The Gift Certificate

Over the recent years, the giving of a gift certificate has been a frowned upon encouragement and thanking tool within my organization.  The primary reason is that it emulates cash, thereby creating a “payment” system for volunteers, and a “raise” system for staff.

To counter the cautions in “paying staff,” our new XP, David Fletcher, is now freeing up this thanking tool once again, through the following steps:

  • Arrange an accounting practice within your finance office when gift certificates are purchased from your organization.
  • Have the gift certificates counted as “income” to the individual.
  • Ensure this documentation appears on the individuals W-9 form.
  • Inform the employee that their gift certificate will be taxed, treating them the same way as a bonus.

A word to the wise wanting to thank employees for going above and beyond with these easy and well-received nuggets of goodness.


~ by Dave Smith on June 1, 2009.

5 Responses to “The Gift Certificate”

  1. Maybe I am confused here, but why go through all this trouble for a $25 starbucks gift card? Why not just give it to them without telling them its income? I think if it is going to be taxed like income, in the form of a bonus, most people would rather just have cash so they can spend as they see fit. Like I said, I understand that I work in a totally different environment than this but I just don’t get all the hassle over $25. Perhaps we are talking about more money than I am assuming. I guess if I had an employee that was doing a fantastic job and my company was a stickler for gift cards, I would just buy it myself and give it to them as a personal token of appreciation.

  2. Good point Brian.

    Yea, a lot of the staff due pay for it out of their own pocket…but when it comes to something like an end-of-the-year thanking initiative to an entire team, that is where it can be beneficial.

    Definitely can be a lot of work though.

    Remember the good ol’ days when a pat on the back, with a “thank you” and a pack of cigarettes was all you needed!

  3. where i come from, a pack of cigs and a smile can still win you some friends. there is hope for america yet

  4. what happened to a nice bottle of wine? Seriously…time is spent discussing this. That explains a lot 😦

  5. Actually, surprisingly not a lot of time is spent talking about this…ensuring we are within the limits of our auditors…but that doesn’t mean there isn’t sometimes other substantial time spent small, policy issues instead of large strategic issues. You know how the machine can run!

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