Federal coronavirus financial aid: What Catholic groups need to know

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Prior to the release of the new rule, “I don’t think any diocese across the country would have qualified [for small business loans]”, Reidy said. The bishop “has ultimate control over everything” in a diocese, including smaller entities such as parishes and Catholic charities, he said, and each diocese could have be considered by the government as a large organization.

Yet the government now treats smaller entities as distinct from dioceses “so long as they are bound together for religious purposes”, he said.

Not all dioceses are structured the same, Reidy warned. While in “the vast majority” of U.S. dioceses parishes and schools are separate nonprofit corporations, in some other cases the diocese is the sole incorporated entity.

In those select cases, Reidy said, a “potential hurdle” for a parish or school still receiving federal aid could be that it doesn’t file payroll taxes and tax returns separately from the diocese, and would therefore be aggregated. in the diocese.

A connection between a parish and a diocese that is “practical” in nature and not just religious could also be a barrier to them getting relief, Knifin said.

Still, Kniffin and Reidy said Catholic institutions should consider applying for the loans under a “good faith interpretation” of eligibility.

Because the rules are “deferential” to the eligibility of religious organizations, Kniffin said, lenders are also urged “to accept good faith representations from applicants at face value.”

As long as Catholic groups have their own employer identification number and 500 or fewer employees, they can submit their own application.

“I think all dioceses, with this new regulation, can do this certification in good faith,” Reidy said.

In its guidelines, the SBA emphasized that recipients of nonprofit loans can have a religious mission and will not be penalized for employing only people who respect the religious mission of the organization.

Each recipient “will retain independence, autonomy, right of expression, religious character and authority over its governance,” the SBA said. The loans can be used to pay the salaries of ministers and staff.

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The new rules require loan recipients not to discriminate when providing property and housing to the public. Depending on the interpretation of existing civil rights protections, some charities could be deemed ineligible for loans because they do not provide services in certain cases.

Examples of this might include a religious adoption agency refusing to place children with a same-sex couple, or a homeless shelter refusing to house a man who identifies as a woman with other women.

The SBA states that it “will not apply its non-discrimination regulations in a manner that imposes substantial burdens on the religious exercise of denominational loan recipients, such as by applying these regulations to the enforcement of ordinances, sacraments or religious practices of the church, unless such application is the least restrictive means of furthering a compelling governmental interest.”

This issue of compliance with non-discrimination provisions is one that religious groups are still grappling with, Knifin said.

Yet with a Catholic group providing social services, like a soup kitchen or a homeless shelter, they most likely received government funding and would therefore already be in compliance with federal regulations.

The ultimate goal of issuing the loans, the SBA added, is to provide quick relief to many small businesses and nonprofits that have been severely impacted by the recent coronavirus crisis.

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