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Research Compliance:

O.K. to accept iPod, gadget, or gift certificate?

Reader Question: Often times I see vendors offer an iPod or other gadget or gift certificate if you purchase a certain amount of product. What are the rules regarding this when you are using federal grant dollars and work in a public University? Are the rules different depending on funding source or
your employer?

Expert Comments:

When a vendor offers an iPod, gift certificate or another similar incentive for purchasing a product, it’s tempting to quote the old maxim “don’t look a gift horse in the mouth.” But, looking long and hard at “this horse’s teeth” could save you a lot of trouble down the trail, whether federal or private funds are involved

First of all, many institutions -- public and private – have policies in place that flat out prohibit accepting gifts or incentives of any type from vendors. In fact, federal agencies (such as NIH) often require their grant recipients to put in place policies that prohibit employees from using their positions for purposes that are, or appear to be, motivated by a desire for private gain. These institutional policies are particularly stringent for health care providers in order to prevent possible violation of Stark or Anti-Kickback laws. Even policies that permit gifts of nominal value in some instances, usually won’t “wash” when the gift is related to a particular transaction or activity. So in this case, given that the “gift” is directly dependent on purchasing a certain amount of product, any de minimis exception is unlikely to apply.

In addition to institutional policies, if federal (and in many cases, state) dollars are involved, then the fact that an employee received a gift or incentive in connection with a purchase could cast a shadow on whether or not the cost of the purchase should be an allowable expense to the grant. Although these standards differ in their specifics, they all generally require that purchase transactions be at “arm’s length” to ensure that they are competitive. These procurement standards themselves also may expressly prohibit employees and agents of the grant recipient from accepting gratuities or anything of monetary value from vendors or contractors.

So, is there any way to save this “gift horse”? Yes – ask the vendor to apply whatever it would have spent on iPods or gift cards as a discount to the purchase price instead. Such action on your part drives home that you select vendors solely on the basis of price and product, and helps you avoid any appearance of impropriety or perceived conflict of interest. And, if you are successful in getting a discount, remember to let your grants and contracts administration folks know, so that they can make sure they account for it appropriately under any cost accounting principles.

Comments by Kristin H. West, J.D., Associate V.P. and Director, Office of Research Compliance, Emory University Atlanta

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