Some Nonprofits Hail Paycheck Protection Program as a ‘Savior’; Others See Layoffs Continue

With Congress weighing another round of stimulus help within the next two weeks, reports on the impact of the government’s previous efforts vary widely, with some charities hailing the Paycheck Protection Program as a financial savior, while other say it provided only a brief respite from layoffs and other cost-cutting measures.

Modesto D. Fiume, leader of Opportunity House, in Reading, Pa., is among the biggest fans of the program.

“It did exactly what it was supposed to do,” said Fiume.

The nonprofit, which provides services for the homeless and other at-risk people, closed its thrift store and and child-care center, and laid off about 70 staff members as the pandemic struck.

A Paycheck Protection Program loan of $588,000, which will likely be forgiven, arrived in the nonprofit’s bank account about a week after its application was approved in mid-May. The nonprofit immediately rehired all its staff except a few who drifted away for various reasons.

The nonprofit’s thrift store recently reopened with reduced hours, and its child-care center reopened at reduced capacity. With those parts of the operation generating revenue again, and donor contributions and government contracts continuing to flow, the nonprofit is on stable financial footing at least through the end of the year, said Fiume.

Jobs Saved

The Paycheck Protection Program saved 4.1 million nonprofit jobs, about a third of all nonprofit jobs in the nation, according to new estimates from the Dorothy A. Johnson Center for Philanthropy at Michigan’s Grand Valley State University.

Nonprofits received a disproportionate share of the biggest loans — those of more than $150,000, according to the study. Previous studies examined only loans of $150,000 or more; the new data from Grand Valley applies to all 181,680 loans received by nonprofits.

The study estimated that about 40 percent of eligible nonprofits received a loan and that nearly two-thirds of eligible nonprofit jobs were protected by PPP funds. The study noted that many smaller nonprofits in particular may have missed out by either not applying for loans or not successfully filling out applications.

Bobbi Douglas, executive director of OneEighty, a multiservice agency in northeastern Ohio, said its $837,000 cash infusion from the Paycheck Protection Program was a crucial lifeline.

“We were bleeding money prior to this coming through,” said Douglas. “It really stabilized us as an organization.”

The nonprofit helps the homeless, victims of sexual assault and domestic abuse, people with mental-health issues, and other people in need. With about 100 employees and an annual budget of about $7 million, the nonprofit would have had to impose deep layoffs without the Paycheck Protection Program, Douglas said. Instead, the government help means the nonprofit will meet its budget targets this fiscal year and will be solvent at least through June of 2021, she said.

Tougher Road

For other nonprofits, especially some larger ones, the benefits of the Paycheck Protection Program appear to have been fleeting.

For example, Carnegie Hall laid off about 80 of its 350 staff members in March and then used a $5.5 million Paycheck Protection Program loan received in April to keep its remaining employees on the payroll, spokeswoman Synneve Carlino said in an emailed statement. However, the money wasn’t enough to avoid further staff cuts.

The organization had an $8 million deficit for the fiscal year that ended in June, Carlino said, and Carnegie furloughed an additional 51 workers this month and enacted pay cuts for the remaining workers.

“The performing arts are expected to be one of the last industry sectors to recover from this crisis, and the financial impact continues to be very significant,” she said.

Carnegie Hall will not reopen until January at the earliest, and it is expecting a larger deficit next season, even with budget cuts, she added.

Despite receiving a $6.8 million Paycheck Protection Program loan, the New York Philharmonic recently eliminated 44 jobs. Spokesman Adam Crane noted that the organization’s lease costs are very high, and the income lost due to canceled performances has been enormous.

“We lost all of our ticket revenue,” Crain said. “It just stopped.”

Rick Cohen, chief operating officer at the National Council of Nonprofits, said in an email to the Chronicle of Philanthropy that he wasn’t surprised that the Paycheck Protection Program was having such a disparate impact on nonprofits.

“When you look at an orchestra, they are the kind of situation where the organization went from steady income to zero dollars coming in almost overnight,” Cohen said. “And the prospects for them to be able to hold concerts don’t look promising. So, they are looking at catastrophic revenue loss and limited prospects for a return to normal.”

Also, an organization based in major cities like New York may have much larger expenses for things like real estate than nonprofits in smaller communities.

Main Street Lending Program

Meanwhile, nonprofit advocates expressed relief that the Federal Reserve expanded its Main Street Lending Program to include nonprofit organizations. Charities with as few as 10 employees are eligible for the program.

However, unlike the Paycheck Protection Program, in which the loans will be forgiven in most cases if recipients avoid laying off workers, the Main Street Lending Program has no such forgiveness component, which makes it far less appealing than the Paycheck Protection Program. With Congress eyeing yet another round of stimulus legislation, nonprofit advocates are hoping for an expansion of the Paycheck Protection Program — especially for removing a cap that prohibits organizations with more than 500 employees from participating.

Another Success Story

For now, Pearls for Teen Girls in Milwaukee, which helps girls develop skills for personal growth, counts itself among the success stories of the Paycheck Protection Program, said CEO Gerry Howze.

The nonprofit’s $185,000 loan “put us in a really strong financial status” and ensured no layoffs among its 37 full- and part-time staff, who have pivoted to providing the program’s services virtually, said Howze, adding that the charity’s fiscal year ended June 30 with a surplus because of the Paycheck Protection Program.

“The loan has been really important in helping us keep our financial footing strong,” she said.