 
• unless they are ‘consumable’ at the time (eg, meals, invitation to events), gifts should be regarded as the property of the entity 
• hospitality offered may provide opportunities for members to develop productive relationships but their presence at such occasions is potentially open to criticism 
• the context when considering hospitality offered by stakeholders. This is to balance the opportunities that may be provided against the potential for criticism. For instance: 
  • does the timing coincide with a particular board decision that could affect the donor?
  • how relevant is the event or function to the entity’s purpose?
  • will the board’s interests genuinely be advanced by having a board member present?
  • should the entity itself meet the costs of attendance in order to avoid any perceptions of influence over the board?

• close scrutiny of offers, such as invitations to attend conferences in New Zealand or overseas, that may comprise travel, accommodation, meals, a fee for speaking, and/or inclusion of a member’s partner. It is essential to consider whether there would be real value to the Crown entity from attendance, and, if so, who is best placed to represent the board or the entity; and 

• Boards considering offering gifts, benefits or hospitality should think very carefully about both the cost and the public and political perception of doing so. The policy needs to specify the purposes for which, and occasions on which, it is acceptable to give gifts or benefits, and the nature and value of gifts that are appropriate. 

Koha 

Entities should be clear about their approach to the question of koha, to avoid misunderstandings. Koha is a gift, token or contribution given on appropriate occasions, such as a visit by board members in conjunction with a consultation hui. It is not a transaction in the usual sense: for example, there may be no written acknowledgement of receipt. 

The Office of the Auditor-General’s good practice guide on sensitive expenditure includes an expectation that entities will ensure that: 

• their policy on koha includes the means of determining the amount of any koha 
• koha reflects the occasion 
• koha is not confused with any other payments that an entity makes to an organisation 
• koha is approved in advance, at an appropriate level of authority. 

See: https://oag.parliament.nz/2020/sensitive-expenditure.   

Disclosure 

Board members should consider checking with the chair before accepting any gift or hospitality they have been offered. Boards also should have in place procedures that enable the chair to disclose and seek advice on gifts and hospitality they are offered. Members should seek advice from or other appropriate source if they are at all uncertain about the appropriate action to take.

Disclosing gifts and hospitality as soon as practicable after they are accepted and maintaining a register of them represents an effective and transparent way for boards to demonstrate integrity in practice, both as a model of accepted behaviour within the entity concerned and in respect of their stakeholders.

Maintaining such a register is strongly encouraged as a practice to be adopted by all Crown entity boards. There is no standard format.  Typically, however, such a register would include the names of the recipient and the donor, the estimated value of the gift and the date received. 

Transparency would be increased further by including gifts for board members on the agenda for each board meeting and/or as part of the Audit and Risk committee agenda. 

Summary: Gifts, Benefits and hospitality  

Many boards have internal protocols on gifts, benefits and hospitality that are tailored to their particular circumstances. The provisions and value thresholds may vary according to the entity’s purpose, circumstances and stakeholders.

At a minimum a good governance manual should cover: 

• the acceptance of gifts and hospitality by a board member can, or may be seen to, impact on the public’s trust and confidence in the entity and in board governance in general. Therefore, such offers should be accepted only if there is no prospect of the gift or hospitality being seen or perceived to influence the board’s judgement in any way 
• the need for careful judgement to be exercised when considering offers of gifts or hospitality, in light of the entity’s roles and relationships 
• the board’s approach to its members accepting offers of gifts and hospitality, including: 
  • any entity-specific considerations that needed to be exercised in deciding whether to accept gifts and hospitality 
  • a monetary value above which gifts and hospitality need to be disclosed 
  • the accepted treatment of benefits in kind (eg. air points) 
  • a transparent process for declaring and registering offers of gifts and hospitality, and  such declarations should be regularly reviewed 
• the need to have in place an understanding of and the appropriate protocols surrounding koha 
• a clear statement that members must never solicit favours for themselves or others 
• annual disclosure of gifts, benefits and hospitality to promote transparency and openness with the New Zealand public.