REPORT AND FINANCIAL STATEMENTS for the year ended 31st December 2011 Scottish Charity Number: SC011353
CONSOLIDATED REPORT AND FINANCIAL STATEMENTS Reference and Administrative Details Scottish Charity Number: SC011353 Principal Office 121 George Street Edinburgh EH2 4YN Website www.churchofscotland.org.uk Bankers The Royal Bank of Scotland plc The Bank of Scotland 36 St Andrew Square The Mound Edinburgh Edinburgh EH2 2YB EH1 1YZ Bank Hapoalim Mercantile Discount Bank Ltd Hasharon Business Centre Branch 646 45 Hamelach Street 1 Agron Netanya 42505 Jerusalem 91710 Israel Israel Mercantile Discount Bank Ltd PO Box 1292 103 Allenby Street Tel Aviv 61012 Israel Independent Auditors PricewaterhouseCoopers LLP (Group Auditors) PricewaterhouseCoopers Chartered Accountants and Statutory Auditors (Auditors of Israeli Subsidiaries) 141 Bothwell Street Shufat Street 5 Glasgow East Jerusalem G2 7EQ Investments The Church of Scotland Investors Trust 121 George Street Edinburgh EH2 4YN Secretary to the Council of Assembly Mrs Pauline Weibye MA, DPA, Chartered FCIPD Solicitor of the Church Mrs Janette S Wilson LLB NP General Treasurer Mr Iain W Grimmond BAcc, CA Principal Clerk Rev John Chalmers BD, CPS
CONSOLIDATED REPORT AND FINANCIAL STATEMENTS Reference and Administrative Details (continued) Council of Assembly Members of the Council of Assembly Voting Members and Charity Trustees Rev Alan Greig, Convener Rev Grant Barclay, Vice Convener (from May 2011) Professor Peter Brand, Vice-Convener (until May 2011) Rev Richard Baxter Mrs Ann Bowie Mr Stephen Brown Rev David Cameron (until May 2011) Rev Donald Campbell (from May 2011) Mr Donald Carmichael Miss Catherine Coull (from May 2011) Rev Neil Dougall (from May 2011) Miss Elizabeth Fox (from May 2011) Rev Graham Finch (until May 2011) Rev Ian Galloway Rev Sydney Graham Rev Ann Inglis Mr Iain Johnston (from May 2011) Rev Mark Johnstone (resigned 27 March 2012) Rev Gordon Kennedy (until May 2011) Very Rev Dr Andrew McLellan Mr Murdo Macmillan (from February 2011) Rev Thom Riddell (until May 2011) Rev Christopher Wallace Non-Voting Members Mrs Pauline Weibye Mr Iain Grimmond Mrs Janette Wilson Rev John Chalmers Rev Ewan Aitken Rev Dr Martin Scott Secretary to the Council of Assembly General Treasurer Solicitor of the Church Principal Clerk of the General Assembly Secretary, Church and Society Council Secretary, Ministries Council Dr Steve Mallon Secretary, Mission and Discipleship Council (resigned 9 March 2012) Mr Peter Bailey Rev Ian Alexander Secretary, Social Care Council Secretary, World Mission Council
CONSOLIDATED REPORT AND FINANCIAL STATEMENTS Contents Pages Trustees Report 1 16 Independent Auditors Report 17-18 Consolidated Statement of Financial Activities 19 Charity Statement of Financial Activities 20 Balance Sheets 21 Consolidated Cash Flow Statement 22 Notes to the Financial Statements 23-43
TRUSTEES REPORT ON THE FINANCIAL STATEMENTS The Trustees are pleased to present their report together with the audited consolidated financial statements of the Church of Scotland Unincorporated Councils and Committees ( the Charity ). The previous pages regarding Reference and Administrative Details form part of this report. Structure, Governance and Management Constitution The Church of Scotland, part of the one Holy, Catholic and Apostolic Church, is the National Church in Scotland, recognised by the State but independent in spiritual matters. In one sense, its Constitution cannot be written down in precise terms, as the Church has built up, stage by stage, upon the foundation of the apostles and prophets, Jesus Christ Himself being the chief corner-stone (Ephesians 2:20). In another sense, the Church's Constitution may be said to be set out in certain important instruments. These include the Articles Declaratory of the Constitution of the Church of Scotland in Matters Spiritual (1921), the Act anent Spiritual Independence of the Church (1906) and the Act of Union (1929). Organisation Conciliar System The distinctive feature of the Presbyterian system is that the Church s authority, received from the Lord Jesus Christ, is vested in Church courts and not in individuals. It is a conciliar system, in which legislative, judicial and administrative decisions, and supervisory actions, are taken corporately. General Assembly The Supreme Court is the General Assembly, which legislates for the whole Church. It is the final court of appeal, although in some matters it is the court of the first instance. The General Assembly, which meets each May, comprises around 850 commissioners appointed by Presbyteries and made up of ministers, elders and members of the diaconate. In addition to its legal function, the General Assembly has an administrative role. During the Assembly, the five Unincorporated Councils, the Standing Committees and any Special Committees or Commissions present their annual reports with proposals known as deliverances which are accepted, rejected or amended by the Assembly. The General Assembly is responsible for approving the appointment of certain key staff of the Unincorporated Councils and Committees, namely the Secretary to the Council of Assembly, the Principal Clerk, the Depute Clerk, the Solicitor of the Church and the General Treasurer. Presbyteries The next highest court is the Presbytery. The Presbytery is responsible for an area made up of a number of parishes, served by congregations. There are 43 Presbyteries in Scotland, plus the Presbytery of England, the Presbytery of Europe and the Presbytery of Jerusalem. Presbyteries are required to supervise and monitor congregations compliance with Church and civil law, including the annual attestation of their accounts. Congregations The lowest court is the Kirk Session of each congregation of the Church. The Kirk Session is responsible for spiritual matters. Most congregations have a separate Financial Board (a Congregational Board or a Deacons Court or a Committee of Management) but in some congregations, the Kirk Session is also responsible for temporal and financial matters. The number of congregations in the latter category is increasing, following upon legislation passed by the General Assembly of 2003, enabling congregations to adopt a Unitary Constitution. Congregations are separate legal entities with their own charity numbers and are not controlled by the Unincorporated Councils and Committees and therefore not consolidated in these financial statements. Unincorporated Councils and Committees The Unincorporated Councils and Committees, appointed by and responsible to the General Assembly, support local congregations in carrying out pastoral care, evangelism and Christian education work, and manage the Church s direct social care service throughout Scotland. They also act as a channel for expressing practical and vocal support at a national, international and ecumenical level, and ensure that legal requirements are being met by the whole organisation. The Councils and Committees employ permanent staff to carry out their remits in accordance with policy decisions taken by the General Assembly. Each Council employs a Council Secretary who is responsible for delivering the Council s remit. Committees and working groups of the Councils focus their expertise on distinctive areas of work and help to shape future policy. The five Councils are as follows: 1
TRUSTEES REPORT ON THE FINANCIAL STATEMENTS Structure, Governance & Management (continued) Organisation (continued) Church and Society Council - engaging in the national, political and social issues affecting Scotland and the world today Ministries Council - supporting a variety of ministries for the Church, from the first stirring of a 'call' through to retirement Mission and Discipleship Council promoting an overall focus for mission and developing resources for congregations Social Care Council offering services in Christ's name and specialist resources to further the caring work of the Church to people in need World Mission Council - working internationally to share the gospel, support theological education and encourage holistic ministry Council of Assembly The Council of Assembly of the Church of Scotland was set up by the General Assembly of 2004 to fulfil an executive function in setting priorities among the Councils and Committees of the Church in line with agreed strategy. The Council of Assembly has the authority to take necessary administrative decisions between General Assemblies, to co-ordinate the work of the Church s central administration and to take decisions with regard to resources, finances and staffing. The Council also has responsibility for the annual submission to the General Assembly of the audited Report and Financial Statements of the Unincorporated Councils and Committees. Voting members of the Council of Assembly are the Convener, Vice-Convener and ten members appointed by the General Assembly on the Report of the Nomination Committee and the Conveners of the five Councils and the Panel on Review and Reform. These voting members were designated as the charity trustees of the Unincorporated Councils and Committees by the General Assembly of 2010. Secretaries of the five Councils, the Principal Clerk, the Secretary to the Council of Assembly, the General Treasurer and the Solicitor of the Church are members but with no rights to vote or make a motion. The Ecumenical Relations Officer, the Head of Communications and the Head of Human Resources and Information Technology also have the right to attend meetings with no rights to vote or make a motion. The Council of Assembly meets nine times per annum and receives reports from all of the Councils, together with reports from its sub-groups, the Staffing Group, the Finance Group, the Communications Group and the Governance Group. Audit Committee minutes are submitted to the Council for information. Conveners of Standing Committees are invited once a year to deliver reports on their work. Minutes of the Council of Assembly and the five Councils are published on the Church of Scotland website. The Audit Committee works with the external auditors of the Unincorporated Councils and Committees to ensure proper financial reporting practice and compliance with charity accounting requirements. It considers any matters raised by the external auditors for the attention of the Trustees and management. It is also responsible for reviewing and approving the annual internal audit plan and monitoring the findings of the internal auditors. The Committee is constituted to ensure its independence. Wider Network of Church of Scotland Organisations There are a number of Statutory Corporations, established by Private Act of Parliament, which provide further support to congregations and to the Unincorporated Councils and Committees. These are the Church of Scotland General Trustees, dealing with property matters and certain endowment funds, the Church of Scotland Investors Trust, providing investment facilities and the Church of Scotland Trust which holds titles to properties outwith Scotland and acts as Trustee for a number of third party trusts. Appointment, Induction and Training of Trustees Members of the Councils and Committees, including the Council of Assembly, are appointed by the General Assembly through the Nomination Committee. The Nomination Committee is appointed by the General Assembly. Consideration is given to the Councils or Committees needs for qualifications and expertise when deciding upon those to be nominated. It is the policy of the General Assembly, as far as possible, to ensure a balance of members by gender, age and geographical location. The 2010 General Assembly introduced a process of open recruitment for nomination as a voting member of the Council of Assembly. An open and rigorous recruitment process is followed; all vacancies are now filled, subject to General Assembly approval by persons who have responded to an advertisement, demonstrated possession of the required skills and undergone a panel interview. 2
TRUSTEES REPORT ON THE FINANCIAL STATEMENTS Structure, Governance & Management (continued) Organisation (continued) Each new member is provided with a copy of the remit of the Council or Committee, guidance notes on the responsibilities of a trustee, a calendar of meeting dates and copies of the Minutes of the most recent Committee meetings. Trustee members of the Council of Assembly also receive a copy of the Code of Conduct for Voting Members as Charity Trustees. This includes guidance on the declaration and registration of interests and on the payment of expenses. All Council and Committee members are briefed on the remit and responsibilities of their Council or Committee and are thereafter updated on governance and charity matters and the effect, if any, on the remit and responsibilities of the Council or Committee. In addition, the Council of Assembly holds an annual introductory meeting for incoming Council and Committee Conveners, shortly before the General Assembly at which they will take up their duties, at which they receive the latest Annual Report and Financial Statements and General Assembly Report and receive comprehensive briefings from office-bearers on charity law and on the structure, legislative processes and current work of the Church. Following the General Assembly, a similar meeting is held for new members of Councils and Committees. Council Conveners and Secretaries ensure in the course of the year that members of Councils and Committees receive the support and information they need to discharge their duties responsibly and well. Reporting Structure The financial statements of the Unincorporated Councils and Committees include the financial results of the five Councils and a number of Support and Services Departments together with Other Funds which include approximately 150 Trusts, the Mission and Renewal Reserve Fund, Housing and Loan Fund and the Church of Scotland Guild. The consolidated financial statements also incorporate the financial results of two subsidiary undertakings, St Andrew s Galilee Limited and St Andrew s Scottish Centre Limited, companies incorporated in Israel. The share capital of both companies is held by the Church of Scotland Trust on behalf of the World Mission Council which has given indemnity to the Trust in respect of all liabilities arising from its shareholdings. The results of two subsidiary undertakings, Circle of Care Limited and Tabeetha School in Israel, are presently not consolidated as their results are not considered to be material to the group. Their results are disclosed in note 33 to the Financial Statements. Senior Management A Senior Management Team supports the coordinating and decision-making work of the Council of Assembly and ensures the efficient implementation of the decisions of it and the General Assembly. The group is chaired by the Secretary to the Council of Assembly, and its members include the Principal Clerk, Council Secretaries and heads of the main support departments. The Senior Management Team is accountable to the Council of Assembly and its minutes are submitted to the Council for information. Senior staff of the Church are responsible for the operational management of their departments under the general direction of their Councils and Committees and for implementing the policies of the General Assembly. The Council of Assembly is preparing a Scheme of Delegation for implementation in 2012; this will set out clearly the decisions which can be taken by staff and which are properly for Councils and Committees. Risk Management The Trustees recognise the risks inherent in resourcing and delivering a challenging programme of worship and mission at local, national and international level in a climate of increasing financial constraints. Each Council and Committee has a risk register which they regularly review and on which they are required to report twice yearly as part of the regular reporting cycle to the Council of Assembly. To assist in this, the internal auditors and the Stewardship and Finance Department have provided training and support in risk management to senior managers. In addition, the Council of Assembly uses a business case template for Councils and Committees for the submission of proposals for staffing changes or new significant spending. This template helps Councils and Committees to analyse and evaluate the risks attached to such proposals. Appropriate arrangements are then made to manage any acute risks identified through this process, jointly with the Council of Assembly as appropriate. The principal risks and uncertainties identified by the Council of Assembly are as follows; comments on the management and mitigation of these risks are noted below each heading. Failure to deliver necessary change A challenging programme of worship and mission means that the Church must be able to respond to need across its whole structure. Clear strategic planning, good financial management, robust and timely communications across the Church, support for Presbyteries as they review Presbytery Plans and good training and development programmes help us ensure that our people are enabled to prepare for change and implement it well. 3
TRUSTEES REPORT ON THE FINANCIAL STATEMENTS Structure, Governance & Management (continued) Risk Management (continued) Safeguarding failure The protection of children and members of vulnerable groups is clearly a major priority. Programmes of communication, compliance monitoring and robust procedures for the recruitment and training of staff and volunteers are in place and supported by Presbyteries and by the Safeguarding Service. The church is aware of the requirements of new legislation in this area and is preparing to meet its obligations. The work and resourcing of the Safeguarding Service remain under constant review by the Safeguarding Committee. Inadequate or poor communication The Church s Communications Framework ensures that the Church conveys an authentic, clear and consistent message about its mission, values and vision to a wide variety of audiences, both internal and external. Communication with Presbyteries continues to improve; there are opportunities for conferences and training for Presbytery representatives. The Ministries Council is responsible for providing pastoral resource, enquiry and assessment and candidate reviews, and maintains an effective flow of information among all those involved in these activities. Internal communication is being addressed through a joint programme with the Human Resources and Communications Departments and staff representatives. Theological/Doctrinal differences A healthy church encourages discussion and debate about its faith and a Presbyterian Church provides many opportunities, formal and informal, for such interaction. The Unincorporated Councils and Committees are aware of the General Assembly s decision to set up a Theological Commission to consider one current difference of opinion; despite press speculation, at the moment no specific risks to the Church arising from the work of the Commission have been identified but the Council of Assembly is monitoring the situation. During 2011, the internal auditors, Deloitte, continued with their three year plan, begun in 2010, to review the adequacy and effectiveness of the main systems and internal controls operating within the Unincorporated Councils and Committees of the Church. In considering their assessment of the framework of controls, their perception of the extent of risk is taken into consideration. Four reviews were completed, covering assessment of the financial control framework, regulatory and legal compliance, grant allocation and management, and Ministries Council management and governance. The Council of Assembly accepted the majority of the recommendations contained in these reports and instructed that they be implemented. The Council, through its Audit Committee, monitors progress on audit recommendations and takes appropriate action to ensure that process improvements are embedded. The internal audit programme for 2012 ensures coverage across a range of key process areas, a continued focus on financial controls and appropriate coverage of the legal, regulatory and risk management process. Objectives and Activities The Church of Scotland is Trinitarian in doctrine, Reformed in tradition and Presbyterian in polity. It exists to glorify God and to work for the advancement of Christ s Kingdom throughout the world. As a national Church, it acknowledges a distinctive call and duty to bring the ordinances of religion to the people in every parish of Scotland through a territorial ministry. It co-operates with other Churches in various ecumenical bodies in Scotland and beyond. The Church carries out a wide range of activities, summarised below, in pursuance of its charitable aim, the advancement of religion: advancement of religion and education relief of poverty and advancement of health relief to those in need through age, ill health or disability advancement of citizenship and community development advancement of the arts, heritage and culture The Trustees consider that these activities provide benefit to the people of Scotland and to a wider national and global community. Congregations are outwardly focused and the Church of Scotland is visibly active in local communities providing practical and spiritual assistance to all those in need, regardless of their status. Further information about the activities of individual Councils and Committees can be found on the Church of Scotland website and in its Annual Review, available from the principal office. More detailed reports and information, including names of all Trustees, can be found in each year s Reports to the General Assembly ( the Blue Book ), which is issued to all General Assembly Commissioners and is available from the principal office. 4
Achievements and Performance Priorities TRUSTEES REPORT ON THE FINANCIAL STATEMENTS The Church of Scotland s vision is to be a church which seeks to inspire the people of Scotland and beyond with the Good News of Jesus Christ through enthusiastic, worshipping, witnessing, nurturing and serving communities. We endeavour to give support to individuals and communities; discerning Christ's call, we are particularly concerned for the needs of those who are poorest and most marginalised. We share work and witness with our ecumenical partner churches in Scotland and the rest of the United Kingdom and Ireland and we also value and enjoy our productive partnerships with the World Church. Much of the work of the Church is carried out at local level by its 450,000 members, encouraged and supported by Ministers and other congregational and Presbytery leaders. The Unincorporated Councils and Committees of the Church of Scotland exist to resource and support this local work. The primary priorities of the Church of Scotland Unincorporated Councils and Committees, as approved by the General Assembly, are as follows: congregational resourcing equipping volunteers for the ministry of the Church parish staffing the provision of paid, parish ministers and parish workers to manage the church s direct social care projects throughout Scotland to engage with the world and the world Church to express vocal support and practical concern for those in need to express views on political, social, ethical and educational issues The Church is a complex organisation, working in a dynamic and constantly changing environment. The General Assembly and its Councils and Committees provide a clear foundation for the general direction of the Church s work but the Assembly also adopted in 2011 a Strategic Framework, a longer-term set of core priorities that help with the assessment of proposals and permit easier evaluation of progress against the sometimes overlapping priorities. There is therefore now a clear framework for the general direction of the Church s work and this is being developed to provide guidance for the allocation of resources. The Church s overarching objective is, participating in Christ s ministry, to worship and serve God. Much of our resource is devoted to encouraging, facilitating and supporting people who provide ministry and leadership in worship and service. The other core priorities are: making disciples exercising priority for the poor serving the vulnerable promoting reconciliation caring for creation engaging with society discovering and encouraging life in all its fullness celebrating our place in the world church enabling ministry in every part of Scotland renewing Church structures and practices empowering young people developing leadership releasing the gifts of all the people of God The Church of Scotland is a church both reformed and in need of reform and our structures and policies must continue to be revised and improved from time to time. Our love for God is unchanging. All we do is for God s glory and in response to God s commands Whose we are and Whom we serve. In addition, each year the General Assembly instructs its Councils and Committees through a number of deliverances to undertake specific pieces of work in accordance with their various remits, set out below. Church and Society Council The Church and Society Council s central remit is to continue the tradition of engaging, on behalf of the Church, in the national, political and social issues affecting Scotland and the world today from asylum and ecological concerns to adoption and education issues. It aims to do this through the development of theological, ethical and spiritual perspectives when formulating 5
TRUSTEES REPORT ON THE FINANCIAL STATEMENTS Achievements and Performance (continued) Priorities (continued) policy and by effectively representing the Church by offering appropriate and informed comments. The Council is also charged with building, establishing and maintaining a series of networks and relationships with leaders and key people in society, and engaging in longer term dialogue and the exchange of ideas with them. The Council is responsible for the work of the Scottish Churches Parliamentary Office and a number of projects including Climate Change and Society, Religion and Technology. Ministries Council The remit of the Ministries Council is the enabling of ministries in every part of Scotland, giving special priority to the poorest and most marginalised, through the recruitment, training and support of recognised ministries of the Church and the assessment and monitoring of patterns of deployment of those ministries. Mission and Discipleship Council The remit of the Mission and Discipleship Council is to enable and empower people to engage in Christ s mission through resourcing worship, witness and discipleship in the context of the changing contemporary culture of Scotland and beyond. Social Care Council The remit of the Social Care Council is to provide social care services as part of the Christian witness of the Church to the people of Scotland. It carries out its work under the name CrossReach. The Council provides services to older people, children and families, people with learning disabilities, epilepsy and in the areas of substance misuse, criminal justice, mental health homelessness and counselling and support. World Mission Council Through the activities of the World Mission Council the Church of Scotland maintains a direct link with the Church worldwide and through this is able to facilitate individual and enriching relationships for congregations and presbyteries in Scotland with our overseas partner Churches. Much of the Council s budget is used to employ Mission Partners to serve overseas and to provide grants to Partner Churches. Increasingly, Council funds are being used to assist congregations to make links overseas and the Council also administers funds raised by congregations to assist worldwide projects. Using the substantial, restricted Salvesen Fund, the Council supports the Presbytery of Europe and its fourteen charges. It is also responsible for the governance of the trading subsidiaries activities in Israel, and for Tabeetha School, a multi-faith school near Tel Aviv. In the course of 2011, the following work has been carried out by the five main Councils and other departments to support the core priorities. Making disciples training and equipping lay and clerical leadership in churches in China provision of worship and prayer resources to support mission delivery of mission training and support to presbyteries publication of Why Believe?, a resource to encourage and equip Christian witness support for new models of church joint working on New Frontiers, to engage with those currently beyond the reach of the church provision of spiritual discipline material development of pilgrimage paths and encouragement of faith tourism in Scotland presence at Royal Highland Show, in partnership with the Scottish Churches Rural Group publication of Life and Work and Different Voices re-establishment of the Mission Forum to consider the context of mission in 21 st century Scotland Exercising priority for the poor provision of practical support to ministries personnel, congregations and communities in Priority Areas promotion by Ecumenical Relations of opportunities for collaborative work in Priority Areas support for Church Action on Poverty membership of the Scottish Campaign on Welfare Reform, the Campaign to end Child Poverty in Scotland, the Poverty Alliance and the Campaign for a Fair Society active support for and promotion of the Scottish Living Wage 6
TRUSTEES REPORT ON THE FINANCIAL STATEMENTS Achievements and Performance (continued) Priorities (continued) research into rural deprivation implementation of recommendations arising from the Poverty Truth Commission Serving the vulnerable support of the HIV Programme with 26 projects in 15 countries active promotion of human rights in Pakistan, China and other countries addressing issues of violence against women delivery of a range of tailored safeguarding training programmes in congregations and CrossReach services to address child protection and adult protection production of a safeguarding strategy and supporting guidance implementation of the Protection of Vulnerable Groups (Scotland) Act 2007 to extend criminal records checking, and protection, to volunteers and paid staff working with vulnerable adults provision of a visitor centre at Perth Prison, a CrossReach project with financial support from the Guild Guild support for an International Justice Mission project in Cambodia, to rescue people from slavery and forced prostitution establishment of new parenting scheme in Govanhill for vulnerable children direct provision of services through 74 units and projects within Crossreach as follows: Older People Adult Care Children and Families Residential Homes 17 Learning Disabilities: Schools 2 Community Day Services Supported Living Services 4 4 Housing Support Services 4 Residential 3 Residential Unit for Children 1 with Disabilities Day Care Services 7 Short Break Services 2 Day Support for Families 1 Dementia Homes 6 Criminal Justice 2 Care at Home 1 Substance Misuse 7 Counselling & Support 5 Mental Health 3 Promoting reconciliation Homelessness: Residential Supported Accommodation 3 2 work with convicted sex offenders to ensure their safe inclusion in worship support for A Place for Hope, an ecumenical project to position the Church as a peacemaker and a healer in a broken world promotion of ecumenical working and ecumenical relationships with other churches, including active involvement in Action of Churches Together in Scotland organising weekend conference for young Christians and Muslims, leading to decision to organise a joint soup kitchen further development of the Interim Ministry team Caring for creation representation, funded by Ecumenical Relations, at the International Ecumenical Peace Convocation in Jamaica and promotion of Church of Scotland s Responding to Climate Change Project provision of resources for the Church season of Creation Time research and publications on sustainable agriculture organisation of conference to consider use of photo-voltaic panels on church buildings invitation to congregations to reuse and recycle clothes and campaign to support garment workers in Indonesia suffering abuse 7
TRUSTEES REPORT ON THE FINANCIAL STATEMENTS Achievements and Performance (continued) Priorities (continued) Engaging with society Guild support for partnership projects, offering members a chance to take an active and crucial part in the work of six projects at home and abroad as well as having an educational and developmental element for local members to grow themselves in faith and understanding hosting of Scottish Churches Parliamentary Office ecumenical partnership working on Scottish gypsy travellers and homelessness in Scotland publication of research on the Internet, focusing on freedom, liberty, regulation and control, the existence of competing mores and issues of real and virtual identity report on human trafficking issues in connection with the Glasgow Commonwealth Games production of study materials to support the One Scotland, Many Cultures report, with its call to radical hospitality ongoing work to combat sectarianism support for World Council of Churches statement on racism and for Racial Justice Sunday publication of report of the Commission on the Purposes of Economic Activity and support for its conclusions representations to Government to withdraw from the war in Afghanistan lobbying for clear labelling on products from Israel conversations on implications for the Church of revised constitutional arrangements in Scotland responding to Government consultations on same-sex marriage; minimum pricing for alcohol; post-16 education; mental health strategy; rural education; offensive behaviour at football matches; Scottish Government Spending Review and Budget; human trafficking; legal intervention on religion or belief rights research on neuroethics development of resources for religious and moral education and religious observance in schools contribution to development of and teaching on a Religious Observance module in a Masters degree in partnership with the University of Glasgow and Scripture Union Scotland membership of the Scottish Joint Committee on Religious and Moral Education, Scottish Churches Education Group and Religious Education Movement Scotland provision of training for school chaplains Moderator s visits to the Scottish and UK Parliaments provision of training and support for church representatives on Local Authority education committees publication of report on marriage Discovering and encouraging life in all its fullness encouragement of ecumenical spirituality issue of guidelines on mental health campaigning work on suicide among young men campaigning work on end of life issues representations to Government to protect education budgets report on barriers to literacy mounting of successful all-church event, Roll Away the Stone, in Princes St Gardens during General Assembly 2011 attendance at 6 Mind, Body and Spirit fairs, offering information on Christian prayer and spiritual practices provision of opportunities for dialogue with those of other faiths, including support for Scottish Interfaith Week support for storytelling in worship, education and outreach support for establishment of self-help groups in priority areas, modelled on projects in India launch of A Chance to Thrive, a project to support congregations in priority areas to develop their buildings to support community regeneration Celebrating our place in the world church deployment of 20 Mission Partners and other support for Partner Churches in Africa, Asia and the Middle East encouragement of individual and congregational twinning and partnership arrangements with congregations throughout the world management of a programme of exchange visits involving 75 Faithshare visitors and 14 countries 8
TRUSTEES REPORT ON THE FINANCIAL STATEMENTS Achievements and Performance (continued) Priorities (continued) sharing with Christians everywhere in the fight to defeat world poverty encouragement of practical expressions of support for investing in peace in Palestine and Israel, including prayer, financial donations, reading, a Christmas Card campaign, pilgrimages and visits and further study support for World Week of Peace in Palestine and Israel Guild support for Mission Aviation Fellowship project in Madagascar active involvement in the World Council of Churches, the World Communion of Reformed Churches, the Community of Protestant Churches in Europe and other ecumenical bodies Enabling ministry in every part of Scotland affirming that Parish Ministry, though changing, is pivotal to the life and ministry of the Church seeking opportunities for ecumenical working in parishes research into churchgoing in the Highlands of Scotland support for presbytery planning processes introduction of Ordained Local Ministry provision of training and support for parish ministers, deacons, readers, Presbytery and Parish Workers and Ordained Local Ministers review of training in parish ministry support and training for chaplains in prisons, universities, healthcare, the armed forces and in workplaces work towards a renewed vision for Diaconal Ministry support for New Charge Development development of new forms of ministry including peripatetic diaconal appointments, transition ministries and secondments Renewing Church structures and practices review of provision of legal services to congregations, Presbyteries and the national church bodies review of Church communications and participation in social media research into mission in a digital age start of a review of church legislation creation of Go For It, a strategic fund for enabling and supporting change in church and community Empowering young people continued support for the National Youth Assembly attendance of young people from the Church of Scotland at World Youth Day in Madrid working with young people to develop their ecumenical experience as a resource to churches in Scotland report on Young People and Decision-Making issued to Kirk Sessions, Presbyteries, Councils and Committees relationships established with Young Scot, Youthlink and the Scottish Youth Parliament to encourage the involvement of young people of faith in their decision-making and projects more young people encouraged to apply for vacancies on Councils and Committees launch of Moderator s Medal, an essay prize for young people to encourage thinking about spirituality development of Youth Strategy Resource Pack partnership with thegkexperience, to develop young leaders from priority areas Developing leadership ecumenical contribution to Ministries project to review leadership and training for Ministers of Word and Sacrament provision of training and support for congregational leaders work towards a model of continuing development for ministers Releasing the gifts of all the people of God worship and presentations at the Guild Annual meeting and production of follow up materials aimed at inspiring action, worship and nurture by challenging people to think about new and often difficult issues 9
TRUSTEES REPORT ON THE FINANCIAL STATEMENTS Achievements and Performance (continued) Priorities (continued) mounting of conference on Pastoral Care support of Presbytery adult trainers Subsidiary Undertakings There are four subsidiary undertakings. St Andrew s Galilee Limited and St Andrew s Scottish Centre Limited were incorporated to manage the Scots Hotel in Tiberias and St Andrew s Scottish Guesthouse in Jerusalem respectively. As well as having the objective of generating funds for the Church s charitable activities, the hotel and guesthouse provide a base for visitors to witness the work of the Church of Scotland in Israel and Palestine, and as a visible witness of solidarity and faith with local Christians. The financial results are described in the Financial Review on page 13 and on note 33 to the Financial Statements. Circle of Care Limited raises funds for the Social Care Council from the sale of calendars, cards and gifts and also raises awareness of the Council s work. Tabeetha School in Jaffa, Israel, operating as a not for profit organisation, educates children from Christian, Muslim, Jewish and other religious backgrounds, with the objective of promoting reconciliation. Support and Services In addition to the five main Councils, there are five committees, the work of which is directed towards good governance and efficient administration. The committees are: Assembly Arrangements, Central Services, Ecumenical Relations, Legal Questions and Safeguarding. Their main tasks are: organising the General Assembly and Commissions of Assembly promotion and support of ecumenical working, as prescribed in the Articles Declaratory relating Church procedures and legislation to the civil law ensuring that work with children and vulnerable adults meets the requirements of civil legislation and regulation and that the Church is a safe place for all managing the Church offices and its service departments employment of the operational staff of the Unincorporated Councils and Committees based at 121 George Street, the Scottish Storytelling Centre and elsewhere Other Funds Funds which are not under the control of any individual Council, are summarised as follows: The Mission and Renewal Fund supports the work of the Councils other than Ministries, as well as the Support and Services Departments, using income from congregational contributions, legacies and donations The Housing and Loan Fund provides rental accommodation and housing loans to retired ministers and their widows/widowers. Loans are provided at favourable rates of interest and normally for values of up to 70% of purchase price with a ceiling which varies from time to time The Church of Scotland Guild is a movement with 30,000 members, within the Church of Scotland which invites and encourages both women and men to express their faith in worship, prayer and action, including financially supporting other projects within the Church of Scotland New College Edinburgh part of Edinburgh University, the funds of New College have been historically linked to the Church of Scotland, providing theological training for Ministers of Religion Miscellaneous Trusts various third party trusts, held for the work of the Church including congregations Volunteers The work of the Church of Scotland requires the support of its members, many of whom serve on the Councils and Committees of the General Assembly, as members and representatives of Presbytery, and as office-bearers in congregations. This service is given in a voluntary capacity as part of their Christian commitment. It involves a generous giving of time and talent, providing the Church of Scotland with a wide variety of expertise from other areas of life, e.g. education, financial services, law, property and social work. This contribution cannot be measured but is absolutely fundamental to the fulfilment of the Church s purpose of sharing the Gospel and enriching human life. 10
TRUSTEES REPORT ON THE FINANCIAL STATEMENTS Financial Review The financial statements have been prepared in accordance with the historical cost convention, as modified by the revaluation of investments, and in accordance with the Statement of Recommended Practice Accounting and Reporting by Charities issued in March 2005, and as updated in May 2008, applicable accounting standards and Scottish Charity legal requirements. The results of the Charity s overseas subsidiaries St Andrew s Galilee Limited and St Andrew s Scottish Centre Limited have been consolidated and the financial statements disclose both the consolidated results and those of the Charity. The results of two subsidiary undertakings, Circle of Care Limited and Tabeetha School in Israel, are presently not consolidated as their results are not considered to be material to the group. Their results are disclosed in note 33 to the Financial Statements. The Consolidated Statement of Financial Activities on Page 19 gives an overview of the income and expenditure of the Church during the year. Total Incoming Resources amounted to 117,811,000 whilst Resources Expended totalled 111,741,000 resulting in Net Incoming Resources of 6,070,000 (2010: Net Incoming Resources of 1,187,000). The improvement of 4,883,000 over the previous year was largely attributable to gains on sale of heritable property of 6,509,000 (2010: 2,668,000). Councils also made further progress on reducing, and in some cases eliminating, operating deficits, resulting in a reduction of 2,614,000 on expenditure on charitable activities. This included the Social Care Council whose expenditure on charitable activities reduced by over 1 million while maintaining income at the previous year s level. The results of the Mission and Discipleship Council s prioritisation of its activities carried out in 2009/10 could be seen in the elimination of its deficit in 2011, with a reduction of 966,000 in charitable expenditure. Other Recognised Gains and Losses During the year, there were unrealised losses on investments in the Church of Scotland Investors Trust Growth and Income Funds of 7,287,000 which all but nullified the gains of the previous year. Realised losses on investments sold during the year amounted to 272,000. This mainly related to the Ministries Council which is selling investments on a regular monthly basis to fund operational and pension deficits. In accordance with Statement of Standard Accounting Practice 20, Foreign Currency Translation, the net assets of the Israeli Subsidiaries and the World Mission Council s bank accounts in Israel were translated to sterling at the rate of exchange ruling at 31 December 2011. This led to unrealised foreign currency losses of 586,000 and 45,000 respectively (2010: gains 1,365,000 and 411,000 respectively). Financial Reporting Standard Retirement Benefits (FRS 17) requires the disclosure in the Financial Statements of income and costs relating to Defined Benefit Pension Schemes. The assumptions used in arriving at the FRS 17 values are disclosed in Note 4 to the Financial Statements on pages 29 and 30. Disclosures under FRS 17 resulted in an unrealised Actuarial Loss of 13,180,000 in 2011 (2010: gain 12,409,000) being disclosed under Other Recognised Gains/(Losses). Taken along with other net income totalling 5,632,000 disclosed under Net Incoming Resources, the total value removed from the Church s funds in 2011 as a result of Pension Scheme disclosures on the Statement of Financial Activities was therefore 7,548,000 (2010: added 18,021,000). Once the total Investment Losses of 7,559,000, Unrealised Foreign Currency Losses of 631,000 and Actuarial Losses of 13,180,000 on the Defined Benefit Pension Schemes are added to the Net Incoming Resources of 6,070,000, there was a decrease in total Funds of 15,300,000 (2010: increase 23,533,000). However, none of these revaluations as at the balance sheet date impacted on cash as can be seen from the cash flow statement on page 22, with a net cash inflow during 2011 of 6,260,000. The cash flow on normal activities was significantly enhanced by sales of investments and heritable property. Income Income was received from the following sources: Congregational Contributions including Stipend Endowment Investment Income, 47,120,000 Income from donations and legacies 3,909,000 Income from investments 5,020,000 Income from activities which are part of the Church s charitable aims 49,776,000 Income from activities which raise funds for the Church s charitable aims 4,232,000 Gains on disposal of heritable property 6,509,000 Unrealised pension scheme adjustments, 1,245,000 11
Financial Review (continued) Income (continued) TRUSTEES REPORT ON THE FINANCIAL STATEMENTS While stipend endowment income remained static, assessed congregational contributions increased by 1,154,000 over the previous year. This continues to demonstrate the committed giving of our members in the current climate of economic uncertainty. However, other donations reduced across every Council and the Other Funds compared to the previous year, by 455,000 (19%) in total, having already reduced by 14% in 2010. Nonetheless, there remains clear enthusiasm on the part of the Church s supporters, for its mission in areas of great need, particularly in the case of World Mission. Legacies of almost 2 million were received in 2011 and these are gratefully acknowledged and commended to supporters of the Church as they consider making a Will, as a way of continuing to enable the sharing of the Gospel. Investment income was 5,020,000 compared to 5,300,000 the previous year. While dividends were maintained at similar levels, some Councils continued to fund operational and pension deficits from the sale of part of their investments resulting in a slight reduction in dividend income received. Interest received on cash funds was again affected by persistently low interest rates. Charitable income, of which 46,316,000 was in relation to The Social Care Council, was also little changed over the previous year. Other Councils and Funds received 2,568,000 from providing supported rental accommodation to staff and retired staff, part-time hospital chaplains, sales of printed resources and publications such as Life and Work, conference income and the Scottish Storytelling Centre s programmes of events. In addition, 892,000 of income was received by the Support and Services departments for charitable services provided to other Church of Scotland organisations. Income and expenditure from activities which raise funds are described on page 13 and 14 of the report. Expenditure Expenditure was under the following main headings: Cost of carrying out the activities under the Church s charitable aims and objectives 110,092,000 Cost of activities which led to additional income generation 4,935,000 Cost of governance 1,101,000, including costs for the General Assembly of 517,000 Unrealised pension scheme adjustments - reduction in expenditure 4,387,000 Financing the Church s Objectives The Church carries out a wide range of activities in pursuance of its charitable aims but financial resources are concentrated in the following areas upheld as its priorities: Parish Staffing the provision of paid parish ministers and parish workers Congregational resourcing equipping volunteers for the ministry of the Church of Scotland Parish Staffing In 2011, the Unincorporated Councils total income was 117,811,000 of which 40%, 47,120,000 was from congregations of the Church. This included 3,162,000 of stipend endowment income funds held and invested by the General Trustees on behalf of congregations with the annual investment income being passed on to the Ministries Council to assist in paying for parish ministers. From congregational income, the Ministries Council paid out 44,110,000 (94%) on providing paid parish ministers and parish workers for congregations. As a measure to reduce its annual deficits and in keeping with the development of its 2020 Vision for Ministries in the 21 st century, the Ministries Council is working towards affordable numbers of ministries in line with the Presbytery Planning process. The effect of this became more evident in 2011. Congregational Resourcing The remaining income from congregations, together with some of their donated funds, investment income and funds from charitable activities was used by all five Councils in supporting this priority. The Mission and Discipleship Council with its remit to promote an overall focus for mission and develop resources for congregations expended the majority of its funds on this priority. By successfully transferring some of its loss making activities and reorganising teams within the department, the Council has been better placed to resource congregations in 2011 on a balanced budget. St Andrew Press printed resources, Life and Work, Different Voices and Pray Now continued to provide congregations 12