Covid fallout: Taxpayer-funded SC nonprofits get forgivable fed loans

July 23, 2020

Investigative Reports

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By RICK BRUNDRETT

Some nonprofit organizations in South Carolina that already receive significant public funding have been awarded forgivable federal loans of at least $150,000 in the wake of the coronavirus outbreak, records show.

The intent of the Paycheck Protection Program (PPP) through the U.S. Small Business Administration (SBA) is to help small businesses pay their employees during the “Coronavirus (COVID-19) crisis,” according to the SBA’s website.

But the program also covers nonprofit groups. Of 7,615 loans of $150,000 or more awarded in South Carolina as of July 2, 505 went to organizations classified as nonprofit, The Nerve found in a review of SBA records, which show loan ranges of up to $10 million, though not exact amounts, for identified recipients.

Under the PPP, a loan is forgivable if used for payroll costs, mortgage interest, rent and utility payments over a specified period. Payroll costs for loan calculations are capped at $100,000 annually per worker; the SBA currently expects that no more than 40% of the forgiven amount can be used for non-payroll costs, according to its website.

Besides churches, private colleges and medical providers, the nonprofit groups in South Carolina awarded PPP loans included some organizations that have received more than half of their total revenues in recent years from government sources, according to federal income-tax records reviewed by The Nerve.

Those organizations, with awarded loan-amount ranges and the number of retained jobs in parentheses, include, according to SBA records:

  • Catawba Regional Council of Governments: $150,000-$350,000 (19);
  • Central SC Alliance: $150,000-$350,000; (8)
  • Charleston Area Convention and Visitors Bureau: $350,000-$1 million; (0)
  • Orangeburg Consolidated School District 5 High School for Health Professions: $350,000-$1 million (34).

The Charleston Area Convention and Visitors Bureau (CACVB) didn’t respond this week to The Nerve’s written questions, including why there were zero listed retained jobs in the SBA records.

The CACVB in tax year 2018 had total revenues of $19.7 million, nearly $11.8 million, or about 60%, of which was listed as government grants or contributions, according to its federal income-tax return. The organization typically receives millions annually in state accommodation taxes to market the area to tourists.

The Nerve reported last year that the CACVB in fiscal 2018 received a $4.1 million “Destination Specific Tourism Marketing” grant from the S.C Department of Parks, Recreation and Tourism, which awarded a total of $14 million in those grants that year to five tourism groups.

Flush with tax dollars

The Charleston organization wasn’t the only heavily subsidized nonprofit to receive a PPP loan, The Nerve’s review found.

The Catawba Regional Council of Governments (CRCOG) provides a “broad range of assistance” to local governments in Chester, Lancaster, Union and York counties, according to its website. The nonprofit had $5.7 million in total revenues in tax year 2017, of which a collective $4.8 million, or 84%, came from federal and other government funds, according to its federal income-tax return.

Randy Imler, the organization’s executive director, said in email responses this week that the CRCOG retained all of its 18 full-time equivalent (FTE) workers with a $349,699 PPP loan. As for government funding identified in the 2017 tax records, he said $223,328 in dues from member counties and $49,750 in state aid “allow the Council to provide matching funds for state and federal planning work.”

Another $1.7 million in listed government contributions for that tax year included income “generated by staff in the form of contractual work performed for local governments and other non-profits,” along with “origination fees and interest income generated” by the organization’s “economic development and brownfield lending activity,” Imler said.

In addition, tax records show that the CRCOG received $3.1 million in federal funding in tax year 2017, which Imler said was for “workforce training and supportive services,” adding the organization could keep up to 10% of those funds for “actual administrative costs.”

The Central SC Alliance, an economic development organization, listed about 70% of its total $2.1 million in revenues in tax year 2017 as government grants or contributions, according to its federal tax return. The Orangeburg Consolidated School District 5 High School for Health Professions, a charter school, recorded about 95% of its $3.7 million in total revenues as government funding, its 2017 tax return showed.

As The Nerve previously has reported, state lawmakers in recent years have annually funneled a total of nearly $5 million through the S.C. Department of Commerce to eight regional economic development groups, including the Columbia-based Central SC Alliance, which represents eight counties.

The Alliance didn’t respond to written messages this week from The Nerve seeking comment.

In a written response Tuesday, Kathy Booker, board chairwoman of the Orangeburg charter school, wouldn’t specify the exact amount of the PPP loan awarded to the school, adding it was “only slightly greater than the lower-end of the threshold” listed in the SBA records, and that the amount would be detailed in the school’s “2019-2020 audited financial statements.”

Booker said all 34 full-time jobs at the school were retained with the PPP loan, and that its regular revenues are a “combination of federal and state grants as well as local-program funding sources.”

The Nerve in April submitted a formal open-records request to the SBA for details on all PPP loans awarded in South Carolina, but didn’t receive any requested documents then. The SBA earlier this month publicly released specifics on loans of $150,000 or more after several national news organizations sued the agency.

The SBA has not publicly identified recipients of PPP loans of less than $150,000. In that amount category for South Carolina, 55,553 loans totaling $1.86 billion were awarded as of July 2, records show.

The 7,615 $150,000-plus loans in South Carolina, processed through SBA-approved lenders, totaled $2.58 billion to $6.26 billion as of July 2, The Nerve’s review found. Most of those loans ranged from $150,000-$350,000 or $350,000 to $1 million.

As of Wednesday nationwide, nearly 5 million PPP loans totaling more than $518.6 billion had been approved, with an average loan size of $104,289, according to the SBA’s website.

Another loan application round in the U.S. began July 6 and will run through Aug. 8.

Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-254-4411 or rick@thenerve.org. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc.

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