Corporate Giving Compliance: How To Protect Your Reputation (And Stay Out Of Jail)

International regulation requires you do your due diligence before making donations. Here’s what you need to do to protect your reputation, stay out of jail, and keep your compliance department happy.


 

A pharmaceutical company was fined a large penalty for donating to a Polish foundation. Why? The foundation’s president was also a government official in charge of purchasing for the nation’s health system. The charitable gift was meant to induce the official to choose the pharmaceutical company’s product, which is prohibited under the U.S. Foreign Corrupt Practices Act (FCPA).

Under the UK Bribery Act, said to be even stronger than the FCPA, individuals or businesses with operations in the United Kingdom who are convicted of bribery may face up to 10 years in prison or unlimited fines. Furthermore, illicit payments to government officials may also violate the anti-corruption laws in the country where the payments are made.

At GlobalGiving, we practice trust-based grantmaking. We can enter into grant partnerships from a place of trust because we begin with a comprehensive understanding of each of our nonprofit partners—grounded in years of working together.

If you’re in charge of a global charitable program, you likely have the same goal: entering into partnerships with trust and confidence.

Complex, ever-shifting charitable giving regulations, which vary from country to country, are an added challenge. Your company needs to comply with the law and protect your reputational exposure. Here are three important compliance considerations for professionals leading global charitable giving:

    1. Make international grants through a grantmaking intermediary to add an independent decision-maker to your charitable giving process.

    2. Confirm that your grantmaking intermediary applies strong compliance practices to control the use of funds.

    For example, look for policies such as:

    • Conducting due diligence on grantees
    • Asking grantees to identify if government officials serve in leadership
    • Obtaining grantee agreement to comply with anti-bribery and anti-corruption laws
    • Checking against law enforcement and financial institution watchlists

    3. If your company is very risk-averse, ask your grantmaking intermediary to add specific questions to the due diligence process.

    Here are some questions you might want to include:

    • “Do any government officials serve in leadership at your organization?”
    • “Do you agree that this support to your organization will not be used to pay for any expenses or events that violate applicable gift and entertainment laws and regulations for foreign, federal, state, or local officials?”

Avoid legal, financial, and reputation risk by staying in compliance with all applicable anti-corruption and anti-bribery laws. “Complying with these laws is vital,” says Robert Sims, a lawyer at Latham & Watkins LLP and GlobalGiving Board Member. “Donors, charitable organizations and, ultimately, the people on the ground we are trying to serve, can all pay a steep price for getting this wrong.”

Learn more about GlobalGiving’s nonprofit vetting services for corporate giving compliance.

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Featured Photo: Youth For Change by Trails For Change NGO, Inc.

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