The Union League sent an email last week to members asking for donations of up to $500 to help the Center City club’s employees who lost their income when restaurants and clubs had to close due to the COVID-19 pandemic.
Longtime member and former president Dan DiLella thought that was ridiculously insufficient. He knew the club’s 3,000 members could do more for the club’s 350 employees whose average annual pay is $32,000. So he got on the phone and urged members to donate more.
“In about an hour and a half, I raised over $100,000, and within one day, I had $200,000. Now, we’re up to over $300,000 and our goal is to hit $400,000, $500,000,” DiLella said this week.
The Union League’s relief fund for employees is different from some of the impromptu relief funds for restaurant workers established on Facebook or GoFundMe. And those differences are not just in the amount of money it has raised.
Under IRS rules that kick in for disasters, the money going into the Union League’s Employee Relief Fund is tax deductible like a charitable donation, and the money going out is tax free to the employees.
To qualify for that favorable tax treatment, the money must flow through a charity. And distributions — to be used for rent, mortgage payments, car loans, and certain other expenses — must be based on need.
The money also can’t be for a predetermined group of people, such as current employees. Employers deal with that restriction by determining that the money is for “our employees in this and any future disaster,” said Richard L. Fox, a lawyer at Buchanan Ingersoll & Rooney PC who helped the Union League set up its fund.
In the Union League’s case, the money is going through its affiliated Legacy Foundation, a charity used normally to support education.
Amid the COVID-19 pandemic, which has cost millions their jobs, at least temporarily, emergency relief funds are having their day, Fox and others said.
Keith Leaphart founded a company, Philanthropi, in 2018 to help firms track how much money they and their employees are giving to charity. Since the COVID-19 crisis struck, more of his clients are looking for help setting up employee assistance funds that would be administered through a charity he also established.
Two of Leaphart’s clients are now in the process of setting up relief funds for employees and 10 are in the queue, he said. It takes four to six weeks to create a fund through his company, he said. It’s faster if a company already has an affiliated charitable foundation.
Employers are realizing “they need to have these types of programs in place for employees in times of crisis. It doesn’t seem like this will be the last time,” said Leaphart, who is on the board of the nonprofit Lenfest Institute, which owns The Inquirer and on the board of the for-profit news organization.
Among other employee assistance funds announced recently is one for game-day staff at Subaru Park in Chester, where the Philadelphia Union Major League Soccer team plays. The Union did not say specifically what the tax status of that fund was.
“Our tax consultants are in the process of finalizing the structure of our program and should have a resolution within the next day or so," a Union spokesperson said in an email.
Contributions to the Philly Restaurant Server Relief Fund, which raised $38,591 to help replace lost earnings for servers, are not tax deductible. Nor are the grants tax-free, said Cheryl Molle, who started the fund. The fund has been giving $400 grants.
ComcastNBCUniversal and Campbell Soup Co. are among the national companies that have employee funds administered by the Emergency Assistance Foundation Inc., a nonprofit based in West Palm Beach, Fla.
At the Union League, employees have to apply for disaster relief grants to get help. The first payments are expected to go out next week to 50 employees, said the club’s general manager Jeff McFadden. “We’re looking at grants between $500 and $1,000 every two weeks,” he said.
The number of employees receiving the money will increase from there, McFadden said.
DiLella, the Union League member who kicked its fund-raising into overdrive, said he was thrilled with the response from the people he called.
"League members fell over themselves trying to help,” said DiLella, who is chief executive of Equus Capital Partners Ltd., a Newtown Square real estate investment fund manager. It’s because of the service the club employees give and the personalities they have, he said.
“They deserve it. It’s time to give back to them.”