Daily Hampshire Gazette [Hampshire MA]
May 12, 2021
By Isabel Contreras
BOSTON – Massachusetts churches, including Catholic and Christian religious organizations, received upwards of $82 million in forgivable loans through the federal Paycheck Protection Program, according to Small Business Administration data released last month.
The Roman Catholic Dioceses of Worcester, Fall River and Springfield, along with the Archdiocese of Boston, collected over $20 million in PPP loans, distributed among different churches and administrative departments under their jurisdiction. Boston’s Archdiocese, led by Cardinal Sean Patrick O’Malley received the most within this group, with more than $8 million in PPP aid.
Ray Delisle, director of communications for the Diocese of Worcester, said the PPP loans were necessary to keep people employed in the diocese while continuing to provide services to the community during these hard times.
“The purpose of the program was to keep people’s jobs and if we couldn’t keep them employed, they’d be on unemployment, further pressuring the system for support,” Delisle said. “This allowed us to keep on being able to provide the supports that society relies on us for, and we have to keep those going, especially during a pandemic.”
Paycheck Protection Program loans allowed small businesses across the country to borrow up to $10 million to pay for employee wages, utilities and rent, with the opportunity of loan forgiveness as long as the funds were used for their intended purposes.
Larger churches and dioceses would not normally qualify for this kind of government aid, since there is a 500-employee cap for businesses and organizations to qualify for PPP loans, but through lobbying the Catholic Church convinced the Trump administration to grant them an exemption from this rule last year.
Northeastern University law professor Peter Enrich said he sees no legal issue in providing PPP aid to non-taxable entities like churches since the program was designed to maintain wages and the money ends up in the hands of workers. However, he said there would be a legal issue if the government had denied churches loans because of their religious affiliations.
“To launch an aid program but then say ‘we’re not going to do that for any religious entity’ would raise very serious concerns about the federal Constitution’s free exercise of religion clause,” he said. “The government can’t discriminate against entities just because they are religious entities.”
American Atheists Massachusetts State Director Zachary Bos said the secular organization does not object to religious institutions receiving PPP funding when needed to support their employees, but that there are important considerations as to why some of them should not have received aid.
Bos said the church’s non-taxable status is conditional to their abstinence from political influence and lobbying, but that the church often sways political candidates and policy.
“The issue is some of these religious organizations exist solely because of their refusal to follow the rules,” Bos said. “If they wanted to continue with political advocacy, that would be fine. They just have to pay to play like every other organization has to do. I’m not sure why PPP funds should be subsidizing a tax cheat.”
Bos also said churches with valuable assets were not in as much need as small businesses that had no other way of staying open than to secure PPP loans, and that some of the churches in financial trouble were in that position because of past coverups of child sexual abuse.
“It’s especially morally problematic that Catholic dioceses in many places, including Boston, were paying huge settlements and penalties for child sexual abuse,” Bos said. “That money is going out the door and their coffers are being refilled by taxpayer dollars. I don’t see the economic justification for supporting morally abusive businesses.”
Many other Massachusetts nonprofits also received PPP loans, including universities, which amassed over $64 million according to the SBA data. Nonprofit preschools, together with primary and secondary education institutions, received more than $175 million in PPP loans. These included schools with religious affiliations.
Religious organizations of other denominations – including synagogues, seminaries and temples – received around $14 million through the program.
Nicolas Duquette is an economist specializing in nonprofit taxation and spending policy at the University of Southern California’s Sol Price School of Public Policy. He said churches have some differences from other nonprofits, but they do depend on hired workers and have costs like others do.
“A church differs from, say, a research university in that a lot more of its resources will come from donations or from people volunteering their efforts for service,” Duquette said. “But there are also many programs that run behind the scenes – soup kitchens, support groups, counseling, daycare centers – that do require paid staff and incur costs.”
Duquette said churches are in fact non-taxable entities, but that it is important to highlight that their payroll is still subject to income taxes, just like wages in for-profit businesses.
“For-profits don’t pay taxes on the money they pay their employees either. They only pay taxes on profits left over after they pay their payroll,” he said. “For purposes of economic policy, we really shouldn’t care if people have a religious or secular job, a business or nonprofit job, if the goal of the program is to keep people employed and able to pay their bills.”
Duquette said that the ambiguity of spending activities in churches is an important factor in some people’s skepticism of their use of donations and financial resources.
“Churches come in all shapes and sizes, and we know less about them than we do about other types of charities and nonprofits because they are not required to disclose their finances in the way that any other secular charity, with only a few exceptions, must,” Duquette said.
“Part of the reason why I think some people are concerned with what the church is up to is that we know so little about their activities, so skepticism has no way to check itself,” he said.
Isabel Contreras writes for the Gazette from the Boston University Statehouse Program.