This article was originally published in Church Law & Tax February 27, 2018
In January, FEMA announced a shift in policy that would allow houses of worship access to federal funds to rebuild after disasters. The recently passed Bipartisan Budget Agreement assured funding for this new policy. After a string of hurricanes devastated communities across the United States last year, causing $306 billion in damage, churches damaged by such natural disasters can now access federal funding as they look to repair and rebuild.
Because access to these FEMA resources is new for most churches, we’re laying out what churches need to know in order to use this new benefit.
National Flood Insurance Program
The foundation of disaster aid is insurance. Most homeowner and commercial insurance policies exclude flood coverage, but houses of worship can purchase commercial policies through the National Flood Insurance Program (NFIP) if they are part of a participating community. This is not a new benefit for houses of worship, but it’s important that churches understand the importance of this first line of defense. Started in 1958, the NFIP is the largest federal insurance program, covering 5 million properties. It has 22,308 participating communities and has paid out over $9 billion in claims to date. These policies are available in both high- and low-risk areas, even if you’ve had prior flood damage. The NFIP website lists all participating communities, and the policies can be purchased through local insurance agents. It’s important to note that an NFIP policy has to be purchased at least 30 days before an event in order to be able to make a claim after.
Access to these funds does not require a presidential declaration of disaster—only two or more acres or properties that have experienced flood damage. Coverage limits depend on the policy, but they can go up to $250,000 toward building repair and $100,000 toward building contents.
SBA Disaster Loans
After disaster damage has occurred, churches now have the option to turn to the Small Business Administration (SBA) Disaster Assistance program for federal aid. This program is the primary form of federal assistance for privately owned property damage, providing loans to churches and faith-based non-profits. These funds are only available following a presidential declaration of disaster.
While 80 percent of these loans go to individuals for primary residence repairs, churches, non-profits, and religiously affiliated schools can apply for Business Physical Disaster Loans. These loans offer up to $2 million for real estate repairs, and can also be used to repair and replace furniture, fixtures, etc. The interest rate offered to nonprofits is fixed at 2.5 percent, and collateral is required for loans over $25,000. The SBA will not decline a loan for lack of collateral, but it will ask for whatever collateral is available.
Because of the policy change, SBA is accepting disaster loan applications for physical damage past the filing deadline from houses of worship for disasters declared from August 23, 2017 through January 1, 2018. Applications can be submitted online here.
Public Assistance Program
Houses of worship and private, faith-based nonprofits are now also eligible for FEMA’s Public Assistance (PA) Program if their facilities are damaged in a storm that receives a presidential declaration of disaster. This program provides supplemental federal disaster grant assistance for debris removal, life-saving emergency protective measures, and the repair, replacement, or restoration of disaster-damaged facilities of private, non-profit organizations.
Applying for this type of assistance requires submitting an application to the state through the new Grants Manager portal within 30 days of the presidential declaration of disaster. This application package includes a Request for Public Assistance form, evidence of federal tax-exempt status, pre-disaster evidence of incorporation/charter/bylaws, and a Data Universal Number Systems number established with the government, in addition to supporting documentation establishing ownership of the building, proof of use, and proof of insurance.
What’s essential to note, however, is that unless they are providing critical services (emergency, medical, utility, irrigation/water supply, custodial care, or educational), most non-profits and houses of worship will need to first go through the SBA Disaster Loan application process before they are eligible for the PA program. FEMA will not consider applications until the SBA decision is rendered.
If eligibility is granted, churches will need to submit a list of sites damaged, “before and after” pictures, and any information about historic structures. FEMA and the state will then coordinate a Recovery Scoping Meeting to determine reimbursable damages.
What to Do Now
Familiarizing yourself with your options now can help alleviate stress and confusion when you actually need those options. To make that process smother after disaster hits, churches can also prepare in other ways: taking and recording all inventory, storing all policy information in a safe place, and keeping copies of policy numbers and contact information in locations that are easy to find and access.
I reached out to Marcus Coleman, acting director of the Department of Homeland Security Center for Faith-based and Neighborhood Partnerships, for his take on how churches can best prepare now. He offered these four essential pieces of advice for building a culture of preparedness:
1. Get connected with your local first responders and emergency management agency. Local emergency managers can share information about potential risks for your area, including whether your church is in a flood zone. First responders can be helpful in helping you think through creating an emergency operations plan. You can also visit www.fema.gov/faith-resources to get started.
2. Document and insure your property. Not all insurance policies are the same. Coverage amounts, deductibles, and payment caps can vary significantly. Consult with your insurance professional to be sure your policy is right for you. We encourage everyone to document and insure your property. In this webinar recording, FEMA and the SBA discuss potential sources on financial assistance for non-profits and houses of worship, including an update on the recent FEMA policy change.
3. Get trained. Use free resources designed for faith leaders to prepare for natural and man-made emergencies—including active shooter incidents. Training includes “You Are The Help Until Help Arrives” and Community Emergency Response Team training.
4. Get organized. FEMA andDHS have developed a suite of resources to help your organization get organized for man-mad and natural disasters. Visit www.fema.gov/faith-resources to learn more.
For more on how churches can work together with FEMA, see our interview with former FEMA administrator W. Craig Fugate.