CARES Act Details

On March 16, 2020, we concluded that we would not be meeting together for an extended time due to COVID-19. Within a couple of days, we quickly changed priorities and strategies, and the staff has done a tremendous job leading through this time. We have streamlined and focused our efforts on the following five priorities:

1. Providing weekly truth and encouragement through God’s word
2. Providing opportunities for community by transitioning life groups to virtual groups
3. Shepherding our faith family, missionaries and church planters by calling them individually and praying for them
4. Identifying and seeking to meet the urgent needs of our faith family and those in our community as a result of COVID-19
5. Maintaining the essential services (i.e., finance, facilities, communications, etc.) of the church

You will be encouraged to know that we have experienced a great response and increasing engagement through these priorities. Many are seeking peace, hope, and truth, and Jesus is drawing them to Himself. Thank you for continuing to share in this mission with us.

By God’s grace and your consistent generosity, we entered this crisis in a healthy financial position. As reasonably expected, we have experienced a decline in contributions but not yet to the extent that is being reported by a vast number of churches. Although no one can predict the future, we are reasonably preparing for this decline to continue into the months ahead as the effects of COVID-19 reach deeper into the economy. To date, we have chosen not to furlough staff, but we have eliminated all discretionary spending and prioritized spending according to the following:

1. Funding staff, missionaries and church planters
2. Providing to help meet the needs of our faith family and expanding benevolence to individuals within our community
3. Funding the ongoing operation of the church (i.e., utilities, contractual agreements, etc.)

We are also revising the proposed 2020/21 ministry budget (that upon congregational approval would go into effect July 1) to include a reduction of 20% across the board. Assuming our contributions are impacted to this level, it, unfortunately, will impact personnel, missions, capital expenditures, and debt retirement. To potentially offset some decreases in contributions, we have spent considerable time examining the details of the CARES Act and how it might apply to Providence.

On March 27, 2020, President Trump signed into Law the $2 trillion CARES Act to relieve economic hardship caused by the COVID-19 pandemic. The act included a Paycheck Protection Program that sets aside $350 billion to guarantee loans/grants to businesses and non-profits employing fewer than 500 employees for expenses like payroll, utilities, and rent or mortgage payments.

Nonprofits, including churches and other religious ministries, are eligible to receive funds covering up to 2.5 times their average monthly payroll, with a cap of $10 million per loan/grant. In a sense, some have considered this act just compensation by the government for temporarily shutting down businesses and churches.

Congress intended the Paycheck Protection Program to accomplish two fundamental goals: 1) help small businesses, non-profits and churches cover their operating expenses during the worst of the crisis, and 2) provide a strong incentive for employers to retain their employees.

Funds are applied for as a loan through a local bank. These funds are forgiven (i.e., the loan transitions into a grant) if the number of employees at the end of an 8-week period equals to or is greater than the number when the loan was originated. In addition, funds must be used towards specified expenses like payroll, utilities, and mortgage interest.

On Friday, April 3, the application process opened. As time was of the essence and the pool of funds limited, Providence submitted an application as a ‘placeholder’ to give the elders time to consider the matter thoroughly.

The elders have prayed, discussed, and wrestled with many aspects of this decision. The central issues are:

• How do we maintain our current staff during this crisis and position Providence well for ministry post COVID-19?
• As God provided time and materials, through King Artaxerxes, for Nehemiah to rebuild the walls (Nehemiah 2), is this grant not also from God’s gracious hand?
• Should a church ever receive funding from the government, and if so, would that open the door for government involvement and restrictions in the future?
• Our current bylaws state that borrowing money must be approved by the congregation at a meeting held at our physical address with a specified quorum, and members must be present to vote. How would this be possible during the current shelter-at-home environment? Also, is this truly a loan, or should this be considered a grant?

On April 8, 2020, the elders voted to accept the funds from the Paycheck Protection Program, contingent on congregational approval and approval from the lender. This would guarantee our staff employment for the next two months while maintaining operating costs and a reasonable financial position.

None of us can predict what the future holds; therefore, this has been discussed thoroughly since the signing of the CARES Act. With the passing of time, further guidance and clarification has been provided, reinforcing the protections that churches currently enjoy. In deciding to move forward, our leadership has read many articles, listened to many webinars from church tax and law experts, and sought various legal opinions. Here are just a few articles that have helped us in this decision:

• From Russell Moore, President of the Ethics and Religious Liberty Commission of the Southern Baptist Convention
• From the Gospel Coalition
• From John Stemberger, President and General Council of the Florida Family Policy Council
• From the Baptist Press

Whether one considers it a loan or a grant, the elders desire full transparency with the congregation. They, therefore, believe we need a congregational vote before utilizing any funds received through this program. There is a chance, although unlikely that Providence would be approved and receive funds prior to a congregational vote. If the congregation does not agree with the elder’s motion, the funds would be returned.

Our current bylaws don’t provide an option for a quorum or vote without physically meeting at the church, and there are no NC General Statutes that provide any emergency gap measures. The Governor issued executive order #125 to override NC statutes to allow “For-Profit” Corporations to hold annual shareholder meetings virtually, but “Non-Profit” Corporations like Providence were not mentioned in that order.

Therefore, we appreciate your patience and help as we navigate our bylaws while also abiding by the shelter-at-home directive.

By way of this communication, we are announcing a special called business meeting on the following motions on Sunday, April 26, 2020, at 5 PM.

1. “The elders recommend temporarily suspending the specific references within Section IV “Meetings” of our bylaws that address meeting and voting in person to allow for virtual business meetings while Wake County and/or the State of North Carolina is under shelter-in-place directives. All other provisions of Section IV would remain.”
2. “The elders recommend accepting the funds from the Paycheck Protection Program while complying with the use requirements to maximize loan conversion to a grant.”

Below is the process we will follow to conduct this meeting:

• In preparation for this vote, you may submit questions by completing this form and submitting it by Friday, April 17, at 5 PM. If you experience log-in difficulty, contact Karen Dorman at [email protected] or Sonia Leath at [email protected].
• All members will receive a link through email to attend a webinar where submitted questions will be answered. The webinar will take place on Thursday, April 23, at 7 PM.
• All members will be sent another link through email to the actual business meeting, which will be held on Sunday, April 26 at 5 PM.
  • For the sake of simplicity, we ask you to submit questions by April 17 so that we can minimize the debate portion of the virtual business meeting.
• During the business meeting, we will provide a link for you to identify your name and register your vote.

If we continue to have restrictions from assembling together as a church in May, we will take our learnings from this virtual meeting to have another virtual business meeting in May to discuss and approve a 2020/2021 proposed annual budget.