An expensive prep school with a $50 million endowment which the children of former presidents Bill Clinton and Barack Obama attended accepted a $5.2 million loan under the Paycheck Protection Program (PPP), but after Treasury Secretary Steven Mnuchin urged “private schools with significant endowments” to “return” PPP funds, the school refused to do so.
The school, Sidwell Friends, where Chelsea Clinton, Maila Obama and Sasha Obama were educated, receives tens of millions of dollars in tuition every year, but its board of trustees claimed its “fiduciary responsibilities” and “Quakervalues” were enough justification for refusing to return the money, as The Washington Free Beacon reports. The school said it would utilize the money to pay its faculty and staff.
The huge loan, the Beacon noted, “is one of the largest in the second tranche of PPP funds,” as less than 0.07% of the 2.2 million loans handed out since April 27 have reached $5 million.
Sidwell Friends is launching a capital campaign to fund its purchase of properties it has bought in recent years, including 3939 Wisconsin Ave., N.W, which cost $8.2 million, and 3720 Upton St. N.W., which had been a nursing home and whose residents had attempted to block the sale of the property in 2016 for $32.5 million, according to the Free Beacon.
In a section of the Sidwell site labeled “Questions and Answers,” The question is posed: “Given the cost of the Washington Home, how can the School afford to make another major real estate purchase such as 3939 Wisconsin Avenue?” The school answers, “The School will be engaging in a capital campaign to fund the purchase of both properties. Sidwell Friends has sought to purchase 3939 Wisconsin Avenue at various times over the past 70 years, and the Board of Trustees did not want to miss this rare opportunity.”
The Treasury Department issued a document titled, “Paycheck Protection Program Loans:Frequently Asked Questions,” in which it asked the question, “Do businesses owned by large companies with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP loan?”
The Treasury Department answered, “In addition to reviewing applicable affiliation rules to determine eligibility, all borrowers must assess their economic need for a PPP loan under the standard established by the CARES Act and the PPP regulations at the time of the loan application … Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification.”
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