Monday, November 05, 2001

Employees trade vacations for donations

By Adam Geller
The Associated Press

        NEW YORK — Toni Schiavo was mulling a trip to Las Vegas to see her parents. Suzi Moczygemba planned to use her time off for an extended Thanksgiving visit with her daughter in Boston. Instead, both women will be back at their desks in coming weeks and will donate their accrued vacation time, reflecting new efforts to direct money to charities aiding victims of the Sept. 11 terrorist attacks.

        The pair's employer, Health Net Inc., is one of a growing number of firms that have started vacation-donation programs in recent weeks in what some say is a direct response to requests from charity-minded, but cash-strapped, workers.

        The arrangements — a new twist on “leave-sharing” programs allowing employees to donate time to colleagues burdened by illness or tragedy — allow workers to forgo vacation days and have their employers donate the cash equivalent to charities.

        “Everybody was just so profoundly affected by this (the attacks), that I felt the need to do something important and significant,” said Ms. Schiavo, a privacy specialist for the Woodland Hills, Calif.-based company who is donating a week of vacation time. “But I don't have enough cash set aside to do something like that.”

        Such donations could get a boost from a decision issued recently by the U.S. Treasury Department and the Internal Revenue Service not to count such donated vacation pay as taxable income.

        The decision was prompted by inquiries from a number of employers since Sept. 11, seeking guidance from the tax regulators on how to treat such programs, Treasury officials said.

        Some employers, though, moved ahead with vacation-donation programs even before the government's announcement.

        At Maine Medical Center in Portland, Maine, employee donations of vacation time in late September translated into checks for a total of $76,047 to the Red Cross and United Way attack relief funds. About 2,500 of the hospital's 4,000 workers qualify for vacation time and were eligible. Employees were allowed to donate a maximum of 16 hours of paid time off.

        “We were hearing from our employees that they wanted to do something, they wanted to do whatever they could to help,” said Paula Squires, the hospital's vice president of human resources.

        Employees of Oakland, Calif.-based Kaiser Permanente donated vacation time worth about $400,000 in a program that ran from Sept. 24 to Oct. 5. The money is headed for relief funds set up by the Red Cross and the AFL-CIO.

        “I haven't been here very long and I don't have a lot of time accrued and usually I guard mine very closely,” said Gail Florian, a payroll department employee at the health maintenance organization's Portland, Ore., office who estimates her two-day donation will be worth $322. “But this seemed like a good reason to give it out.”

        Ms. Moczygemba, a nurse who works in a Health Net office serving Carswell Naval Air Station in Fort Worth, Texas, said she e-mailed executives to suggest a program, recalling donations of time she and her co-workers made several years ago to a colleague injured in a fire.

        County government employees in Alameda County, Calif., also began donating vacation time in mid-October in a drive that continues. So far, about 250 of the county's 9,000 workers have traded in about 3,145 hours and local court workers, employed by the state, have asked to join the program, said Scott Haggerty, president of the county Board of Supervisors.

        The vacation donation window at Health Net began Thursday and runs through Nov. 15. The company began considering it after a number of employees separately raised the idea in meetings and e-mails to executives.

        Treasury officials said they had fielded calls from several companies asking for clarification on tax implications of such donations.

        The programs are “a variation of what's already been out there,” said Rob Hanson, tax legislative counsel for the Treasury Department. “People came to us in September and said we've seen these leave-sharing programs out there. Can we do a leave-donation program?”

        The department said it will allow such donations without taxing workers through the end of next year.

        More employers will probably embrace the idea because of its philanthropic appeal and because they're allowed to deduct it as a business expense or corporate charitable contribution, said Margaret Richardson, a partner with tax consultant Ernst & Young, which has fielded inquiries from several client companies.

        “I suspect you're going to see more and more of it,” said Ms. Richardson, who was commissioner of the IRS in the mid-'90s.

        Ms. Schiavo acknowledges she'd like the vacation time, but thinks it worth the trade-off.

        “I might miss it,” she said. “But, and I think this is going to sound hokey, I'm thinking I'm going to be a proud American going to work on a day I'm supposed to be off and knowing that I'm doing something.”


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