Rules for inviting a public official to charitable events

Your civic-minded company often purchases tickets to charitable or community events to support worthy causes. In addition to the community benefit, those events are an opportunity to spend quality time with key customers, clients and other guests. But what if your customer is a public official who is governed by Ohio’s ethics or lobbying laws?

You can offer a complimentary ticket for a charitable event to a public official or employee, and they can accept the ticket. But, unless the fundraiser is a low-dollar event, public officials or employees who do business with your company should pay the fair market value of the ticket. If you employ a lobbyist, you’ll also need to consider potential reporting requirements. Until recently, there was some ambiguity about how to calculate the fair market value of a ticket in this situation.

For example, a $100 ticket to a charitable event may constitute a $25 meal and a $75 charitable deduction for your company. Is the fair market value the $100 face value of the ticket or the $25 value of the meal only? The answer, until recently, depended on which public agency governed the ethical behavior of your guest under the circumstances.

Ohio has two state agencies that administer different ethics laws for public officials and employees: the Ohio Ethics Commission (OEC) administers ethics laws for state and local officials and employees; and the Joint Legislative Ethics Committee (JLEC) administers ethics and lobbying laws for the General Assembly and staff. The two agencies operate under separate laws, and have equally compelling authority to interpret the laws that apply to their constituencies.

Both OEC and JLEC now advise that the fair market value of a ticket to a charitable event is the dollar amount that is NOT tax deductible. In other words, the value of the meal (and not the portion of the ticket that constitutes a charitable deduction for your company) is the amount that must be paid or reported by all public employees governed by these laws.

For more information, see OEC Advisory Opinion 2009-003 and JLEC Advisory Opinion 2014-003, or contact Maria Armstrong or Katie Reardon with any questions regarding your compliance requirements.

Reprinted from the Summer 2014 Compliance Connections Newsletter. Download the complete Summer 2014 issue here.