Disaster & Hardship Relief Funds: Three Design Considerations

July 14, 2015

When setting up a fund, many organizations forge ahead without putting much thought into the best practices in creating these types of programs. Failure to do so could result in a fund that is less efficient, and therefore less effective, than it could be. While not an exhaustive list, the following are some areas to consider before finalizing the details on a disaster & hardship relief fund.

1. Consider the geographical structure of the organization. Does the organization do business in one particular area of the country? Is it nationwide? Are there international operations? Understanding the types of disasters team members are most vulnerable to can help organizations better prepare grant criteria that suits the needs of their team members.
2. Decide upon the type of hardships the fund will cover. Some funds only cover disasters, such as tornadoes floods. Other funds are specifically for personal hardship, such as illness, death of a loved one, or other personal financial hardship. Still other funds have provisions for both. Depending on the type of fund set up, there are tax implications as well as grant application criteria considerations.
3. Finally, the type of funding vehicle chosen is an extremely important consideration. Funds can be set-up as organization-sponsored charities, organization-sponsored private foundations, or as orgazation-sponsored funds with outsourced public charity. Each option comes with different legal and tax considerations, and should be considered carefully before a choice is settled on by an organization.

Source: Stockham, D., Clontz, B. 17 May, 2012. Emergency Assistance Funds (EAFs) for Employee Hardship and Disaster Relief: Legal, Tax and Design Considerations. Planned Giving Design Center. Accessed from: http://www.pgdc.com/pgdc/emergency-assistance-funds-eafs-employee-hardship-and-disaster-relief-legal-tax-and-design-cons

Author: Doug Stockham, President

Emergency Assistance Foundation