Employee Hardship Funds Promote Community within Local Businesses

Janet is a single mother to three children, a full-time employee and a diligent student chipping away at the bachelor's degree she started a decade ago but couldn't finish when her first child arrived. 

"It was tough not knowing what to do when that happened, or how to get out of the situation," recalls Janet (not her real name). Somehow, though, she did make it out of it.

Today she's gainfully employed -- and, most of the time, manages just fine. Still, last October, Janet was figuring out homeownership for the first time: paying on a mortgage, paying for daycare, moving from her previous place. The bills piled up and Janet didn't see a way to get her finances back under control. 

When a co-worker told Janet about a hardship fund offered through their employer, she applied. "If you need help, you need help," says Janet succinctly. She didn't mind asking a favor from her long-time employer. 

Janet received a small award -- just a few hundred dollars -- but a little can go a long way. "It wasn't enough to get me over the hump, but it helped," says Janet. "It's pretty awesome that they will help out during certain circumstances if you explain your situation."

Hardship funds with third-party help

Hardship funds can be handled in many different ways with a wide range of different criteria. Some companies establish internal funds, and others work with a third party to handle administration. Some funds are triggered only by a natural disaster or illness, and others are not.

Assisting employees in need is something Kelly Purdy, Senior Philanthropic Services Officer for The Denver Foundation, thinks many employers are already doing informally through executive donations or car washes and bake sales. 

"It is human nature to want to support those on your team," says Purdy, explaining how setting up a hardship fund through The Denver Foundation allows employers to formalize the process, reducing administrative burdens and ensuring impartiality. 

The 2013 flooding in Colorado was the impetus for The Denver Foundation's work with hardship funds.Mitigating taxes is nice, too. "If an employer hears an employee's husband has been diagnosed with cancer, they might provide support by giving the employee extra money," explains Purdy. When that process is used, the gift is viewed as income, and both employer and employee pay taxes on the "bonus." By setting up a formal fund, employers are eligible for tax deductions on seed money, and awards to employees aren't viewed as income. 

The Denver Foundation began discussing employee hardship funds after last year's floods. This program is modeled on other funds across the country, and is available to companies with 1,000 or more employees. Participating corporations will need about $100,000 dollars to establish a fund through The Denver Foundation, and can consider using executive donations or other internal fundraising to keep it going. Once established, Foundation staffers select an in-house committee in order to review employee applications through a confidential online portal and grant or deny awards based on preset criteria. 

"The fund is intended to support circumstances outside of the employee's control. We look at things like natural disasters, life threatening illnesses, catastrophic injuries, and deaths in the family," says Purdy, noting that these funds won't assist with accumulated financial hardship. Employees who meet the criteria may receive up to $1,500 dollars per incident, and employees can apply up to three times in a two-year period. 

Application analysis by outsourced committee members ensures an unbiased process providing a level playing field for access; anonymity gives employees the wherewithal to take advantage of this benefit. 

An employer never knows which employees are supported or why. Rather, The Denver Foundation reports back to participating companies on the number and types of applications received, alerting employers to the issues their employees are facing. 

Keenan Alexander, Senior Strategic Business Analyst at SYKES Enterprises, likes gaining insight into his employees' struggles. With its North American operational headquarters in Denver, the company was the first to sign on with The Denver Foundation, and launched their relief fund on July 16. "They have something like 40,000 employees, and we are averaging around 25 applicants a month," Purdy says. 

"People don't open up to an HR department like they'd open up to a grant-application process," Alexander says. "It's nice to have a professional, experienced third party boil things down and give us insights. We take that anonymous information into meetings and discuss it." These discussions, says Alexander, help drive business. 

The business at SYKES is outsourcing for customer service centers. As such, in addition to employees based in 30 brick-and-mortar locations throughout the U.S. and Canada, the company also has remote national and international employees. And the fact that SYKES is a new conglomerate of acquired companies "lends an interesting cultural challenge," says Alexander. 

Fostering a community vibe isn't just cordial -- it is crucial. "We are looking to build employee retention through the creation of a better work environment," Alexander adds. Initially, SYKES looked into pioneering the program itself. "But that's not our core competency, and we more than anybody realize the benefits of outsourcing," Alexander says. 

In-house hardship fundsDU's program was established in 1997, with the primary purpose of cultivating a culture of goodwill.

Other local companies like First Data, though, are seeing success with in-house programs. "Our purpose is to help clients grow their business, and we know that this goal is impossible to reach without the talented and dedicated people who work in our organization," says First Data Communications Manager Kwiyoung Baumgarten. "We also know bad things can happen to good people."

The First Data Hardship Fund was established to help employees and their immediate family members who have experienced significant financial hardship, which might include the death of an employee or her immediate family member, or life threatening medical conditions. All employees with at least one year of service with First Data are eligible to apply. Once an application is received, a grant committee determines eligibility and assistance on a case-by-case basis. 

Aside from corporations, government agencies, schools, and universities are notoriously good about taking care of their own. Colorado state employees might tap into the $500 Emergency Assistance Grant issued by the Working Together Foundation, and Denver Public Schools offers a hardship benefit to its employees.
 
The Staff Benevolent Fund at the University of Denver, governed by the Executive Committee of the Staff Advisory Council and funded through its annual budget, also aims to pay it forward by providing relief to full- and part-time employees facing undue hardship, such as unforeseen expenses caused by medical emergencies, family emergencies and acts of nature. 

DU's program was established in 1997, with the primary purpose of cultivating a culture of goodwill, says Staff Advisory Council President Stefanie Ungphakorn Cowan. 

Her seven-person committee reviews applications received via email, and votes on eligibility. "Rarely do we not award or give the full amount, which is $300," Ungphakorn Cowan says, noting that she's seen everything from family issues and tragedies to traveling to care for loved one who are ill or attend a funeral. 

In 2011, four awards were granted, and Ungphakorn Cowan estimates that's the yearly average. The process is anonymous to the extent that information received is kept within the Executive Committee. 

True hardship funds like these probably won't solve a financial crisis on their own, but local employers find this simple, small benefit goes a long way toward boosting morale and community spirit.

This story was produced in partnership with The Denver Foundation as part of a series on giving and philanthropy. Read more stories from this series here.