raft.wiki 🚣

Hardship grant eligibility

7 min read

When we talk about eligibility criteria for hardship grants, there are two main concepts to understand: “charitable class” and “evidence of need.”

Charitable class

One of the most important concepts to understand when creating a hardship grant program is is the need for a defined charitable class. A charitable class is a well-defined, but also open-ended (or indefinite) set of potential grantees, such that either:

  • The defined group is “large enough that the potential beneficiaries cannot be individually identified,” or
  • The group is “sufficiently indefinite that the community as a whole, rather than a pre-selected group of people, benefits when a charity provides assistance”

Essentially, the tricky part is making sure that even if a class is more limited in size than, for example, an entire geographical area, it is indefinite (i.e., open-ended) in some way, such that “the total number of potential members making up the charitable class cannot be counted or identified.”

Specific income requirements

In some cases, it may be appropriate to have a requirement for income.

An example of a potential income requirement is having a total household income that does not exceed 185% of federal poverty guidelines.

Examples

A useful example1 is of a membership organization that wanted to support members experiencing a natural disaster:

If the group of eligible beneficiaries is more limited, such as members of a particular membership organization, the group of individuals eligible for disaster assistance (i.e., the charitable class) must include members affected by the current disaster and those who may be affected by a future disaster. This makes the class indefinite so that, while it may be possible to identify the members who were victims of a present disaster, it is not possible to identify members who could be affected by future disasters. As long as the charity follows a policy of assisting members who are victims of all disasters, present and future, it would be successfully providing assistance to an indefinite charitable class. (Yay!) Otherwise, the charitable class would consist of a pre-selected group of people, which is prohibited. (Boo.)

Here are some rough examples of improper charitable classes alongside their corrected versions:

Not acceptableAcceptable
Supporting striking workers at the 14th Street StarbucksSupporting Starbucks coffee workers experiencing hardship
Relief from Hurricane Jerry for residents of 123 Main StreetRelief from natural disasters for residents of the Village of Huntington
Therapy grants for current clients of Dr. Janice BrownSupport for individuals living in Houston experiencing depression

The possibilities are endless - we are happy to talk through potential iterations with you!

Limitation: one grantee per household

To avoid duplication and fraud, our policy is that only one member of a household may request grant funds from a grant program. A household is defined as:

A group of related or non-related individuals, exclusive of boarders, who are not residents of an institution, but who are living as one economic unit and for whom food is customarily purchased and prepared in common. It also means an individual living alone.

In most cases, we would not consider economically-distinct housemates a household, even if they share the costs of shared food, unless their financial lives are far more intertwined.

Evidence of need

Another aspect that is unique to hardship programs is evidence of need. For every hardship program, we must define requirements for evidence of need.

What is “need”?

A person in need is defined as one who “lacks the necessities of life, involving physical, mental, or emotional well-being, as a result of poverty or temporary distress.” Hardship does not have to be purely financial, even if grant programs alleviative efforts are. The IRS lists these examples:

  • a person who is financially impoverished as a result of low income and lack of financial resources
  • a person who temporarily lacks food or shelter and the means to provide for it
  • a victim of a natural disaster or civil disaster
  • a person who is temporarily not self-sufficient as a result of a sudden and severe personal or family crisis, such as a crime of violence
  • a person who is financially unable to care for themself as a result of a sudden and severe or overwhelming financial burden arising from events beyond their control

These are only examples, and they can be extended in any number of ways to match your desired program.

In the view of the IRS, “individuals do not have to be totally destitute to be needy; they may merely lack the resources to obtain basic necessities.” At the same time, they note that “maintaining a person’s standard of living at a level satisfactory to that person rather than at a level to satisfy basic needs” is not charitable activity. Thus, we don’t give hardship grants to people who clearly have enough income and resources to meet their needs themselves.[^wealth]

Specific evidentiary requirements

It unfortunately falls to us to burden hardship grantees - to ask them to articulate their financial position so that we can grant funds to them confidently. In the course of our design, we try to do this in as lightweight a way as possible. The IRS, for its part, states when discussing natural disasters that collection of evidence of need should be done with “common sense and sympathy for the plight of victims.”

Every program is different. The amount of evidence required depends on how much funding will go to each grantee - more money, more proof.

Here is a list of potential “evidence” that can be requested, from least to most burdensome for the grantee to supply:

  • A brief description of the circumstances that led them to apply
  • Signed attestation that they are experiencing hardship and do not have the income/resources to weather it on their own (or that they have special needs)
  • Signed attestation as to their current income level and resources
  • Signed attestation as to their current monthly expenses
  • Documents showing current major expenses
  • Government document proving eligibility for government support (such as SNAP or Medicaid)
  • Tax return showing lack of income
  • Bank statement showing lack of resources

For grants of $1,000 or less, the first two points will suffice. The attestation can read something like:

Please tick the box below to confirm that this financial hardship means you cannot meet your basic needs, and you do not have the independent financial means to weather this hardship.

For grants of more than $1,000 (i.e., $1,000.01 or more), and increasing as the amount increases, more documentation will be required.

We are also open to your ideas about what is appropriate for the particular situation.

Exception: urgent natural disaster relief

In the wake of a widespread natural or non-natural disaster, the IRS allows us2 to move quickly to set up a grant program that has no evidence requirements, beyond information (i.e., a name and address, or for businesses, business name and address) showing that the grantee is within the affected geographic area.

At some point, however - perhaps after a month or two, depending on the disaster - the urgency comes to an end.3 At that point, you will need to submit a new grant program that meets our non-disaster requirements, detailed above.

Footnotes

  1. This is actually a highly-edited version of an example from the IRS. ↩

  2. “In the chaotic and disorienting aftermath of a disaster, a charity can attend to a victim’s immediate needs without regard to financial means. When flood waters drive people from their homes, everyone urgently needs shelter, warmth, food, clothing, medicine, transportation, and some cash for incidental expenses.  A charity may provide this immediate aid to everyone without pausing to conduct an individual needs assessment. However, the charity is still responsible for documenting and maintaining records of this type of assistance.” ↩

  3. The IRS continues: “But as time goes on, the danger recedes, and people are able to call upon their individual resources, it becomes increasingly appropriate for charities to conduct individual financial needs assessments. Those who require additional assistance can have it, but those who do not need such continuing assistance should not use charitable resources. For example, families displaced by a hurricane may have a need for longer term emergency housing assistance if they do not have adequate resources to meet basic living needs.” ↩

Graph View

Backlinks