Quarterly reportback on Diocesan Finances Saturday 1st October 2016 AGENDA Welcome Financial position – 2015 audit and first 8 months of 2016 Taxation update Clergy remuneration adjustments for 2017 and budget guidelines New procedures for monthly debits when insufficient funds available General Close
Quarterly reportback on Diocesan Finances Saturday 1st October 2016 AGENDA Welcome Financial position – 2015 and first 8 months of 2016 Taxation update Clergy remuneration adjustments for 2017 and budget guidelines New procedures for monthly debits when insufficient funds available General Close
12 months to 31 December (in Rand) DFB in 2015 12 months to 31 December (in Rand) Income 2015 2014 Difference Parish contributions 6 813 479 6 237 140 576 339 Parishes without clergy 331 129 406 315 -75 186 Special appeals 1 190 803 967 700 223 103 Tax benefit sharing (2009-2014) 483 844 Other income 1 288 587 829 571 459 016 TOTAL INCOME 9 623 998 8 440 726 1 183 272 14.0% Expenses Ministry 2 723 093 2 450 162 272 931 Administration 2 736 588 2 503 823 232 765 Payment to Capetown (Province) 1 702 371 1 593 607 108 764 Post-retirement costs 1 994 732 2 046 209 -51 477 Training 1 210 930 1 155 917 55 013 Other -474 363 -282 738 -191 625 TOTAL EXPENSES 9 893 351 9 466 980 426 371 4.5% Operating deficit -269 353 -1 026 254 756 901 Less interest paid -574 477 -385 810 -188 667 Tax reversed - prior years 187 539 NET LOSS AFTER TAX -656 291 -1 412 064 755 773
Combined DFB and Trustees 2015 DFB Trustees Total HQ Income 9 623 998 1 431 554 11 055 552 Operating expenses 9 893 351 1 859 686 11 753 037 Operating deficit -269 353 -428 132 -697 485 Less interest paid -574 477 -605 243 -1 179 720 Add tax provision not needed 187 539 Net deficit -656 291 -1 033 375 -1 689 666 2014 DFB Trustees Total HQ Income 8 440 726 990 285 9 431 011 Operating expenses 9 466 979 1 069 014 10 535 993 Operating deficit -1 026 253 -78 729 -1 104 982 Less interest paid -385 811 -535 306 -921 117 Tax - Net deficit -1 412 064 -614 035 -2 026 099
Conclusions regarding 2015 DFB reduced its loss from R1.4 million in 2014 to R0.7 million in 2015 – GOOD Trustees increased their loss from R0.6m in 2014 to R1m in 2015 – NOT GOOD Interest paid by HQ rose from R0.9 m to R1.2 million between 2014 and 2015 because of additional losses racked up by both DFB and Trustees, plus delays in recovering tax from parishes. NOT GOOD DFB Income rose far faster (14.5%) than expenses (4.5%) in 2015, enabling the reduction in the deficit. Particularly helpful were the additional contributions of R12,000 per parish and tax benefit sharing between parishes and DFB. GOOD – but not enough to eliminate the deficit for 2015. There is way too much debt in the Diocese: Interest servicing costs of R1.2 million for HQ alone need to be reduced by paying off debt. That was an objective set for 2016 – so how have we done thus far? (See next slides)
2016 Diocesan Finance Board results 8 months to 31 Aug 2016 (in Rand) Income Actual Budget Difference Parish contributions 4 844 530 5 068 691 -224 161 Parishes without clergy 475 000 228 000 247 000 Payroll levy 462 216 426 208 36 008 Other income 1 227 833 1 029 334 198 499 TOTAL INCOME (a) 7 009 579 6 752 233 257 346 Expenses Ministry 1 437 621 1 270 237 -167 384 Administration 1 510 146 1 749 035 238 889 Payment to Capetown (Province) 1 150 024 1 137 333 -12 691 Post-retirement costs 851 137 1 077 600 226 463 Training 811 286 630 027 -181 259 Other 58 960 68 000 9 040 TOTAL OPERATING EXPENSES (b) 5 819 174 5 932 232 113 058 Operating surplus (a) – (b) 1 190 405 820 001 370 404 Less interest paid -409 138 -320 000 -89 138 Less tax provision -123 900 -133 333 9 433 NET SURPLUS AFTER TAX 657 367 366 668 290 699
2016 DIOCESAN TRUSTEES RESULTS 8 months to 31st August 2016 (in Rand) Income 443 546 Operating expenses 187 851 Operating surplus 255 695 Less interest paid -445 197 Net loss -189 502
Combined DFB and Trustees Results for 8 months to 31 August 2016 Total Head Office Income 7 009 579 443 546 7 453 125 Operating expenses 5 819 174 187 851 6 007 025 Operating surplus 1 190 405 255 695 1 446 100 Less interest paid -409 138 -445 197 -854 335 Less tax provision -123 900 Net surplus / deficit 657 367 -189 502 467 865 Without debt, there would have been R854,335 more to spend on ministry in 8 months
Conclusions regarding Jan – Aug 2016 DFB surplus (as planned) is good news, helped by not having to pay a Diocesan Secretary and by donations from organisations. Result was hindered by parishes that ignored the decision to pay 10% of their income to the Diocese in 2016 (Negative impact: R224,000). The R600,000 surplus achieved by DFB decreased the debt by this amount. GOOD NEWS Trustees’ operating surplus of R256,000 became an overall loss of R189,000 because of R445,000 interest burden. Their debt increased. BAD NEWS Combined HQ result for 8 months was a surplus of R467,000 compared to a loss of R1.7 million in 2015 and a loss of R2 million in 2014. GOOD NEWS Warning: We do not yet have a grip on the extent to which any of the R19 million borrowings from the DFB (via the Deposit Fund) may turn out to be irrecoverable, necessitating a provision for bad debt as an hitherto unbudgeted expense. WORRYING Things are going in the right direction – but the pace needs to increase.
Quarterly reportback on Diocesan Finances Saturday 1st October 2016 AGENDA Welcome Financial position – 2015 audit and first 8 months of 2016 Taxation update Clergy remuneration adjustments for 2017 and budget guidelines New procedures for monthly debits when insufficient funds available General Close
Taxation of commercial income R3.8 million paid to SARS at end of July for 2009 – 2014. Now up to date. Most parishes have refunded the Diocese their equitable share – some disputes still need to be ironed out. 2015 tax being calculated now for payment in December 2016. Aim to advise parishes ahead of then of how much each owes, so that errors and disputes can be dealt with before submission to SARS. Parishes will have to pay the Diocese in early December 2016. All parishes MUST provide for tax in both the 2016 financial statements and in 2017 budgets – suggest a simple 28% of net profit from trading activities. Where a Rectory is rented out and a parish pays for priest’s accommodation, the cost of that accommodation can be deducted as an expense – reduces tax. All deductible expenses must be clearly stated in the financial statements. All parishes with taxable income need to pay tax – claims of being unable to pay because of being poor are not accepted by SARS. Budget to use only 72% of trading income to fund the parish (100% less 28% tax = 72% to spend)
Quarterly reportback on Diocesan Finances Saturday 1st October 2016 AGENDA Welcome Financial position – 2015 audit and first 8 months of 2016 Taxation update Clergy remuneration adjustments for 2017 and budget guidelines New procedures for monthly debits when insufficient funds available General Close
Important notes about allowances on next slide Stipends for 2017 Set portion 2017 Increase 2016 Per Month Per Year Pensionable stipend R 13 500 R 162 000 8.7% R 149 040 Pension Fund Parish Contribution - 39% of Stipend (36% in 2015) R 5 265 R 63 180 21.1% R 52 164 Estimated Medical Aid for married couple - no children R 4 200 R 50 400 10.8% R 45 480 Estimated Contribution to Post Retirement Medical Aid R 6 100 R 73 200 10.9% R 66 000 U.I.F Parish Portion R 149 R 1 788 0.2% R 1 785 Group Life Benefit R 80 R 960 0.0% Group Personal Accident R 280 Total Cost to Parish of set portion R 29 294 R 351 808 11.4% R 315 709 Parish Allowances (Recommended) Housing allowance R 3 950 R 47 400 Car Allowance to cover all costs R 4 500 R 54 000 Parish reimbursive allowances - to be paid against receipt of Vouchers Retreat Cost R 3 500 Books R 2 500 Vestments Communication: Landline, cellphone, Internet Important notes about allowances on next slide
Stipends and Allowances 2017 Medical aid: Contribution rates for 2017 not yet known, so the figures given are estimates only (both for current and post-retirement) Medical aid: Actual medical aid expense per parish will depend on how many dependants the clergy person has. Table illustrates a single dependant (spouse) only Increases in “Additional allowances” to be capped at 7%. No increases in “Additional allowances” are permitted where a parish has any of the following: budgeted deficit for 2017, an accumulated deficit, unapproved borrowings from the Deposit Fund or loans from the DFB.
Budget guidelines for 2017 Contributions to Diocese to be a minimum of 10% of total income. Fund parish operations out of 90% of total income. Parishes that have historically paid more than 10% are requested to continue. Budget to spend no more than 72% of any net taxable trading income. Set the remaining 28% aside to pay tax in due course. No nasty surprises. Stipends and allowances were approved by Trustees on 22 September 2016 Insurance premiums for 2017 not known at this stage – awaiting Joint Insurance Fund.
Quarterly reportback on Diocesan Finances Saturday 1st October 2016 AGENDA Welcome Financial position – 2015 audit and first 8 months of 2016 Taxation update Clergy remuneration adjustments for 2017 and budget guidelines New procedures for monthly debits when insufficient funds available General Close
New procedures for monthly debits when insufficient funds available When the payroll is closed, the office will send an email to parishes advising them of the total amount that will be debited to their bank account and advising them of the date of the debit Parishes are expected to ensure that sufficient funds are available on the day of the debit to cover the amount of the debit Should a parish not be in a position to meet the debit, they should immediately advise the office together with details of what plans they have to ensure that the debit is paid in full. If they are not in a position to repay the letter in full by the end of the month, the amount required to eliminate the overdraft will be regarded as an unauthorised loan. The parish will be required to formally request condonation from the Diocesan Finance Board of the unauthorised loan. The formal request should be accompanied by a copy of the latest monthly accounts of the parish together with a detailed plan as to how the parish will repay the loan together with any arrears on previous unauthorised loans