If you had an unexpected disaster strike, could you cover it financially? According to the 2022 Economic Well-Being of U.S. Households, 37% of adults would have difficulty covering an unexpected expense of $400.
Unexpected expenses, such as a medical bill or a home repair stemming from a disaster, can be a hardship for many families. Fortunately, more companies are establishing employee relief funds to help their employees offset the cost.
What is an employee relief fund?
An employee relief fund is a program established by or sponsored by employers to help employees cope with unexpected hardships that place undue financial stress on them and their families. It empowers employers to offer tax-free financial support to their workforce through a private foundation or by partnering with a third-party relief fund administrator.
Uses for employee relief funds
There are two main use cases for employee relief funds:
- Disaster relief: Assistance for team members impacted by natural disasters like hurricanes, earthquakes, floods, and more.
- Personal hardship: Assistance for those experiencing personal hardships like serious illnesses, domestic violence, and more.
Benefits of offering an employee assistance relief fund
Employee financial stress costs employers an average of $5,000 per employee per year in lost productivity. Employee relief funds are a vital resource in keeping a workforce happy, financially healthy, and productive. When employees are happy and healthy, they are more likely to be engaged, which translates to higher performance.
Employee relief funds:
- Demonstrate compassion and care for employees
- Increase productivity, employee engagement, and retention
- Encourage employees to feel safe and comfortable asking for assistance
- Empower the workforce to come together to help their colleagues in need
- Support employees wherever and however they work
Beyond financial assistance, offering employee relief funds improves company culture and employee morale. Prosocial motivation (the desire to protect and promote the well-being of others) has become increasingly important in the workplace. Hence, many employee assistance funds are established based on demand from a company’s employees. In fact, 47% of employees say they’d consider leaving their current employees for one that sponsors an employee relief fund.
Designing an employee relief fund
There are several an employer can design an employee relief fund:
- Work with a third party with the experience, expertise, and infrastructure to establish and administer a public charity. Most companies choose this option because it’s the easiest and most flexible.
- Establish a private foundation
- Set up a public charity as a donor-advised fund
- Offer direct corporate assistance
The amount of money put into the fund depends on the number of employees and the projected average grant size.
Partner with an employee relief fund administrator
Partnering with a third-party partner allows companies to offer a comprehensive program that covers a wide range of financial hardship situations with maximum tax benefits to the company and employees. It also eliminates the administrative burden required to successfully implement and manage an employee relief fund. Lastly, it allows an objective “third party” to review applications and approve grants, providing anonymity to the applicant and protecting the private information of your employees, minimizing the risk to the company.
Emergency Assistance Foundation (EAF): financial first responders
Emergency Assistance Foundation partners with companies—its Fund Partners—to help the companies’ team members struggling through difficult times. Whether they have suffered an unexpected disaster or personal hardship, EAF’s employer-sponsored relief funds award grants that provide essential financial assistance on the path to recovery.
EAF administers over 350 employer-sponsored relief funds, through which it supports 12 million employees globally. Since its inception, EAF has awarded $260+ million in financial assistance to more than 330,000 individuals and families in 93+ countries. Additionally:
- 77% of EAF’s grant recipients felt more positively toward their employer
- 76% of grant recipients felt less stressed or worried overall
- 70% felt the grant provided breathing room so recipients could determine the next steps
Through our partnership, companies have another method for donating to emergency relief funds. Our partnership empowers employers to supplement their employee assistance programs to support overall employee well-being and financial wellness support.
Read our Partner Profile spotlight on VP of Strategic Initiatives at EAF, Michelle Naggar Reichenbach.
Contact PTO Exchange or EAF to learn how your company can implement an employee assistance relief fund today.
Published on Nov 15, 2023 by Dave Sherman
