NEW YORK, NY – APRIL 14: The Church of Our Saviour in Manhattan is shown open for prayer and … [+]
On April 5, the Small Business Administration announced that faith-based organizations are eligible to receive financial assistance under the CARES Act, including the Paycheck Protection Program, and Economic Injury Disaster Loans. This would make the hundreds of thousands of congregations and other faith-based organizations that were legally restricted from receiving SBA business loans now eligible for funding.
The announcement has resulted in outcry from lawyers, academics, pastors, and other public figures who are concerned this decision erodes the constitutional separation of church and state. Under this new provision churches could receive forgivable loans to pay pastors and other employee salaries, which critics say is akin to government-funded religion.
Federal regulation states that religious organizations cannot receive small business loans, yet the SBA said it would “decline to enforce those subsections” in a published document. Since non-profit organizations are eligible for federal aid under the CARES Act, the SBA has decided that eligibility extends to faith-based non-profits as well. The SBA’s justification invokes the second clause of the first amendment, which prohibits discrimination based on religious-belief:
“Those regulations bar the participation of a class of potential recipients based solely on their religious status,” the Small Business Administration wrote in a public document published April 3.
This decision, although unprecedented, is not surprising. The Trump administration has been consistent in its desire to expand access to federal funds for religious organizations, especially churches. It has relied on the non-discrimination clause of the first amendment, and a Supreme Court decision from 2017, to bolster its argument that no organization should be exempt from receiving federal funds because of its religious nature.
Following the devastating impact of Hurricane Harvey in 2017, the Trump administration expanded public assistance eligibility for faith-based organizations under the Federal Emergency Management Agency (FEMA). Previously, only religious institutions providing secular activities that “help the community at large” were eligible for public assistance as community centers. In the amended 2018 policy guide for FEMA public assistance, all language that placed restrictions on religious non-profits was removed. Activities such as “worship, proselytizing, religious instruction, or fundraising activities” that were previously considered ineligible for government grants, were now eligible under the category of essential governmental-type community services.
Since non-profit organizations were already included in the text of the CARES Act, the Small Business Administration only had to shift their policy to enable public assistance for faith-based organizations. In doing so, the Small Business Administration is ensuring that religious institutions, including houses of worship, are eligible for any loans that a private non-profit is eligible for under the CARES Act, regardless of how the money is used. The SBA makes clear that even the salaries of ministers and other staff engaged in the “religious mission” of the institutions can be covered under the grant.
“Explicitly religious activities cannot be funded by federal dollars,” says Katy Joseph, Director of Policy and Legislation at Interfaith Alliance. “That is consistent with the establishment clause of the first amendment.”
Courts have been parsing the meaning of the first amendment since it became law. The longstanding tension is between its first two clauses: the establishment clause and the free exercise clause. The government cannot regulate religious activity, and it cannot prohibit the free exercise of religion.
In giving money directly to churches, in the form of potentially forgivable loans, isn’t the government funding religious activities? The nature of the crisis, however, leads some to ask instead: if the government didn’t offer aid to faith-based organizations, would it be discriminating against them on the basis of religion?
“This [decision] will be adjudicated, it will be tested in the courts, no doubt about it,” says Allen Hertzke, Professor of Political Science at the University of Oklahoma.
There is no doubt that houses of worship, and religious organizations have been economically impacted by COVID-19. River Run Church in Chuluota, Florida is one of many churches that has been forced to transition to online services. The church’s pastor Tyler Jagen said the decision to apply for the SBA loan came down to economics.
“Not knowing at all what the future may hold, we wanted to take advantage of [the funding] to take care of our staff and families,” says Jagen.
The CARES Act money, distributed through the SBA, can be used for payroll as well as other operating costs such as rent, mortgage, and debt payments.
“I don’t see anything in these acts of government-funding religion,” says Russell Moore, President of the Ethics & Religious Liberty Commission of the Southern Baptist Convention.
His justification is based on the legal language of the act: “the government is backing up lending power of banks, which is entirely appropriate. The government is insuring that the free flow of lending continues and that churches and faith-based organizations are not discriminated against in that lending,” says Moore.
Yet stricter separationists, as they’re called, see cause for concern.
“This is a radical department from previously established restrictions,” says Katy Joseph of the Interfaith Alliance.
Critics see a lack of accountability and oversight in the program. For example, churches don’t have to be registered as 501(c) 3 non-profits to be eligible, they only have to meet the requirements. Affiliation exemptions are loose, meaning that a church connected to the larger ministry could still qualify as a small business if it counts its employees as under 500. And, as is the case with all the SBA loans under the CARES Act, all that is required is a “good-faith certification” of eligibility.
In addition to mismanagement, critics are worried about the strings attached, a concern deeply rooted in the establishment clause.
“With federal dollars comes federal oversight,” says Joseph
When houses of worship take federal funds, they consent to a certain degree of government regulation. The funding from the SBA comes with the legal obligation of nondiscrimination, applied to members of the public (and not members of the congregation), according to a document published by the SBA. These regulations are interpreted within a constitutional context of religious freedom, and no longer apply once the loan is repaid or forgiven.
The context of disaster relief assuages the fears of some critics. Because it is an emergency measure, it will not likely turn into ongoing support and become problematic for faith-based organizations.
But others disagree. “It’s hard to close the faucet of public money to faith-based organizations,” says Joseph.
“The first question is do we need this money? The answer is we don’t,” says Dan Lamey, Pastor of Jubilee Fellowship in Naples, Florida. His congregation has decided not to apply for the loan.
“Our resource ultimately is god, not the government.”