Profiting from a Pandemic: How Ineligible Unions Collected Millions in Federal COVID Relief Funds

Profiting from a Pandemic: How Ineligible Unions Collected Millions in Federal COVID Relief Funds

Profiting from a Pandemic: How Ineligible Unions Collected Millions in Federal COVID Relief Funds

Executive Summary

Between creation of the Paycheck Protection Program (PPP) by Congress in March 2020 and passage of the American Rescue Plan in March 2021, as many as 223 forgivable loans totaling $36.1 million were provided to labor unions and related organizations that were statutorily ineligible for the funds. Teachers’ unions, government employees’ unions and AFL-CIO advocacy organizations are among the most prominent beneficiaries of the relief funds.

This breakdown in the PPP, administered by the Small Business Administration (SBA), has not been publicly documented previously. The ineligible loans diverted resources away from the purpose of the PPP, namely helping businesses keep employees on payroll. Further, given that union revenue derives primarily from dues deducted from members’ paychecks, direct support to unions was unnecessary; to the extent the PPP loans to businesses allowed union employees to keep working, it also allowed unions to continue collecting dues from their paychecks.

Disconcertingly, the apparently inappropriate PPP loans may have been granted due to fraudulent loan applications or other questionable conduct by applicants or the private lenders operating under the SBA’s delegated authority to approve loan applications. Appropriate federal authorities, including at least the SBA and the Department of Justice, should investigate the matter further and take appropriate actions to recover funds improperly paid and prosecute any fraudulent activity committed.

Read the full report.

Download the complete list of ineligible/suspect loans.

Update 3/28/2022: This report has been edited since publication to account for the removal of three loans — Nos. 9859357107, 2966517405 and 3887708406 — that were initially identified as potentially inappropriate on the basis of the recipients’ tax-exempt status but were subsequently determined to have been made to eligible 501(c)(3) organizations.

Director of Research and Government Affairs
As the Freedom Foundation’s Director of Research and Government Affairs, Maxford Nelsen leads the team working to advance the Freedom Foundation’s mission through strategic research, public policy advocacy, and labor relations. Max regularly testifies on labor issues before legislative bodies and his research has formed the basis of several briefs submitted to the U.S. Supreme Court. Max’s work has been published in local newspapers around the country and in national outlets like the Wall Street Journal, Forbes, The Hill, National Review, and the American Spectator. His work on labor policy issues has been featured in media outlets like the New York Times, Fox News, and PBS News Hour. He is a frequent guest on local radio stations like 770 KTTH and 570 KVI. From 2019-21, Max was a presidential appointee to the Federal Service Impasses Panel within the Federal Labor Relations Authority, which resolves contract negotiation disputes between federal agencies and labor unions. Prior to joining the Freedom Foundation in 2013, Max worked for and the Washington Policy Center and interned with the Heritage Foundation. Max holds a labor relations certificate from the University of Wisconsin-Madison and graduated magna cum laude from Whitworth University with a bachelor’s degree in political science. A Washington native, he lives in Olympia with his wife and sons.