Recent press coverage has been rife with stories of public companies taking forgivable loans under the Payroll Protection Plan (PPP). In times of economic uncertainty, it’s understandable that many businesses quickly applied for whatever programs were available. But businesses with strong banking relationships crowded out many nonprofits from accessing the funding stream.
The initial $349 billion allocated for PPP by Congress under the CARES Act was exhausted in less than two weeks. Another $310 billion for PPP was approved this week, but major banks say there are literally hundreds of thousands of applications in their queues. Already, there’s concern that the second tranche of funding may not be enough.
With limited federal funds available, nonprofits that serve others and often operate with minimal reserve funds, are having to compete with businesses.
Who is truly in need?
Amid public outcry and new guidance from the federal government, some public companies have started returning PPP loans. Shake Shack, one of the first, said they are “fortunate to have access to capital that others do not” and “many who need it most, haven’t gotten any assistance.”
One might hope that altruism and a sense of common good would drive businesses to do the right thing from the start. But any assistance received under federal and state programs is subject to Freedom of Information Act requests. Businesses know the public is watching. Perhaps that explains the recent uptick in businesses returning funds they had secured.
Ron DeSoiza, CPA, partner at the accounting firm PKF O’Connor Davies says, “it is the job of CPAs, attorneys, payroll companies, and other professionals to make their clients aware of the various government relief programs that are available.” And to that I’d add foundations—now is the time to step up and help nonprofits know about and access relief opportunities.
Every entity, whether nonprofit or for profit, must attest to and sign: “Current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant” when applying for PPP funding. Some, if not all, entities would probably say that no matter how secure their present circumstances. There is not a business or nonprofit in the U.S. that is not currently facing economic uncertainty.
Counsel your nonprofit community
Those of us in the foundation world have the opportunity and obligation to support grantees with not only funds, but also wise counsel on opportunities for government funding. At the same time, foundations should highlight the important work their grantees are doing (most of which are, in fact, small businesses) in the hopes that others may follow Shake Shack and a growing number of companies in acting as responsible community members.
To their credit, Shake Shack was among the first to recognize the importance of others in the community. Or on a cynical note, they quickly listened to the public outcry.
More and more businesses are realizing what so many in the foundation and nonprofit world know every day—that the right thing to do is to do the right thing.
Henry Berman became Exponent Philanthropy’s CEO in 2011, previously serving as acting CEO, board member, and committee member. Through his experience as a foundation co-trustee and Exponent Philanthropy member since 2003, he brings a firsthand understanding of the needs of members to his role.