The Paycheck Protection Program’s impact on nonprofits

A recent analysis from the Johnson Center for Philanthropy looks at how many eligible nonprofits benefited from the Paycheck Protection Program (PPP). Entities with 500 or fewer employees were eligible for PPP loans up to 2.5 times an organization’s monthly payroll costs, with a maximum loan of $10 million.

The Johnson Center used data from the U.S. Department of the Treasury and the U.S. Small Business Association to examine the impact of Paycheck Protection Program loans on nonprofits. The analysis reveals five key takeaways:

• Nonprofits received 3.7 percent of all PPP loans nationwide.
• Nonprofits received a larger share of high-dollar loans than all other entity types.
• Nearly one in three nonprofit jobs nationwide was protected by PPP funds.
• Of all PPP lenders, 88 percent made at least one loan to a nonprofit organization.
• A typically lender made 4-5 percent of its total loans to a nonprofit.

These national figures provide baseline information about the share of nonprofits that received PPP loans. To look more closely at the effect of PPP loans on the nonprofit sector, the Johnson Center first estimated many nonprofits were eligible to receive the loans. Then it looked at how many eligible nonprofits actually received a PPP loan and how many nonprofit jobs were protected.

To determine the number of eligible nonprofits, the Johnson Center created a “Best Eligible Estimate.” This estimate includes all organizations that file IRS Form 990 or 990-EZ, which typically have at least one employee, minus all 990 filing organizations with more than 500 employees. The final tally was 452,000 nonprofits nationwide, which likely overstates the number of eligible nonprofits. Based on this estimate, the Johnson Center found:

• Nationwide, approximately 40 percent of all eligible nonprofits received a Paycheck Protection Program loan.
  Under the PPP, 451,966 nonprofits were eligible and 181,680 loans were made. A closer look revealed large variations by state. In some states 67 percent of eligible applicants received loans, whereas in other states, only 28 percent received loans. Alabama, Kansas, Mississippi, Oklahoma, and South Dakota were among states where more than 55 percent of eligible nonprofits received a loan. Arizona, California, Idaho, Montana, and Utah were states where less than a third of eligible applicants received a loan.

• Nationally, nonprofits received 7 percent of total loan dollars.
  Nonprofits received 4 percent of loan dollars in the under $150,000 category and 8 percent of all loan dollars in the $150,000 and over category.

• Nearly two-thirds of eligible nonprofit jobs were protected by PPP loans.
  Just as the percentage of eligible nonprofits receiving a PPP loan varied from state to state, the share of nonprofit jobs protected also differed by location. PPP loans protected more than 90 percent of estimated eligible nonprofit jobs in Mississippi, Texas, Alabama, Oklahoma, Nevada, and Louisiana. The District of Columbia, Rhode Island, Alaska, Washington State, Virginia, Connecticut, Oregon, and Vermont were at the bottom end of the scale, however, with less than 50 percent of eligible nonprofit jobs protected.

Conclusions

Nonprofits received a larger share of the $150,000 and greater loans than entities in other sectors, but the number of nonprofit jobs protected by PPP loans was less than expected. It is possible that larger nonprofits had more success attaining PPP loans, and that smaller nonprofits may not have applied for loans or were not successful with their applications.

Overall, fewer nonprofits than expected applied for or were successful in the first round of PPP loans. In the next round of PPP loans, those in the nonprofit sector should reach out to PPP-eligible nonprofits, especially small nonprofits, who may need help applying.