Written by John Winer
As the COVID-19 health crisis began to escalate, thousands of small businesses across the country faced many financial challenges. Recent data indicates that while there were more than 140,000 small business closures, some businesses were lucky enough to receive much needed financial help by securing a loan from the federal Paycheck Protection Program (PPP), a $659 billion fund created to help smaller businesses and nonprofit groups keep their employees on the payroll. But many were shocked and angered to learn that between those who were seeking financial help were more than 12,000 Catholic churches in the U.S. who also applied for PPP loans and received more than $3.5 million in funds.
The PPP is a federal funding program provided through the Small Business Administration (SBA) that administers forgivable loans to small businesses to keep their employees on staff. Funds can also be used to pay interest on mortgages, rent, and utilities. According to guidelines set by the SBA, faith-based organizations, including houses of worship, were eligible to receive SBA loans under the PPP, regardless of whether they provide secular social services.
Forbes reported that faith-based organizations are typically prohibited from lobbying for federal funds distributed by the SBA however, Congress allowed churches and other nonprofits to apply for loans via the Paycheck Protection Program, as long as they abided by the SBA’s “affiliation rule,” which dictates that only entities with fewer than 500 employees are eligible. As a result, the AP reported that at least 3,500 Catholic organizations qualified for loans worth at least $1.4 billion — and as much as $3.5 billion, with much of the money going to dioceses that have paid huge settlements or sought bankruptcy protection because of clergy sexual abuse cover-ups.
Even before the health crisis began, the Catholic Church had been facing financial pressure due to the lawsuits filed over clergy sex abuse. According to a report by The Washington Post, the number of allegations of Catholic clergy sex abuse of minors more than quadrupled in 2019 compared to the average in the previous five years, and U.S. church officials reported that the majority of the lawsuits were in part the result of new church-run compensation programs for victims as well as survivors were driven to come forward by several major clerical abuse scandals. An AP report found that around 40 dioceses were approved for a PPP loan of $200 million after suffering financial stress due to large payments to clergy abuse victims.
The COVID-19 pandemic brought along many financial hardships for businesses across the nation, and many expressed frustrations upon hearing the news that church organizations received federal help, despite being tax-exempt. Some groups including the Freedom from Religion released a statement condemning the loan, claiming it was an “unconstitutional, possibly corrupt handout of taxpayer funds to churches, including churches run by some of the government’s closest allies, under the Paycheck Protection Program.” Advocacy groups claim that churches who received this payout should ultimately do the right thing and use the money to pay sexual abuse victims and are seeking more information about the loan recipients in order to raise awareness of religious involvement in the stimulus program.