Wednesday, May 13, 2020





SHOULD CHURCHES TAKE MONEY
FROM THE GOVERNMENT?




The present crisis of the COVID-19 pandemic has presented us with any number of ethical problems. The biggest, of course, is whether to re-open more and more public places even though this will mean an increase in the rate of coronavirus infections and deaths. There is another ethical issue I want to bring up now, and that is the question of whether churches should take money from the government.  

First, let us review what has happened. In response to the sudden and drastic disruption caused by the various closures and social distancing policies of state and local governments, Congress passed four massive bills to inject money into the economy. The third of these was the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES), signed into law on Mar. 27, 2020. Part of this was the Paycheck Protection Program (PPP) of $350 billion. The aim of the PPP was to keep employees on the payrolls of small businesses adversely affected by the closures. The fourth was an extension of the third, signed into law on April 27, 2020. It provided for an additional $320 billion for small businesses.  In all, the federal government offered $670 billion to help small businesses survive the economic disruption of the pandemic.

As the laws were crafted, the authors included, with small businesses, the 501(c)(3) nonprofit organizations, such as religious institutions. The PPP offered "loans" equaling 2.5 times the average monthly payroll costs. These would be administered by the Small Business Administration through banks. The loans would be forgiven if all employees were kept on the payroll for eight weeks and the money was used for payroll, rent, mortgage, interest, and utilities. In other words, under the certain conditions, the loan would become a grant. 

The loans were offered on a first-come-first-served basis starting on April 3. Before the money was exhausted 13 days later, the SBA had issued several million loans, averaging $206,000. There were 30,000,000 small businesses in America. One survey showed that 75% of them applied for PPP loans but only 20% obtained them. Hotels and restaurants, among the hardest hit businesses, received only 9% of the money. The second round of grants started on April 27. In the first five days, $176 billion was allocated. As of this writing, its funds have not been exhausted.

Many churches could not resist the offers of free money from the federal government. The closures of churches, starting in March, had caused a significant decline in church income. One report said more than half of churches reported 25% decline and 18% reported 50% fall. One survey showed that 40% of Protestant churches applied for the PPP loans and 59% of those were approved. Of the 17,000 Roman Catholic parishes in the U.S., 12,000 applied and 9,000 obtained loans. One survey showed that 573 Jewish organizations won loans totaling $276 million.

The national Episcopal Church and the Anglican Church in North America did not take positions on the PPP loans. However, many dioceses and local parishes did rush to claim the loans. The ACNA did a survey and found of 85 respondents, 36 had applied, 23 had been approved and 12 were pending. It also found that 3 ACNA dioceses and 2 ministry partners had applied. Of these 4 had been approved and 1 was pending.

The Diocese of South Carolina was one of the numerous Episcopal dioceses that sought the PPP loans. Early on, either in late March or early April, the EDSC posted a document on its website entitled, "The CARES Act and the Paycheck Protection Program: Important Information for Churches." Find it here . It proclaimed in bold face, "The Diocese of SC is applying for a PPP loan, and we encourage our congregations to use this resource as well. Your diocesan leadership encourages all eligible congregations to take advantage of this program." It gave detailed instructions on how to apply. The EDSC applied and received a loan (I do not know the amount).

Two days ago, I contacted the Anglican and Episcopal diocesan headquarters in Charleston to inquire about diocesan and parish applications for PPP loans. How much did EDSC receive in its loan? Did the ADSC apply? If it succeeded, what was the amount of the loan? Which parishes applied? Which won loans? What were the amounts? One responded to my email. Neither diocese would provide any of the information I requested. Under the Freedom of Information Act, federal agencies are required to provide non-classified information to the public. Under the FOIA, I have requested the information from the Small Business Administration on the PPP loans to the Episcopal and Anglican churches in South Carolina. I am awaiting a reply and will relay the information when I get it.

While many churches rushed to get the virtually free money from the federal government, not everyone thought it was the right thing to do. Jon Costas, a pastor and former mayor of Valpariso, Indiana, wrote an eye-catching article in Christianity Today discouraging churches from pursuing the PPP money. Find the article here . To Costas, the issue was much more complicated than it may have first appeared. He urged churches to consider carefully five questions before applying:

1-What Scriptural principles should inform our discussion?

2-Is our church truly experiencing financial hardship to the same degree as small businesses?

3-Will accepting a large governmental subsidy rob our members of an opportunity to give sacrificially and experience the Lord's provision?

4-Is the decision to accept the PPP grant a decision made in faith or fear?

5-What message will accepting PPP funds send to an unbelieving world?

Costas concluded, "I believe the decision to apply for and receive PPP funds is one of the most important issues the church will face in this decade. It will set a precedent for the future and may, in time, hinder the mission of the church when the strings attached to government funds are not consistent with Scripture. It will impact how the unchurched view us, and how our own members respond to our spiritual leadership."

Costas' article gives us much to ponder about the issue of churches taking government handouts. In the first place, a great deal of money is involved here. For a parish with a million dollar annual budget, the PPP "loan" would be roughly $200,000. In the second place, the demand far exceeded the supply and the vast majority of small businesses did not receive loans under the PPP. Of the ones that failed to obtain the loans, those owned by African Americans and women were disproportionately represented. Churches soaked up money that might have gone to truly needy "mom and pop" shops. No one knows now how many of them went out of business or will go out of business soon.

Costas did not bring this up, but I, a life-long student of history, will---separation of church and state. The First Amendment of the U.S. Constitution forbids the Congress from making any law respecting the establishment of a religion. While PPP does not exactly establish a government religion, one could argue it comes close by funneling public, tax-payers' money into religious institutions. This is a dangerous precedent that could lead to harmful relations down the road. Separation of church and state has worked very well throughout American history. One could make a good case that this has greatly benefited the churches. At least the empirical evidence shows a much stronger attachment of Americans to religious institutions than in the old countries of Europe. Americans like the idea of the separation of church and state.

After the first round of loans ended, on April 13, there was a public outcry about rich corporations, big businesses, universities, and even sports teams that had received the loans meant only for needy small businesses. The clamor was so loud and the spotlight so strong, that many of these well-heeled places were embarrassed enough to return the money.

So, back to our question, Should churches take money from the government, at least the PPP? This is a complicated and difficult issue that, as Costas said, is more nuanced that we might have thought at first glance. Church officials should carefully consider whether it is right to take government handouts. 

The best argument that can be made for churches to pursue the PPP grants is that the money may preserve the jobs of church employees who would have been fired or furloughed. After all, this was the original motivation of the PPP. It was meant to keep employees on the payroll for the duration of the closures. On the other hand, churches taking PPP loans may be depriving needier small businesses of the money they must have in order to stay afloat and to preserve the employment of their limited numbers of workers. Too, this may hit hardest the little businesses owned by people of color and by women. How can the churches justify taking the money under these conditions? Finally, there is the principle of the separation of church and state. As tempting as it may be at any one moment to "fudge" on this, it is a dangerous game that ought to be avoided in the best interests of both state and church.

As I see it, churches should reconsider their participation in the PPP loans. If they are to be the respected oracles of ethics and morality, they must behave accordingly. What they do speaks much louder than what they say. For a church that got a PPP loan, unless it can make a compelling case that it should keep it, the church should seriously consider returning it so that others may have the money. This would be in the spirit of a servant religion.

At the very least, church leaders and people should think about the ethical and moral dimensions of reacting to the highly disruptive conditions of life as we struggle through what will be a long night. The pandemic will continue until a vaccine appears and God only knows when that will be. The darkness of the hour must not, indeed cannot, extinguish the light of our faith. Peace.

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Sources:

Wikipedia, "Paycheck Protection Program" .

NPR, "Not-So-Small Businesses Continue to Benefit from PPP Loans." 

CBS. "More than 12,000 Catholic churches in the U.S. applied for PPP loans and 9,000 got them."

ACNA. "Navigating the Financial Realities of COVID-19."