PPP loans from Jewish nonprofits can be used for layoffs – The Forward
For Jewish nonprofit employees, finding out that their organization got a loan from the Small Business Administration’s Wage Protection Program is long-sought good news. Even the name of the program signals that it is a harbinger of job security in turbulent times. And although it is technically a loan, the government will most likely forgive it, if the recipient follows the rules of the program.
The program “helps businesses keep their workforce employed during the coronavirus (COVID-19) crisis,” according to the SBA. And Jewish nonprofits are eligible – about 50% of them received the loans they requested in the first round. (The second round started on April 27.)
Indeed, the main national Jewish organization advising many small groups on the program – the Jewish Federations of North America – describes it similarly on their website. He says, “The CARES Act allocated $ 349 billion in funding to help keep workers at work amid the pandemic and economic downturn,” and that organizations that receive loans must certify in good faith that they use the funds to “retain workers and maintain the payroll or to make mortgage, rental and utility payments.”
But while employees gain a renewed sense of optimism, the conversation between leaders of nonprofits seeking guidance from JFNA seems quite different. Despite the language on its website, the JFNA sees the program first as a way to protect organizations, and second as a way to protect employees. They are spreading the word that severance pay is included in the list of things the loan can be used for, which means the payroll protection program can be used to help lay people off and the government will likely always cancel the loan.
“We’re all working on the collective assumption that this was meant to protect people’s jobs until June 30,” said Sarah Shapiro-Plevan, co-founder of the Gender Equity In Hiring Project and founder of Rimonim Consulting. “It is a loophole that is susceptible to being manipulated by the people who need to manipulate it.”
On the one hand, organizations must use temporary help to make long-term decisions in order to sustain their operations beyond the short loan period. On the other hand, payroll protection was supposed to provide a lifeline to employees as a more than 36 million people have applied for unemployment insurance nationwide in recent months.
Leading Edge, an organization that investigates Jewish nonprofit organizations, estimates there are approximately 80,000 Jewish nonprofit employees in the United States. Some areas, including Jewish community centers and summer camps, have been hit hard by layoffs due to the coronavirus, and many have had to lay off staff. It is unclear how many also got loans from the Wage Protection Program – the Union of Reform Judaism, for example, which laid off 60 people this month, declined to say whether it got a loan.
JFNA has emerged in recent months as the authority on the worldwide loan program of Jewish nonprofit organizations, including social service charities and synagogues. He was part of a broad coalition that lobbied lawmakers to include charities in a bill providing Small Business Association loans. He hosts frequent webinars and answers frantic questions from Jewish organizations, with authority and honesty. He set up a survey to get an idea of how Jewish organizations behaved in their loan applications.
And his advice to Jewish nonprofits on P3s and severance pay is completely legal. The law indicates that beneficiaries can use loans for “salary costs”, including salary, payment of accrued vacation and “termination or separation pay”.
But she also got a payroll protection loan herself and would have been fired up to 37 members of its staff, previously consisting of around 180 people.
Spokeswoman Rebecca Dinar confirmed that JFNA got a loan, but declined to say whether the organization was using the loan to pay for severance.
However, the JFNA advises Jewish organizations on how to maximize loan forgiveness while paying employees who have been made redundant.
“Anything that counts as compensation should be included in the capacity to be forgiven,” said Pam Kurtzman, director of the National Jewish Federation Bond Program, one of the presenters of a online seminar Thursday hosted by JFNA. “Severance pay, we know, is included. “
It’s not entirely clear how severance packages fit into requirements that organizations maintain a consistent monthly average of full-time employees, but in a March 1 webinar, Kurtzman informed participants to compare their current staff to one of the two periods when the average would be lower to maximize forgiveness, even if the number of full-time employees was reduced.
A die slides from last week’s presentation also states that “forgiveness will not be affected” if “employees are replaced by other employees”.
Lawyers catering for non-sectarian businesses and non-profit organizations are also advise their clients that the use of SBA loans for severance is permitted and will not affect the chances of organizations getting their loans canceled.
An SBA spokeswoman declined to comment on whether the law defining severance pay as a salary cost is consistent with the original spirit of the bill.
It is unclear how this provision ended up in the legislation, and the office of House Speaker Nancy Pelosi did not respond to a request for comment. But in her remarks on the CARES law, which included the payroll protection plan, she said the tension between business and worker protection had been in the bill from the start.
Democratic leaders “have turned a business-focused Republican bill into a worker-driven Democratic bill,” she said.
The JFNA interpreted the loan program as a way to protect the organizations of Senators Marco Rubio, a Republican from Florida and Ben Cardin, a Democrat from Maryland, who answered questions during a JFNA webinar last month.
“The payment protection plan was actually created to take the strain off businesses and be a cover for a period of time,” Dinar said. “Part of that is thinking about the impact on people, but it’s really about relieving companies, and when you look at the law it becomes pretty clear. “
She also said the loan is designed to help in the short term, but tough decisions like firing people might be the only reasonable way to spend the money to support operations in the long term.
“You have to make decisions over a short period of time depending on how you expect your business to take over,” Dinar said. “The loan was not intended to transport you in perpetuity.”
JFNA retained more than $ 127 million in net assets in 2018, according to tax returns, and spent around $ 24 million on wages and other compensation.
JFNA CEO Eric Fingerhut said when announcing the layoffs that he would agree to a temporary pay cut of 10% and that seven senior workers would cut their wages by 5%.
Neither the JFNA nor the SBA has released a list of organizations and businesses that have received loans, and many Jewish nonprofits have refused to announce their loan status.
T’ruah, a nonprofit that trains Jewish clergy to work on human rights campaigns, has secured a loan and is using it to pay salaries and even hire more people, executive director Rabbi said. Jill Jacobs.
“We are using it for what I understand to be the purpose,” she said.