By Tom Tracy
Catholic News Service
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 crass 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.”
It continued, “When the cash catastrophe church leaders feared didn’t materialize, those assets topped $110 million by summer.”
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.
“This would be unethical. Our parishioners and donors rightfully expect that we will honor the purpose for which funds are given to our parishes, schools and ministries.”
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.
“The AP story also erroneously claims the Charlotte Diocese ‘had roughly $100 million of their own cash and short-term investments available last spring,’” Weldon said.
“This is simply not true,” he explained. “In fact, audited financial statements posted on our website for the year ending June 30, 2020, lay out our finances in detail: The report shows that, excluding parishes (which as separate entities have their own finances and report separately to their parishioners), the diocese had financial assets available for general expenditures — after subtracting current liabilities — of about $9 million, which equates to only six weeks of operations.”
Regarding future pandemic assistance loans from the government, it is too early to determine whether Charlotte parishes will qualify and choose to apply for a second round of PPP funding.
“As separate employers, parishes and schools in Charlotte are still evaluating their financial needs in consultation with their finance councils,” Weldon told CNS.
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.
Each parish applied individually and had its own unique financial strengths and weaknesses. Parish loans ranged from relatively small amounts of under $10,000 up to about $850,000. The archdiocesan loan was $1.2 million, and Catholic Charities was $800,000, according to the statement.
“We disagree with the analysis of the audited financials of the archdiocese and note that a June 30 report reflects the situation only a few months into the pandemic,” the Louisville statement said.
