Emergency Assistance Funds Frequently Asked Questions

What is an Emergency Assistance Fund?

An Emergency Assistance Fund (EAF) is a program established by employers to help their employees cope with unexpected hardships that place undue financial stress on them and their families. An EAF can help mitigate the financial impact of unexpected events, such as disasters, medical expenses, funeral costs, and other circumstances.

What are the options for establishing an Emergency 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 that has experience, expertise, and infrastructure necessary for managing an EAF. This option provides the most flexibility for a company. An established charity with proven fund management expertise—such as America's Charities—does not face the same restrictions as private foundations, as outlined in the first example. More information can be found in IRS Publication 3833.

Why should we have an EAF?

An EAF program helps employees cope with unexpected hardships that place undue financial stress on them and their families.

  • Approximately 2 in 5 (37%) Americans say they couldn’t afford an emergency expense of $400 or more, and the median emergency savings is $600; 21% of Americans have no savings at all.
  • This financial insecurity impacts more than just an individual’s life at home. According to BrightPlan’s 2024 Wellness Barometer Survey, employees typically lose more than 7 hours of productivity each week because of financial stress, costing U.S. employers $183 billion annually.

What compliance risks exist with employee relief funds? What are the benefits of outsourcing the administration of a fund to a nonprofit administrator?

Outsourcing your company’s EAF to America’s Charities offers special legal and tax advantages and supports your company’s objective to support employees in times of distress and hardship.

  • Financially Prudent: Donations are tax-deductible, and grants are tax-free.
  • Compliance: We stay up to date on IRS rules, memoranda, and updates to ensure compliance, so our clients don't have to. Our policies, eligibility criteria, including the class of eligible grant applicants, and objective application processes are designed to maintain compliance throughout all phases. Partnering with America's Charities removes the time-consuming and costly governance and filing requirements of forming your own 501(c)(3) organization.
  • Mitigates Risk: Provides anonymity to applicants, protects your employees’ privacy, and manages the sensitive application review and appeals process, reducing your risk and legal exposure.
  • Assistance Grants for a Broader Array of Hardships: Working through a public charity such as America's Charities reduces the number of tax restrictions, providing additional flexibility in the defined disaster and emergency hardship categories covered.
  • Reduces Overhead: Eliminates the administrative burden required to implement and manage an EAF program successfully.
  • Easier Management: Allows an objective third party to review applications, conduct necessary follow-up, approve grants or make recommendations, and serve as the point of contact to answer any questions that your employees have.

Is an EAF a separate 501(c)(3)?

An EAF is a program that is fully administered by a 501(c)(3) charity but is not its own charitable organization. For example, any of the EAF Programs that America’s Charities runs fall under our Employer Identification Number (EIN).

How long does it take to get an EAF launched? 

An Emergency Assistance Fund can be launched within 30 days, depending on the program's complexity; more complex programs may take at least 90 days. We also offer a "quick launch" program that can get your EAF set up in 2-3 weeks.

How many applications does an EAF receive?

Typically, 0.5% to 1.5% of your employee base will submit applications for assistance. However, this number can grow if there are major natural disasters that affect your employee base and where they work/live. Other factors include the nature of your workforce. For example, companies with a high percentage of hourly workers, such as those in retail, food services, and manufacturing, may experience higher application rates.

What questions should a prospect ask an EAF vendor when they are shopping for an EAF partner?

  • What flexibility will the prospect have to give input on the policy when IRS guidelines guide it?
  • Is there an appeal process if an applicant is denied?
  • Is there a maximum allowable grant?
  • How often can employees apply for a grant?
  • What is the overall fee structure?
  • How many clients and in what industries do you serve?
  • How do you manage an application surge during times of disaster?
  • What steps are taken to mitigate for potentially fraudulent applications?

How does outsourcing an EAF help streamline processes, reduce risks, time, and costs?

We eliminate the need for a company to apply for 501(c)(3) status by housing the fund under America’s Charities existing designation, as emergency assistance funds fall within our stated charitable purpose. This removes the time, cost, and effort required to establish and maintain a separate 501(c)(3), as well as the lengthy approval process, which can take six months or more. We also assume full responsibility for program management, IRS compliance, and execution. In managing the grant application process, we collect all IRS-required substantiating documentation, communicate directly with applicants, and handle the time and costs associated with grant payments and fund distribution. We validate vendors to ensure the legitimacy of documentation provided.  We also utilize a two-level application review process, including intake and senior-level evaluation. The senior-level review is conducted by a committee of our senior leadership team (VP level and above), eliminating the need for your internal leadership to approve each grant. Finally, we execute the full distribution of EAF grants

Options

What types of events can an EAF assist with? 

An EAF is established to help cover unanticipated, unavoidable events that cause an individual to struggle to pay for them or leave them unable to pay household bills. 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.

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.

What are the requirements for an individual to receive a grant? 

A successful applicant will need to demonstrate financial need, provide documentation of a qualifying event affecting their household, and substantiate the impact of financial hardship.

Do you offer EAFs for international needs?

Yes.

Are we able to personalize the policy and what it covers? 

Yes, America's Charities provides a core policy that is based on IRS regulations and best practices, but some aspects can be tailored.

What are the most requested hardship events from applicants?  

Natural disasters, medical issues and expenses, accident, funeral, and unexpected home and car repairs.

Ongoing Management

How is an EAF funded? 

Funding for the EAF is provided through the organization as a donation to America's Charities. This allows us, as a 501(c)3 to award tax-free grants. Funding can come from the organization, individual donors such as board members or staff, or through a workplace giving program, as a few examples. America's Charities offers giving tools and platforms to facilitate donations to the fund.

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.

What metrics should we track for an emergency assistance fund?

The most common metrics include application rates, approval rates, types of qualifying events, average grant size, and funding levels. Additional metrics can be tracked, but it's important not to be too granular so that it's easy to identify an individual applicant.

Who 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.

What functions of the Emergency 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 its employees with the employee assistance fund application. The company will also internally promote and communicate the availability of the EAF to employees.