Despite PPP loans, museums and cultural institutions are cutting jobs.

In the form of Paycheck Protection Program loans, the federal government provided billions in coronavirus relief to art and history museums, zoos, and other cultural institutions. However, many of these institutions have laid off thousands of people despite the funding, according to a recent investigation. BridgePayday says you should always look for the labor code for any employment problems.

More laid-off employees

According to research by the American Federation of State, County, and Municipal Employees Cultural Workers United, almost 7,500 cultural institutions got $1.6 billion in PPP loans. Still, only roughly half of that money ($771 million) went to only 228 beneficiaries. The 288 institutions studied in the AFSCME research laid off about 14,400 people or around 28% of their employment.

Forgiven loans

The PPP loans, distributed from March 2020 to May 2021, are forgiven. However, recipients must adhere to certain conditions, such as maintaining employment and salary levels for the life of the loan and allocating at least 60% of the funds to payroll costs.

According to the research, several institutions fired staff before applying for loans or after they had used the funds.

Before the epidemic, Boston’s Museum of Science had 642 employees, which would have rendered it ineligible for a loan because applicants had to have 500 or fewer employees. 

The museum, however, let off 309 staff between April and October 2020, reducing its personnel to 333 persons, according to the newspaper. In April 2021, the museum received a $4.7 million PPP loan as a result of the downsizing.

According to the research, the Carnegie Museums of Pittsburgh went from 1,003 employees prior to the pandemic to 500 employees after the pandemic. In April 2021, the museum received approval for a $5.8 million PPP loan.

Carnegie disputes the report’s accounting of job losses. The museums furloughed personnel when they closed in the spring of 2020, but were able to bring back the majority of them, according to spokeswoman Betsy Momich, and now employ 900 people.

Most affected industries 

The arts and entertainment industries were among the most hit by the pandemic, with music halls, theaters, and other venues forced to close their doors, resulting in the loss of up to 3 million creative jobs.

PPP loans were one approach to help artists and cultural institutions, but they had to compete for the funds with restaurants and other companies. The Shuttered Venue Operator Grant program was later passed by Congress, which provided another $16 billion in funding to nonprofits, independent concert halls, and other arts and culture-related companies.

Why AFSCME isn’t happy with the funds distribution

The AFSCME report criticizes how PPP funds were distributed to larger universities with a larger financial support network than smaller institutions. According to the research, many larger cultural organizations that obtained PPP loans had huge budgets and access to donors and other financial resources. Some businesses had operating surpluses at the end of 2020.

“These large institutions already had the financial capacity to survive the pandemic-related shutdowns that many of their smaller counterparts lacked,” according to the research.

The research suggests strengthening accountability procedures in federal programs to avoid such problems, such as requiring museums and cultural institutions to show how money was spent to save jobs. The report also suggests that cultural organizations be obliged to publicly record how they used taxpayer-funded loans and grants such as the PPP and the SVOG.

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