Generating the Common Fund:

Transcription

1 Generating the Common Fund: A new approach for Derby Diocese

2 Contents Foreword from Mark Titterton and Maureen Cole Consultation meeting dates 1: Background to the review Why do we need to review the Common Fund? Where does the money come from? What are the aims of the review group? 2: The two options being considered Option A: Deployment and Generous Giving Option B: Mutually Supported Church Communities 3: Issues to consider Appendix 1. A deeper discussion of issues 2. Worked examples to illustrate the two options 3. The membership of the Review Group 2

3 Foreword As we write to you we are very conscious of the responsibility that lies on all of us to be disciples of Christ. As our two Archbishops have reminded us recently, As disciples of our Risen Lord we are called to be loyal to the inheritance of faith which we have received and open to God s Spirit so that we can be constantly renewed and reformed for the task entrusted to us. Our Diocesan Vision to be Christ s presence in every community is at the forefront of our minds as we start to face into the challenge of the future financial health of Derby Diocese. We have to ensure that we have the finances to support our future mission and ministry so that we grow both spiritually and numerically. Our prayer is that we become a learning, growing, healthy and outward looking diocese that is set up for mission and ministry in future years and for future generations. As we both started in our new roles, just over a year ago, many of you told us that the current process for calculating parish share was complicated and unfair and that you wanted us to review our approach. In addition we all have to face the reality that as disciples of Christ we have a responsibility to be generous givers and we thank God that so many of our parishes and individuals give generously and in some cases sacrificially. In the autumn last year, we set up a review group which is looking to see if there is a better way to allocate our Common Fund (new name for Parish Share) and now is the opportunity for you to have your say. The review group has come up with some suggestions for how we could take a new approach and we would like to encourage as many of you as possible to get involved in reviewing their suggestions and letting us know if you have some other ideas.

4 We are mindful that our diocese is made up of a variety of local communities and parishes, some large, some small, some facing real financial challenges and others who are blessed. We need to ensure that we can provide sufficient ministers and support local mission opportunities that truly enable our Diocese to flourish and grow and we all have to be committed to pay for this. Please do read the pack, come to one of the consultation meetings being held across the Diocese and let us know your views. We look forward to meeting with you over the coming weeks Thank you Mark Titterton Executive Chair Diocesan Board of Finance Maureen Cole Diocesan Secretary Consultation Meetings Meetings start at 6.30pm with refreshments available from 6pm. All welcome. Thursday 19 February: All Saints, Marlpool Tuesday 24 February: St John the Baptist, Tideswell Tuesday 3rd March: St George and St Mary, Gresley Morning meeting: Wednesday 25 February: St John, Tupton. 9.30am, refreshments available from 9am. 4

5 1 Background to the Review In this section: Why do we need to review the Common Fund? Where does the money come from, and how is it spent? What are the aims of the review group? Why do we need to review the Common Fund? The Common Fund is the sum of money collected annually from contributions given by the parishes of the Diocese. This money is primarily used to meet the cost of ministry. In 2015, 8.7 million has been budgeted for Diocesen expenditure with 4.8m coming from Common Fund. This will cover 74% of the cost of ministry with the shortfall of 1.7 m being met from other sources. A further 1.9 m will be spent on parish support and 0.4m will be spent on National Church costs. The total income generated will not be enough to meet the 8.7m expenditure in 2015 and so 0.2m will be transferred from reserves. This will be the third year the Diocese has had to operate a deficit budget. Each parish is asked to make a contribution to The Common Fund. Previously this amount was calculated by the use of a formula. Over the years, the various adjustments for factors have made the calculation complicated and less transparent. Ceiling and floor contributions (maximum and minimum amounts) have been identified as being unfair. Some parishes feel stigmatised because, despite their best efforts, they cannot afford the floor payments. Fluctualtions in share contribution requests have sometimes been steep and unexpected. Thus the current share mechanism is widely regarded as not fit-for-purpose. In summary: the Diocese is not able to raise the funds it needs for mission and ministry and the current share formula for generating the Common Fund has lost the confidence of most parties. The purpose of the review is to devise a solution to this situation. 5

6 Where does the money come from and where does it go? The columns below show the costs and the expected income in This shows how the Common Fund helps pay for the costs of ministry. Note the transfer from reserves to make up for the shortfall in income. How the money is spent Where the money comes from People Costs (91%) 7.9 million The largest part of our budget funds staffing costs including ministers stipends, employee salaries, National Insurance contributions, pension contributions, housing of ministers, training and other staffing costs (removal & resettlement grants etc). These costs amount to over 7.9 million Support, Funding Contributions & Administration (5%) 0.4 million Other than people costs we pay for all other diocesan administrative expenses and support costs. National Church Costs (4%) 0.4million This pays for our contribution to national church costs, including training, the work of Archbishops Council and General Synod. Common Fund (55%) 4.8million In 2015 we have applied a flat rate increase of 2% at deanery level. Our Common Fund is used to meet all the costs shown opposite most of which occur at the same rate per month throughout the year. We ask that parishes make every effort to pay the amount requested. Church Commissioners (18%) 1.6million The church Commissioners allocate 40million to dioceses to pay clergy stipends, housing costs and mission support. We receive 1.6million. The Church Commissioners also pay for bishops stipends, their office and working costs, most cathedral clergy stipends and grants to cathedrals. These costs do not form part of the diocesan budget. Returns on Investments (18%) 1.6million We earn income from investments with much of this income from rents on land and buildings. Other income (7%) 0.6million Other income includes parochial fees. Parochial fee income is the statutory amount that is payable to the Diocesan Board of Finance from the fees for services such as weddings & funerals. Transfer from reserves (2%) 0.2million We are planning for a small transfer from reserves to finance part of the budgeted expenditure. 6

7 What are the aims of the Review Group? The Review Group is made up of a variety of people from a wide cross section of parishes and roles within the Diocese. The group has set out to listen to those who live and work in parishes. The task is more than just improving the mechanics of share collection. The group believes that a carefully designed new approach to gathering the Common Fund could help strengthen trust, appreciation, understanding, mutual support and encourage generous giving. This in turn would be a good and conducive environment for advancing mission. The review group therefore aims to develop an approach to gathering the Common Fund with the following characteristics. Infuses a spirit of generous giving. Giving is appreciated and the gifted money is seen to sustain church ministry and advance developments in mission. Is widely regarded as fair across the deaneries, in affluent and less affluent parishes alike. Is simple and straight forward without numerous adjustments for various factors. Does not include the application of ceiling and floor payments. Is accessible, is easily communicated and understood. Gives deaneries a role in adjusting parish/benefice contributions in the light of local circumstances but does not overburden deaneries with excessive responsibilities. Includes an explicit element for advancement of mission. Gives significant year-on-year stability in the contributions requested, eliminating the current tendency for sudden annual rises in the contributions requested. Is flexible enough to operate successfully in a developing and changing church. Gives parishes, benefices and deaneries incentives to support one another. 7

8 2 The two options being considered The Review Group has considered a number of different types of approaches currently used in other dioceses to generate the Common Fund but has concluded that most would be unsuitable for the Diocese of Derby. We have devised two possible options which we believe do have many of the desirable characteristics needed. These are presented below. Whilst we believe that either of the two options could work for the Diocese they may need further work in order to fully meet our needs. An important part of this consulation process is to allow you to help develop and refine the options or suggest any other approaches we could consider. Option A: Deployment Contribution and Generous Giving This approach is developed around two principles. Parishes take increasing responsibility for the costs of their local ministry, with significant financial help for poorer parishes. Secondly, encourage generous giving from parishes. Ceiling and floor payments would also be removed. This option would work as follows: Step One: Calculate the cost of local ministry The cost of ministry (stipendiary and non-stipendiary) in each parish or benefice would be calculated. The cost of a full time stipendiary minister is approx 47,000 per year. The cost of non-stipendiary ministers is variable and would be calculated individually for each parish. Step Two: Calculate discount bands to reflect deprivation The National Index of Multiple Deprivation (IMD) (2010) data will be used to calculate a series of discount bands. The IMD measures the relative deprivation of neighbourhoods in England. The IMD is calculated from 38 indicators which are grouped to reflect income, employment, health, education, crime, access to services and living environment deprivation. Each parish or benefice would be allocated a discount band. The discount reduces the size of the contribution requested towards the full cost of the locally deployed ministers. Discounts would be automatically applied to the parishes and benefices 8

9 which qualify. The cost of the discounting would be met from a Discounting and Mission Development Fund sourced from the annual grant given by the Church Commissioners. The Business Committee would decide the size of the fund and the thresholds for the discount bands. These parameters could be fixed for several years to give relative stability. Step Three: Issue invites requesting contributions for deployed clergy Invitations are issued to each deanery requesting a contribution to cover the cost of the deployed clergy (stipendiary and non-stipendiary). The invitation would show the contribution expected from each parish or benefice including any discounts. There is scope for cross-deanery support at this point. Step four: Issue invitation to give generously All parishes, benefices and deaneries receive a second invitation to give to a mission fund. This fund would be administered centrally and used for a range of local mission opportunities across the diocese. Relatively affluent and large parishes or benefices, where the costs of ministry deployment are less than the current ceiling contributions, would be well placed to respond generously. Poorer and smaller parishes may not be able to afford to respond to this second invitation, but would have the satisfaction of having contributed to the costs of their local ministry. What happens if the calculated contribution does not cover local ministry costs? If there are parishes or benefices in a deanery which are not able to cover the costs of the local ministry then the deanery would be expected to conduct a review and offer help to strengthen the position. The deanery may wish to consider revising the deployment of the ministers. Such reviews would be periodic as decided by the deanery. Approach A advantages Simple concept Parishioners can see direct benefits of the funding they contribute to Fair to both wealthy and poorer parishes Wealthy churches are able to give generously Supports missional growth Has flexibilty to function in the changing church 9

10 Option B: Mutually supporting church communities This option combines the ideas of contributions based on an ability to pay and encouraging church communities to support one another missionally. There are two components to this approach. The first is a simple mechanism to determine the fraction of the Common Fund that each parish, benefice and deanery will be requested to contribute. The second is the creation of a local Deanery Mission Fund for the purpose of supporting parishes within the deanery. The funds, which may be topped-up by the Board of Finance, may be used by deaneries for mission related events, projects or Fresh Expressions. Step One: Calculate the share points The first step is ability to contribute. This would be worked out using the following calculation made up of two components. The first is the size of the congregation [C] based on the standard data which is collected annually by the Archbishops Council. The electoral roll or the population size of the parish would not be included as these figures are sometimes misleading. The second is 5% of the average Annual Disposable Income [ADI] in the parish from the most recent available census [currently 2001]. This element is used so that the mechanism allows more affluent communities to support more impoverished communities in the diocese. The ADI is divided by 100 to give an indicator which will generally range from 1.0 to Calculate the Share Points [SP] for the parish: C x [ADI/100] = SP The share points may be aggregated to arrive at totals for both the benefices and the deanery. Step two: Calculate the share fraction and the contribution The Parish Support Office adds together the total share points for all the parishes in the diocese and then calculates the share fraction that each parish, benefice and deanery represents. The amount requested from each parish is the product of the share fraction and the budgeted Common Fund. Parish Contribution ( ) = (Individual Parish SP/ Total Diocese SP) x Common Fund total. Step three: The deanery consideration The request for the contribution would be sent to each deanery but would indicate the calculated contributions expected from each parish and benefice. The deanery would be able to make any adjustments it thought appropriate to take account of local 10

11 factors. It is possible that the deaneries could ask parishes or benefices to contribute amounts which are slightly different from the calculated figures. Step four: The creation of Deanery Mission Funds The next step is mutual support between Christian communities. Each deanery would be encouraged to raise a Deanery Mission Fund for the purpose of pursuing mission-related activities. This fund is separate from the Common Fund. The fund which will be built by voluntary giving in the parishes of each deanery will enable parishes to work together towards agreed mission objectives. Deaneries would be able to decide whether to use the funds for special events, for mission-based projects or to support Fresh Expressions. It is proposed that money from Deanery Mission Funds spent in pursuit of approved Christian mission activities would also be eligiable for grants from the Board of Finance. benefit from more income. If numbers decrease, the loss of income could be mitigated by the deanery level adjustment. Each new fixed share period would open with a transition year to moderate the suddenness of any changes. Approach B advantages Easy to understand Ability to pay is seen as a fair basis for calculating contributions Simple calculation and no adjustments Encourages responsibility and appropriate action Gives deaneries new opportunity to develop mission Has the flexibility to operate in the changing church See Appendix 2 for a worked example of the calculation of the parish contribution. Fixing share fractions It is proposed to fix the share fractions for three, four or five years to provide stability. The Common Fund would then be restricted to an agreed percentage rise over the period of fixed share. This stability would enable parishes and deaneries to plan their finances with more confidence. If congregational numbers increase then parishes will 11

12 3 Issues to address The Review Group has identified some issues which could relate to each approach. These are outlined below. A fuller discussion is provided in Appendix 1. Option A 1The use of Indices of Multiple Deprivation may not be a reliable way of identifying the parishes which should be given a discount or subsidy towards their costs of ministerial deployment. The use of the index alone could be criticised as a blunt instrument for identifying struggling parishes which qualify for discount because it fails to take account of the size of congregations. The solution may be to use discretion in the application of the discount bands or to apply discretionary deanery or diocesan relief in the case of small parishes. 2 There is a risk that the amount raised for the Common Fund could fall, resulting in a larger diocesan deficit. This risk could be mitigated by ministers explaining to parishioners the level of giving which would make a positive difference. There is also the possibility that the removal of the payment cap could result in larger revenues than previously. 3 There is a risk that the income to the Common Fund fluctuates year-on-year because affluent parishes are torn between giving generously and proceeding with parish projects strongly favoured by parishioners. This could be mitigated by prudent financial planning and leadership by the minister. Good communications between parishes and parish support officers will be very important. 4 There is a risk that by placing emphasis on covering the costs of the local ministry, that parishes and benefices shed ministers in order to lessen cost. Any change in the ministry should be agreed at deanery and Parish Support level. Ultimately the decision rests with the Bishop of Derby. 5 The Discounting and Mission Development Fund could be entirely consumed by providing subsidies for deaneries with very little remaining for mission development. The Business Committee could separate the two functions and decide exactly how much should be spent on discounting each year. 6 Poorer parishes or benefices which are given discounts could feel stigmatised by their deprived and subsidised status. There is no reason why parishes should feel stigmatised if they are simply treated fairly. With discounts in place parishes may not need to ask for financial assistance. 12

13 Option B 1 Counting congregational numbers is notoriously variable and inaccurate data would adversely affect the calculations of share. There is also a theoretical risk of fabricated figures. It is important to use consistent data in which parishes have reasonable confidence. The official data submitted to the Archbishops Council is appropriate. It may be advisable to have a process of verification of attendance information conducted within the deaneries. 2 The calculation is very simple so is it fair? The existing formula has numerous adjustments at different levels to make it more fair but in fact each adjustment has potential weaknesses. The Review Group have avoided having a series of adjustments as these tend to make the calculation less transparent. 3 The removal of ceiling [maximum] payments might be seen by some as penalising large relatively affluent parishes. 4 The floor [minimum] payments ensured that all parishes contributed at least 50% of ministry cost. Is it not right that they should make [at least] this contribution? The floor payments were often, in practice, unaffordable and therefore not made. There has to be a more constructive and sensitive approach to meeting the costs of ministry. 5 This proposed approach is inflexible and would not adapt to a changing church. The approach is comfortable with growth [and any decline] in congregational numbers and it can also adapt to changes in ministerial configuration. 6 Modelling of this approach indicates that more affluent parishes would be asked to contribute more. They may be reluctant to do so. The contributions requested from every parish or benefice would be affordable for that parish or benefice. More affluent parishes would be supporting more impoverished parishes. The ceiling payments represent an artificial barrier to parishes making contributions on the basis of ability to pay. It does not make sense to continue ceiling payments. However, transitional arrangements would be necessary to mitigate any sudden increases. 13

14 General points on gathering the Common Fund How is the contribution paid? The Board of Finance prefers regular phased payment of the share by standing order paid monthly through the year in order to pay clergy stipends and monthly pension contributions, but this is not a requirement. If a parish or benefice chooses to pay its share in full at the beginning of the year, it will be entitled to a discount. This might vary from one year to the next. What happens if the calculated contribution is a low proportion of ministry costs? Despite their best efforts, not all parishes are able to cover the costs of local ministry. Parishes with small congregations in impoverished areas have special difficulties. In some instances the contribution is less than 50% of ministry cost. A deanery may decide that some shortfall in the income towards the cost of ministry is tolerable for the continued support of a small parish community. However, there comes a point at which income is so low that a review is required. It is proposed that when the proportion of ministerial costs covered falls below a threshold of 75%, or a higher figure set by the deanery, this prompts a periodic deanery review. It may be advisable to reconfigure the local ministry arrangements or other actions may be appropriate. The review would commonly culminate in a three year plan with milestones. A parish which achieves a substantially improved position following completion of an action plan should be rewarded. This might be effected through the Deanery Mission Fund. What happens if the contribution is underpaid? Both approaches employ the idea of contributions varying in accordance to the ability to pay. The contributions requested should be affordable and so underpayment should become exceptional. If an issue arises in a parish, the minister is recommended to inform the Area Dean and Parish Resources Officer and ask for assistance. Some fabric funds are available from the Diocese. A parish or benefice which has underpaid its share without a reason acceptable to the deanery and Diocese would not normally be eligible for deanery mission funding. Repeated underpayment by a parish is not a tolerable situation and should normally prompt a review of the financial circumstances and implementation of a supportive action plan. Alternative ideas You may have an alternative idea that you can share with the Review Group. 14

15 Appendix 1 Option A 1 The limited suitability of the Index of Multiple Deprivation (IMD) By not taking into account congregational numbers, the use of the Index of Multiple Deprivation could be considered unreliable in identifying the parishes or benefices which need a discounted contribution. Theoretically, some large parishes could qualify for a discount which they do not need while some smaller parishes could fail to qualify because their area is not classified as deprived. Response: This could be addressed by exercising discretion in the application of the discount bands. The risk is further mitigated by the intention to manage the discount at deanery level. This would enable the deanery to consider the contributions and the deployment costs over a wider area. 2. A possible fall in the amount collected for the Common Fund We expect parishes to respond well to the request for contributions towards the cost of local ministry. However, the amount given by more affluent parishes in response to the invitation to give generously is much less predictable. There is a risk that collectively the deaneries give less than they do currently in which case the deficit would become larger. Response: The removal of the current formula asking for large contributions will help to create an environment which is conducive to generous giving. There is every reasonable expectation that affluent parishes would give generously but of course this cannot be guaranteed. 3. The contributions to the Common Fund fluctuate from year-to-year Annual contributions to the Common Fund could vary significantly because some parishes are torn between giving generously and proceeding with an important parish project favoured by parishioners. A fluctuating and unpredictable income would be problematic for the Diocesan Board of Finance. Response: This problem might be mitigated by careful financial planning which balances the respective needs of the Diocese and the parish. The parish would wish to be seen as contributing generously to a fund which benefits the wider deanery and Diocese. 15

16 4. An over-preoccupation with the costs of ministry could lead to loss of clergy If too much importance is placed on covering the costs of the local ministry, parishes and benefices might decide to lose a minister simply to lessen the deployment charge. This situation has been reported in another Midlands diocese (2014). Response: Any changes to the number of ministers will be considered and agreed by the Deanery and the Diocese. The Diocese does not expect every parish to cover the full cost of the local ministry. There is an important distinction to be made between necessary improvement in efficiency and removal of a minister for no other purpose than to reduce costs. 5.The Discounting and Mission Development Fund may just be spent on discounts The Discounting and Mission Development Fund could become exhausted through providing discounts for deaneries in accordance with the calculated discount bands. This would leave little or no money for mission development. Response: This would be a real risk if the amount to be spent on discounting is unspecified. The risk could be avoided if the Business Committee separates the two components and fixes the amount to be spent on each function. This might be a desirable refinement of the proposal. 6.Poor parishes which are subsidised could feel stigmatised Poorer parishes or benefices which are given discounts might feel stigmatised by their deprived and subsidised category. This feeling of stigmatisation may sharpen if the parish become the focus of regular annual reviews of the management of its ministry. Response: The use of discount bands avoids any need for parishes and benefices to have to ask for financial assistance. However, all parishes should be encouraged and supported to meet as much of their costs as possible. This may sometimes lead to reconfiguration of the local ministerial team to help make the costs more attainable. Option B 1. The problem of reporting congregational numbers consistently Inaccurate or inconsistent data would undermine the value of calculating the share. There is also a theoretical risk of fabricated figures. Response: It can be difficult to make an accurate physical count. Some churches report that many of their parishioners prefer to attend services in the week rather than on Sundays. There are also special occasions which may swell numbers and skew the figures. There is also the matter of how to treat Fresh 16

17 Expressions. It is proposed to use the official statistical data which are submitted annually to the Archbishops Council. It would probably be advisable to have a verification process which is conducted within the deaneries. 2 The calculation is very simple so is it fair? The formula used in Approach B is very simple indeed. It only uses the official congregation number and the census data on disposable incomes. This raises the question as to whether such a simple formula is a fair indicator of the parish s ability to contribute to the Common Fund. In the past it has been deemed necessary to make a number of adjustments to ensure fairness. Response: It is felt quite strongly that this formula is a fair reflection of the ability to contribute. The proposal could have included adjustments for a range of factors such as the number of church buildings, the cost of insurance and the distance to be travelled by the minister- all used in the existing formula. The list of factors could also have been extended to include the cost of upkeep of rural churchyards. In practice each individual factor can be complicated to assess and the inclusion of adjustments could introduce unfairness. We have concluded that it is best to remove the formulaic adjustments and keep the formula simple and transparent. Deaneries can make manual adjustments to accommodate parish circumstances. 3. The discontinuation of ceiling payments The removal of ceiling [maximum] payments could be regarded as a penalty levied on large relatively affluent parishes. Demanding high contribution payments could adversely affect and weaken flourishing parishes. This would compromise their ability to assist poorer parishes. Response: The application of ceiling payments is inconsistent with the idea of ability to pay. Ceiling payments are designed to protect parishes from the full effects of a formula. This seems artificial and unwarranted. When other parishes have experienced a 10% or 15% increase in contributions, those parishes with a ceiling have experienced a very small increase which some might regard as unfair, Since the proposed formula is designed to reflect affordability, there is no reason for setting an upper limit to contributions. Under Option B, the higher contributions requested of wealthy parishes would be just as affordable as the lower contributions requested from poorer parishes. Ceiling payments would not operate in either option. 4. The discontinuation of floor [minimum] payments The existing floor [minimum] payments ensure that all parishes contribute at least 50% of ministry cost. Is it not right that they should make [at least] this much contribution? 17

18 Response: Floor payments are ineffective as they are unaffordable for parishes concerned. This only risks stigmatising the parish for failing to pay the requested contributions. This gives rise to a demoralised parish with unhappy parishioners. It is felt that requested payments should be affordable and the proposed formula will deliver this. A parish which is only making a modest contribution towards the costs of ministry should review its situation and develop a plan to strengthen the position. This is more constructive than demanding unaffordable contributions. 5. The approach may be inflexible Some have suggested that the formulaic Option B is inflexible and would not be suitable for a changing church. Response: This is not the case. The periods of fixed share provide an opportunity for parishes to grow without risk of the additional income being lost through contribution. This is a very real incentive to progress mission. If there are lower congregational numbers in a parish with corresponding reduced income, there is the potential for the deanery to balance the figures from elsewhere in the deanery. This is the significance of the mutually supporting church communities. The approach can also easily adjust for different configurations of ministerial teams. Further information 1. What does modelling of the two options show? The adoption of a new approach, either A or B, will result in changes to the contributions requested from parishes and benefices. Has any insight been gained from modelling the two options? Response: The Review Group believes that the primary consideration needs to be that parishes and deaneries are convinced that the correct option is chosen and that the principles behind it are fair. It would therefore be unhelpful to attempt to present any detailed analysis of the modelling undertaken so far but it is clear that both options A and B, are capable of appropriate recognition of poorer parishes and benefices. In all parishes or benefices the contribution requested would be considered affordable in the context of the size of congregation and the average disposable income. 18

19 Appendix 2: Worked examples to illustrate the two options The examples presented are only illustrative and are not taken from any actual parishes. Option A: Calculating the deployment contribution 1. Calculate the cost of local ministry The cost of ministry in each parish or benefice would be calculated and would include stipendiary and non-stipendiary ministers. In 2015 the cost of a full time stipendiary minister is 46,450 per year. The cost of non-stipendiary ministers is variable and is calculated separately for each individual parish. The number is then expressed as Full Time Equivalents (FTE). In this example a parish has one stipendiary minister and two visiting nonstipendiary ministers who come to a total of 0.12 FTE over the year. The cost of the local ministerial staff is calculated as follows: Full time stipendiary minister (1.0) plus non-stipendiary ministers (0.12) = 1.12 FTE The cost of local ministry is 1.12 FTE x 46,450 = 52, Devise discount bands to reflect relative deprivation The Index of Multiple Deprivation (IMD) is used to calculate a series of discount bands. Each area has an IMD score which is expressed very precisely, for example, The IMD score for the area is divided by the population of the same area to give a weighted average IMD score. In the Diocese of Derby, the weighted average IMD scores range from 0 to 55. This range has been subdivided into five bands with Band 1 denoting the highest deprivation and Band 5 the lowest deprivation. The width of each band in terms of IMD score is not equal. Band 1 is broad; the other bands are narrower. Each band has been allocated a discount value. The bands are numbered in order of decreasing deprivation from 56% (Band 1) to 0% (Band 5) in 14% steps. The scores used to define the bands and the discount values applied to each band could be changed. 19

20 Index of Multi Deprivation (IMD) Score Banding Range Band From To ` So, for example, a benefice with a IMD score of 15 comes into Band 3 and is automatically given a discount of 28% from the full cost of the local ministry. A benefice with an IMD score of 35 comes into Band 1 and is given a discount of 56% from the full cost of ministry. Fifty-six percent is the largest discount given. 3. Apply the discount due to each parish or benefice The full cost of the local ministry calculated in step one is reduced by the percentage assigned to the discount band which applies to the parish or benefice. In our example of a parish where the cost of ministry is 52,024 [from step 1] and Band 1 with 56% discount applies. Full cost of local ministry = 52,024 Band 1 Discount given (56%)= 29,134 Discounted cost [difference] = 22,890 The contribution requested from the parish is therefore 22,890. An observation regarding the discount bands The discount bands have been carefully designed to provide significant assistance for parishes or benefices located in areas of deprivation. One disadvantage of discount bands is that the discount relief is in 14% steps. If a benefice happens to have a score on the borderline between two discount bands, it could be argued that that the discount given is a matter of coincidence in which case the benefice might feel fortunate or unfortunate depending on which side of the borderline it is placed. A solution to this is to devise a formula which gives one continuous range of discounts rather than the stepped discounts which are currently described. Option B: Mutually Supporting Church Communities 1. Calculate the parish share points The official statistics submitted to the Archbishops Councils will be used to work out the size of the congregation (C). C ranges from 4 to 278 with typical congregations ranging from 35 to 100. We will take 75 as an example. The second figure is 5% of the average Annual Disposable Income [ADI] in the parish from the most recent available 20

21 census [currently 2001]. The ADI ranges from 212 to 470 per annum across the Diocese. We will take 295 as an example. Calculate the share points [SP] for the parish: C x [ADI/100] = SP Example parish 1: 75 x [295/100] = The share points are aggregated to arrive at totals for benefices, deaneries and the entire Diocese. 2. Calculate the share fraction and the contribution The amount requested from each parish is the product of the share fraction and the budgeted Common Fund. The total of share points for the Diocese (Total Diocese SP) is approximately 35,000. The Common Fund budget for 2015 is 5,022,450 Example parish 2: If the parish had been smaller with a congregation of 20 with an average Annual Disposable Income of 235 per annum Parish Share Points = 20 x 2.35 = 47 (47/35,000) x 5,022,450 = 6,744 Example parish 3: If the parish had been larger with a congregation of 175 with an average Annual Disposable Income of 380 per annum Parish Share Points = 175 x 3.8 = 665 (665/35,000) x 5,022,450 = 95,427 The deanery may decide to make minor adjustments to the calculated amounts for the parishes within the Deanery in order to address some local factors. (Individual Parish SP/ Total Diocese SP) x Common Fund = Parish Contribution Example parish 1: (221.25/35,000) x 5,022,450 = Parish Contribution = 31,749 21

22 Appendix 3: Membership of the Common Fund Review Group Paul H Bridges MBE, Chairman The Revd Canon Matt Barnes, Rural Dean, Chesterfield Maureen Cole, Diocesan Secretary Jack Cooper, Diocesan Treasurer Tom Crooks, Treasurer, Hathersage *The Revd Margaret Jacques, Rector of Morton & Stonebroom with Shirland *The Revd Andy Larkin, Rural Dean, Ashbourne John Sinclair, Treasurer, St Alkmunds, Derby Gordon Thornhill MBE, Lay Chair, Longford The Revd Canon David Truby, Rural Dean, Wirksworth The Ven. Christine Wilson, Archdeacon of Chesterfield * Corresponding members Officer in attendance: David Meredith, Director of Finance For information and consultation: Bill Druce, Vice Chair of The Diocesan Board of Finance Secretary to the Review Group: Kat Alldread 22

23 Notes 23

24 JAN1502