Frequently Asked Questions
last updated on: 6th Dec 2010
Financing the mission and ministry of the Diocese of Leicester Frequently Asked Questions
1) What is the parish share?
The parish share is the proportion of the costs of the diocese that your parish is asked to pay to support the mission and ministry of the church in Leicestershire. It is divided up amongst the 237 parishes by a formula that seeks to recognise the needs of some parishes to be supported by others and to apportion cost in a way which is just.
2) What is the parish share used for?
The total income received by the diocese from all the parishes will be about £4.9 million in 2008. The total expenditure budget is £7.7 million, of which clergy related costs total £6.3 million.
3) So the parish share does not even cover the cost of clergy?
No that is correct, parish share as a proportion of the total receipts has fallen over the last 3 years, but fortunately we do receive an increasing proportion of our income from the investments owned by the Diocese and from the Church of England centrally.
4) What is the annual cost budget for all of the parishes and central costs
For 2008 the total budget is £ 7.7 million of which £6.3 million is for clergy stipends, pension costs, ministry training and maintenance of clergy houses. The other large items of expenditure are central administration and governance (£0.4million), grants (£0.4 million) and central church costs (£0.4million).
5) How is all of this paid for?
The largest source of income is the payment of the parish share (£4.9 million), but other significant sources are the Church Commissioners (£1.1 million), income from investments (£0.6 million), income from glebe property (£0.3 million) and fees (£ 0.3 million). More details on the finances are available on the diocesan website.http://www.leicester.anglican.org/diocese-info/finance
6) This all seems rather a lot of money, how do you make sure it is all properly controlled?
The finances are managed by a charitable company called the Diocesan Board of Finance (the DBF), the trustees of which are the members of the Finance Committee. The voting members are the members of Diocesan Synod. Each year the budget is drawn up, in consultation with Bishop’s Council, and presented to Diocesan Synod for amendment and approval. The annual report and accounts are also scrutinised by the audit committee, external auditors and must be approved by Diocesan Synod.
7) I feel our parish share is unfair what can I do about it?
The parish share committee consider carefully the individual situations of each parish or benefice and take account of any exceptional issues before allocating share; it seeks to make just decisions. It hopes that the allocations will be accepted, since if the share is not received from one group, the burden falls more heavily on someone else.
8) What will happen if my parish does not pay its share?
We plan to match income with costs, if there is a shortfall in parish share, this will affect the resources which we can deploy to further the mission and ministry of the church in Leicestershire. Most parishes do pay their share but a few, for a number of reasons, do not. To help struggling parishes a parish giving campaign can be set up by the Funding Team, provided for centrally. There is always a debate to be had about changing the allocation of parish share system, but no system is going to be perfect, which is why there are as many ways of allocating the cost as there are dioceses. The effect of a parish not paying its share is that other parishes have to make up the shortfall or the work of the diocese is diminished.
9) It is thought unfair that in a split benefice with parishes with similar assets that they should pay different “Share” arrangements, which is due to historic payment systems which have been carried over a large number of years.
The way the parish share is divided between parishes and benefices is determined by a number of factors and principles. We are currently trying to decide whether the existing system should be changed. However it is probably impossible to design a system which is seen as fair to all parishes (which is perhaps why every Anglican diocese operates a different system). An initiative called “Gods Gift – Our Response” is being prepared and will be launched early in 2009; it is looking at how we might improve how and why we give to the work of the church.
10) I am concerned by the level of central overhead why does this cost £ 0.4 million?
Within the last 12 months parishes were consulted about what services they needed, as a result some changes have been made. Any enterprise that manages assets, income and expenditure on the scale of the diocese needs professional officers and advisers for example the Diocesan Secretary, the Chief Financial Officer, Parish Funding Directors, Glebe and Housing managers and so on. A number of professional advisers provide services on a pro-bono basis, estimated to be worth £100k. To improve the quality of service and provide value for money we share 12 staff with Coventry Diocese, we also benchmark what we do with other similar dioceses, which confirms that we do have an efficient and cost effective operation.
11) Where do the Bishop and the Cathedral fit into this?
The costs relating to the Bishop and the Cathedral are directly financed by the Church Commissioner’s. The Church Commissioners are the custodians of the historic assets of the Church of England; they also make a significant contribution to diocesan costs as well as being responsible for all pension fund liabilities pre 1998.
12) Clergy pensions are a high percentage of the overall budget, why is this and is there any assistance from the Church Commissioners. Also are we currently making provisions for future pensions or paying for retired clergy.
A big problem has been to know what would be required in future for clergy pensions. Decisions made at general synod in 2007 effectively capped pensions at 40% of stipend. The scheme is what is called a defined benefit scheme which means than any future liability is with the Church Commissioners and the DBF and not the potential pensioner.
This is the reverse of what happens now in virtually all of the schemes open to new members in the commercial world, since the defined benefit schemes are considered too risky and too expensive for most companies. This is quite a complex subject, but there are good reasons why our clergy should have this type of scheme. The rightful provision of the best pensions which could be afforded has driven some of the pressure on parish share in recent years.
The Church Commissioners and the DBF are responsible for fully funding the future cost of pensions; this is assessed at each actuarial valuation (usually every 3 years). If there is a greater liability than currently provided for, this will reduce the funds that the commissioners have available to support the general running costs of dioceses, cathedrals and bishops. Various options are being considered by General Synod to improve what is available for clergy on retirement, particularly the provision of housing.
13) Most people in secular employment make a contribution to their pension fund why do the clergy not do this?
In assessing the level of stipend, the value of the whole of the clergy remuneration package is taken into account and then benchmarked against data from the National Council of Voluntary Organisations. The nature of the stipend is significantly different from a salary. There is also much concern about the ability of clergy to provide for their retirement; therefore after a full debate in 2007 General Synod concluded that it would not be appropriate for clergy to be asked to make any contribution to their pension fund.
14) The salaries of the senior lay employees of the Diocese are significantly higher that those of the parish clergy, how is this justified?
This is sensitive area, in recruiting senior lay staff we seek to strike a balance between what high quality people in secular employment might expect to earn and an element of calling in working for the church. In the recruitment process we seek to test calling as well as competence to find people who will operate effectively and to high standards of professionalism.
15) Do staff at Church House try and save money?
Yes. In recent years, there has been a concerted effort to keep administrative cost increases as low as possible. Here are some examples: Contracted services, like surveying for clergy properties, cleaning, audit, catering, insurance, etc., have been put out to tender for the most competitive rates. Shared posts with Coventry Diocese save us about £90k annually. Increased use of email and the website has substantially reduced postage costs.
16) What about trying to help parishes with their finances?
Part of the 'central' budget that the Diocesan Synod approves each year is specifically designed to provide professional guidance and support for parishes, especially in areas of property, finance and law. Staff are employed to assist with parish funding and fundraising, to advise on charity accounting, to assist parishes in sharing best practice and in providing training on a wide range of topics. Political lobbying is also undertaken on issues like Water Rates, and the Diocesan Secretary has negotiated substantial reductions in parish insurances by promoting a group discount scheme with Ecclesiastical Insurance.
17) Does the Diocese pay all the clergy stipend costs or is there any assistance from the Church Commissioners?
We do receive significant support from the Church Commissioners each year towards costs and in particular clergy stipends – currently the total is about £1 million.
18) There is limited or no information regarding the diocese budget or parish share or a breakdown of how the parish share is used.
The new web site does now give access to the full diocesan accounts. As part of the review of how we share more information in an accessible way, more and more information will be available both electronically and by hard copy, over the next 6 months. The presentation of the budget for 2009 made on 4th September 2008 has been posted on the web site here
19) It would be nice to have a very simple explanation of the operating of the Diocese and how it is funded.
We hope that this question and answer paper together with the PowerPoint presentation “LDBF Financial Analysis" will achieve this.
20) The Diocese has currently a large number of projects or initiatives underway; all of which need funding and staff. Can we really afford them in our cash strapped diocese?
The way we use our human and financial resources is determined by Diocesan Synod and the Bishop’s Council. There is a fine balance to be determined between risk taking for the gospel and prudence in managing of finances. We seek to respond to opportunities whether within parishes, the wider diocese, nationally or internationally through wide consultations, biblical principles and prayer. We recognise the need to communicate better on our projects and initiatives, how we do this is being discussed as part of the giving review.
21) It is widely believed that when the Church Commissioners took over all the assets of the parishes they paid the clergy costs. When they were unable to do this due to poor investment returns the responsibility for this went back to the parishes as Parish Share. Now that the fortunes of the Commissioners have returned why have they not continued with their original responsibilities?
The historic funds of the Church Commissioners are committed to meeting pension fund liabilities and providing support for the church in a number of areas, but principally providing annual funding to dioceses, cathedrals and bishops. The policy for the use for these funds is determined by General Synod, this regularly reviewed and debated. Members of General Synod can submit private members motions and the Diocese can also submit motions, to seek a review of current policies. Improved investment returns since 2003 have meant that we have received greater funds from the church commissioners. Information about the Church Commissioners is available at http://www.cofe.anglican.org/info/yearreview/jun08/chrcms.html