A Guide to Stipends & Employee Perks (Updated for 2023)
Stipends are a modern way of providing benefits to your employees. Here's everything you need to know about designing them.
Our 2023 Benepass Benefits Benchmarking Guide reveals insights on top pre-tax and perks programs, average stipend contributions, and benefits design so you can design more competitive benefits.Get the guide
Employee compensation is about so much more than a regular paycheck. It’s about employers acknowledging that their workforce consists of well-rounded people with health concerns, hobbies, homes to run, and more. Companies that offer holistic support with a full range of paid employee stipends take the weight off their workers’ shoulders and improve lives both inside and outside of work.
In this guide, we’ll dig into stipends and employee perks — their benefits, examples of what other companies offer, and best practices when implementing your program.
Stipends and employee perks form part of a company’s benefits strategy. Employers offer a stipend to cover living expenses and employee perks, such as travel allowances, wellness programs, tuition reimbursement, or remote working. But these examples merely scratch the surface of what’s available to accompany your employees’ regular pay.
Example: Your company might offer a fixed sum, such as $120 per month as a fitness stipend, $89 as a food allowance, and $109 to cover phone and internet costs.
A stipend is fixed or regular pay provided to employees as a form of allowance or financial aid. Typically, it is delivered upfront as a one-off lump sum or periodic payment, such as an annual, quarterly, or monthly stipend.
Stipends differ from reimbursement policies, where employees spend money, submit a claim for the expenses incurred and wait to receive the money back. Instead, upfront stipends and perks enable employees to use a predetermined allowance toward their preferred mix of eligible living expenses.
Even a small stipend is usually classified as taxable income and treated as part of your employees’ overall compensation package.
Here are four reasons to consider delivering stipends and employee perks to your workforce:
Traditional benefits programs are laden with paperwork, processes, and requirements. A stipend can cut out a lot of time-consuming administration for your benefits team and employees. Instead of your employees filing expense reports to obtain a reimbursement, they can receive the stipend upfront without any extra red tape.
Stipends allow employers to treat employees as the individuals they are. Instead of assuming all employees want or need access to the same benefits, you can tailor your stipend to offer more personalized perks. For example, some companies partner with a single gym venue to offer discounted memberships to employees — but not every employee will enjoy that particular method of exercise. Flexible stipends enable employees to choose what works best for them, whether that’s a gym membership, yoga classes, running shoes, or biking equipment.
Glassdoor reveals that companies that invest in their reputation as an employer could reduce staff turnover by 28%. Offering an attractive range of stipends and employee perks ensures you appeal to potential candidates and remain relevant with your existing crew. By anticipating and catering to their needs, you strengthen the relationship between your business and its employees. By doing so, you’ll motivate your workforce to talk positively about you in their personal and professional networks.
Stanford University researchers found that 27% of all paid, full-time days were worked from home in early 2023. Remote working is here to stay, but employers must support their distributed team members differently from their office-based colleagues as their needs vary based on location and home office setup. Offering stipends and perks relevant to people in multiple locations is the best way to remain equitable.
Stipends and perks are both broad terms, but we can split them down into these popular categories:
The 2023 State of Mental Health in America Survey finds that 21% of Americans have at least one mental health condition, and 55% are not receiving any treatment. Clearly, we need to do better in offering support and ensuring people know where to turn. Employers can do their part by providing an emotional wellness stipend covering wellness apps, self-help books, or online therapy. For example, ReachDesk offers a generous monthly $150 wellness stipend. Travel stipends can also help employees cover the costs of a vacation so they can rest and recharge.
Medical debt is the top reason that people file for bankruptcy in the United States. Although your health insurance will cover medical care, a physical wellness stipend aims to maintain a healthy lifestyle and reduce the likelihood of needing health treatments.
Employers like Mindbody offer a stipend that employees can spend on exercise to remain fit and active. Physical wellness stipends can cover items such as fitness programs, gym memberships, health screening kits, medical equipment, vitamins, and diet consultations.
30% of Americans report they feel lonely, thanks to working longer hours, attending a physical workplace less often (if at all), and lacking friends in multiple areas of their lives. Interestingly, Maine, Vermont, and Oregon residents report feeling more isolated than employees based elsewhere in the country.
Employers can take charge of social wellness by following the lead of Automox, whose AX Connect program uses stipends for physical and virtual coffee dates to stay connected.
Spiritual stipends can support employees in feeling grounded and better equipped to handle the stresses of the modern-day work environment. Studies suggest that 20 to 40 minutes of mindfulness or meditation daily can make a world of difference to your employees’ physical and mental health.
Spiritual wellness stipends range from yoga apps and classes to retreats and mindfulness training. Ensure your package covers a broad selection of activities that resonate with your team.
Intellectual wellness enables learning and encourages us to challenge and expand our knowledge. Providing stipends in this area positively impacts team performance, and employees will appreciate the opportunity to become experts in new areas.
Examples include art classes, writing workshops, MasterClass subscriptions, and more. Crisis Text Line offers a stipend that employees can use on professional enrichment opportunities like these.
Gen Z and Millennials are more concerned about impacting the world’s future than other generations in your workforce. To meet their needs, employers can offer environmental stipends, including tree planting schemes, gardening activities, and carbon offset initiatives.
Work from home stipends enable employees to set up a distraction-free workspace in their remote offices, equipped with all the essentials they need to perform their jobs well. Jefferson McCall, the Co-founder and HR Head of TechBullish, explains why this is important in the current benefits landscape:
“One of the most successful perks programs that companies are implementing worldwide is remote work stipends. With the ongoing trend of remote work, helping employees set up their home office can increase productivity and employee satisfaction.”
Follow Jamf’s example by offering a remote work stipend to use on items such as computer monitors, chargers, keyboards, headphones, office furniture, and printers or scanners. Because of its flexibility, Jamf’s program sees a 98% engagement rate among employees.
94% of employees would stay longer at a company if it invested in learning and people development, according to LinkedIn. Professional development stipends provide employees with the opportunity to upskill and develop new skills. Examples include language classes, coding boot camps and professional development certifications.
“One of the initiatives was a stipend for external learning opportunities — our Be Your Best Self Program allows each individual to spend up to $1,500 annual stipend on certifications, conferences, workshops, memberships, etc., that will benefit their current and future role(s). Each person brings their proposal to their leader, and they discuss the options. Afterwards, the leader approves initiatives that are best aligned with the person’s goals and roles. This program allows an elevated level of career self-advocacy that has been a massive success as an employee-driven perk. In 2022, we had 93% usage of the stipend in the organization.”
Office pizza parties no longer cut it, with increased remote workers and office-based employees keen to leave their desks on time to support work-life balance. Instead, companies offering flexible food stipends can see engagement rates of 90% or more. Meal and food stipends allow employees to access grocery stores, restaurants, meal kits, and more to stay well-fed and healthy.
Check out how Wix provides equitable food perks to its workforce in our case study.
If your employees commute to the office, consider providing stipends so transportation and parking costs don’t eat into their regular salary. For example, Moderna launched a commuter benefit that covers public transit, taxis, rideshare services, and parking to help employees with these costs.
Instead of offering multiple specialized stipends, you could also opt for a lifestyle spending account (LSA). With this program, you can add a variety of spending categories and lifestyle spending account eligible expenses to your benefit policy. For example, you could elect to allow employees to spend on massages, gym memberships, meals and groceries, art classes, online therapy, and more — all under one account. This gives your employees more freedom to decide how they spend their benefits.
To dig deeper into your available options, we’ve put together a set of guides on how to offer various types of stipends. Check them out below:
Follow the below best practices to demonstrate your commitment to your employees’ overall well-being:
Small companies and startups may initially feel drawn to keeping benefits administration in-house to save money. But this can be a false economy, as the time spent on repetitive tasks will prevent your skilled team members from doing what they do best.
Instead, choose the right third-party platform to manage your benefits programs. This switch will give you more control over your budget and transparency into how people use their stipend and other benefits. People and Culture Director Grace He shared the thought process behind why TeamBuilding has handed over the burden of perks and stipends administration to an external provider:
“Originally, we were administering our company’s meeting meal perks and monthly healthy living stipends by manually reimbursing receipts, but this process was not scalable and was cumbersome for the staff handling the requests. Our new solution allowed us to send a preloaded digital credit card to our staff quarterly to cover meal and related perk expenses. We’ve also used this system for occasions like team retreats. This platform makes it easy to distribute funds to employees and audit usage in bulk instead of reviewing individual purchases. It is easy for staff to use the cards at a wide variety of vendors instead of limiting their options. Simplicity and usability are key with perks, and this solution fulfilled those needs.”
Check out Benepass’s Customer Stories for details of how we’ve helped countless organizations win back valuable hours.
How do you know that your stipends and perks are competitive and attractive compared to others? Conduct thorough market research to benchmark your offerings against the competition. This step is vital in determining your budget and separating your nice-to-haves from your must-haves.
Get started by digging into our Benepass Benefits Benchmarking Guide based on our internal customer data. View averages by:
Workforces comprising multiple generations find their employees’ needs and preferences vary widely, so flexibility should be at the heart of a successful stipend and perks program. Achieve this by providing a range of options to ensure everyone feels supported:
“Go as bespoke as you can, allowing your employees the greatest degree of control over their benefit choices, which align directly with what they deem the most useful to them. For certain gym memberships, training days, and health plans — the requirement or even ‘want’ for each of these is likely to vary between employees, so giving them the option not only shows that you want what’s best for them but also means that perk or stipend usage is greatly increased on a per-employee basis.”
“Some stipends come with strings attached. Companies stipulate that employees must use their stipend to pay for gym membership to encourage healthy habits. But not all employees want to join a gym, or can even find one that fits their needs. We have some employees who are parents and don’t have time for a gym. We don’t stipulate that the stipend be spent on a gym membership. Instead, we stipulate that the money be spent on an activity that helps the employee maintain their health or well-being.”
Communication is key when introducing a new perk or stipend program to your workforce. Talk about your program regularly throughout the year, celebrate success stories, highlight new partnerships or vendors, and explain changes to the program. Give employees details about:
Take the time to implement stipend and perks programs with honest communication, and you’ll create a culture of engagement and appreciation within your workforce. Administrative Manager Antreas Koutis from Financer shares a success story about a former employer that went the extra mile to involve its employees in discussions about its benefits culture:
“I’ve found that transparency is vital when implementing perks and stipends. We introduced a health and wellness stipend, but instead of simply informing employees about this addition, we organized a town hall meeting. During this, we walked them through the reasons behind the perk, how it would benefit them, and the process. We also invited questions and feedback to foster a sense of involvement and understanding. This open approach not only increased engagement but also boosted morale, as employees felt valued and heard. Providing clear, accessible information about the benefit programs helps employees to utilize them better and enhances their overall job satisfaction.”
Have you decided who is eligible to participate in your stipend and perks program? Stay fair by outlining how you’ll distribute equitable benefits for:
Eligibility decisions may be determined by state or federal regulations so ensure compliance by reviewing your stipends and perks program each year. This keeps your organization in line with the Department of Labor rules and the changing legal landscape. Remember: the rules in different countries and states may vary if you have a globally distributed team.
Once your stipends and perks program is live, never assume that your work is done. The most successful initiatives need maintenance to ensure they’re still:
Pro tip: Include a mix of close-ended and open-ended questions. Close-ended questions with Yes/No answers are quick for employees to answer and offer useful quantitative information. However, open-ended questions allow employees to add qualitative insights about their experience receiving stipends.
There are numerous ways to distribute your stipends and employee perks using Benepass, all with flexibility at the heart of your program. It’s easy to get started: