02 Apr 2020

How the CARES Act Impacts You and Your Ministry

Allan Armitt

On March 27, 2020, the President signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). This stimulus plan is the largest economic stimulus package in the history of the United States. It includes approximately two trillion dollars to help people and businesses impacted by COVID-19. Many pastors and ministry leaders are asking, “What does this mean for me?” We’re here to help answer your questions!

First and foremost, it’s important to know that almost everyone will be impacted by the CARES Act. In drafting the act, the Senate included provisions not just for businesses but also for individuals and nonprofit organizations. 

In this blog, we are going to summarize the pieces of the act that may benefit your church or ministry and try to direct you in how to access those resources. As this bill was just recently passed, rules will come from various government agencies in the coming days that may provide more clarity, but here is what we know now.

How does the CARES Act impact my organization?

The CARES Act includes two provisions that we want to highlight that impact churches and ministries. These include the Payroll Protection Program and also some changes to charitable donation limitations for 2020.

Payroll Protection Program

For small businesses, nonprofit organizations, churches, and ministries, the CARES Act includes what is probably one of the two most impactful portions of the act — the Payroll Protection Program. The Payroll Protection Program authorizes the Small Business Administration to offer loans to small businesses and nonprofit organizations to help cover payroll costs. If these loans are used to maintain payroll costs (and some other administrative costs), they are completely forgivable! This is great news, and this program could help many churches and small businesses keep their staff engaged and innovating, even if you’re in a difficult circumstance.

In order to calculate the amount your church may be eligible for, you would need to calculate your monthly average payroll costs during the one year period before the loan and multiply that amount by 2.5. Your payroll costs include salary, wages, commissions, retirement, health care costs, vacation leave, etc. made to any of your employees or contractors.

Currently, we don’t know for sure if housing allowance can be included in the calculation. While the act doesn’t specifically address housing allowances, it does state “salary, wage, commission, or similar compensation,” which will likely include housing allowances, as they are a form of compensation for ministers. We won’t know for sure until the SBA puts out rules, but it would be a good idea to calculate your payroll in both ways — with and without housing allowance included.

Also, some payroll costs, specifically any payroll for an individual over $100,000 in a single year, are excluded from the calculation. So if you’ve got a staff member compensated $120,000 in the previous 12 months, you can only use $100,000 of that compensation in the calculations.

For example, if the average monthly payroll costs for your church include two staff members and are $10,000 ($120,000/year) total, you could apply for, and be eligible for, a loan of $25,000. That $25,000 can be used to cover your employee costs for the next couple of months, while we, as a country, deal with the COVID-19 pandemic.

The act also delegates authority to approved lenders (which includes almost every major bank, and lots of other small banking institutions) to make these loans in order to speed up the process. This means you should go to your local banker as soon as possible to begin this process.

As I mentioned above, the loans are completely forgivable if used to cover the costs of payroll, but it can also be used to cover rent, mortgage, utilities, interest on prior debts, etc. and still be forgivable. That means, in the example above, that your loan of $25,000 could be used to cover payroll, and never have to be paid back to the lender. The goal of this portion of the CARES Act is clearly to keep small businesses and nonprofit organizations operating and paying their employees during the uncertainty surrounding COVID-19. The rules aren’t written yet on how we will be reporting what the loan was used for, but it will be a good idea to have your books in order so you can track any payments you make with those dollars in order for the loan to be forgiven.

This loan forgiveness is also tied to how many full-time equivalent employees used in the payroll calculation (average number per month). If you lay off your staff, the loan forgiveness is reduced by the percentage of employees that you’ve had to lay off. If you already had to reduce your staff, the act allows you to hire back those workers, and use the funds from the loan to pay them. In fact, that’s the spirit of the CARES Act. This program wants you to keep your staff going, and keep them paid for approximately two months while the country works through the COVID-19 pandemic.

The CARES Act does include provisions about how the worker count will be calculated, so your payroll records (state and federal) and bookkeeping both need to be accurate, or you may risk some or all of the loan not being forgiven, even if you use the funds on payroll costs.

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Charitable donation changes for 2020

The CARES Act also includes some special provisions for charitable giving for the 2020 tax year that will benefit some (or all) of your donors. Many of you know that the Tax Cut and Jobs Act in 2017 had a side effect of discouraging some charitable giving by increasing the standard deduction. Many donors switched from itemized deductions, which included their charitable contributions, to the new standard deductions, which meant their giving no longer impacted their tax returns. Now, we know that for most donors, the tax benefits are not “why” they are giving, but it is an added benefit for some, and the CARES Act gave at least a little of that benefit back.

The CARES Act includes a provision that allows for up to $300 in a tax year, which can be used to adjust your gross income down. This allows the tax benefit to apply even if you take the standard deduction. These donations still have to follow the rules for charitable donations, but there is now some financial incentive for donors who typically don’t give to receive a fiscal benefit just for supporting their local church or ministry.

The other benefit included in the CARES Act related to charitable giving is a lifted maximum for corporate and individual donations to nonprofit organizations for the 2020 tax year. The 50% limitation on individuals is suspended, the corporate limitation increased from 10% to 25%, and the limit on food inventory donations is increased from 15% to 25%.

How does the CARES Act impact me personally?

The CARES Act also includes some provisions that may not be targeted at your church organization but may have a substantial impact on some or all of your members. We want to make sure you know that these are available to those you serve. Benefits to individuals are described further below and include direct payments to taxpayers, expanded unemployment assistance, and some support for mortgage payments, student loan payments, and early retirement provisions.

Direct payments to taxpayers

The CARES Act includes an unprecedented stimulus for individuals and families through direct payments as well. I’m sure many of you have seen this all over the news, but every individual U.S. taxpayer should be receiving a direct payment from the government in the next two to six weeks. If you file your taxes with the IRS using a bank account for direct deposit or receive Social Security payments, then they should already have your information, and you should see your payment appear in the next month or so. If you do not have a direct deposit account with the IRS, you will likely receive a paper check in the mail.

These checks vary in their amounts, but I’ve included a summary below:

  • $1,200 per adult and an additional $500 per child to single filers earning less than $75,000 annually
  • $1,200 per adult and an additional $500 per child to joint filers earning less than $150,000 annually
  • Lesser amounts will be provided to those individual filers earning more than those limits

No action is required on your part to receive this benefit.

Unemployment assistance

As many of you know, many state unemployment programs don’t require churches to pay into their unemployment insurance and are therefore unable to apply for unemployment benefits. The CARES Act includes federal unemployment assistance that expands eligibility to include those who don’t normally qualify. This includes self-employed workers, contractors, and even non-profit employees. If you have been let go by your employer or church, you can check with your State on how to apply for the expanded unemployment benefits.

While the CARES Act includes lots of incentives for employers to keep their employees, unemployment assistance may be a major benefit for some. This expanded unemployment includes $600 per week and extended duration for the unemployment benefits.

Mortgage, student loan, and retirement assistance

A few smaller provisions included in the CARES Act may be huge for some individuals. Mortgage assistance, student loan assistance, and waiving retirement savings account penalties may all be helpful options for many people.

The act includes a mortgage assistance program that allows lenders and mortgage servicing companies to provide up to 180 days of payment deferrals (you may see this called forbearance) on federally backed loans to customers experiencing some form of hardship due to COVID-19. You will need to contact your lender or servicer to see if this is something they can help you with.

Also included is a similar program for student loan payments. I know countless pastors and ministry workers with student loan debt, and the CARES Act includes a deferment of ALL federal student loans through September 30, 2020. If you have questions about this provision or to see if your student loans are eligible, you can contact your loan servicer directly.

Finally, there are also some provisions allowing the federal government to waive the 10% additional penalties on the first $100,000 distributed from an IRA or other retirement plan if you need to access those funds prematurely for those who have been directly impacted by COVID-19. This could have a number of other implications on your personal finances though, so please check with your financial advisor to see if this is the best option for you.

Resources, links, and assistance

The Association of Related Churches (ARC) held a great webinar that included Senator Tim Scott answering some questions directly about how he envisioned the CARES Act impacting churches and ministries.

The Small Business Administration has numerous resources available to nonprofit organizations with the recent stimulus laws that have been passed.


Check out the SBA Faith-Based FAQ PDF


If your bank is unable to help you obtain the loan you need, then consider looking at the link below. The Evangelical Christian Credit Union (ECCU) may be able to assist you.


If you’re like me, some of you may want to see the law for yourself. A link to the exact bill text is included below. Most of the resources referenced in the above blog are included in "Division A, Title I and Title II."


Exponential, in partnership with Billy Graham Center’s Send Institute, Leadership Network, Catalyst, discipleship.org, and ARC hosted a webinar and survey for specifically evangelical churches and ministries and how they are responding to the COVID-19 pandemic. If your church is looking for ideas about what other churches are doing during this time, this webinar may be a great resource for you.


How can we help you?

If you were called to plant a church, don’t stop now. Your time to shine has come. Use this time while you are home to get set up and organized so you are ready for what the Lord will do in the season to come.

If you are ready to take your ministry forward or have questions about the CARES Act, I encourage you to give us a call at (844) 520-2601. Our specialists are standing by to assist you. 

Please feel free to comment. We always appreciate good dialogue. However, we do moderate each comment to ensure that it is on topic and not derogatory to other participants. We ask that you keep your comments brief and pertinent to the topic so that others may benefit.

Raul Rivera

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