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Bankrupted By Sexual Abuse Cases, Church Saved By Coronavirus Aid

Published: July 13, 2020
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The U.S. Roman Catholic Church accumulated a sum equal to $1.4 billion using a special and unprecedented exemption from US federal rules, in taxpayer-backed coronavirus aid. Millions from the aid went to dioceses that have invested money into huge settlements or pursued protection against bankruptcy because of clergy sexual abuse cover-ups.

  • Bankrupted by sexual abuse cases, US Roman Catholic Church is one of the biggest beneficiary of taxpayer-backed Coronavirus aid with more than $1.4 billion
  • Faith-based organizations are not usually eligible for money from the U.S. Small Business Administration
  • The administration was requested by religious groups to free them from a rule that typically disqualifies an applicant that has more than 500 workers
  • The Archdiocese of New York received 15 loans worth at least $28 million just for its top executive offices
  • The amount that the church collected, between $1.4 billion and $3.5 billion, is an underestimate
  • The government’s data was released after pressure from Congress and a lawsuit from news outlets
  • Long before the pandemic, scores of dioceses faced increasing financial pressure because of a massive rise in clergy sex abuse claims
Catholic Church Coronavirus Aid
Bankrupted by sexual abuse cases, US Roman Catholic Church is one of the biggest beneficiary of taxpayer-backed Coronavirus aid with more than $1.4 billion

Biggest beneficiary of taxpayer-backed Coronavirus aid

The $1.4 billion figure was sometime before, now the Church’s sum could be estimated to be $3.5 billion. This makes the U.S. Roman Catholic Church a global religious institution that has more than a billion followers, emerge as one of the biggest winners in the U.S. government’s pandemic relief efforts.

Faith-based organizations for worships that encourage religious beliefs are not usually eligible for money from the U.S. Small Business Administration. But as the unemployment rates soared, Congress let faith groups and other non-profit organizations to take help of the Paycheck Protection Program, a $659 billion fund created to keep the main street open and ensure the employment of Americans.

By emphasizing on this payroll program Catholic dioceses, parishes, schools and other ministries have obtained permission to forgive at least 3,500 loans, the Associated Press reported.

As an example, the Archdiocese of New York received 15 loans worth at least $28 million just for its top executive offices. St. Patrick’s Cathedral was approved at least $1 million.

In Orange County, California, where a sparkling glass cathedral that costs over $70 million was recently inaugurated, the diocesan officials received four loans that were at least equivalent to $3 million.

A loan of minimum $2 million was given to the diocese covering Wheeling-Charleston, West Virginia. Here a church investigation done last year revealed that the then-Bishop Michael Bransfield took funds and made sexual advances toward young priests.

Lobbying for a loophole

In this scenario, being eligible for low-interest loans was a new opportunity. For surety, the Church couldn’t have obtained approval for so many loans. The government could have approved if they are used for wage, rent and utilities without a second break.

The administration was requested by religious groups to free them from a rule that typically disqualifies an applicant that has more than 500 workers. Without this request many Catholic dioceses are ineligible as they exceed the 500-person limit.

Actual amount of loans hidden

The amount that the church collected, between $1.4 billion and $3.5 billion, is an underestimate. The Diocesan Fiscal Management Conference, which is an organization of Catholic financial officers did the job of surveying members and reported that about 9,000 Catholic entities have already received loans. That is nearly thrice the number of Catholic recipients the Associated Press (AP) could identify.

The AP couldn’t find more Catholic beneficiaries because it was denied the permission of naming recipients of loans under $150,000. This is a category in which many smaller churches would fall into. The government’s data was released after pressure from Congress and a lawsuit from news outlets. Being more precise wasn’t possible because only ranges of loan amounts were released.

Although it wasn’t an in-depth accounting, AP’s analysis seats the Catholic Church as one of the major beneficiaries through the Paycheck Protection Program, which also has helped companies backed by celebrities, billionaires, state governors and members of Congress.

However, many of the financial problems of the Church were self-inflicted. Long before the pandemic, scores of dioceses faced increasing financial pressure because of a massive rise in clergy sex abuse claims.

The sexual abuse scandals

The 2018 scandals reverberated throughout the world. Pope Francis ordered the former archbishop of Washington, Cardinal Theodore McCarrick to live a life of “prayer and penance” following allegations that he abused minors and adult seminarians. A grand jury report about the abuse in six Pennsylvania dioceses revealed bishops had long covered spurring investigations in more than 20 other states, for predator priests.

As the church presumed with its longtime crisis, abuse reports tripled to a total of nearly 4,500 in the whole nation combined. From $106 million, in just five years the dioceses and religious orders lost $282 million. Most of this incurred money went to settlements, besides legal fees and support for offending clergy.

There were about 40 dioceses as loan recipients that have spent hundreds of millions of dollars in the previous years paying victims through compensation funds. The AP’s review made the finding that these dioceses were approved for a sum that is estimated to be about $200 million, though the value can likely be much higher.

In 2016, a victim compensation fund was established by Cardinal Timothy Dolan to lift the limitations on filing of child sexual abuse. Since then, other dioceses have established similar funds, which offer quick settlements to victims.

For latest updates on the outbreak check out our Coronavirus Coverage.

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