Monthly Employee Stipend Aimed at Supporting Small Local Businesses

February 2, 2021
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small business stipend

​Foosball tables, free food in the communal kitchen, and fridges stocked with wine or beer have disappeared as company perks now that many more employees are working from home during the COVID-19 pandemic. As a result, employers have to be creative and find new ways to engage and retain employees.

To boost morale—and the local economy—an employer in Austin, Texas, introduced a benefit for its employees that also supports small local organizations facing huge challenges: a monthly $200 stipend for workers to spend at nearby businesses.

"We felt this was a really important thing for us to do," said Jason Shiver, CEO of Waterloo Sparkling Water. "I see restaurants that have been around and have been [part of the] fabric of their communities going out of business."

The number of active business owners in the U.S. fell by 3.3 million—or 22 percent—from February to April 2020, the National Bureau of Economic Research (NBER) reported in June. That was the largest decline on record, and it affected nearly all industries.

Minority-owned companies were especially hard hit. Black-owned enterprises experienced a 41 percent drop in trade, Latino-owned businesses saw a 32 percent decline and Asian-owned businesses saw a 26 percent decrease.

Additionally, immigrant business owners saw a 36 percent loss in business, and women-owned businesses experienced a 25 percent drop in trade, the NBER found.

Shiver's company—which has 35 employees spread throughout Arizona, California, Florida, New York, Texas and Wisconsin—has budgeted $84,000 for the new benefit in 2021.

"Through no fault of their own in this COVID time, small-business owners are facing dire challenges," Shiver said in a news statement. "As an entrepreneur myself, it has been heartbreaking to see so many members of our community, many I consider friends, watch their livelihoods evaporate."

The small-business community "is a vital sector of our economy and essential to driving innovation," he said. Shiver expects his employees to use the stipend to patronize small businesses in their area—a local flower shop, drycleaner or favorite restaurant.

He said he is especially interested in seeing his employees support longtime businesses that have some heritage within their community.

Small businesses such as restaurants, bars and music venues are among his company's customers, but he said employees are free to use their stipend at any small business. And there can be a ripple effect. He recalled one employee who asked him if the money could be used to buy takeout food for someone who was in need.

The answer: "Absolutely."

Shiver advised employers interested in starting a similar initiative to avoid tax implications for employees. His reimbursement process is similar to that used for business travel expenses.

But whatever employers do to aid small businesses, he added, "it needs to be authentic and something you're really passionate about. That really comes through."

 

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