Human Service Organizations’ Participation in the Paycheck Protection Program: A Cross-Sector Comparison

The Paycheck Protection Program (PPP) was passed during the COVID-19 pandemic to assist small and medium-sized organizations. However, only a fraction of eligible nonprofits applied for and received loans. Using a contract failure lens, we posit that nonprofits are more likely to have higher per-employee loan amounts and use funds for payroll than for-profits. Analyzing a sample of 174,496 first-draw loans across human service sub-fields, results suggest differences by size, particularly among single-employee organizations, and by nonprofit and for-profit recipients. Single-employee organizations represent nearly half of HSO recipients, suggesting an unintended consequence of prioritizing short processing times over more scrutiny. During times of crisis, policy makers should consider oversight along with speed during policy implementation to discourage and detect self-motivated behavior.Organizations who successfully used adaptive tactics during the crisis included large organizations with more than 200 paid staff and nonprofit ownership structure.Managers of large nonprofit organizations in competitive subfields demonstrated resilience to competition and commercialization pressures by focusing on employee retention. During times of crisis, policy makers should consider oversight along with speed during policy implementation to discourage and detect self-motivated behavior. Organizations who successfully used adaptive tactics during the crisis included large organizations with more than 200 paid staff and nonprofit ownership structure. Managers of large nonprofit organizations in competitive subfields demonstrated resilience to competition and commercialization pressures by focusing on employee retention.