Companies Turn to Community Funds for Help With Disaster Aid

When Hurricane Sandy slammed into the Eastern seaboard last year, community funds were deluged with requests they never anticipated.

The Capital One Financial Corporation, in McLean, Va., wanted to direct help to workers whose homes were damaged by Sandy, so it turned to the Community Foundation of the National Capital Region for help.

The Washington foundation set up a fund that allowed both employees and the corporation to contribute tax-deductible dollars directly toward helping workers hurt by the storm.

And in Charlotte, N.C., the Foundation for the Carolinas got so many requests after Sandy that it had to hire temporary workers to help distribute the money. It now oversees about 10 funds for companies that are helping workers recover.

In neither case did the foundations do much, if anything, to solicit the companies. Terri Lee Freeman, National Capital’s president, says community grant makers have gotten these requests more and more as natural disasters and other problems ripple across the regions they serve.

“It just seems as though the times require it,” she says.

Tax Benefits

Community foundations have long been involved in disaster relief, but have begun formalizing their efforts in recent years, says Lucy Bernholz, visiting scholar at Stanford University’s Center on Philanthropy and Civil Society.

“I think you’ll see more of it,” Ms. Bernholz says. “In the last couple of years everyone on the planet has become more attuned to natural disasters and the thought that one could happen in your backyard.”

Internal Revenue Service rules make community foundations attractive partners for businesses. Companies that want to help employees hurt by a federally declared disaster, such as a hurricane, can do so directly or through their corporate foundations.

However, direct gifts from the company aren’t counted as charitable expenses, and co-workers can’t receive a charitable deduction for contributing to the effort, says Kelly Shipp Simone, vice president for legal affairs at the Council on Foundations.

While corporate foundations can take contributions from employees and others for disaster relief, she adds, such foundations often aren’t set up to handle gifts from a variety of sources or to oversee grant making to individuals.

By establishing a fund with a community foundation, the company gets more flexibility to help its workers and also gets a partner familiar with what Ellen Lehman, president of the Community Foundation of Middle Tennessee, calls “the administrivia” of overseeing applications and grants.

Employee Morale

It’s difficult to tell just how much money is flowing into such funds. Community foundations are loathe to disclose the amounts in their funds, and officials say annual grant making can fluctuate sharply as disasters come and go.

But in some cases, the numbers can be substantial.

For instance, Lockheed Martin’s employee disaster-relief fund, overseen by the Community Foundation of the National Capital Region, was created after September 11’s terrorist attacks (and since repurposed as a general disaster-relief fund). It has attracted more than $6-million in donations from employees, according to the aeronautics company’s Web site.

The funds’ missions vary according to corporations’ needs. Some focus narrowly on natural disaster, while others are configured broadly, encompassing aid to employees who may suffer catastrophic illnesses, or other personal woes. Companies typically contribute to the fund, but most also allow employees to give.

For corporations, it’s a logical, compassionate tool that also helps buttress workers’ morale, says Ms. Freeman. “It’s another demonstration of, ‘Wow, they really care about us.’”

Making Grants

In many cases, the grant making is handled by the foundation, an arrangement proponents say allows companies to steer clear more easily of IRS concerns and potential conflicts of interest between employees dispensing grants and those receiving them.

For instance, A.O. Smith Corporation, which manufactures water heaters and has a plant in Ashland City, Tenn., started a disaster-relief fund with the Community Foundation of Middle Tennessee to aid workers who had been affected by flooding in the spring of 2010.

A.O. Smith employees seeking aid submit grant applications to the community foundation, not the company.

“Quite frankly, that is their specialty. That’s what they do,” says Charles Wright, a spokesman for the company, about the community foundation’s lead role in vetting grants. “They’re very efficient, very effective.”

Employee Control

In some cases, companies prefer to bring the key decisions on grant making in-house, says Ms. Freeman of the National Capital Region community fund. A company panel will make recommendations to the foundation that holds its disaster-relief fund; then, the foundation’s staff vets the grants, checking especially for potential conflicts of interest between grant seekers and company panel members.

When Capital One associates wanted to help colleagues hurt by Hurricane Sandy, it put employees at the center of the grant-making process. The financial company identified a small group of workers from its community affairs, communications, human resources, and legal departments to help oversee the distribution of grant money from its fund at the Community Foundation of the National Capital Region.

Kristin Buckley, a senior manager for community affairs at Capital One, said in an e-mail to The Chronicle that it was handled that way “so as our associates raised funds from bake sales, car washes and other fundraisers to help the Sandy recovery effort, they could know that there would be a dedicated account available” and that it would be controlled by the company’s employees.

Fielding Requests

While some companies might feel strongly about influencing grants that are made with their money, Ms. Bernholz says many soon learn how difficult it can be to meet individuals’ needs in the wake of a disaster. Those who try giving themselves following one disaster often later turn to a foundation.

“Responding well and compassionately is not simple,” Ms. Bernholz says. A company, she says is “in the business of what they’re in the business of. The community foundations are in the business of moving money around and being knowledgeable about the community.”

However, giving money to disaster-stricken individuals, rather than to charitable organizations, is a new arena for many foundations, as well.

“It’s much closer to what a social worker does,” says Lance Linares, head of the Community Foundation of Santa Cruz County, Calif. “That’s a specialized talent that comes with a cost.”

At the Tulsa Community Foundation, the job falls to Lacey Matney, who spearheads grant-making operations for emergency and disaster-relief funds.

Tulsa’s funds are set up so that the foundation handles the grant making on behalf of companies. Employees can call her directly “so you don’t have to share potentially private details with your boss or your HR manager,” Ms. Matney says. “Sometimes those can be very difficult stories to hear. Sometimes people just need to vent and get it off their chests.”

The Community Foundation of Middle Tennessee now manages about 30 corporate disaster-relief funds, says Rebecca Finley, a spokeswoman for the group, and also handles grant making on behalf of its corporate clients.

The organization uses a program manager with a background in social work to work with grant seekers. Ms. Finley recalls that one employee needing assistance was a domestic-violence victim trying to get help paying her rent.

Ms. Finley stressed that other foundations shouldn’t set up corporate funds without carefully considering their staffing levels and capabilities.

“It does require a lot of time and effort,” she says. “We’ve been careful to create a process that’s best for us and the corporations and employees we serve.”

But, she cautions other community grant makers, “It’s taken us years to get to this point.”