A break even budget enables us to make missional decisions

Chair of the Board of Finance, David Greensmith presented the Board of Finance's 2014 accounts and 2016 budget to the last synod. He highlighted the work still being done to enable us to bring both the operating and capital elements of our finances into neutrality, so that we can make decisions based on Missional need rather than through financial imperatives.

Finance is important, Good stewardship is a biblical principle and it enables us to hear God's call and to do what we think is right not what is expedient. Our Board of Finance works hard to support and resource us in mission and ministry. We aim to be accountable to synod and our diocese and the process of reporting is instrumental for us to acheive that accountability.

The overall financial results for 2014 were mixed. We  set a breakeven budget but were unable to meet it due to non-payment of Parish Share (£126k) and an overspend in the Missional Leadership section (£13k).

Parish Share collection rates are falling; in 2014 they fell to 98.3% from a high of 99.5% in 2013. As Parish Share collection is one of the two biggest financial issues for us, we need to get the rate back up again. The more money we get in from Parish Share, the more money we can give back to the deaneries through the mission and growth fund.

Our revised investment strategy continues to be fruitful. (CCLA Investments £260,882)  The impact of property activities on our balance sheet shows an overall reduction in funds during the year (£1,354,504) however, they enabled us to significantly strengthen our cash position. Continued good management of our assets is essential for our long term financial security.

We set a breakeven budget for 2015. Currently we are falling short of achieving that budget. We are closer to achieving the Missional Leadership budget than at this stage in recent years and continue to mitigate the impact of Parish Share non-payment by reducing Deanery Mission and Growth Funds accordingly. However, we are predicting a revenue deficit of £245,000.

The 2016 budget is due to be 4th in a pattern of breakeven budgets and retains the structural balance established in 2013. Missional Leadership costs continue to be funded through Parish Share and our National Church Allocation, with St James’ House Services funded though DBF income.

The pressure points will continue to be any fall in Parish Share collection rates and missional leadership costs. The 2016 budget continues to be calculated on the equivalent cost of 204 Missional Leadership posts, which falls slightly short of the full requirements of Fit for Mission. In effect, this delays the point at which we can expect to achieve the Missional Leadership budget.

Looking Ahead
Looking ahead to future issues 2017 and beyond, whilst the core structure of our budget will remain balanced, we continue to monitor two areas of potential vulnerability, Pension Scheme deficits and Church Commissioners allocations.

The funding position of both the Clergy pension scheme and LDBF staff pension scheme fluctuate significantly from year to year. Both schemes have been in significant deficit in recent years with significant deficit recovery contributions payable towards both.

Following the work of the Resourcing the Future task group, the basis of the Church Commissioners allocations will change. From 2017 National Church funding will begin to place a greater emphasis on investment rather than subsidy and the basis of calculating distributions will change. We don’t yet know what the exact impact on our total income from the National Church will be, but anticipate that our position will worsen by £100k - £150k in 2017.

We have a determination at all levels to manage our finances well. This is crucial so that we can have a platform to make growth decisions not financial decisions. If we are to be a bigger church making a bigger difference we need strong finances. We need to continue to grow our giving base and maintain the principles of Parish Share so we can continue to love and serve our communities.

The more money we get in from Parish Share, the more money we can give back to the deaneries through the mission and growth fund.