First, it is important to understand that the rules differ based on whether the organization making gifts to employees is a corporation or a corporate foundation. In either case, it is a good idea to consult an attorney to be sure that the legal rules are being followed.
It’s actually easier for the corporation to give to its employees, if the disaster fits the definition of a "qualified disaster" AND specified criteria are met. A disaster meets the criteria of a "qualified disaster" if it is:
- a disaster that results from a terrorist or military action,
- a presidentially-declared disaster,
- a disaster resulting from an accident involving a common carrier, or
- a disaster caused by any other event determined by the secretary of the treasury to be a catastrophic event.
Relief payments to affected employees can help with "reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence or the repair or replacement of its contents."
If acorporate foundation (or a public charity sponsored by the corporation) wants to give to the corporation’s employees, it can do so if all the following requirements are met:
- The class of beneficiaries is large or indefinite,
- There is a process that ensures an objective determination of need, and
- Certain documentation is gathered.
Again, because of the complexities of giving to employees, corporate foundations should work with legal counsel before making these grants.