Financial Responses to COVID-19

 

Financial Responses to COVID-19

We give thanks for the many ways local churches across the Conference are continuing in the mission of making disciples of Jesus Christ for the transformation of the world during this pandemic.  At the same time, we realize that many churches are struggling financially as churches continue to hold worship services online and many members have had reductions in or loss of their employment.  In response, the Conference wants to partner with you in these ways:

• A three-month waiver of the local church component of pension and health benefit premiums.
• The establishment of the WNC Connexion Fund to help our WNC congregations support clergy and their families as they continue to lead our ministries.
• Interpretation of the Coronavirus Aid, Relief and Economic Security (CARES) Act.

 
Please find details below.
 

Conference Board of Pensions Waives Local Church Benefit Obligations for Three Months

From April - June 2020, churches will not be billed for the local church component of the Conference Sponsored Pension and Health Benefits Plans. 
 
Benefit obligations waived include:

• Church Pension Premiums (CRSP-DB, CRSP-DC, and CPP)
• Church Health Benefits Premiums

 
This waiver will not impact the benefits received by any of the participants.  Due to legal and payroll deduction requirements, clergy contributions will continue as usual.
 
Unless further circumstances warrant the Board of Pensions to make additional decisions, regular invoicing shall resume in July for the remaining 6 months of 2020.  No payments for April, May or June will be required.
 
 

 

WNC Connexion Clergy Relief Fund

By joint action of the Connectional Table and the Conference Council on Finance and Administration, the WNC Connexion Clergy Relief Fund is established to help our WNC congregations support clergy and their families as they continue to lead our ministries.
 
This fund will accept donations and contributions from churches, agencies, groups, organizations, and individuals to be used to assist churches who are struggling to pay clergy compensation due to this crisis. 
 
The WNCC Bishop and Cabinet will make determinations of such grants based on an application process. Please click HERE to complete your application. Treasury Services will manage disbursements. 
 
Disbursements will be remitted directly to the approved churches, who will in turn continue compensation distributions to the clergy so that payroll deductions and allocations will remain intact and W2s will be accurate. 
 
Donations to the fund can be executed on the newly established WNC on-line portal that accepts electronic funds or checks may be mailed to the Huntersville office (PO Box 2757, Huntersville, NC 28070).   Use the fund name “Connexion Clergy Relief Fund” to make your donations.
 
The Conference Board of Pensions and Health Benefits has authorized a seeding investment into the fund of $1,000,000.
 
 

COVID-19 Relief:  CARES Act

The United States Senate and House of Representatives passed, and President Donald Trump signed into the law the Coronavirus Aid, Relief and Economic Security Act on March 27, 2020.  This act has many provisions to benefit individuals and business impacted by the COVID-19 Pandemic.

Here is a sample application from Conference Treasurer Mark King for your reference.

Download the Paycheck Protection Program Application here. 
 
Faith Based Organizations FAQ

UPDATE April 16
The SBA has reported that funds for the EIDL are now exhausted until Congress appropriates additional funds. 

UPDATE April 14
The United Methodist Credit Union is approved as an SBA participating institution and would be happy to assist any UMC church in this regard. Find more information here.

UPDATE April 9
It has come to our attention that churches can apply for another loan program, that is forgivable, with the Small Business Administration and the CARES Act. The Economic Injury Disaster Loan (EIDL) program allows up to $10,000 that small businesses, including non-profits and churches, can immediately apply for. Information about the EIDL is found here: EIDL Portal.  You continue to work through a bank but the reporting documentation is not as stringent as with the Payroll Protection Program (PPP) and you can directly apply on the SBA portal. PLEASE NOTE that proceeds, should a church get approval for both PPP and EIDL, can NOT be used for same purposes. We recommend PPP proceeds be used for payroll purposes and the EIDL used for anything else non payroll related. However, if you do not get a PPP, then EIDL funds can be used however a church needs.​


Of particular note to churches, based on information the conference has received from various congressional authorities and leaders, are the following:


A. Paycheck Protection Program.  Nonprofit organizations, including Faith Based ones such as churches, may apply to the Small Business Administration for a loan that includes payroll obligations, including benefits, for a selected period for business with no more than 500 persons.  There are included stipulations for the forgiveness of such loans if certain requirements are met.  The SBA administers its loan programs through banks.  Churches interested in the program should contact their local banking representatives for all details. 

We have received information that you are NOT required to have a charge conference to apply for this loan.  Please do make sure that your Finance Committee and Church Council know that you are applying.
 
We have also learned that the application process will open on April 3.  Please work with your bank to get your application in on that date or as close to it as possible as there is a limited pool of money available for these loans. View the Paycheck Protection Program overview. 
 
Here is denominational group ruling for the UMC for you in case you need to submit it with your application, or you can get a personalized letter for your church at this link.
 
If you have further questions, please contact Mark King (mking@wnccumc.org).
 
Key Provisions according to WhitleyPenn, a Texas Accounting Firm that specializes in churches: 

• Eligible churches and non-profits will be able to borrow up to 2.5 times their average monthly payrolls and benefits up to $100,000 per employee.
• Funds can be used to cover payroll, benefits, employer payroll taxes, rent/mortgage payments, utilities and interest on existing debt. 
• The SBA will have to issue guidance on how housing allowance will factor into the calculations.
• If the church or non-profit meets the employee retention requirements up to 100% of the loan can be forgiven.
• The loan pool is $350 billion with a maximum loan per applicant of $10 million.
• The period during which the program applies is February 15 – June 30, 2020.
• Express loans (36-hour approval) may be granted for loans up to $1,000,000.
• Borrower and lender participation fees in the Paycheck Protection Program are waived but lender servicing fees apply up to 5%.
• Borrowers are required to make a good faith effort to document that the loan is necessary due to economic conditions caused by COVID-19. Borrowers will need to demonstrate that the loan was used to retain employees, maintain payroll, and pay rent and utilities. They are not permitted to receive duplicate payments for the same purposes under a different SBA program.  

 
What can you do now? (from Horizons Stewardship)

• You can ensure your 2019 Financial Statements are complete and your first-quarter financial statements are prepared as soon as possible.  
• You can contact your District Office about scheduling a charge conference (via Zoom) to approve applying for this loan.
• You can locate an SBA approved bank and let them know you would like to apply. Ask them to immediately provide you loan documentation requirements once published by the SBA. 

 


B. Assistance for Churches with clergy and staff and families coping directly with the COVID-19 virus.  Small and mid-sized employers, including churches, now must provide paid sick and family leave to employees who are unable to work due to certain absences related to the COVID-19 (coronavirus) outbreak. Ordinarily, providing paid leave will not directly increase out-of-pocket payroll costs because paying an employee for time on leave costs no more than paying the employee while he or she is at work.  However, in the aggregate, allowing employees to take paid leave without using their paid time off represents a business cost. When Congress mandated paid leave, it also allowed businesses to recoup that cost. Any church or religious organization that withholds payroll taxes for employees is eligible to participate.  Check this link for more information: Reimbursing Churches for Mandated COVID 19 Sick Leave.

Unemployment Benefits: From all the information available at the moment, it appears that there are provisions to provide relief to workers in the non-profit sector if their jobs have been eliminated, or they have been laid-off due to COVID-19.   In the past non-profits, including churches, have not participated in state funded unemployment plans, therefore employees were not eligible for these benefits if their employment ended for any reason.   The CARES Act (Coronavirus Aid, Relief and Economic Security Act) provides federal funding that will now open this benefit up to non-profits for a specific period of time, through December 2020.   You should urge any lay employees who may not be working and receiving a paycheck at this time to contact the North Carolina Division of Employment Security -  des.nc.gov or (888) 737-0259.  While you may file a claim over the phone, due to higher than normal volume, it is recommended you do this online, a process that will take approximately 20 minutes.   Under normal circumstances there is a one week waiting period for benefits, but this has been waived due to this event, and if someone qualifies, it will take about 2 weeks for the first payment to arrive.    
 
Another provision of the expanded unemployment benefits provides payments to contract workers (those that normally receive a 1099 from your church/organization – occasional musicians, janitorial services, yard maintenance, etc.).   We will share other details and instructions as they become available.
 


C. Charitable Donations: The new law suspends the individual charitable contribution limitation of 60% of adjusted gross income for the 2020 tax year and creates a $300 charitable contribution deduction that is available to taxpayers that do not itemize deduction. Tell your donors!
Similarly, the Act increases the charitable contribution limitation for corporations for the 2020 tax year from 10% to 25% of taxable income and increases the limitation for food inventory contributions from 15% to 25%.

 

For more information, read the COVID-19 Financial Relief FAQs or visit Financial and Administrative Resources for other documents.