Lori Rogers, VP of Corporate Operations, Emergency Assistance Foundation.
A relief fund can be a valuable tool for companies that want to help their team members recover financially in the aftermath of disaster or hardship, but relief fund administration can be a complicated process. Based on my experience in this industry, here are four common myths about relief fund administration that can help you determine how establishing a relief fund could work best for your organization.
1. Sponsoring a relief fund is too expensive.
Sponsoring a relief fund for team members can be expensive, but the exact costs associated with a fund vary, and there are tools available that can help you save money. Some common expenses that are associated with relief funds include:
• Administration costs for setting up and managing the fund, such as legal and accounting fees.
• Software or platform costs to manage and track donations and grants.
• Overhead expenses such as salaries for program managers, office space, etc.
Overall, the costs associated with a relief fund will depend on a variety of factors, and it is important to consider which factors are relevant to your organization before implementing a program.
2. Relief funds can only be administered in the U.S.
Although there are some unique challenges associated with international grantmaking—like compliance with the laws of multiple countries, regulatory and tax hurdles, language barriers and more—international relief fund grants can be distributed quickly and efficiently.
Being prepared with processes and platforms that ensure you can scale quickly in times of a global, large-scale disaster is important for international grant administration. For a U.S.-based organization to make grants (both domestically and internationally), they must receive IRS approval. If your organization is multi-national, ensure your grant process includes translation services, currency conversion, international processing and payment options and data security.
3. Establishing relief fund grant guidelines is too complicated.
Establishing grant guidelines for a relief fund can be a complex process, but the most important thing is to ensure a fund’s grant guidelines comply with IRS regulations—meaning they must be clear, precise and objective. According to IRS regulations, the organization must establish “specific written criteria for the application, selection and disbursement of funds.”
To determine if your guidelines meet the IRS requirements, here are a few questions to ask yourself.
• Do the guidelines clearly outline eligibility and selection criteria?
• Are the guidelines free from personal biases or subjectivity?
• Can the guidelines be easily understood by anyone who reads them?
By ensuring that your grant guidelines meet the IRS requirements, you can have confidence in your organization’s ability to distribute the funds fairly and effectively to those in need.
4. Sponsoring a relief fund requires extensive knowledge of IRS regulations.
While studies have shown that self-administered funds often do not meet all compliance regulations, keeping these common regulations in mind can help prevent your organization from encountering that problem.
• To ensure the nexus between employer and employee is deemed acceptable, employment must be the only initial qualifier used to determine grant eligibility. Avoid considering disciplinary issues, seniority, department, etc.
• IRS publications require that “[t]he organization informs all charitable class members that disaster relief and emergency hardship funds are available, including the criteria for application and selection.” Therefore, it is important to regularly and proactively communicate the fund’s specifics, including grant criteria and successes, to all team members.
• Providing a private benefit to the party administering a program is not allowed. The IRS’s main concern is that relief funds do not “impermissibly serv[e] the related employer,” meaning that the fund is not used as a disguised benefit or compensation.
Choosing A Relief Fund Partner
Sponsoring a disaster and hardship relief fund directly impacts the lives of team members experiencing an unexpected event. Therefore, when searching for a relief fund partner that is a good fit for your company, here are several things to keep in mind.
• User-Friendliness: It is essential to understand the application process and requirements involved to ensure that the fund is user-friendly, easy to access and provides guidance for the applicant. The process should be simple and transparent with clear guidelines. This will help ensure that applicants can complete the application on their own or receive the support they need from a customer service team.
• Customer Support: A responsive and supportive customer service team can be invaluable to ensure applicants receive guidance and support while they are experiencing a disaster or personal hardship. Ask prospective fund partners about their customer service team’s language requirements, response time and availability, as these factors can have a significant impact on the applicant’s experience.
• Payment Logistics: Be sure to discuss grant payment logistics, particularly if you are a global company. A partner should have a reliable and efficient payment system to ensure that the disbursement of funds is timely. Discuss grant payments with your potential partner to determine if their process is seamless and efficient.
• Communication: Effective and regular communication is a critical component of any successful partnership. Will you have a dedicated point person that you can contact about any questions or concerns? Will you have access to real-time reporting regarding the fund’s balance, application, donations and grants?
When searching for a relief fund partner for your company, carefully evaluating potential partners and discussing these items can help ensure that your efforts are successful and that the grant can make a real difference in supporting your team.
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