The success of not-for-profits and small businesses is often built on a relationship of trust, loyalty and mutual reassurance with their client base. A strain in this relationship can form when a customer is unable to meet their financial commitments due to unexpected situations, such as:
- Loss of employment of a customer or a family member.
- Illness; including physical incapacity, hospitalisation or mental illness of the cusomer or a family member.
- Family breakdown.
- A death in the family of the customer.
Thereby, through no fault of their own, individuals are often left in a positions where their economic capacity to meet their financial commitments is greatly diminished, due to either a reduction in income or increase in expenditure.
Not-for-profits and small businesses are faced with the dilemma that on the one hand they don't want to abandon a valued customer in their time of need and, on the other hand, they need to maintain the economic viability of their institution.
A financial hardship policy could be implemented in those circumstances so as to provide a framework to the giving of assistance to customers who are temporarily experiencing genuine financial hardship.
There is no established legislation articulating what is required under a financial hardship policy.
Ultimately, socio-economic disadvantage is not a protected attribute (such as age, sex, marital status, race, disability etc) under Anti Discrimination Legislation at the State or Federal level. As such, the scope for the development of terms and conditions of financial hardship policies can be flexible, and often dependant on the nature and set up of the institution to which they relate.
Forms of financial assistance include reducing fees and amending billing payment arrangements for people experiencing genuine financial hardship.
Key issues to include in when formulating financial hardship policies include:
- Defining what is considered to be genuine "financial hardship" entitling eligibility – both long term and temporary.
- Details of evidence of "financial hardship" required to prove status.
- Generally accepted codes/practices of conduct - the policy is following (where applicable) including guidelines, minimum standards.
- Types of "financial assistance" offered.
- Who determines eligibility and the nature of assistance provided – Director, Board, Executive?
- Method of implementation and management of the policy - including enforceability, breach of policy, termination.
As you would appreciate, it is essential to provide uniformity in the application of any financial hardship policy so that customers and stakeholders know they are being treated fairly and impartially.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
