1. TREASURERS’ CONFERENCE
AUTUMN 2018
supporting the mission and ministry
of the Diocese of Rochester

2. Budget 2019

3. WHERE OUR MONEY CAME FROM

4. WHERE THE MONEY IS SPENT

5. The Context New Finance Strategy, agreed by March ‘18 Synod
Increasing costs of compliance
Parish Offers not increasing in absolute terms over last 5 years
Plan to break-even ‘within three years’
Key assumptions re. clergy numbers and Parish Offers
‘Indicative Offers’ – now in a period of consultation

6. Budget ‘19/Forecast ‘18 £M Budget 2019 Forecast 2018 Total expenditure
12.86
12.64
Transfer from DPA (re parsonage repairs)
---
(0.25)
Estimated capitalisation of property costs
Additional reductions in costs
(0.20)
Pension costs provided
(0.77)
Diocesan Expenditure
11.64
11.37
Parish Offers
9.45
9.22*
Other income
1.50
1.55
Transfers
0.09
Diocesan Income
11.04
10.77
Budget Deficit
£0.60M
* Budgeted £9.74M (i.e. £0.52M variance)

7. Budgeted SOFA ‘19 Surpluses due to realised returns on property £M
SOFA 2019B
SOFA 2018F
Unrestricted General Fund
(0.60)
Other Funds
(1.13)
0.30
Realised Property Gains
4.61
5.36
Surplus
2.88
5.06

8. Budgeted Cashflow ‘19
Improving cash-flow due to surplus sales of property £M
Cashflow 2019B
Cashflow 2018F
Cash b/f
9.81
6.71
Operating Surplus/(Deficit)
(0.60)
Pension Deficit Funding
(0.77)
Interest on Pension Deficit
0.09
Net Projects Inflow/(outflow)
(0.85)
(0.92)
Major Property Proceeds
11.59
7.96
Major Property Additions
(4.08)
(2.66)
Closing Cash
15.19
Impact on return of cash movement
0.03
---
Cash C/f
15.22

9. 5 Year Financial Projections
Breakeven achieved in 2021 £M
2019B
2020P
2021P
2022P
2023P
Surplus/(Deficit) on Unrestricted General Fund
(0.58)
(0.49)
----
0.10
0.25

10. Indicative Offers

12. SUPPORT COSTS FOR A PARISH (2019 Values)
Cost of a Full-time Incumbent £41.0K
Diocesan Parish Support Costs per Benefice £9.6K
£50.6K
Average contribution required to cover costs of
Future Ministry, Wider Diocesan Mission and National CofE £13.3K
Net average contribution required to support parishes unable
to cover fully the cost of a Full-time Incumbent and Diocesan
Parish Support Costs £7.1K
Average contribution required from parishes £71.0k

13. CHALLENGES WE FACE!
Understanding and operation of the Parish Pledge system
Local support for the mission of the church
Increasing awareness of the wider context
Diocesan support structures
Supporting Parishes in Mission Planning and Stewardship

14. PROPOSAL FOR INDICATIVE OFFERS
Indicative Offers for each Deanery and Parish
Formula:
Cost of ministry provision (£41K for a full-time incumbent)
plus £9.6K per benefice for Diocesan Parish Support Costs
plus 50% of Residual Net Income
System of appropriate follow up and support
Establishing a ‘Common Fund’
Common Fund … recognising we all share in the responsibilities to fund mission and ministry across the Diocese

15. Indicative Offer calculation diagram

16. Calculation Example - 1
St. Mary’s on its 2017 Parish Return has an income of £110,000 and expenditure of £35,000. It has a full-time incumbent. It is a one parish benefice.
Net Income in 2017 would be £75,000 (i.e. £110,000 less £35,000). This is then inflated by 2.5% for 2 years, i.e. making it £78,797 for 2019.
Its Indicative Offer for 2019 would be £64,699; i.e. (£41, ,600 = £50,600) + £14,099 (50% * (£78,797 - £50,600 = £28,197)).

17. Calculation Example - 2
St. Stephen’s on its 2017 Parish Return has an income of £70,000 and expenditure of £35,000. It has a full-time incumbent. It is a one parish benefice.
Net Income in 2017 would be £35,000 (i.e. £70,000 less £35,000). This is then inflated by 2.5% for 2 years, i.e. making it £36,772 for 2019.
The parish is invited to aspire to pledge at least £50,600.
The first calculation of Indicative Offer however be would set at £36,772.

18. Calculation Example – 2 cont’d
But should income the following year be increased by £10,000 and expenditure remain the same, then all things being equal (i.e. without applying inflation) the Indicative Offer would be increased by £5,000 to £41,772.
Each extra pound of net income, the parish retains 50% (i.e. 50p in the pound) and increases their offer the following year by 50p in the pound.

19. FAQs How does the calculation exactly work?
Why is capital expenditure excluded?
Why are donations to Mission and Charities excluded?
What about income for Preschool and Playgroups?
What is the distinction between restricted and designated funds?
What is the process for 2019 offers?
What if we question our own PCCs calculation?
Why are we being asked to maintain our offer if our Indicative Offer is lower?

20. Timetable Consultation Process 23 June 18 Diocesan Synod
5 Sept Deanery/Parish Consultation
W/c 10 Sept 18 Deanery/Parish Indicative Offers Published
2 Nov 18 Close of consultation
2 Mar Diocesan Synod for Approval

21. Technical Update

22. Funds General Fund (unrestricted) Designated Funds (unrestricted)
Restricted Funds
Endowment Funds
Permanent
Expendable
Funds are the way in which Charity Law requires Charities to track money given by donors or from other sources.
This is so that people can be confident that the money they give is not misused or wasted but used properly.
Encourage giving
4 types of fund
When income is received or money spent the fund must be clearly specified.
Restricted and endowment funds must be shown separately in the annual accounts.

23. General Fund Money given for normal every day church activities
Donor does not specify what if should be used for
Can be used for purposes agreed by the PCC
Examples
Collections at services
General donations
Gift days for general work of parish
Most of the money received by the PCC will fall under this category.
Funds are unrestricted in that they can be used for any purpose to further ministry and mission as agreed by the PCC.
Any income generated on assets in the unrestricted general fund will be unrestricted income.

24. Designated Funds Allocated for a particular purpose by the PCC
Can only be used for that purpose
But can be moved to other general funds if the PCC so decides
Examples
Church Repair Funds (CRF) held by Diocese.
Church Hall Fund
Organ Fund
Money given to the General Fund but PCC decides to allocate funds for a particular purpose in the future.
Still unrestricted so can be moved to other general funds and can either be re-designated or undesignated as the PCC decides.

25. Restricted Funds Funds given to the PCC for a specific purpose.
Can only be used for that purpose.
Income generated will also be restricted to that purpose unless the donor has specified otherwise.
Examples
Collection for a particular purpose.
Fundraising event.
Legacy with a specified purpose.
Restricted by the donor for a particular purpose and cannot be changed unless consent to variation of purpose has been given by the donor.
If an appeal for a particular purpose any funds raised in excess of what is needed must also be used for that purpose or returned to donors.
Get power beforehand to use excess for general/other purposes.
Where special collection sent straight to another charity (e.g. Christian Aid) then not funds of PCC and not included in church accounts.

26. Endowment Funds Funds given for longer term retention Restricted Fund
Capital maybe permanent or expendable
Made with specific instruction for capital and income
Examples
Capital gifts or grants
Legacies
Capital money or asset given to the Church made with specific instruction.
Permanent endowment – only income can be spent as specified by donor. Capital has to be held permanently.
Expendable – donor has authorised spending of the capital. Trustees have discretionary power when to spend but must be used in accordance with donor’s instructions.

27. Governance Code

28. Annual Report and Disclosures
Brief statement explaining use of Governance Code
NB The Essential Trustee CC3
Board effectiveness – if a Trustee has served for more than nine years, their reappointment is explained in the Trustee Report
Diversity – the Board publishes an annual description of what is done to address diversity of the board and performance against diversity objectives

29. Accounting and Reporting
SORP Information Sheet – April 2017
N.B. aggregate disclosure of total amount of donations received, without conditions, from PCC
Bulletin 2 – w.e.f. accounting periods beginning 1 Jan 2019
Little impact on Parish accounting
Comparatives on all financials
Statement of Public Benefit – see RDSBF accounts

30. Digital Giving
Video on how they can be used in your church please click here. 

31. Information

32. Information ACAT Training for new Treasurers and Independent Examiners
Drop-ins re Indicative Offer Calculations
Monday 29 October; Tuesday 30 October
2018 October count into the 2018 Statistics for Mission Return
2018 Parish Return 31 May
Training offered in early 2019
Reconciliation to published Report and Accounts – independently examined

33. Questions