The Office of the Bishop takes seriously our role in developing and sharing resources that help those legally and spiritually responsible for faithfully stewarding the funds of the church. As many of our parishes have applied for (and received) Payroll Protection Program (PPP) funds, the Office of the Bishop and Joint Finance Panel (JFP) offer the following guidance about how to manage funds received and convert the loan into a grant by complying with program guidelines.
Please note that the Office of the Bishop will administer funds to missions and other diocesan entities participating in the joint PPP application through our finance office. Guidance on mission disbursements will be forthcoming if and when the Diocese of Olympia’s loan application is approved.
- Funds received must be accounted for according to federal government PPP program guidelines in order to be converted from a loan to a grant. If a congregation receives funds and does not comply with the guidelines in the legal regulations or in the promissory note issued by your local bank, the loan must be repaid.
- The best way to maintain transparent records and convert the money to grants is segregating these funds in your accounting software or into a separate account than operations.
- All income received by congregations is assessable, including income received in the month of April, unless otherwise specified by the Diocesan Convention (or the Diocesan Council when the Convention is in recess). All congregational assessments must continue to be paid to the diocese, just as the diocese is continuing to make its assessment payments to the wider Episcopal Church. If you are having trouble paying your assessment, continue to submit your NDI reports and contact the Canon to the Ordinary to initiate the assessment relief process.
- Money is a symbol of what we value. When we pay “pledges,” “diocesan assessment” or “churchwide apportionments,” we demonstrate a shared commitment to Episcopal Branch of the Jesus Movement; to the work of realizing God’s kingdom. Even when it is costly.
- Record the income received as a loan as an Unassessed Temporary Restricted Fund.
- Software: In your accounting software, add a new Fund to the Balance Sheet called “PPP Unassessed Fund Balance,” and add an income and expense account for the fund. Draw all Payroll from here for the period of the loan/grant.
- Bank account: Open a separate bank account. Make sure when you add this to your Balance Sheet in your accounting software or other records that you specify the funds are “Unassessed.”
- Drawing payroll: Until the money is used for payroll it is unassessed. Report it as income the month it is used.
- When you use the money for payroll, it becomes assessable income. You should claim the funds used for Payroll on the NDI for that month as income.
- Example: In May, you used $40,000 of loan funds to pay salaries. June 15, you would submit your May NDI report with $40,000 income reported as “A2. Designated or Restricted Income Used for Operations.”
- Maintain accurate up-to-date payroll records during the loan period.
- The treasurer and priest-in-charge/rector/vicar should keep a copy of these records available for review on file. While the federal government issued basic guidelines to banks administering the PPP funds, each bank created its own application and documentation requests based on its reading of the law. As the government and banks modify the program, you may be required to offer updated information. Make sure you know where these documents are and be prepared to produce them at the end of the loan term.
- If the congregation has not altered its payroll during the time period specified by the federal government and promissory note, the loan ought to be converted to a grant per program rules. Assessment would have been paid on any money used and any funds that were not used for permitted expenses under the rules will be repaid to the bank.
Many folks have found the PPP loan process frustrating and confusing. If at any time you have questions about how to manage or report on the use of funds received through the PPP program please consider reaching out for help.
- Contact the Office of the Bishop if your congregation would like help setting up the accounting procedures for managing your loan funds. We can connect you with a mentor who can help you.
- If you have questions about what documentation will be required to convert the loan into a grant, check with your lender. If that information is confusing, reach out the Office of the Bishop and we will work with you to find the information you need.
- If you have questions about assessments or NDI reporting, please contact the Canon to the Ordinary.