Benevolence Fund

The Benevolence Fund is used to help people who need funds and are facing family hardships due to various reasons like natural calamities, health issues, accidents, or any other natural cause. The church generally maintains it with the sole purpose of distribution to help instead of concentrating on who is donating. To support needy people is called the Benevolence Fund.

A benevolence fund policy holds significant importance as it serves as a financial safety net for employees facing unexpected hardships or emergencies. It showcases a company's commitment to the well-being of its workforce, fostering employee morale and loyalty. Such funds provide critical financial support during challenging times, reinforcing a positive employer-employee relationship and promoting a caring corporate culture.

A benevolence fund, often established by a company, is a financial program designed to provide assistance to employees or their immediate family members facing unexpected financial hardships or crises. This fund reflects a company's commitment to the well-being of its workforce beyond the workplace.

The primary significance of a benevolence fund lies in its role as a compassionate safety net for employees during challenging times. It offers vital financial support when employees are grappling with unforeseen situations such as medical emergencies, natural disasters, sudden job loss, or family crises. This support can help bridge financial gaps, cover essential expenses, or offer relief during times of distress.

From a business perspective, a benevolence fund contributes to a positive corporate culture. It demonstrates the organization's genuine care for its employees, fostering a sense of belonging, loyalty, and goodwill among the workforce. When employees know that their employer has their back in times of need, it can boost morale and strengthen the employer-employee relationship.

Furthermore, a benevolence fund can indirectly benefit a company's bottom line by reducing employee turnover and absenteeism. When employees feel supported during tough times, they are more likely to remain engaged, productive, and committed to their jobs.

Establishing and maintaining a benevolence fund also aligns with corporate social responsibility (CSR) initiatives, showcasing a company's commitment to social and ethical values. This can enhance the organization's reputation and appeal to customers, investors, and potential employees who value socially responsible businesses.

An employee benevolence fund is more than just a financial aid program; it represents a company's commitment to its employees' well-being, fosters a positive corporate culture, and aligns with CSR values. It's a tangible expression of corporate empathy and can yield substantial benefits, both for employees facing hardships and the company as a whole.

The process of implementing a benevolence fund policy has multiple steps that are discussed in detail through the explanation below.

1. Firstly, the benevolence committee is to be created, but if the committee is not created, the board of directors is responsible for creating a benevolence policy and looking after it.
2. The benevolence committee is accountable to the board of directors, ultimately for drafting and creating the benevolence policy.

The individuals or the families who want to seek assistance from the benevolence fund are required to follow the below steps:

1. Firstly, the individual or family members must obtain and submit the application form for assistance from the church.
2. The required documentation should support the form.
3. Then the interview or the appropriate counseling must be completed with the concerned authorities.
4. Lastly, all the additional information and documents asked by the concerned authority must be provided.
5. Then the authorities will review the application and approve and communicate the amount of assistance to the one seeking assistance as early as possible.

The implementation of a benevolence fund policy requires the company or entity to qualify for a certain pre-requisite. Let us understand them through the points below.

• The purpose of the need should be well defined, i.e., for what kind of needs fund will be provided, such as food, shelter, utilities, etc.
• Define the financial criteria under which a recipient can get the payment of funds such as unemployment or income below the specified limits.
• It should be pre-decided who is responsible for approving the expenditures from funds like the designated minister or committee.
• Further, it is advisable to make payments directly to the vendors to whom the person seeking assistance owes rather than transferring the amount to the designated person directly to ensure that the funds are not misappropriated.
• The records should be maintained related to the spending of funds and the person to whom the funds are given.

The employee benevolence fund is the lender in last resort, i.e., when all the possibilities of getting funds are ruled out like savings, investment, and the family, it is intended as a source of finance in times of hardship. The disbursement of the benevolence fund shall not be in the form of any loan. The persons seeking financial assistance should be ready to take the appropriate counseling before approval; the Deacons will make sure that the person seeking assistance will not have any negative or irresponsible behavior and does not intend to misspend the funds.

The disbursements of this fund shall be made directly to the party to whom the designated person owes the amount and not to be payable as cash so that the misappropriation of funds can be avoided.

A benevolence fund policy payment that is made to an employee is taxable as employee’s wages. Therefore, the payroll taxes are to be withheld from them, and the same rule is applied to any other expense, which is paid on behalf of the employee.

Also, for donors, pass-through donations are not tax-deductible. Still, if the donations are routed through the benevolence fund, the church has control over the donation which makes the donation tax-deductible.

The benevolence fund is needed to help the church members or the nearby community in their difficult times. The benevolence fund is used to pay high medical bills and other expenditures important for the member's survival or another individual.

The benevolence expenditures must meet a minimum of two requirements – Need and Recipient resources.

The need is important to survive. Still, the need is defined in the church policy. Therefore, it is upon them what they include in the definition of need, i.e., policy should include what type of needs are eligible for getting benevolent payments and who is responsible for deciding what kind of need the church may assist.

This has been a guide to the Benevolence Fund and its meaning. Here we discuss taxability, need, applications, and how it is distributed along with guidelines. You may learn more about financing from the following articles –

• Ex Gratia Payment
• Donation Tracking Template
• Audit Committee
• Best Personal Finance Books