We’ve Received the PPP Funds…Now What? | Sharpe Group blog
Posted June 8th, 2020

We’ve Received the PPP Funds … Now What? (The “All Things Considered” Edition)

I’ve got my memories
Always inside of me
But I can’t go back
Back to how it was
I believe you now
I’ve come too far
No I can’t go back
Back to how it was

Created for a place I’ve never known

This is home
Now I’m finally back to where I belong
Where I Belong
Yeah, this is home
I’ve been searching for a place of my own
Now I’ve found it
Maybe this is home
This is home

Switchfoot (This Is Home)

(Bob speaking) One of my favorite shows on public radio is “All Things Considered.” I couldn’t help but think of that title when I was writing this blog.

Just to recap, our previous blog on this subject outlined considerations for applying for a PPP loan. Many nonprofits did just that and now are faced with what to do with the funds.

As with any big money decision facing a nonprofit, there are many angles the executive team should consider. We’ve laid out what we believe are the most important considerations:

Consider the legal implications and required compliance that accompany the PPP funds.

Compliance will be important in order to have a portion of the loan forgiven. The wording states that the organization must have the ability to prove that their current economic uncertainty makes the loan request necessary to support their ongoing operations.

Because the signatory on the application affirms that the applicant needs the money, we would recommend, at a minimum, your nonprofit document your understanding and analysis of the “need” for the PPP funds. Currently, the SBA officials are saying there will be some form of an audit of the need at certain amounts. Documentation should include a review of the funds and their use as well as include the reasoning behind the need.

Further, we would recommend discussing your findings on the use and compliance of the PPP funds with your auditor, banker and board of directors. As we’ve said before, communication with experts and leadership is essential.

Consider the ethical/moral questions you may face by taking the PPP funds.

(Bob speaking) I’ve recently had a discussion with two prominent churches who applied for and received the PPP funds. In both cases, the churches grappled with the ethics of their decision to apply for—and then receive—the funds. In both instances, the churches brought these decisions to their ruling authorities.

The same process should be considered by nonprofits; your board and/or leadership should play a prominent role in the decision whether to accept the PPP funds.

I’ve also spoken with several nonprofit CFOs who decided not to apply for PPP loans on the basis that some employees may not agree with the application and could be vocal about it. In these cases, they determined taking the loan was not worth the risk.

Which brings us to our last consideration…

Consider the potential reputational risk that goes along with taking the PPP funds.

As noted in recent media articles, the reputational risk that could result from negative media should be quantified in making your decision and how you communicate it to your staff and donors.

While it is difficult to fully quantify the reputational risk, one option could involve polling key constituents and board members as to how they would view the organization accepting the funds. Taking the time to reach out for others’ opinions allows your organization to make decisions that are not in a vacuum.

At Sharpe, we have 50-plus years of reputational, relational and technical experience working exclusively with the nonprofit sector. If your organization needs expert counsel in developing an ongoing strategy, we can assist.

By Bob Mims, Sharpe Group CFO, and Tom Grimm, Sharpe Group Senior Consultant

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