1. What is an Employee Assistance Fund?
An Employee Assistance Fund (EAF), also known as an Employee Relief Fund or an Employee Crisis Fund, is a program established by employers to help their employees cope with unexpected hardships that place undue financial stress on them and their families. A leading and convenient way to manage and distribute assistance funds is through an external nonprofit partner. This increases the flexibility of what hardships the fund can cover and lowers the administrative burden to the company and the employee.
2. What are the options for establishing an Employee Assistance Fund?
There are two ways to establish an EAF:
- A company may establish its own charity or a private foundation. Both of these require investment, ongoing administration, and adherence to applicable laws and regulations. In addition, there may be additional program restrictions with a private foundation. For example, a corporate foundation can only provide tax-exempt grants for qualified disasters. Many disasters and emergency hardship situations are not qualified as disasters under IRS guidelines.
- A company may partner with an established public charity who has experience, expertise, and infrastructure necessary for managing an EAF. This option provides the most flexibility for a company. An established charity with proven funds management experience expertise—like America's Charities—does not have the same restrictions that private foundations do, as outlined in the first example. More information can be found in IRS Publication 3833.
3. What are the benefits to using a third party solution/partner like America’s Charities?
Using a partner like America’s Charities provides several benefits to the company, including:
- Allows the company to offer a comprehensive program covering a wide-range of financial hardship situations with maximum tax benefits to the company and the employee (donations and grants are both tax-deductible when using America’s Charities for the administration and management of a program)
- Eliminates the administrative burden required to successfully implement and manage an Employee Assistance Fund
- 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 risk to both the employee and company.
4. What is the benefit of partnering with the U.S. Chamber of Commerce Foundation?
The U.S. Chamber Foundation has more than 20 years of experience working with the business community in the disaster space. We have developed a suite of best practices and resources for businesses to leverage during times of disaster.
5. What types of hardships can an Employee Assistance Fund cover?
An EAF can cover a wide range of hardship situations, from a federally qualified disaster to other emergent circumstances creating a financial hardship, such as a medical emergency, a house fire/destruction of property, funeral expenses, and other situations that are defined and established as part of the overall program design.
6. Are donations made to the fund tax deductible?
When America’s Charities, a 501c3 public charity, is used to administer the Fund, donations made by both employees and the company are tax deductible.
7. Are financial assistance awards provided to employees through the Fund subject to taxation?
When America’s Charities, a 501c3 public charity, is used to administer the program, grants made to employees are not subject to federal taxes. Grant recipients are encouraged to contact a tax advisor for additional information.
8. Are employees working and living outside of the United States eligible for grants through the Fund?
At the current time, the fund is only able to make grants to employees based in the United States and the U.S. territories.
9. What support does America’s Charities provide a company in establishing its Employee Assistance Fund?
America’s Charities will work, in consultation with a company, to establish parameters for the EAF. These parameters include fund criteria, such as eligibility for awards, qualifying events and levels of financial assistance to be provided. Based upon the criteria that is established, America’s Charities creates application materials for company employees in need of assistance.
10. Who actually reviews the applications and makes the grant award determination?
Applications are reviewed by a trained EAF coordinator at America’s Charities who also makes an initial recommendation on grant approval. A formal EAF Review Committee, consisting of America’s Charities leadership, reviews the recommendations and makes the final grant decisions.
11. What functions of the Employee Assistance Fund is the company responsible for?
The company is responsible for providing America’s Charities with adequate and timely funding for the program. A minimum fund balance, as determined by the company and America’s Charities, must be maintained. The company is also responsible for providing input to America’s Charities to establish clear and specific award eligibility criteria and requirements.
The company will provide and make available the employee assistance fund application to its employees. The company will also internally promote and communicate the availability of the EAF to employees.
12. What are typical application rates – how many employees can I expect to request assistance?
Most programs experience an annual application rate of 0.5% to 1.0% of their total number of employees. America’s Charities assumes an application rate of 0.75% when designing programs. As an example, for an organization with 10,000 employees, we project 75 applications in one year.
13. How is the program funded?
EAFs can be funded through corporate contributions and by employees as part of a company’s workplace giving program.
14. How much money should be put in the fund?
This figure depends on the number of employees and the projected average grant size. As an example, for a company with 10,000 employees (and 75 projected applications) and a projected average grant of $2,500, the company can expect to have $187,500 in grants. It is recommended to provide initial funding at 50% of this amount with additional funds provided as needed.
15. How long does it take to review and approve an application?
Provided an application is complete and includes all necessary documentation, applications will be reviewed and a decision will be made within 10 business days from receipt.
16. Is there an expedited process for times of significant natural disasters?
America’s Charities can include an expedited review process for natural disasters that shortens the application process and documentation requirements, as well as an expedited review and approval process.
17. What information is shared with the company regarding the program and its usage?
Regular reporting (quarterly or monthly) will be provided showing fund balance, applications received, application review processing time, disposition of applications, and grants awarded.
18. Will a company be notified when fund balances run low?
Yes. America’s Charities will notify a company when fund balances fall below an agreed upon amount, usually the Fund minimum, within ten business days from when balance hits that amount. The company will then have the option to replenish funding.
19. How is the price of the program determined?
Pricing for America’s Charities EAF services is based on the size of the program and effort required to successfully execute the program. Program set up and projected application volume are the two primary drivers. We do not establish pricing based on a percentage of dollars kept in the fund or disbursed, as we believe costs should be driven by activity and not by the dollars contributed to or awarded from the fund.