Challenges of Establishing an Employee Relief Fund and Recommended Solutions

Main Takeaways:

• Establishing an Employee Relief Fund (ERF) can be challenging due to the complexities of regulatory compliance and deciding on the parameters of the fund, but consulting with those experienced in ERF management can provide valuable guidance.
• Effective communication is crucial as many employees may hesitate to apply for aid due to privacy concerns or misunderstanding of the program, thus partnering with HR and using online platforms like GrantsConnect can ensure privacy and accessibility.
• Sustaining an ERF requires continuous funding, whether through employee contributions, fundraising events, or direct company contributions, to meet the demands of crises.
• Employers must develop a comprehensive communication strategy that includes diverse methods to reach all employees, ensuring they are aware of the ERF’s existence, eligibility criteria, and application processes to avoid exclusions due to misunderstandings.

The growth in Employee Relief Funds (ERFs) exploded in the spring of 2020 as Covid-19 began to affect companies and their employees around the globe. Companies wanted to help employees who had been furloughed or had experienced hardship as a result of the pandemic and saw ERFs as a way to do this. But there are many things that companies need to be aware of in setting these up, most importantly, the IRS regulations governing their operation, but also considerations such as staff, budget, operations, and much more.

This blog is based on LBG Associates’ and LBG Research Institute’s latest landmark study called Secrets to Building an Effective and Sustainable Employee Relief Fund. The study took place in May and June of 2021 and involved personal interviews with 24 companies/organizations. This blog will tackle some challenges, suggested solutions and resources provided by YourCause for setting up an ERF.

1. Creating an Employee Assistance Fund

Challenge: For those embarking on the ERF journey, just setting one up can be daunting, especially if management is pushing to have it done quickly, which was often the case during Covid-19. There are so many things to consider such as how to ensure regulatory compliance, the charitable class members, what will be supported, the size of the grants, and much more.

Solutions: Reach out to others who have an effective program to get their guidance, review existing resources such as this report and others, or consult with a third-party administrator, such as America’s Charities, E4E, and Emergency Assistance Foundation, Inc. that have extensive relief fund experience.

Resources: These posts and corporate grantmaking toolkit can help your company get started creating and managing an employee assistance fund.

• Blog – 4 step for Starting and Employee Relief Fund
• Blog – Navigating Regulatory Requirements for Disaster and Hardship Relief Funds: A Guide for CSR Leaders

2. Ensuring Employees Know About Your Programs

Challenge:  A major challenge is getting help to those in need. Many employees are reluctant to apply because they may not want HR to know that they are facing a personal hardship, may feel too proud to apply, may believe that others need it more than they do, or are intimidated by the application process. 

Solution:  Ensure that employees know about the program and that there are enough funds to cover everyone who needs the support. Also, working with HR is key as they often know who has been impacted by a disaster or personal hardship and can remind them to apply or even help them complete the application and get any required back-up documentation.

Resources: Using an online application management platform like YourCause GrantsConnect can provide employees a place to fill out the application without needing to sit in the HR’s office. GrantsConnect allows for information to be kept private from initial reviewers and still gives HR access to information they may need to approve the grant funding.

3. Source of Funding

Challenge:  Another key challenge is ensuring that the fund is sustainable. This means that there needs to be a constant and consistent input of funds and that the amount is sufficient to handle whatever crises employees are facing. During Covid-19, this meant an unprecedented number of applications and in some cases, additional requests for natural disasters that were occurring at the same time.

Solutions: For those companies that fundraise from their employees, offering them a variety of ways to donate is key. Holding fundraisers is also important. In the cases where executives are the primary funders, make sure that they are donating enough or that the company/foundation is willing to make up any shortfall.

Resources: This blog walks through some of the tough decisions that comes along with starting an employee assistance fund including a breakdown of the legal structure of the fund. This grantmaking toolkit walks through the basics of setting up a corporate foundation for grantmaking including emergency assistance funds.

• Blog – Creating and Managing an Employee Assistance Fund
• Whitepaper – Corporate Foundations and Grantmaking Toolkit

4. Communicating Employee Relief Fund Eligibility and Other Details to all Employee Types

Challenge: Communicating with employees about the ERF is generally a challenge for multiple reasons. It is often difficult to get the space needed to explain it in internal publications. During a disaster it might be easier for this to happen, but as this is an ongoing program, employees need constant reminders to access the program for personal hardships or to donate. In some companies, part-time or hourly associates may not have easy access to email, which means that alternative forms of communicating are necessary. Finally, for global programs, translating documents and emails can be difficult and require attention to cultural mores.

Perhaps a subset of communication is making sure that employees truly understand the fund—who is eligible to apply, which events it covers, the size of the grants, the process that is involved in applying, and more. An application may be rejected because insufficient information is provided to substantiate the claim or the event that is being applied for is not eligible for funding.

Solution: Partner with corporate communications and develop a plan at the beginning of each year that will ensure that the information employees receive is frequent and timely. It is a good idea to include a number of mediums, such as posters and letters home for those employees who do not have access to a computer during the workday. Also, work with HR to ensure that all documents, and especially those that being translated, are culturally sensitive.

Getting the word out about the program and its components can occur in various ways such as including FAQs on the company’s intranet, discussing it at a staff or town hall meeting, or asking business managers or HR staff to distribute a written brochure to employees who they feel could benefit from the Fund. In all cases, it is important to make sure that the information and the application are easy to understand so there are minimal confusion and reasons not to apply.

Given the nature of ERFs, there will always be challenges. Covid-19 has certainly proven this to be true. But that doesn’t mean that they are insurmountable. As we have discussed, with some foresight and ample planning, most, if not all, of them can be met. And for those that are unanticipated, companies with strong programs in place will be able to pivot to ensure that their employees get the support they need…quickly.

Resources:  An important part of any CSR strategy is to think about how you’re going to communicate and engage all groups withing the company from the new hires to remote workers and tenured executives. This communication toolkit linked below has a checklist and planning guide for developing a strategy to spread your message about your programs.

all cases, it is important to make sure that the information and the application are easy to understand so there are minimal confusion and reasons not to apply.

Given the nature of ERFs, there will always be challenges. Covid-19 has certainly proven this to be true. But that doesn’t mean that they are insurmountable. As we have discussed, with some foresight and ample planning, most, if not all, of them can be met. And for those that are unanticipated, companies with strong programs in place will be able to pivot to ensure that their employees get the support they need…quickly.

Resources:  An important part of any CSR strategy is to think about how you’re going to communicate and engage all groups withing the company from the new hires to remote workers and tenured executives. This communication toolkit linked below has a checklist and planning guide for developing a strategy to spread your message about your programs.