Hi mpMS,
1) If you have Site Owner rights to a site, you can assign an alert to other people with any kind of permission when the alert is created.
a) Go to where your folder is
b) Click the “Alert Me” in the drop down list of the folder
c) Input the users you want to send alerts to in “Send Alerts To” section
d) Do the proper settings in other sections
e) Click “OK”
2) About the “An issue with your use case is that you cannot assign permissions to folders in a doc library” Jeff DeVerter mentioned, I don’t agree with that. You can manage the permissions of folders according to “Manage Permissions” in the drop down list of the folder if you have proper right to this folder.
Hope it is helpful!
