Diocese of Knoxville among organizations receiving PPP loans

The East Tennessee Catholic staff

The Diocese of Knoxville is among thousands of U.S. for-profit and nonprofit organizations that participated in the federal government’s Paycheck Protection Program (PPP) that has kept diocesan churches open and vital ministries that assist the public operating.

The PPP, as it’s commonly referred to, is a bridge loan program that is part of the CARES Act, which Congress enacted in the spring to keep the U.S. economy going amid the coronavirus pandemic.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed by Congress with bipartisan support and signed into law by President Donald Trump on March 27. It is an economic relief package of more than $2 trillion.

PPP funds are one part of the act and were made available to small businesses and eligible nonprofit organizations. The funds are provided in the form of loans that will be forgiven when used for payroll costs, interest on mortgages, rent, and utilities. Loan forgiveness is based on employers maintaining or rehiring employees and maintaining salary levels.

Loan recipients must use the funds by the end of 2020.

According to federal data, more than 93,000 Tennessee businesses were approved for $8.9 billion in PPP loans, and of that number of loan approvals, about 4 percent were nonprofit organizations.

The Diocese of Knoxville followed national public health recommendations and temporarily closed churches and offices to the public on March 20, doing so knowing that revenue to churches and ministries would be significantly curtailed. Diocesan schools continued to operate by switching to a learning-at-home curriculum as classrooms were closed for the rest of the 2019-20 school year.

The temporary shutdown placed Catholic schools, Catholic Charities of East Tennessee, the St. Mary’s Legacy Clinic, pregnancy help centers, immigration resources, resources for lower-income residents and homeless individuals, and churches where the faithful worship at risk.

But because of the bridge loans, the diocese was able to keep these ministries operating and employees working. The loans ensured that hundreds of diocesan employees were able to keep working.

The Diocese of Knoxville received just over $7.2 million in PPP funding. And of that amount, most is being used to pay employees, according to Shannon Hepp, chief financial officer for the diocese.

“At least 60 percent can only be used for payroll costs, which is defined as salary and some specific benefits. Up to the remaining 40 percent can be used for rent, utilities, and mortgage interest. We don’t have mortgage interest since we loan internally to parishes, and we have very little rent other than copier leases really, so we will end up closer to 85 percent to 90 percent used for payroll costs and 10 percent to 15 percent primarily on utilities during the covered period,” Mrs. Hepp said.

According to the diocese, five PPP loans were applied for during the first round of loan applications in April. The diocese received two loans totaling $1,767,453 that went to Notre Dame High School and Knoxville Catholic High School.

In the second round of loan applications in May, the federal government funded the remaining three requests of the initial five loan applications from round one. The three loans awarded totaled $5,464,800.

Diocesan ministries receiving PPP funds were:

• Knoxville Catholic High School—$1,076,353;
• Notre Dame High School—$691,100;
• Diocese of Knoxville—$4,129,600;
• Cathedral of the Most Sacred Heart of Jesus—$930,000;
• Catholic Charities of East Tennessee—$405,200.

The Diocese of Knoxville includes all parishes and schools other than KCHS, Notre Dame, and Sacred Heart and also includes the St. Mary’s Legacy Clinic, the Paraclete Catholic Books and Gifts store, and the Chancery. The loans covered 715 diocesan employees.

“I think it’s essential to remember that our diocese is a nonprofit, faith-based organization that offers vital services to Catholics and non-Catholics in our community. The PPP loans allowed the diocese to keep its staff employed so that they could continue to provide spiritual and practical help to those who need it most. Our more than 700 employees include the staff of Catholic Charities of East Tennessee and its homeless shelters, pregnancy services centers, immigration offices, and counseling resources. It includes the staff of the St. Mary’s Legacy (mobile medical) Clinic, which serves the residents of many rural locations in East Tennessee,” Bishop Richard F. Stika said.

“The loan has allowed the diocese to continue to pay teachers and operational staff at its 10 schools, and it also has allowed its 51 parish churches, which offer spiritual and charitable support in their communities, to remain open by keeping staff there employed. The PPP and CARES Act was a broad government approach to keep people employed. But for our diocese, it went beyond that,” he added. “It kept people employed that, through Christian virtue, allowed the Church to continue working in a pastoral and merciful way. The PPP loan allowed us to do all of this despite the fact that diocesan-wide weekly contributions at our parishes have suffered, and are down 15-20 percent due to lower attendance. We are grateful that our diocese has remained open and that no employees have been furloughed. We continue to pray for a resolution to the current health crisis and for its victims, and we also pray for a return to civil discourse in our society.”

Media outlets have been reporting on the businesses and nonprofit organizations that applied for PPP funds and were approved. Some reports have been critical of for-profit and nonprofit organizations for receiving the funds.

“Some media outlets have made an issue of the Church being included in the PPP because we’re tax exempt. The last I looked, most of the 700-plus employees of the Diocese of Knoxville pay the government on their income at the same rate as every other American. The Church was right to ask to be included in this program,” said Jim Wogan, communications director for the diocese.