Given coverage of the @AP story today on PPP funds, I'm reupping this piece with @tebbe and @RichSchragger on @SBAgov's religious exemption from its affiliation rules under PPP. theatlantic.com/ideas/archive/… /1
There seems to be some confusion about how religious organizations are treated under the CARES Act and PPP, which established emergency loans for small businesses and nonprofits. There are two separate issues here: /2
1. @SBAgov rules initially restricted aid to religious nonprofits, including houses of worship. But SBA announced that it would not enforce those rules and would propose to amend them in line with constitutional doctrine. sba.gov/sites/default/… /3
2. @SBAgov also granted a religious exemption from its affiliation rules, which restricted eligibility for affiliates of entities with more than 500 employees. sba.gov/sites/default/… /4
This religious exemption is important for churches and other religious organizations that are affiliates of larger organizations that have 500+ employees. Without the religious exemption, those smaller affiliates would not have qualified for PPP loans. /5
The problem is that affiliates of nonreligious 501(c)(3)s were given no similar exemption. So large religious nonprofits received loans, but large secular nonprofits were excluded from PPP funding. /6
One could argue that the religious exemption is important for equal treatment of small and large religious entities (or the affiliates of large entities), but the exemption does that at the cost of introducing inequality between large religious and nonreligious nonprofits. /7
There is an obvious solution here, which is to lift the affiliation rule for all large nonprofits. GOP Senators have opposed this change, but there is a strong constitutional basis for requiring it. /end
