Over half a trillion dollars in aid has been set aside for the government Paycheck Protection Program to Help Small Businesses Weather the Coronavirus Pandemic – but hastily crafted guidelines mean that some of the most needy businesses are missing crucial funding.
The Small Business Loan Program is only open to businesses and organizations with fewer than 500 employees, which aims to ensure that the most vulnerable businesses receive support. But that inadvertently excludes large nonprofits that provide essential human services.
These groups could desperately use an influx of money as they reach out to a growing number of society’s most vulnerable populations, such as the homeless and the elderly, many of whom are also at high risk for developing symptoms. severe cases of COVID-19, the disease associated with the coronavirus.
“These nonprofits are the kind of groups that slip through the cracks,” said Doug White, a nonprofit and philanthropic advisor. “This note doesn’t go where they are. They’re hanging out to dry.”
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While the workforce restriction prevented nonprofits from accessing the money they badly needed, the otherwise loose guidelines meant unwitting recipients received millions of dollars. This included the Los Angeles Lakers basketball team, one of the most profitable franchises in the NBA, which was able to get $ 4.6 million in the first round of PPP distribution. The Lakers finally returned the money.
The main purpose of PPP loans is to cover eight weeks of salary, but a lower percentage can also be used to cover rent and utility expenses. If the rules are followed, the loans will be canceled, making them particularly desirable for human service nonprofits, which are struggling to respond to the pandemic.
As providers of essential services, these non-profit organizations must remain open. Not only are existing services more in demand, but new spending related to COVID-19 is taxing finances as well.
The problem isn’t whether these crucial organizations can repay the money – it’s whether they can stay afloat long enough to continue helping people survive the pandemic.
The problem these large nonprofits face is not whether they will get back the money they spend. They most likely will, thanks to city or state reimbursements. The problem is whether they can stay afloat long enough to survive the pandemic without the immediate relief something like PPP would provide.
“They don’t know when they’re going to get this money back,” said Michelle Jackson, interim executive director of the Human Services Council, which represents 170 nonprofit human service organizations. “PPP would be great to help them fend for themselves over the next few months. “
Tom Hameline, President and CEO of Help USA, a nonprofit fighting homelessness, said, “90% of what we’re talking about is cash flow and timing. . “
Help USA, which is based in New York City, operates 53 programs and shelters in six states. To serve more than 3,500 people every day, it has a workforce of more than 1,600 employees, including social workers, janitorial teams and security guards.
“Over the past month, we spent almost $ 700,000 on COVID-related expenses, including protective gear, additional staff, diapers, supplies for families quarantined with us,” Hameline said.
One of the most significant new expenses linked to the epidemic is disinfection after a suspected or positive case of COVID-19. This requires calling on a specialized outside company that sends cleaners in heavy protective gear. Each incident costs thousands of dollars. Last week alone, Help USA had to hire cleaners seven times. In total, he spent more than $ 100,000 on remediation related to COVID-19.
Help USA also now has to pay for sharply increased protective equipment for workers and occupants while continuing to pay regular salespeople, who are strained by the economic downturn and adopt a first-pay, first-served policy.
Services provided by Help USA, such as its pantry, are also used more, as more adults and children are out of work and school. Costs that could be offset by a workplace or school are imposed on the organization and its shelters. For example, Help USA had to purchase mobile Wi-Fi devices to ensure that students in its shelters could follow virtual instruction while schools were closed.
It also pays its employees 100 percent of their regular wages, even if they work reduced hours.
“I wake up between 3 and 4 a.m. worrying about people dying and not having enough money,” Hameline said. “I don’t know what to do with what you do when you run out of money.”
Help USA is $ 13 million in the red. He’s working to increase his line of credit from $ 5 million to $ 10 million, which is an expensive route for a nonprofit – one that Brooklyn, New York-based CAMBA is trying to do. ‘to avoid.
CAMBA, which operates numerous homeless shelters and provides social services to New Yorkers, has approximately 2,000 employees.
“We spent around $ 1 million in that very short period of time,” said CEO Joanne Oplustil.
Part of the cost is associated with providing its shelters with a daily supply of 1,500 gloves, 500 masks and 30 gowns. CAMBA has also had to rent hotel rooms to ensure that people in its adult shelters, which are structured like dormitories, can socially distance themselves. There is also a greater demand for expensive packaging services, such as delivering meals for the elderly and those in quarantine who have tested positive for COVID-19.
“PPP is really ideal for the nonprofit world, where a lot could be repaid without interest,” Oplustil said. “It’s the quagmire of nonprofits. There is nothing planned for us. “
Not only are nonprofits ignored by coronavirus aid; they have also had to cancel valuable fundraising events due to social distancing measures. Some groups have gotten creative and turned to other foundations for help, but this is only a temporary solution.
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Henry Street Settlement CEO David Garza was recently able to get an additional $ 1 million, but rising costs due to the pandemic have pushed ongoing spending well beyond that amount.
Henry Street, which operates four homeless shelters and two supportive housing units in New York City, now provides 1,800 meals a day to people. It employs around 700 people.
The organization pays on-site staff on time and a half and, for now, has been able to continue paying its employees who are not currently working. He launched a helpline made up of 16 social workers to serve people staying at home. Henry Street has also awarded emergency cash grants totaling tens of thousands of dollars to high-risk groups, such as undocumented migrants, performers and concert workers.
“It is gravely regrettable that we are not eligible given the relevance and importance of what we are doing,” Garza said. “As far as I understand how quickly they needed to get this out, that’s what happens when you post a single directive like 500 employees.”
Sadly, the end of the pandemic and a return to normalcy will only cause more tension as human service providers grapple with the fallout from a struggling economy.
“More people are going to be homeless because of the epidemic,” White said.
Jackson agreed, saying evictions would increase, as would dependence on essential services.
“Nonprofits will be at an even riskier position in the long run, as recovery from COVID will be squarely on their backs,” Jackson said. “They’re going to be more heavily invoked when we get back from this. “
