Emergency Financial Assistance Funds Are the Best Way to Support Your Employees

Is there any better way to show support for employees than to establish an Employee Hardship and Disaster Relief Fund? When Hurricane Sandy struck the Northeast coast, companies with employees in the New York and New Jersey areas rushed to figure out how to help their employees, how to do it while complying with IRS regulations and without giving the employees a tax burden. This is an exact repeat of similar efforts and frustrations right after Katrina hit.

When Katrina’s floodwaters receded in the Gulf Coast, some employers established permanent Relief Funds and built ongoing programs. Others folded up their efforts and stuck all the paperwork in a drawer. The ones who closed down their programs did so because they felt it was either too expensive to continue, took too much administrative time to operate the program while complying with IRS regulations or, in many cases, they simply did not know what else to do.

The companies that kept their funds going saw significant benefits. First, they found a way to keep their Relief Funds going discovered that their employees liked donating to a fund which helps fellow employees in crisis. They also discovered that employees felt a stronger connection to the company and the employee who needed the relief got back on their feet faster and back to work sooner.

Now, more than five percent of the largest employers in the United Sates have an employee disaster or hardship relief program, while other companies are showing a growing interest in these programs. If the funds are established correctly, the donated money is tax-deductible and grants are tax-free. Hence, when a tornado destroys homes, a flood ravages a town, a family member dies, or an unforeseen sickness causes unusual medical expenses, their employees can receive quick assistance from their company’s Employee Relief Fund. When Sandy hit, the companies with an existing program already knew what to do and their employees knew how to donate directly to their fellow employees without rushing to figure out much at all.