Catholic bishops defend federal paycheck loan participation

Catholic bishops defend federal paycheck loan participation

Paycheck Protection Progam application. Credit: photo_gonzo/shutterstock.
Paycheck Protection Progam application. Credit: photo_gonzo/shutterstock.

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The U.S. bishops on Friday defended the use of the federal Paycheck Protection Program by Catholic parishes, hospitals, schools, dioceses, and social service agencies, after a report from the Associated Press said the government had given “special consideration” to faith groups in the loan program and characterized Catholic participation in the coronavirus relief program as an “aggressive pursuit of funds.”

“The Paycheck Protection Program was designed to protect the jobs of Americans from all walks of life, regardless of whether they work for for-profit or non-profit employers, faith-based or secular,” Archbishop Paul Coakley, chairman of the U.S. bishops’ conference committee on domestic justice and human development said in a July 10 statement.

“The Catholic Church is the largest non-governmental supplier of social services in the United States. Each year, our parishes, schools and ministries serve millions of people in need, regardless of race, ethnicity or religion. The novel coronavirus only intensified the needs of the people we serve and the demand for our ministries. The loans we applied for enabled our essential ministries to continue to function in a time of national emergency.”

“In addition, shutdown orders and economic fallout associated with the virus have affected everyone, including the thousands of Catholic ministries -- churches, schools, healthcare and social services -- that employ about 1 million people in the United States,” Coakley added.

“These loans have been an essential lifeline to keep hundreds of thousands of employees on payroll, ensure families maintain their health insurance, and enable lay workers to continue serving their brothers and sisters during this crisis.”

The federal loan program is a $669-billion initiative that allows entities to obtain low-interest loans that can be forgiven if the money goes mostly to cover payroll expenses, and to keep people employed who are in danger of losing their jobs. While more than 4.9 million loans have been approved to date, more than $130 billion remains available to potential borrowers.

Earlier this week, data was released by the government that revealed the identities of many, but not all loan participants. Loan recipients included Planned Parenthood affiliates, numerous firms owned by state and federal lawmakers, the publisher of the National Enquirer, the libertarian Ayn Rand Institute, and other organizations that have raised eyebrows or been subject to criticism.

Still, officials with the federal Small Business Association said that the program was designed to keep people employed, regardless of their industry or employer, and that the SBA will exercise oversight to ensure funds were not borrowed under false pretenses.

If borrowers can’t demonstrate that at least 60 percent of borrowed funds were used for payroll-related expenses, then the terms of the loans will require their repayment.

The July 9 Associated Press report said that Catholic organizations borrowed between $1.4 and $3.5 billion, and noted that at least 407,900 jobs were saved through those loans. At the high end of the Associated Press estimate, Catholic institutional borrowing would represent .5% of funds allocated to the loan program. And if $3.5 billion was in fact borrowed, the cost for each job saved through the loans would amount to $8580.

In May, CBS News reported that 12,000-13,000 of the 17,000 Catholic parishes in the U.S. had applied for the loans, and 9,000 had already received them.

The July 9 Associated Press story said that the Catholic Church in the U.S. used an “exemption from federal rules” in order to “amass at least $1.4 billion in taxpayer-backed coronavirus aid” through its participation in the federal program.

The report said that Catholic entities gained this “exception” to the Small Business Association’s eligibility rules through lobbying efforts, citing an April report from Catholic News Service.

That Catholic News Service report said that Catholic lobbyists worked, in the week the legislation creating the program was actually passed, to ensure that as rules were devised by Department of Treasury officials, that Catholic entities civilly distinct from each other would not be regarded as one entity, which might place the consolidated entities above a 500-employee eligibility cap.

In the Church’s canon law, parishes are distinct legal entities from each other and from dioceses, and while diocesan bishops exercise legislative and judicial authority over parishes, parishes do not constitute subsidiaries of dioceses. Nor do affiliated entities like Catholic Charities, Catholic schools and universities, or Catholic hospitals, which are ordinarily overseen by lay boards on which bishops often have only ordinary voting membership, if that.

The Catholic Church is a web of organizations connected by faith, mission, sacraments, and oversight, but those organizations are not uniformly administered as subsidiaries or under the direct control of local bishops.

While parishes generally pay annual fees to dioceses, the funds of distinct canonical entities may not be permissibly commingled, and canon law requires that the civil structures of parishes, dioceses, and other Catholic entities reflect their canonical reality.

Nevertheless, the complex organizational structure of the Catholic Church made it possible that several Catholic entities in the same place might be regarded by the SBA as one entity. The effort of the USCCB lobbyists was to ensure that wouldn’t be the case, the Catholic News Service report explained.

That effort was successful.

An April 3 FAQ document from the SBA explained that the general loan rules provided that if faith-based organizations had an affiliation related to “religious beliefs about church authority or internal constitution, or because the legal, financial, or other structural relationships between your organization and other organizations reflect an expression of such beliefs,” they would qualify for an exemption to rules that would ordinarily count “affiliated” organizations as one entity for purposes eligibility determination.

However, faith-based organizations “affiliated with other organizations solely for non-religious reasons, such as administrative convenience...would be subject to the affiliation rules,” the SBA explained.

In the United States, both parishes and dioceses are facing serious financial shortfalls and in Rome, the Vatican has run sizeable budget deficits for years. While the Catholic Church has assets of artistic, cultural, and historic value, those are not easily liquidated, and with few exceptions, Catholic entities around the world have been facing a serious cash crunch for years.

In his statement, Coakley acknowledged that “more than 100 Catholic schools have announced that they plan to close, with hundreds more facing an uncertain future. Businesses, hospitals, schools, and churches all across the country are facing many of the exact same problems.“

“We will continue advocating for everyone negatively affected by this terrible pandemic, praying for all the sick, for all who have died and are in mourning, and especially the poor and vulnerable at this time of great need.”

Tags: USCCB, Catholic News, Coronavirus, Paycheck Protection Program, PPP loans

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