Companies are making emergency funds easily available to workers regardless of the nature of the emergency, often helping them afford basic living expenses like housing, food, and utilities amidst their hard times. This article originally appeared in Benefits PRO on December 9, 2022.
The world itself is chaotic – in addition to work being chaotic – and people value whatever support they can find even more than before. We’re all dealing with so much variability and change that the workplace being a source of security is a higher value than ever before.
According to a TIAA Financial Wellness Survey (2022) conducted earlier this year, almost 45% of Americans don’t have access to an emergency savings fund for six months. That’s 45% of Americans who aren’t financially equipped to deal with a natural disaster, or house fire, among other events. These are the kinds of things that no one wants to imagine happening to them, but the reality is that they just might.
Now with record-high inflation, greater job insecurity, and increasingly common and catastrophic natural disasters, employers are stepping up to the plate to provide employees with a financial safety net at no cost to the individual: an emergency fund via grants by the employer. And, like many other employer offerings, this isn’t necessarily just a perk of the job – it’s an expectation.
According to the same TIAA survey, two-thirds of Gen Z, the most recent addition to the workforce, believe that employers have a responsibility to help improve or maintain employees’ financial wellness.
What this means is something we all already know – money is at the top of everyone’s mind at work. Due to this, employers are providing essential resources via emergency grants foremployees to help in financial crises. Here’s what that means, and how you, as an employer, can take the necessary steps to establish one yourself.
What is an emergency relief fund?
An emergency relief fund enables organizations to incorporate relief funds into their employee offerings to help in times of economic and financial crisis. My own company, Canary, is an example of this. Solutions like ours provide a third-party platform to host and manage emergency funds for employers, maintaining the privacy and dignity of employees in need.
These kinds of third-party platforms enable external grant management teams to take the burden off internal HR teams – both from a time and capacity perspective and a maintaining privacy perspective.
Most importantly, and the biggest reason why employers like yourselves should seriously consider emergency relief offerings – these platforms and funds help companies foster a supportive, caring relationship with their workforce. They’re making emergency funds easily available to workers regardless of the nature of the emergency, often helping them afford basic living expenses like housing, food, and utilities amidst their hard times. This kind of offering proves to employees that their companies care about them and want to support them when times get tough.
It creates trust between employers and employees, giving workers the confidence that they work for a company that genuinely cares about their well-being – something workers are increasingly demanding from their employers.
Additionally, these platforms provide employers with insightful, actionable data around grant usage – i.e. why employees need financial help and what they use the money for (provided in aggregate, to maintain anonymity for the individual). This can help guide employers’ decisions in an effort to meet the needs of employees and provide them with the resources they need most.
Furthermore, emergency funds can also lead to an increase in productivity amongst the workforce due to less financial and personal stress. In fact, according to PWC, 76% of stressed employees report that financial worries have had a negative impact on their productivity.
Knowing that your company is there for you in times of need frees up headspace, allowing employees to focus on their actual job and, most importantly, their overall happiness and well-being.
Depending on what specific route you take when building out an emergency fund program, the experiences of both employers and employees will differ slightly. When using a streamlined third-party platform, the process can be pretty easy.
For the employer, it’s as simple as writing a check to seed their company’s fund. Then, if employees choose to donate to the fund, they can opt into a payroll deduction system, or make one-time or recurring credit/debit donations. In many cases, employers will host company-sponsored fundraisers and events to raise money for their funds. Ultimately, you have the freedom to decide what method works best for you depending on the size, operations, and earnings of your company.
For employees, they have access to these funds without ever having to contribute personally. If they find themselves in need of financial assistance, they can submit an application and, if approved, the funds will arrive quickly and in their entirety with no tax obligations. The only money that comes directly out of a paycheck is money that an employee opts in to donate to help their coworkers. That’s it.
Setting up an emergency fund program
Now you might be thinking, I want to start an emergency relief fund offering at my own company.
Where do I start? First and foremost, analyze your workforce, consider their unique needs, and determine exactly what you want to offer. Is there a per-employee grant maximum you want to keep in mind? Can an employee request multiple grants over time? What financial hardships qualify for help? Use the needs and desires of your workforce to help guide you through answering these questions.
Next, determine where the money for this fund is coming from. Generally, employers select a combination of employer and employee contributions. As previously mentioned, company-sponsored fundraisers or donations are great ways to raise money that not only goes back into the betterment of the company but into the betterment of employees.
From here, it’s important to establish an easy-to-use, equitable application, and review process. This can involve partnering with a third party to take on this workload, or companies can manage this themselves. (If the latter, the company has some additional steps to understand the required compliance infrastructure.) Then, share the application with your employees, explain how much money they can access, and what hardships qualify for assistance. Ask them to bookmark the application and continue to share throughout the year – especially at pivotal moments like after a natural disaster, around the holidays, or in tandem with open enrollment, so they know this resource is available to them.
Ultimately, throughout this whole process of getting started, it’s important to remember your goal: to build trust by acting on the idea that “we’re all in this together” within your company. You have your employees’ back when they need it most. Investing in this type of wellness offering ensures your company is there for your employees when they need it and creates a culture of community at work that inspires trust and excitement among your workforce.
We know good talent is harder and harder to both attract and retain. Offering additional financial wellness offerings at a time when so many people’s financial lives are uncertain (thanks to inflation and the rising cost of living) can set you apart as an employer of choice.
The future of work, and your company’s place in it, is inextricably caught up in the call to meet today’s workforce with innovative offerings that support their whole selves. Increasingly, workers are asking for companies to stand by their values and support what they actually want and need, and that includes helping people when they encounter unexpected bumps in the road.
