Stimulus aid creates dilemma for churches

Federal officials said this week that there will be little scrutiny of churches that receive money through a $2 trillion stimulus package passed in response to COVID-19.

Meanwhile, a federal judge has ruled that churches currently in bankruptcy proceedings should also be eligible for financial assistance through the CARES Act.

Passed in March, the act was meant to be a lifeline to small businesses that have shuttered because of the spread of coronavirus. But unlike during previous stimulus packages, lawmakers in Washington took an unprecedented step in allowing churches and nonprofits with fewer than 500 employees to receive forgivable loans to cover payroll costs, rent and other operating expenses.

“The federal government is paying the payrolls of churches for the next two months,” said William Vanderbloemen, founder of a Houston-based church consultancy group. “That’s just kind of mindblowing.”

Still, there were plenty of church leaders who were skeptical of applying for the money, which they fear comes with “strings attached” and could allow for future government meddling in religious affairs.

Others who have been approved for federal help have recently said they might return the money because they were uncertain how to calculate payroll or other expenses when applying for the loan.

The Small Business Administration addressed that on Wednesday, saying it would treat all applications for loans of less than $2 million as being made in “good faith” and, therefore, unnecessary to scrutinize.

It marked the second win for churches this month: A week prior, U.S. Bankruptcy Court Judge David Thuma ruled that the SBA could not deny a $900,000 loan to the Roman Catholic Diocese of Santa Fe, N.M., simply because the diocese is in bankruptcy proceedings.

The diocese filed for Chapter 11 bankruptcy in 2018 amid hundreds of sex abuse claims.

It’s unclear how much of the program’s initial funding went to any of the nation’s roughly 350,000 churches, most of which have about 100 members and would likely be eligible.

Last week, CBS News reported that most of the nation’s 17,000 or so Catholic churches applied for the program. A recent poll by LifeWay Research also found that 40 percent of Protestant pastors had applied for the program, and about half were accepted for loans.

Paul Sanders, president of a

Houston-based group that assists small churches, also said churches may have applied after the program’s initial $350 billion in funding dried out. Lawmakers are currently mulling another round of stimulus funding.

“The money went away so quickly,” he said. “It just disappeared.”

For Vanderbloemen, the legislation has resulted in massive upticks in business.

He said he realized the historic nature of the bill almost immediately and, after realizing there was little information available to church leaders, effectively turned his 40-person firm into a one-stop shop for any church’s CARES Act questions.

They started hosting Facebook live chats with federal lawmakers and retooling the business’ website with tip sheets on how to navigate the CARES Act.

The videos have since been watched more than 50,000 times, and Vanderbloemen’s firm has been inundated with tens of thousands of questions or requests for help. Before coronavirus, they typically received about 250 in a week, he guessed

“We were all blown away,” he said. “Apparently there was a real gap in what people needed to know and what was provided to them.”

Grant or loan debate

Meanwhile, religious leaders continue to debate the pros and cons of accepting federal help. To some, the idea is unpalatable because of its potential consequences on the separation of church and state.

“The funding of a church is as much a matter of worship as it is a matter of accounting,” said Bart Barber, a Farmersville-based pastor. “I worry that churches who are bailed out by the government may wind up confusing the government, the public and their own memberships about who meets the material needs of churches, potentially to the detriment of God’s glory and the advancement of the faith.”

The federal government has previously given grants to military chaplains, and the Supreme Court has ruled that faith-based organizations can’t use federal grant money to fund “inherently religious” activities. Yet the court has also said the government can’t discriminate in its grant or loan eligibility requirements.

Benjamin Marcus, religious literacy specialist at the Freedom Forum’s Religious Freedom Center in Washington, D.C., said debates over the CARES Act have focused in part on one question: Is a forgivable loan the same thing as a grant?

“What makes this really historic is that (the act includes) loans that could directly pay for clergy people, and not for the secular services they provide,” he said.

That argument was also cited in the Santa Fe diocese ruling: “The ‘loans’ are really grants,” the judge wrote. “Repayment is not a significant part of the program.”

Marcus said he is not too worried about the legal precedents set by the CARES Act because it’s “very clearly only appropriate” in the context of coronavirus. But, he continued, “One thing that we, as a society, need to balance is how much do we become flexible in times of crisis on bedrock principles, including constitutional principles.”

New levels

Generally speaking, Americans support churches and nonprofits receiving federal funding.

In a 2009 poll, Pew Research found that more than half of people supported giving help to synagogues, or to Protestant, Catholic or evangelical churches. Roughly 44 percent said the same for Mormons, and only one-third supported federal money going to mosques.

Those views, one expert said, reflect trends in American law and governance dating back to President George W. Bush, whose administration made churches eligible for federal money if it was not used for religious purposes.

Even so, the new legislation is unprecedented, said Garet Robinson, a Houstonarea pastor who studies nonprofits at Harvard University.

“I don’t know of any specific example of this happening before,” he said. “We had this happening up to 15 years ago, but it’s never been at this level.”

Over the same time, Robinson said, many American churches have also modernized everything from music to organizational structures.

The result: A “more pragmatic” ministry that Robinson said “removed a lot of ecclesiastical riverbanks” and made more churches focus on how to be “the most effective” in carrying out their missions.

Doing so, Robinson said, includes keeping churches financially solvent. A decade after one recession — and with another looming closer each day — that thinking has persisted, and likely influenced church leaders’ thoughts on receiving federal help.

“I think within 10 years you’ll see an even wider acceptance,” he said.

Vandebloemen, the Houston-based consultant leader, hopes that Robinson is right. Many churches, he said, are simply hoping to keep their doors open — “trying to see 5 feet ahead” — and the effects of COVID-19 will be felt for years, if not decades.

“Crisis is always an accelerator for change, and this is the biggest crisis I’ve seen,” he said.