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[Back to index of November articles] Diocesan finances: a primer for 2006 By Jim Naughton Comes autumn, and as surely as the leaves will change, your church will ask you for money. By now, if you are a church-going Episcopalian, you've probably heard what one punning priest referred to as "the Sermon on the Amount." Parish stewardship drives are in full swing, and the diocese is planning next year's budget. As that budget depends heavily on the generosity of its congregations, the diocese is taking extra measures to make sure its financial situation is well understood. The Diocese of Washington is one of few in the Episcopal Church that does not require its parishes to contribute a fixed percentage of normal operating income to the diocesan budget. Rather, it relies on the voluntary giving of its congregations. A minimum norm of 10 percent of a parish's normal operating income was adopted unanimously by the Diocesan Convention in 2001, but to date, that figure has been honored primarily in the breech. Congregations contributed an average of 7 percent of their operating income to the diocese last year, a figure nearly eight percentage points below the national average. "We'd really like to see our parishes committing themselves to the 10 percent minimum endorsed by the convention," said Paul E. Cooney, canon to the ordinary. "Increased financial support will assure that we can continue to have vigorous ministries for our youth, with programs such as the upcoming mission trips to help those on the Gulf coast; ministries to college students, where the diocese has launched a new college chaplaincy at Bowie State University and ministry among Spanish-speaking persons, for whom the diocese has brought on board a full-time Latino missioner in 2005. Supporting the diocese also helps assure our ability to help our parishes in their work in ways ranging from help with Web site design to group purchasing programs and cooperative advertising opportunities." The most recently completed diocesan audit, evaluating the 2004 fiscal year, shows a budget of $4.24 million funded primarily by $2.56 million in parish giving and a $1.46 million infusion from the earnings - never, by law, the principal - of the Ruth Gregory Soper Memorial Trust. Other significant sources of support for the operating budget include gifts to the bishop's appeal and a payment from the Protestant Episcopal Cathedral Foundation. The foundation makes an annual contribution to the diocese in recognition of the time that the bishop dedicates to his work as its president and chairman of its board of trustees. The main operating expenditures of the diocese are for staff salary and benefits -approximately $2.6 million, and support to the national church of more than $640,000. Together, these elements account for more than 75 percent of diocesan expenditures. A proposed 2006 budget of $4.52 million was discussed last month at the diocese's annual Regional Assemblies. The Diocesan Council will discuss the budget at its November meeting, and is expected to approve a budget proposal at its meeting in December. The Diocesan Convention will vote on this proposal when it meets in late January. The draft of the budget presented at Regional Assemblies assumed a 5 percent increase in giving from parishes. It proposes a reduction in the rate of increase in the diocese's contribution to the national church, and projects a deficit of $8,000 for 2006. Despite the potential for a budget shortfall, the diocese's financial position remains tenable, if not robust, due to trusts and bequests, reserves of approximately $700,000 and real estate holdings estimated to be worth more than $4 million. The Soper Trust is by far the largest of the diocesan trusts. It is also the most discussed and perhaps the least understood. At the end of 2004, the corpus of the Soper Trust had a value of approximately $27.45 million. The Soper money is administered, under the terms of the trust, by PNC Bank. The diocese cannot touch the principal of the trust, but each year it receives a distribution equal to 5 percent of the average value of the trust during the preceding three years. These earnings may be used for any purpose determined by the Diocesan Council or the diocese's convention. In 1996, when earnings of the Soper Trust first became available, the diocese established a grant program under which income from the trust was used to make grants to congregations and community organizations and to fund construction projects being undertaken by mission congregations. Since 2003, earnings from the trust have supported the diocese's operating budget. Diocesan officials had hoped that an increase in congressional giving would allow them to phase out the use of the Soper Trust in the operating budget over a five-year period. Had congregational giving continued to grow at historic rates, those hopes would have been realized. However, congressional giving has remained relatively flat, and for the third straight year, the diocese will use upwards of $1 million to balance its operating budget. A committee chartered by the Diocesan Council has been reviewing the diocese's policy regarding the use of earnings from the trust with a view toward establishing a consistent policy to guide the use of this legacy in the future. Of the remaining trusts and special purpose funds, some are "restricted," meaning that the terms of the trust or gift indicate the purpose for which the money may be used. Others are classified as "unrestricted." Unrestricted funds are further classified as either "designated" meaning that the diocese, through the action of its convention or council, has dedicated them to a certain purpose, or "discretionary" meaning that the funds are available for any purpose authorized by the council. (See tables at bottom futher details) Several of these funds are available to support the creation of new churches or to supporting existing congregations. These include: the Missionary Development Fund with assets of approximately $1.4 million, an unrestricted fund designated for parish loans and missionary property acquisitions, renovations, repairs and maintenance; the Phillips fund, with assets of approximately $900,000, an unrestricted fund designated in recent years to defray the costs of construction projects for mission congregations; the site purchase fund, with assets of approximately $250,000 for the purchase of land for future churches and the closed parish fund with assets of approximately $915,000. In October, the Diocesan Council made approximately one third of this fund available to the Church of the Epiphany in Forestville. St. John's, Broad Creek and Transfiguration, Silver Spring, have loans from unrestricted diocesan funds. The diocese owns land in Germantown that was to be used for the Holy Spirit mission as well as a small parcel in Prince George's County that had been acquired for the use of Holy Redeemer mission, a congregation that closed in 1999. The Germantown parcel has been appraised at more than $3 million. The diocese estimates the Prince George's parcel to be worth more than $1 million. The diocese also is a co-beneficiary, together with St. Barnabas, Leeland, of a major trust established under the will of W. Seton Belt. The funds in this trust are restricted for use in support of ministries for the aging. The assets of the Seton Belt trust include substantial real estate in Prince George's County. Negotiations are under way for the sale of this property. Diocesan proceeds from the sale would also be restricted to ministries for the aging. "Managing the overall finances of an energetic diocese is - and should be - challenging," Cooney said. "If it were easy, we wouldn't be trying hard enough to carry forth the work that the Gospel gives us to do."
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