Philly-area churches got unprecedented financial help from Paycheck Protection Program

The Trump administration’s Paycheck Protection Program offered something new to churches and other religious groups: the chance to tap into government grants and loans with no separation-of-church-and-state strings attached.

And for the first time, the Trump administration decreed that the money — at least $5.7 billion nationally — could go to pay the salary for the minister in the pulpit, the rabbi in the synagogue, and the priest at the altar. In short, the administration said it was OK that the funds be spent on explicitly religious activity.

With that assurance, nearly 1,500 Philadelphia-area religious congregations and other religious nonprofits jumped at the chance, receiving at least $112 million and up to $212 million in loans that can be forgiven, according to Small Business Administration data released this week. Those figures don’t include millions more that went to dozens of Catholic, Quaker, Jewish, and other schools owned and operated by religious entities.

Without the money, churches would have been forced to lay off thousands in the region because they were missing out on weekly offerings during the COVID-19 shutdown, said one expert who was in favor of including churches in the rescue program.

Matthew Manion, faculty director of the Center for Church Management at the Villanova University business school, said the money was vital for many religious organizations.

Many church leaders were hesitant at first about accepting the money, Manion said. But, “Once it was clear that there were no strings attached, that made it really easy for churches to say, ‘Yes, we’ll take this help.’ It kept tons of people employed, and it kept tons of churches and religious institutions afloat.”

However, critics say the program represents another significant step in the weakening of the church-and-state separation established at the nation’s founding.

Nationally, more than 87,000 loans totaling at least $5.7 billion and potentially as much as $10.3 billion went to groups that were categorized as “religious organizations” in the SBA database, though some of them may have been mischaracterized. The precise amount is not known because the government disclosed only a dollar range of the sum borrowed by all givers who took in more than $150,000.

» READ MORE: Philly-area law firms received at least $228 million in PPP funds, the most of any industry. Search to see how much firms got.

It’s not that churches can’t ever receive government money.

Nelson Tebbe, a law professor at Cornell Law School and opponent of the funding, joined with two other law professors to write an op-ed in the New York Times about “the quiet demise of the already ailing separation of church and state.” The professors said they found it remarkable how little push-back the funding had generated.

“There is a federal aid program that helps nonprofits enhance security, and synagogues have been significant beneficiaries,” Tebbe said. “But, of course, that program doesn’t directly subsidize religious activities.

”And there have been direct aid programs that help all schools, including religious schools, but the constitutional rule has been that such aid cannot go to religious activities.”

The First Amendment’s Establishment Clause prevents Congress from establishing a state religion and is the source for much law and custom separating church and state. But the $669 billion Paycheck Protection Program broke further through that barrier.

“Under these circumstances, the Establishment Clause does not place any additional restrictions on how faith-based organizations may use the loan proceeds,” the SBA said in a frequently-asked-questions guide for faith-based groups.

» READ MORE: Philly-area companies reaped millions from PPP funds for small businesses. Search the list to see who got how much.

“In particular, loans under the program can be used to pay the salaries of ministers and other staff engaged in the religious mission of institutions,” the April 3 document says.

That message helped organizations decide to participate.

“The fact that the government was so clear in their guidance, saying that it did not come with strings attached, our Christian principles were not going be questioned or challenged in any way, made a difference for us as we completed the application,” said Daniel Sheldon, chief financial officer of InFaith, a mission agency based in Exton that works exclusively in the United States.

“It was hugely significant as far as allowing us to make more orderly decisions, to not be in panic mode, in reactionary mode, and to know that we can weather this, and we can continue without putting brakes on everything,” Sheldon said.

InFaith, which was founded in 1817 in Philadelphia as the American Sunday School Union, gets most of its revenue from donations and received a loan in the range of $1 million to $2 million. Sheldon declined to give the specific amount.

The Paycheck Protection Program worked as it was supposed to, said the Rev. Thomas M. Higgins, who is a pastor at Holy Innocents Parish in the Juniata Park section of Philadelphia. “We were able to keep everybody on the payroll. We were blessed that way,” he said. “That was the purpose, right? The government didn’t want people to have to go on unemployment. It was already flooded.”

» READ MORE: Philly-area charter, private schools receive millions in federal PPP loans

Higgins declined to give the specific amount of the loan the helped him keep at least 45 people in their jobs. The loan was in the range of $150,000 to $350,000, government data showed.

The Archdiocese of Philadelphia, which received a loan in the range of $2 million to $5 million, did not respond when asked in an email for specifics on how many parishes and related entities received loans, and for how much. In a reply, the archdiocese merely said it was thankful to be able to participate in the program.

Each of the 17 diocesan high schools received separate loans in the range of $350,000 to $1 million. The loans are generally forgiven if groups can show that at least 60% was used to pay salaries. Even if the money is not converted to a grant, the terms were generous, with interest on loans set at 1%.

The Diocese of Camden, which also received a loan in the range of $2 million to $5 million, provided a similar statement without details. Some parishes and schools received separate loans.

A third church to receive a loan of $2 million to $5 million was the General Church of the New Jerusalem in Bryn Athyn. The affiliated private high school, the Academy of the New Church, also received a loan in the same range. Church officials did not respond to a request for comment.

Protestant and Roman Catholic organizations dominated the list of loan recipients, but at least 30 Jewish congregations and related organizations participated. For example, Congregation Beth El in Voorhees received a loan in the range of $350,000 to $1 million. Its executive director, Josh Laster, did not respond to an emailed request for comment.

Other religious groups to participate included the Coptic Orthodox Diocese of Pennsylvania and Affiliated Regions, the Ukrainian Catholic Archeparchy of Philadelphia, and the Al-Aqsa Islamic Society.

Manion, the Villanova professor, and others called the program a blessing for churches. “Without it, we would be having a different conversation,” he said. “There would be massive closures going on.”

Staff writer Chris Williams contributed to this article.