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/ 30 July 2020

Current status of Diocesan finances – in light of COVID-19

The COVID-19 pandemic has caused significant disruption to many people, families and churches across the Diocese.

As the London Diocesan Fund (LDF), we want to be open and transparent with our parishes about:

  • The financial resilience of the LDF, and its reliance on Common Fund
  • The outlook for diocesan finances in 2020 and 2021
  • Our plans to deal with financial deficits that arise
  • Our plans for the Parish Standard Cost (PSC) for 2021
  • The Common Fund plans for 2021.

Thank you for your continued Common Fund contributions, particularly to those parishes that are now willingly using reserves to cover all or part of their contribution. We understand that this is a hugely challenging time financially, as well as in many other ways, for PCCs and if you do need support with your Common Fund now, or going forward, please do contact your Area Finance Adviser.

The bullet points below give some headlines about the current state of the finances of the LDF:

Common Fund income

  • Most importantly, we want to support our churches with the financial challenges they face and be open to discuss the level of their Common Fund giving in 2020.
  • We have been closely monitoring Common Fund receipts. There has been a shortfall each month with June 2020 about 15% down.
  • We are still expecting a significant reduction in Common Fund for the period July to Dec 2020.


Diocesan Expenditure

  • The largest areas of cost for the LDF are clergy stipends, and clergy housing. We are not looking to radically scale back expenditure, but to maintain momentum and to continue to support our parishes well while resources allow.
  • Stipend and salary increases planned for 1 April 2020 have been deferred
  • Other Training and Support costs are being reviewed, and some property costs are currently being deferred.
  • At its peak in May 2020, we furloughed 7 LDF staff and continue to keep this under review.


Overall deficit on the LDF General Fund

  • We want to reassure you that we are sharing the financial pain. The London Diocesan Fund is modelling a ‘reasonable potential likelihood’ deficit in 2020 on its General Fund of the order of approximately £4 million to £5 million.
  • The actual deficit incurred will depend hugely on how well the level of Common Fund can be maintained
  • The significance of the flow of Common Fund, and the extent to which our parishes recover operationally and financially from the COVID-19 crisis, means we could well experience a further General Fund deficit in 2021, and we are beginning some modelling for this, which could require further asset sales.
  • In addition, we have lined-up borrowing facilities to call-on (as and when required), to provide additional cash, which is crucially important for us to be able to weather the uncertainty of the coming years.


In summary

  • We want to support our parishes
  • We are in a resilient financial position, but continue to keep this under close review
  • We want to maintain momentum
  • We want to plan well for the future and are also planning our new Vision & Strategy 2030, which will incorporate our Finances, and our Buildings, suitably adjusted for our evolving assessment of the post-COVID-19 landscape.


A word on the past – 2019

The previous financial year – the penultimate year of Capital Vision 2020 – seems a very long time ago, but we are pleased to report that our accounts received a clean bill of health from our external auditors, and were approved by our trustees in May 2020. A full copy of the signed 2019 financial statements can be viewed here.


2021 Common Fund

In much the same way that parishes are having to think hard about their financial plans for the coming year, we are also reflecting on the options for how we approach Common Fund in 2021, and we plan to set out our agreed approach in the next few months.

However, we want to share with you now some of our current thinking, which includes setting the Parish Standard Cost (PSC) for 2021 at the same level as 2020. We are looking to constrain all costs so that there are no overall increases. The full extent of the Training and Support funded by the PSC is set out here.

We are also contemplating seeking Common Fund contributions from parishes for 2021 at the same levels as were originally pledged for 2020.

We expect there to be a number of parishes who, due to the ongoing impact of COVID-19, will be unable to stretch to this, and the LDF will continue to support those parishes in a tailored way.

We will communicate again in the early autumn to set-out the Common Fund 2021 process more fully, including what the arrangements will be for engaging with Archdeacons, Area Finance Advisers and other Deanery colleagues.

If there are any immediate questions about 2021 please do contact your Area Finance Adviser.

Richard Antcliffe, Outgoing Director of Finance and Operations

Chris Harris, Incoming Director of Finance and Operations

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