A U.S. government program, despite its flaws, supplied a financial lifeline to hundreds of United Methodist ministries in the early days of the pandemic.
The federal Paycheck Protection Program for the first time offered federally guaranteed small-business loans to nonprofits with fewer than 500 employees, including churches.
The goal: To help employers keep workers on the payroll during coronavirus-related closures. Loans can be forgiven — essentially becoming grants — if employers show they used at least 60% of the funds on paying workers and meet other criteria.
The program has faced criticism for favoring larger enterprises over smaller ones and violating the U.S. legal tradition of separating church and state.
Nevertheless, many United Methodist leaders point to the program as a needed reprieve at a time of plummeting giving and rising ministry needs.
“Even though there are a lot of churches doing better right now, there are others that very clearly did not have to lay off significant numbers of staff because they were able to get a PPP loan,” said Scott Brewer, treasurer and director of administrative services for the Great Plains Conference.
This month, the U.S. Small Business Administration — which administers the program — made public its large-dollar recipients, including various United Methodist ministries.
According to a UM News analysis of the administration’s data, at least 751 United Methodist organizations received between $150,000 and $5 million in loans.
This tally includes 736 organizations with “United Methodist” in their name, seven United Methodist seminaries and eight historically Black colleges and universities supported by the denomination’s Black College Fund.
These large-dollar United Methodist recipients include local churches, camping ministries, preschools, retirement homes, eight general agencies and 39 of the 54 U.S. annual conferences. For example, Brewer’s Great Plains Conference received about $1.5 million in loans that covered the conference, church camps and campus ministries.
The Small Business Administration lists the loans within a financial range rather than giving exact amounts. But based on those ranges, the 751 United Methodist ministries altogether received close to half a billion dollars in taxpayer-backed aid.
And with these loans, the ministries report that they kept tens of thousands of people on the payroll.
What these numbers do not include are churches that are affiliated with the denomination but do not use “United Methodist” in their name.
The UM News tally also does not include churches and other ministries that received less than $150,000. The Small Business Administration lists these recipients only by ZIP code.
Among the larger recipients was the United Methodist Church of the Resurrection, based in Leawood, Kansas. The denomination’s largest U.S. church in attendance was among 16 United Methodist organizations listed as receiving between $2 million and $5 million in loans.
“As an employer, the loan was an immediate relief because we faced economic and programmatic uncertainties unlike we’d seen in our church’s 30-year history,” said Dan Entwistle, the church’s senior executive director.
“Because our employees are exempt from state unemployment, keeping vulnerable staff members employed was particularly important.”
Entwistle said the church also was able to initiate new ministries even as in-person gatherings ceased.
“The staff members we redeployed found themselves leading new efforts, such as converting grain alcohol into homemade hand sanitizer, sewing face masks, holding no-contact food drives, encouraging first responders and hospital employees and showing appreciation to grocery store clerks,” he said.
Chapelwood United Methodist Church, a multi-campus megachurch in the Houston area, is another recipient of a loan in the $2 million to $5 million range.
Whitney Allen, the congregation’s communications director, said the loan allowed the church to retain all its teachers at its two schools even though the church stopped collecting tuition in March.
The loan also has enabled the church to have ministerial staff at Fair Haven Food Pantry, which the congregation serves in partnership with the Houston Food Bank. Since March 24, Allen said, Chapelwood has served more than 100,000 people with groceries and weekend food for children.
Grace United Methodist Church, a mid-sized congregation in Dallas, received a loan of $52,600 in late April.
“We continue to dip into our reserves every month, so the PPP funds have given us the ability to maintain ministries that otherwise may have had to be put on pause,” said Paul Ott, chair of the church’s administrative council. “Importantly, we have kept on all our staff, and that certainly furthers our ability to support those ministries.”
As soon as the loan program came online, the denomination’s General Council on Finance and Administration and Wespath, its pension agency, collaborated in providing information on how ministries could gain access to the funds.
GCFA’s board also authorized the denomination’s church-funded agencies to apply for loans. The finance agency itself received a nearly $2 million loan that covers its own staff and provides support for the Council of Bishops and the Commission on the General Conference. GCFA administers funding for both the bishops and the staff who help plan the denomination’s top lawmaking assembly.
Most United Methodist ministries rely to some extent on giving. Denomination-wide ministries such as general agencies and bishops receive apportionments from conferences, which in turn ask for apportionments — recommended giving — from local churches.
But with rising unemployment and economic uncertainty, many conferences placed a moratorium on apportionments from local churches.
While some local churches report giving has rebounded since the early days of the pandemic, that is not being seen at the conference or general church level.
“We are seeing significant declines in apportionment receipts since April of approximately 40-50% lower than previous years,” said Sharon Dean, GCFA’s communications director. “Based on that decline, we feel (the Paycheck Protection Program) is enabling the general church to maintain operations and ministries.”
She added that the decline in the apportionments is greater than the income from the federal loans.
United Methodist Communications, of which UM News is a part, received a loan of about $1.7 million. Danny Mai, the agency’s chief operations officer, said the funds have helped the agency continue to pay staff while also continuing local church grants. Churches use the grants for websites, videoconferencing and radio — tools that are increasingly critical as churchgoers shelter in place.
If anything, United Methodist educational institutions are in a more precarious financial position. As many sent students home for online classes, they also had to shut down student housing and food services that are sources of revenue.
“The way I see it is it’s allowed us to keep good people and see farther in the future to continue to pursue our mission,” said the Rev. David McAllister-Wilson, president of Wesley Theological Seminary in Washington. The seminary received a loan in the $1 million to $2 million range.
He added that he does not see the program as too much entanglement between church and government because it’s helping employees to continue paying payroll taxes to the government.
With its $1.4 million loan, Garrett-Evangelical Theological Seminary in Evanston, Illinois sustained not only faculty but also students on work-study and staff unable to work from home.
“Our students will continue to have the classes they need, but more than that, Garrett-Evangelical will remain a robust learning community driven by the principles of quality, liberative and equitable education,” Lallene J. Rector, the seminary’s president.
Cynthia Bond Hopson, executive of the Black College Fund at the United Methodist Board of Higher Education and Ministry, said the loans are sustaining schools through the summer even as they deal with revenue shortfalls.
“Black colleges are historically underfunded and the amazing work they do, in spite of that, turns out leaders who are visionary,” she said. “They serve students other schools might not.”
But with rising COVID-19 cases causing shutdowns again across the U.S, finances across the United Methodist connection remain a concern.
“Now we are onto the next iteration of the crisis,” said Brewer of the Great Plains Conference. He does not expect to see another Paycheck Protection Program again.
“But it’s very clear that there are going to need to be other forms of help,” he said. “And I hope that churches can continue to be a part of both supporting the economic recovery but also, when appropriate, be included in the economic recovery.”
Hahn is a multimedia news reporter for United Methodist News. Contact her at (615) 742-5470 or [email protected]. To read more United Methodist news, subscribe to the free Daily or Weekly Digests.