U.S. dioceses are crying foul over an investigative report on coronavirus relief funding they say grossly mischaracterized the Catholic Church’s finances and unrestricted cash flows, leaving the impression the Church used the 2020 CARES Act to hoard cash.
Officials of the Diocese of Charlotte, North Carolina, said their diocese was among several first contacted by The Associated Press last December in advance of an investigative-style report headlined, “Sitting on billions, Catholic dioceses amass taxpayer aid,” and the Charlotte Diocese provided the AP with detailed written responses and financial data related to the Paycheck Protection Program, or PPP.
The CARES Act, passed in March 2020, initially authorized some $350 billion in loans to small businesses through PPP, a program intended to allow them to continue to pay their employees.
In late April, statistics compiled by the Diocesan Fiscal Management Conference showed 8,000 parishes, 1,400 elementary schools, 700 high schools, 104 chanceries, 185 Catholic Charities agencies and 200 other diocesan organizations in 160 dioceses had applied for assistance at that point.
But not all dioceses, parishes and Catholic schools applied for the PPP funding and some later returned the funds once their fiscal status was clarified in spite of the pandemic and economic downturn, according to Patrick Markey, executive director of the conference.
But the recent AP story alleges that “scores of Catholic dioceses across the U.S. received aid through the Paycheck Protection Program while sitting on well over $10 billion in cash, short-term investments or other available funds,” and that “even with that financial safety net, the 112 dioceses that shared their financial statements, along with the churches and schools they oversee, collected at least $1.5 billion in taxpayer-backed aid.
“A majority of these dioceses reported enough money on hand to cover at least six months of operating expenses, even without any new income,” the AP report states, noting at the top of the report that the Charlotte Diocese received some $8 million in Small Business Administration emergency federal funding despite sitting on “$100 million of their own cash and short-term investments available last spring.”
William Weldon, a certified public accountant, who is chief financial officer and chief administrative officer for the Diocese of Charlotte, told Catholic News Service Feb. 7 the AP story mischaracterizes the financial reality in Charlotte, incorrectly conflating its finances with assets owned and controlled by more than 100 separate Catholic parish and other entities within the diocese.
The report, Weldon said, also grossly overstates available assets, ignores financial liabilities, and erroneously suggests that restricted donations and funds designated for specific purposes could have been diverted to cover payroll, rent and utilities for other entities.
“That would be like shifting money parents pay in fees for school construction to cover salaries at the central office of the diocese, or taking a parish’s hard-earned savings that are set aside for a new parish hall or youth program to pay for another ministry’s rent and utilities,” Weldon said.
When the pandemic hit last spring, the PPP was a lifeline for many parishes, and without that assistance, parishes, schools and ministries would have had to consider layoffs, furloughs and pay cuts: the very impacts the PPP was designed to help employers avoid, he added.
The recent AP report and a previous AP report on churches and PPP funding published in July implied the Catholic entities’ success in procuring the emergency pandemic funds may have come at the expense of other community needs, faith groups and charitable agencies.
All applicants were subject to the same criteria, application process and forgiveness process, Charlotte’s Weldon pointed out. Applicants were required to provide supporting documentation to substantiate that they spent the loan funds on qualifying expenditures.
To date, all of those loans have qualified for forgiveness following compliance reviews by the entities’ financial institution and the SBA, he said of the Charlotte Diocese.
In Kentucky, the Archdiocese of Louisville, singled out in the AP report, noted last year salaries were frozen for all employees of the archdiocese, parishes, and schools until Jan. 1, 2021, and there likely would have been layoffs and furloughs throughout the system without the PPP loans.
According to an archdiocesan statement Feb. 5, Louisville Archbishop Joseph E. Kurtz strongly recommended parishes apply for the funding, and all but two of the parishes applied.
The Louisville Archdiocese said it had pointed out to the AP reporters that some four out of five parishes of the archdiocese surveyed reported their collections at 76% to 90% of normal giving, with 25% of parishes reporting more significant decreases in collections. In addition, parishes with schools had significant extra expenses due to COVID-19 safety measures.
In the Diocese of Raleigh, North Carolina, Russell Elmayan, chief financial officer and chief administrative officer, said Feb. 5 in a statement to CNS that “the recent AP article as written does not provide appropriate context, in my opinion,” he said, adding, “Parish offertory remains approximately 10% below the prior year at this time.
“Since offertory is by far the largest part of the revenue stream for any parish, the PPP loans clearly saved jobs and kept people employed, which is what they were designed to do,” Elmayan said.
The PPP was therefore an appropriate and necessary lifeline to preserve the nearly 3,000 jobs in our parishes, missions and schools to continue to provide ministry and services, he added.
In Massachusetts, the chancellor for the Archdiocese of Boston, John Straub, told CNS the archdiocese and AP reporters had several rounds of information sharing.
He said he and other archdiocesan officials went back and forth with AP about the article and their responses to questions in an effort to clarify the justification for getting the PPP funding and demonstrate that separate entities such as the statewide Catholic Schools Foundation are not an unrestricted source of funds for the archdiocese as the article implied.
“It ends up being very misleading to the reader,” he said. “The overall assumption the article makes that is the Catholic Church should not have participated in the PPP program, but if folks go back to imagine what things were like at the start of the pandemic the need increased almost immediately after people started losing jobs or were not able to work full time.”
“We encouraged churches to participate in the program to avoid us putting people in the state unemployment lines. And to be fair the states were unprepared for the crush of people lining up for that aid,” Straub said.