‘Recession is not the most important factor’
Times are hard but it was only recently that we began to detect an effect on parish finances. In the last few years the number of parishes paying their Parish Share by regular instalments has risen steadily whilst the percentage of share paid has stabilised at around 95.5%. In 2010 regular payment continued to improve but, despite this, the percentage of share paid fell to 93.8%. It was only late in 2010 that signs emerged of more parishes being in difficulties so we have been exploring the factors involved.
Since 2004 there has been a gratifying reduction in the number of parishes unable to pay their shares in full. From around 120 in 2004 and 2005, the number had fallen to 93 by 2009 and was projected to be only 82 in 2010 had things continued normally, but instead the number rose to 98. Why was this? Was it simply the effect of the recession or were there other influences too?
The number of parishes making share payments is 474 and around 50 of these have long-standing problems, most of which are being addressed, although an increase in the average shortfall of this core group in 2010 presents a further challenge. In addition to this core group, there is a fringe group of fewer than 30 parishes where the situation is more short-term. This group has become smaller over the years but, like the core group, its average shortfall increased in 2010.
As well as the core and fringe groups, we can identify a new entrants group and it is here that the most significant changes seem to have occurred. The numbers of such parishes has declined to around 11 each year, with about half returning to full payment the next year. However, and very significantly, this didn’t apply to the 2009 group of new entrants, as all continued to have difficulties in 2010, and were then joined by a further 20 new entrants.
Contact has been made with many of these parishes and in most cases the recession seems not to have been the most important factor. A few parishes have been in difficulties because their investment income has fallen (similar problem to the plight of savers with interest rates well below inflation rates) but the rest have other issues. Amongst these are:
- exceptional one-off problems or emergencies;
- a change in the pattern of services;
- some church members retiring recently with a knock-on effect on income;
- PCC reserves now depleted to the point where giving has to be addressed; and
- giving has been addressed but time is needed for this to produce fruit.
A further look at the summary accounts submitted by PCC Treasurers each year, for the years 2007 to 2009, suggests that whilst the number of PCCs running with a deficit has little changed (is about 16%), the number with a surplus has declined (now about 43%) and the number with balanced income and expenditure has increased (now about 41%). Surplus situations are becoming balanced situations and are therefore more fragile.
In the present financial climate we must look for such trends to avoid being caught out. Don’t forget that the Parish Finance Office is there to help (01245) 294430.
Canon Don Cardy
1st April 2011