Perk Stipends: Nearly Everything You Need to Know

The next generation of employee perks. 

What is a perk stipend?

A perk stipend is like a Flexible Spending Account (FSA), but instead of being a dedicated account for out-of-pocket health care costs, it’s a stipend given to employees to spend on perks.

They’re becoming more popular in today’s work climate, especially among tech companies because they dramatically improve both the process of offering perks for HR team members and more importantly, the experience for employees.

sam's sample perk stipend

How would you spend your $100/month?

In the example to the left, Sam's company has allocated $100 per month to spend the following categories: learning, health & wellness, and food.

This month, she purchased books, a gym membership, paid for a lunch with her team, and still has $20 remaining.

Companies using perk stipends today:

Most companies use perk stipends in one of two ways: 1. As a supplemental perk offering to an existing perk program or 2. an entire perk program. 

From Airbnb to Facebook to Buffer, below are company culture leaders and their perk stipend programs:

Whether you're creating a perk program from scratch or looking to make significant improvements to an existing one, perk stipends achieve many of the same goals that traditional perk programs do, and then some.

The various platforms used by Buffer's team for their $20/month learning stipend.

As mentioned above, Buffer offers their employees a $20/month continuous learning stipend.

After analyzing their employee's usage of the perk stipend, they noticed that their employees were using many different platforms to learn.

15 unique platforms to be exact.

How could an HR or People Operations professional create a program that supports this diversity of need?

This perfectly illustrates the power of a perk stipend.

Benefits of offering perk stipends:

Do a Google search for “top perks” and tucked inside almost every single list in not-so-hidden sight are a surprising abundance of perk stipends.

This new approach to perks has been gaining a lot of media attention lately because they solve so many common problems of traditional perk programs, and they also address so many trends for the future of work.

So what exactly are the benefits for companies and employees? They're below:

  1. Decrease the administrative burden on HR. Less time-consuming and labor intensive tasks, and more automation.
  2. Offer more comprehensive and diverse perks to employees. Pet insurance, in-office yoga, and financial planning services are excellent perks, but often only a small percent of your team will use them. Stipends let's everyone get what they need, when they need it, and fully removes HR from the buying process.
  3. Personalize the employee experience. 100% personalization for every employee.
  4. Give employees a voice and control. Employees have a choice in every area of their life, why should their choices at work be any different?
  5. Encourage a more equal distribution of perks and who they solve for. Beer might sound like a great idea, but does it really solve for everyone? Avoid usage for the sake of usage, and give more meaningful perks to everyone.
  6. Solve for all employees, not just ones located in local HQ. In-office and remote employees alike love perk stipends.
  7. Make the most of every company dollar spent on perks. No more expired food, wasted tickets, under-attended in-office fitness sessions.
  8. Better align with company mission, vision, values, and goals. Gain a competitive edge by approaching perks strategically and aligning them with what matters to the business.
  9. Are IRS compliant. Finally, your CFO will be able to sleep comfortably at night knowing your perks are appropriately taxed. And, they have you to thank for that.

Find more in-depth review on the benefits of perk stipends here.

When do companies consider using perk stipends?

Companies usually begin looking to perk stipends when they:

5 simple steps to setting up a perk stipend:

Setting up a traditional perk program from scratch takes seven steps and many months to do it right. Perk stipends aren't too far off, but the process is much easier and in the end, employees are much happier.

Follow these 5 steps to set up a perk stipend program:

  1. Identify your current and future EOY number of employees, and your total budget.
  2. Based on the information above, determine how much you'd like to spend per employee per timeframe. Timeframes could be monthly, quarterly, semi-annually, annually, or a one-time basis.
  3. Select categories for employees to spend in. These could align with company mission, values, goals, or be 100% open to give employees complete freedom over their perks. Some popular categories include: health & wellness, continuous learning, family, food, and travel.
  4. Setup your program. If you use a perk management software like Compt, this could take 15 minutes. If you're doing it manually - develop a spreadsheet/form where you can manually track the individual perk expenses, total amounts remaining within each time-frame, collect receipts, account for taxes, data for finance, and status of each perk expense.
  5. Last, but not least, communicate it to the team. Draft up an email, or better yet, a page on your internal wiki to communicate the new perks plan. Remember to explain the why, what, when, and how details. Lastly, supercharge your communication plan by creating a forum for people to provide feedback, whether it's a form for them to complete or holding a series of office-hours. 

What people can purchase with their perk allowance

Curious what people actually spend their perk allocations on? We've pulled together some actual purchases from users of our Compt software.

Continuous Learning:

Health & Wellness:


Want a more comprehensive list, check out our ideas for perk spending page which also includes suggestions for spending.