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Unions Lauded Lockdowns While Raking Tens of Millions in Ineligible COVID Relief Funds: Report

Published: February 7, 2022
A Washington Free Beacon article about a Freedom Foundation report revealed unions took tens of millions of dollars in COVID relief without qualifying tax status.
Teamsters march on May 1, 2018, in Los Angeles, California. Numerous trade unions received COVID-19 stimulus funds despite lacking the qualifying tax status during the lockdowns, union corruption watchdog Freedom Foundation revealed. (Image: DAVID MCNEW/Getty Images)

Since March of 2020, 226 trade unions received $36.7 million in forgivable Coronavirus Disease 2019 (COVID-19) relief loans from the Small Business Administration (SBA) based on a non-profit tax status that they didn’t have.

The monies were disbursed by the SBA as part of the Paycheck Protection Program (PPP) launched the same month to help small companies and charitable organizations to keep their businesses open during the first wave of lockdowns, stated the Washington Free Beacon based on a report collected by Freedom Foundation. 

Non-profit organizations are registered with a 501(c)(3) tax status, which exempts them from federal income tax because donations received are tax-deductible for donors, according to Investopedia.

Leaking coffers

But many who applied, specifically labor unions who do not enjoy the same tax benefits, nonetheless received hundreds of thousands, or even millions of dollars.

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According to the Beacon, during the first wave of SBA payouts under the Trump administration, the discrepancy was noted by some high level officials, but no immediate action was taken to counter the problem.

Eventually, when the Biden administration passed one of its first socialist-style spending bills, the American Rescue Plan in March of 2021, PPP regulations were altered, allowing unions to qualify.

Guard dogs

When the Freedom Foundation picked up on the news and launched an investigation via the Freedom of Information Act (FOIA), it found that the U.S. government gave away $36.7 million in forgivable COVID-19 relief loans to entities, which at that time did not qualify for the subsidies.

Freedom Foundation describes itself on its website as an anti-union corruption entity “taking on government union bosses and defunding their radical unconstitutional agenda everywhere.” 

The Foundation’s report stated that the SBA had forgiven a staggering $790 billion in PPP loans to small businesses and non-profits so long as they could prove they used the funds to retain their personnel and stay operational during the pandemic.

According to the Beacon, some unions who received funding based on 501(c)(3) status, which they did not possess, actively advocated for strict lockdown mandates.

The article noted that two branches of the National Education Association, the Michigan Education Association and the Memphis-Shelby County Education Association received more than $6.4 million and $107,000 respectively while applauding or pushing for the closure of schools in March and April of 2020.

As Maxford Nelsen, author of the Freedom Foundation report, put it, “It only adds insult to injury to know that teachers’ unions were getting federal funds all while trying to keep schools closed and that labor groups that engage primarily in political advocacy received taxpayer dollars to do so.” 

Nelsen added that the handing out of money to unqualified organizations “represents a failure on so many levels” while referring to the SBA and its creditors.