Employee Crisis Funds: Focusing CSR Inward

​Disaster can strike at any time—whether it's a hurricane ripping off the roof of one's house, a catastrophic health issue or some other unexpected hardship.

The resulting stress has consequences on employees' health and well-being, and has impacts for the employer, as well. With a whopping majority (92 percent) of workers worried about their finances, engagement and productivity take a hit (50 percent and 48 percent, respectively), according to BrightPlan's 2023 Wellness Barometer Survey. The findings are from a survey the investment advisement firm, headquartered in San Jose, Calif., conducted with 1,400 U.S. workers.

Nearly half of employees have more debt than is manageable—and just over one-third have no emergency savings or only up to two months' worth of funds, the survey found. With this struggle in mind, some employers offer an emergency relief fund (ERF).

"In times of crisis, the last thing we want our team to worry about is their financial well-being," said Tracy Cauley, HR director at VEM Medical, based in Dallas. "That's why we created a relief fund based on the unique needs of medical device manufacturing workers."

About 70 percent of VEM's 100-plus employees received relief funds when the pandemic prompted the manufacturer to limit its operations, using fewer employees during shifts to maintain social distancing, according to Cauley.

Having an ERF not only helps relieve immediate financial stress, it "also promotes a sense of belonging and trust in the organization," she said, and credits it for a 10 percent improvement in retention from previous years.

Establishing a relief fund is a way "for employers to focus their corporate social responsibility inward on employee needs and wellness," America's Charities noted on its website. 

It can certainly be "a lifeline" in times of personal crisis or natural disaster, said Clarke Duncan, founder of OutsourcingStaff.ph, headquartered in Glasgow, Scotland. The company has provided emergency funds for its workers in the Philippines, which "experiences a significant number of natural disasters" such as hurricanes, floods and volcanic activity, he noted.

[SHRM Online article: Tips for Setting Up an ERF]

When the Taal Volcano erupted in 2020, a staffer who lived nearby was concerned about the dust and sulfur that filled the air around his home. With two young children, the employee wanted to temporarily relocate his family but could only afford a few days in a hotel.

"We covered their hotel stay for two weeks and his wages during this time due to the extraordinary circumstances," Duncan recalled. "Fortunately, his house was merely covered in ash with no severe damage, so no additional assistance was required," and the employee was profoundly grateful.

"It's not just about financial assistance, but also about showing empathy and concern for the well-being of staff," Duncan said. "It reinforces the idea that the company truly cares about them, boosting morale and loyalty."

CVS recently distributed money to colleagues impacted by the Maui wildfire to fund their shelter and other essentials, said CVS spokeswoman Courtney Tavener.

Since its inception in 2011, the company's ERF has provided more than $5 million in short-term financial support, according to Tavener. It is funded by employee contributions and an initial donation from CVS Health. The CVS Health Foundation also has a matching gifts program that contributes funds to organizations its colleagues support, which includes the ERF, Tavener said.

Setting Up a Crisis Relief Fund

ERFs—also known as employee assistance or crisis funds—typically are dispersed through an external nonprofit partner, according to America's Charities.

A typical rule for eligibility for receiving a tax-free grant from the crisis fund is that an employee's financial need must stem from a setback such as a medical problem that causes family members to stop working; funeral expenses; an emergency that necessitates travel; or a fire or flood that damages an employee's home, according to SHRM. 

ERFs can be funded several ways, according to the Association of Corporate Citizenship Professionals (ACCP):

• A one-time or periodic gift from the employer.
  
• Contributions from employees.
  
• Fundraising.
  

These funds "require a set of guidelines that govern the fund, including criteria for who is eligible, the nature of allowable hardships, the maximum dollar amount, and the individual or group accountable for allocation decisions," the ACCP notes on its website.

VEM has a structured application process employees use to request funds. About 3 percent of the company's annual budget is allocated to its ERF, averaging out to about $800 per employee. It's a figure that Cauley said strikes a balance between "providing meaningful support" for employees and "maintaining financial sustainability.