A corporate sponsored charitable organization may conduct disaster relief and emergency hardship assistance programs for the benefit of its sponsoring corporation’s employees. With respect to a corporate sponsored “private foundation” (e.g., where the charitable organization receives substantially all of its support from the corporation), relief may be provided to employees who are victims of any Presidentially declared disaster, which may include an earthquake, flood, hurricane, or tornado. With respect to a corporate sponsored “public charity” (e.g., where the charitable organization receives support from the corporation and employees), relief may be provided to employees who are victims of any Presidentially declared disaster or any emergency hardship resulting from a severe personal crisis, such as a fire, accident, illness, death, or crime.
Relief must be provided based on an objective determination of need and the selection committee should be comprised of individuals who are not in a position to exercise substantial influence over the sponsoring corporation. In addition, the disaster relief and emergency hardship assistance programs cannot be used by the sponsoring corporation to recruit or induce employment or otherwise satisfy an obligation to provide employee benefits. See IRS Publication 3833, Disaster Relief, for additional discussion regarding disaster relief and emergency hardship programs. If the requirements are satisfied, donors who contribute to the charitable organization are entitled to an income tax deduction and the relief payment is not treated as taxable compensation to the employee.