Ethics, kickbacks and disclosure

Vendors offer commissions; venues offer favours. Decide now how you handle them, and how you disclose relationships to clients, the way this site discloses its founder’s companies.

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Ethics, kickbacks and disclosure.

Vendors offer commissions; venues offer favours.

Decide now how you handle them, and how you disclose relationships to clients, the way this site discloses its founder's companies.

Where the money tempts you.

Three offers will reach you in your first year: a venue that pays a referral fee for every booking you bring, a vendor who offers a commission on top of the client's price, and a supplier who offers a free upgrade "for you" on a client's event.

None of them is illegal.

A policy you can say out loud.

Write one paragraph you would be comfortable reading to a client, and put it in your agreement.

Simplest and easiest to explain. Your fee is your fee.

Writing the paragraph.

A disclosure clause does not need a lawyer's vocabulary.

It needs four things: what you might receive, from whom, what you will do with it, and when the client will hear about it.

How to handle the offer when it comes.

Thank them and ask for the terms in writing. A verbal "we look after our planners" is not a term; a percentage and a payment trigger are.

Check it against your policy. If you decline commissions, say so the same day and keep recommending them on merit.

Ownership disclosure, the EventPlans way.

This site is an example of the second principle.

Its founder owns several of the companies listed in the Directory.

That is the lesson. The worksheet and the quiz are just below this video.

What you will be able to do

• Write a personal disclosure policy
• Handle a vendor commission offer
• Explain conflicts of interest to a client

Where the money tempts you

Three offers will reach you in your first year: a venue that pays a referral fee for every booking you bring, a vendor who offers a commission on top of the client’s price, and a supplier who offers a free upgrade “for you” on a client’s event. None of them is illegal. All of them change whose interest you are serving when you recommend.

A policy you can say out loud

Write one paragraph you would be comfortable reading to a client, and put it in your agreement. Three common positions:

1. Decline all commissions. Simplest and easiest to explain. Your fee is your fee.
2. Disclose and credit. Accept referral fees but disclose them in writing and credit them against the client’s invoice.
3. Disclose and keep. Accept them, disclose them in the agreement, and let the client decide whether that affects their trust.

Most planners who last choose one of the first two. The third is defensible only if the disclosure is genuinely clear.

Writing the paragraph

A disclosure clause does not need a lawyer’s vocabulary. It needs four things: what you might receive, from whom, what you will do with it, and when the client will hear about it. A version of position two reads: “Some venues and suppliers pay referral fees to planners. If any supplier on this event offers one, I will tell you in writing before you sign with them, and the full amount will be credited to your invoice. I do not accept gifts from suppliers above a token value, and I will name any supplier with whom I have a personal or financial relationship before recommending them.” Read it aloud. If any sentence makes you wince, that is the sentence to rewrite until it does not.

How to handle the offer when it comes

1. Thank them and ask for the terms in writing. A verbal “we look after our planners” is not a term; a percentage and a payment trigger are.
2. Check it against your policy. If you decline commissions, say so the same day and keep recommending them on merit.
3. If you disclose and credit, tell the client before the contract is signed, in the same email that recommends the supplier.
4. Record it on the budget sheet as a credit line with the supplier’s name beside it.
5. Never let the fee influence ranking. If you would not have put them first without the fee, do not put them first with it.

Ownership disclosure, the EventPlans way

This site is an example of the second principle. Its founder owns several of the companies listed in the Directory. Every one of those listings carries a visible disclosure and gets no ranking preference, and where a category has only those listings, the page says so plainly. If you own a rental company and plan events, the same rule applies: say so in the proposal, show an alternative, and let the client choose.

Conflicts you do not control

• A venue’s exclusive caterer or AV supplier is a conflict the client inherits; your job is to name it and price it.
• A vendor who is also a friend: disclose the relationship or do not recommend them.
• Gifts from vendors over a token value: refuse, or declare to the client.

Questions to ask yourself before every recommendation

• Would I recommend this supplier if they paid me nothing?
• Have I shown the client at least one alternative at a similar price?
• Does the client know about every payment or relationship between me and this supplier?
• If the committee minutes recorded this recommendation and the reason, would I be comfortable?
• Is the venue’s exclusive arrangement priced on the budget sheet as its own line, so the client can see what the exclusivity costs?

GTA practice notes

Referral arrangements in the Toronto market are common and rarely hidden on purpose; they are hidden by habit. Hotels and banquet halls often offer planners a credit calculated on the food-and-beverage minimum; rental companies and some entertainment agencies offer a percentage on bookings. Charities and public bodies may have procurement rules that prohibit undisclosed commissions outright, and a foundation’s auditor may ask. A corporate client’s procurement team will sometimes include a question on the vendor registration form about commissions received. Answering “none, by policy” or “disclosed and credited” is easy; discovering the question after the fact is not.

Worked example

For the Harbour Gala, the hotel offers a planner referral credit of 5 percent of the F&B minimum. Our agreement says we credit referral fees to the client, so $900 comes off the foundation’s invoice and the committee hears about it in the budget review. That sentence has won us more repeat clients than any discount.

The same event tests the policy twice more. The mentalist we recommend is someone we have booked for years and consider a friend; the proposal says so in one line and offers a second performer at a similar fee, and the committee picks the first on the strength of the showreel. The florist offers to “throw in” a bigger arrangement for the head table at no charge as a thank-you for the referral; we accept it on the client’s behalf, record it on the budget sheet as an in-kind credit of roughly $300, and tell the committee. None of this took more than ten minutes, and all of it is in writing if the foundation’s auditor ever asks.

Common mistakes

• Taking a referral fee and planning to “mention it later”. Fix: disclose before the client signs with the supplier, in writing.
• Recommending a friend without saying so. Fix: one line in the proposal and one alternative.
• Accepting the venue’s exclusive supplier as “just how it is”. Fix: price the exclusivity as a line and let the client decide whether the venue is still the right choice.
• Letting a gift sit in a grey area. Fix: set a token value in your policy and declare anything above it.

Worksheet

Download the worksheet, complete it for your own event (or the running gala example), and keep it in your course binder. It takes about 10 minutes.

Download the worksheet (PDF)