Answers to some commonly asked questions may be found here.
What is a qualified disaster?
A qualified disaster is defined in Internal Revenue Code Section 139 as a disaster that:
- results from terrorist or military actions,
- results from an accident involving a common carrier,
- is a Presidentially declared disaster (if in a foreign country declared by the U.S. as a qualified disaster), or,
- is an event that the Secretary of the Treasury determines is catastrophic.
What is a charitable class?
The group of individuals that may properly receive assistance from a tax-exempt charitable organization is called a “charitable class.” A charitable class must be large enough or sufficiently indefinite that the community as a whole, rather than a pre-selected group of people, benefits when a charity provides assistance.
For example, a charitable class could consist of all the individuals in a city, county or state. This charitable class is large enough that the potential beneficiaries cannot be individually identified and providing benefits to this group would benefit the entire community. If the group of eligible beneficiaries is limited to a smaller group, such as the employees of a particular employer, the group of persons eligible for assistance must be indefinite. To be considered to benefit an indefinite class, the proposed relief program must be open-ended and include all employees affected by the current disaster and those who may be affected by a future disaster. Accordingly, if a charity follows a policy of assisting employees who are victims of all disasters, present or future, it would be providing assistance to an indefinite charitable class. If the facts and circumstances indicate that a newly established disaster relief program is intended to benefit only victims of a current disaster without any intention to provide for victims of future disasters, the organization would not be considered to be benefiting a charitable class.
Because of the requirement that exempt organizations must serve a charitable class, a tax-exempt disaster relief or emergency hardship organization cannot target and limit its assistance to specific individuals, such as a few persons injured in a particular flood. Similarly, donors cannot earmark contributions to a charitable organization for a particular individual or family.
What can a SVCF Employee Disaster Fund pay for?
The following expenses can be paid through your EDF:
- reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a qualified disaster,
- reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence due to a qualified disaster (a personal residence can be a rented residence or one you own), and,
- reasonable and necessary expenses incurred for the repair or replacement of the contents of a personal residence due to a qualified disaster.
Qualified disaster relief payments do not include:
- payments for expenses otherwise paid for by insurance or other reimbursements, or,
- income replacement payments, such as payments of lost wages, lost business income, or,
- unemployment compensation.
Is financial need a critical factor in short-term employee disaster funding?
The Internal Revenue Service (IRS)has determined that assessing financial need is only necessary for long-term aid. Your EDF fund is designed to provide short-term emergency assistance and does not require this evaluation. Short-term assistance includes expenses that are reasonable and necessary to ensure victims of a disaster are able to provide for their basic necessities, which typically consist of food, clothing, housing (including repairs), transportation, and medical assistance (including psychological counseling).
Can family members of employees also benefit?
The Internal Revenue Service (IRS) permits family members residing with the employee to be included as beneficiaries of the fund for short-term emergency assistance.
Are foreign contributions accepted into an EDF?
Contributions to qualified domestic charitable organizations that provide assistance to individuals in foreign countries qualify as tax-deductible contributions for federal income tax purposes, provided the U.S. organization has full control and discretion over the uses of such funds. If the contributor is a corporation, its contributions for use in a foreign country are not deductible unless the domestic charity is itself organized as a corporation for federal tax purposes. Contributions to foreign organizations are generally not tax-deductible, unless permitted by a tax treaty. The United States currently has tax treaties with Canada, Mexico, and Israel. See IRS Publication 526, Charitable Contributions, for limitations that apply pursuant to these treaties.
Can SVCF support international employees via an EDF?
Yes, Silicon Valley Community Foundation is uniquely positioned to grant funds globally. SVCF can support employees that have been impacted by a qualified disaster and are subject to U.S. tax laws. (see Q: What is a qualified disaster?)
How long does it take to review applications once a fund is opened?
The length of time it takes to review applications will vary depending upon the volume of applications received. All applications will be reviewed and assessed within 15 days of receipt.
How do employees submit applications?
There are several options employees can use to submit an application, depending on your company’s EDF set-up structure.
- Option 1: Employees complete an application from your company’s intranet, and return it directly to firstname.lastname@example.org. SVCF works with the company’s point-of-contact for any incomplete documentation.
- Option 2: Employees complete an application from your company’s intranet, return it to your company’s point-of-contact (preferably someone from HR), who verifies the applicant's employment status (i.e. eligibility) and also checks to ensure that the application is complete and all required/available supporting documentation is included. The company representative sends the applications individually or in batches, depending on volume and preference to email@example.com.
Do applicants need to apply and provide supporting documentation in English?
Yes. In order to facilitate a timely review of all applications, the applications and supporting documentation must be in English.
Can members of our organization participate in the Selection Committee?
Yes. As per IRS regulations, employers may recommend up to 49% of the Selection Committee. The remainder of the committee, no less than 51%, will be staffed by SVCF appointees.
What is the role of the Selection Committee?
SVCF will perform all initial due diligence on the received applications and will make recommendations to the Selection Committee. The Selection Committee acts in an advisory capacity and recommends specific grant amounts with the understanding that awards will not be final until approved by SVCF staff.
Can we fundraise for the EDF?
Yes! You can request a donation link when your fund has been created which can then be emailed to request donations. Please have SVCF review the email in advance to ensure it is compliant with IRS rules for fundraising into a SVCF EDF. Additionally, for a fee of $600 you can have SVCF create a donation landing page on your site where you can direct employees to learn more about your fund and make donations.
Can SVCF work with my matching gift provider?
Yes! SVCF has worked with all major matching gift providers and can have your matching gifts directed to an EDF.
Can the fund accept gifts of stock?
Yes! SVCF can accept many different assets as donations into your disaster fund. Checks, credit cards and cash wire are the most common. But stock, cryptocurrency and tangible assets are also possible.
How do I know how much money we have raised?
Select designees from your company will be granted access to SVCF’s online system through which you will have access to view regularly updated gift information (money into the fund) as well as grant information and fees (money out of the fund).
Will beneficiaries of the fund have to pay taxes on their grant award?
Internal Revenue Code section 139 provides that qualified disaster relief payments from any source, including employers, reimbursing or paying individuals’ specified expenses in connection with qualified disasters are not taxable as income and are not subject to employment taxes or withholding. For definitive tax information and guidance, recipients should consult with their tax advisor.
What services will SVCF provide to your organization through an EDF?
SVCF will provide the following services:
- Develop tailored grantmaking criteria
- Accept gifts into the fund
- Assist in the design of the grant application
- Create a simple funding application
- Manage the grant review and assessment process
- Review and make recommendations regarding received applications for assistance
- Appoint 51% (or more) of the Selection Committee members, as the company is allowed to appoint up to 49% of the Selection Committee members
- Facilitate training for the Selection Committee
- Process payments
Upon request, SVCF is also available to assist with other aspects of your corporate social responsibility programs, including developing a communication strategy for your EDF.
How are the grants delivered to the recipients?
Grants will be sent via ACH within 3-5 business days. Check payments are mailed via U.S.P.S. within 4-7 business days of receiving the final reccomendation for funding from the Selection Committee.
In the event of a qualified disaster, how long should applications be open for employee submittals?
SVCF recommends that for each specific disaster event, employees can apply for assistance up to six months post event. Any remaining funds can remain available for future disaster relief events.
What happens to any unexpended funds?
The fund should hold unexpended funds to be available for future disaster relief efforts for those from the company who meet the standards of a qualified class.