STREETWISE & SAVVY

STREETWISE & SAVVY Diocese of Llandaff Autumn 2012 SALT Sharing & Learning Together

On the agenda: • Streetwise & Savvy – Part One • Financial management & governance • Background • Governance • The role of the PCC • The role of a church treasurer • Matters arising • Solutions

The background • Newly elected & appointed church officers, including church treasurers • A desire to ‘do it right’, ‘by the book’ or ‘put our house in order’. • Perhaps you’ve taken on the role of treasurer in place of someone else who carried out the role faithfully, but perhaps not how you would do it! • Perhaps you’ve got a new incumbent who is asking questions, changing things and keeping you all on your toes! • Perhaps, you are sensible enough to know that the rules are always changing...we all need to keep up to date. • Perhaps you’re already doing all these things and doing them well...but you’ve just come along to check that’s the case!

The background • To make life easier for everyone! • To get a full picture of the resources of the parish in order that we can better plan for mission and growth • To ensure that the PCC is in full possession of all financial information and can make decisions on an informed basis so that it can meet all its responsibilities and discharge all its liabilities. • To ensure minimum exposure to fraud and to meet the requirement to evidence robust procedures, policy and practice in the event of a fraudulent incident.

The background • Two sets of annual returns are made each year; Archdeacons returns (to the diocese) and a membership and finance return to the Representative Body of The Church in Wales. Financial data is analysed for the purposes of planning future mission and ministry needs and opportunities and to periodically review all aspects of parish life and to offer additional support and advice as appropriate.

The background • The Diocese of Llandaff also offers extensive support and advice to parish officers in all aspects of parish management (including financial management), promotes best practice in these areas and offers regular training to officers based on the needs it identifies.

The background • In some parishes it has become apparent that the financial structures and organisation within them, require alteration in order for the parish to comply with the very minimum of charity law, as set down by the Charity Commission. • The Diocesan Accountant & Parish Resources Adviser work with clergy, officers and PCC’s to ensure that changes are made and that these requirements are met.

Governance • Parishes are part of the Diocese of Llandaff and The Church in Wales. • From these bodies various models of parish management are either prescribed, recommended or advised. • Most parishes (at the current time) are an excepted charity as part of the Diocese of Llandaff charitable status and therefore enjoy the full benefits of charitable status...but they also have the responsibility too.

Governance • Most parishes are not (at this time) registered as a charity (with the Charity Commission) in their right. However, this does not alter the responsibilities, liabilities and requirements made of a PCC. • Legislation laid down in law and enforced by the Charity Commission must be complied with by all charitable groups of any size and type including all PCC’s. This is not optional! • Parishes are also subject to the rules and regulations of HMRC.

The role of PCC members • All PCC members are charity trustees; a steward of the church’s money and resources. • You must together ensure compliance with charity law and regulation and implementation of best practices whenever and wherever possible. It is a shared responsibility.

The role of PCC members • Trustees must: • ensure that the PCC is able to meet all its financial responsibilities, and that PCC funds and assets are used appropriately. • report on what the PCC has achieved, and how it has used its money and resources. • manage the PCC’s money, and balance risk and reserves.

The role of PCC members • The responsibility for looking after the Church’s money is shared between the whole of the PCC. Making use of particular skills that you have on the PCC is good practice, and some ‘day to day’ tasks will be delegated to the treasurer or to a finance sub-committee, but the responsibility remains with the whole PCC.

The role of the PCC • Just like managing your own money you need to know: • ‘How much money is coming in?’ • ‘How much money you will give, spend or save?’ • ‘How much money is left over, and what you will do with it?’ • ‘Is the money being spent on the things people gave it for?’

The role of a church treasurer • Just as you keep a regular check on your own money, at each PCC meeting you should do the same with the church's money. • The treasurer should give a brief report on: • All money coming in – called Receipts or Income • All money being spent – called Payments or Expenditure

The role of a church treasurer • How much money you have e.g. in the bank - sometimes • called Current Assets. • How much money is owed - sometimes called Liabilities • Just as at home, the PCC should prepare a budget to help you manage money as you go through the year. • At the end of the year any money ‘left over’ forms your reserves. Whether you are blessed with significant reserves, or just scraping by, each PCC should develop a policy on the amount of reserves it feels it needs, and why they are needed. It should also say what you will do to reach that amount and what you will do with any extra money. You will also need to decide where to keep or invest your reserves.

Matters arising... • Financial structures... • Churches with many & various bank & building society accounts, not recorded or declared to the PCC, and not correctly managed nor accounted for to the PCC on a regular basis, and no accounts presented to the annual church meeting. There might be numerous accounts (perhaps for small groups, perhaps a ‘historic’ or even ‘obsolete’ fund, or from an abortive project), which are holding balances of funds way beyond the requirements of their purpose and are in breech of charity law • These accounts are sometimes operated for groups within the ‘umbrella’ of the ‘church’, but are not operating fully or correctly within it. • PCC members have direct liability for all such accounts, but have little or no control.

Matters arising... • Communication & reporting... • Often a PCC does not have a full and proper picture of all its assets. • It cannot make fully informed decisions about the resourcing of mission and ministry and planning for the future until it has a complete picture of its finances. • It cannot currently operate in compliance with basic accounting requirements of charitable law.

Matter arising... • Proper financial management is sometimes exceptionally difficult (if not impossible!) in a parish where the correct policies, practices, communication and structures are not in place to link finance to the mission of the church. • The treasurers task is made exceptionally and unnecessarily complicated.

Matters arising... • Some parishes are almost certainly not operating to maximum financial efficiency, meaning potential income sources are being neglected. i.e. Gift Aid, investment income, etc. and real savings could be made on actual expenditure in some areas.

Solutions • Keep it simple! • Only two bank accounts are legally required – Church & Churchyard. • Any other ‘funds’ to be identified can be held within one main church account and can be identified or designated as required and reports run on these fund areas as needed. • The PCC may choose to hold ‘savings/investment accounts if needed and desirable – however have a written purpose and a policy in place.

Solutions • All accounts are to be held by the PCC and are to be subject to their full management and control. (signatories, statements, spending and saving decisions etc) • Where too many accounts are held the PCC should begin a process of rationalising all accounts held; closing and merging as appropriate and implementing proper financial management and control. • Use the on-line Church in Wales recommended format for accounts or a church accounts package such as those offered by Data Developments.

Solutions • For the avoidance of doubt to avoid misunderstanding and to make the purpose and vision of your church clear: • Agree and communicate a reserves policy • Agree and communicate an expenditure policy (authority; tender process, etc) • Agree and communicate a legacy policy

Solutions • Communication and reporting... • The church treasurer should report briefly at each PCC meeting on income and expenditure to date; projected; and against the annual budget, monitoring performance and advising on matters arising. • Why not form a finance sub group to work and support the treasurer and ensure the best parish financial management? It’s a good way to involve and include others and use the skills that they have!

Solutions • Finance & Mission... • Mission Action Planning...cost your churches priorities...be sure to include all aspects of church life. • Your parish budget should mirror the priorities outlined in your Mission Action Plan. What does your annual budget say about what’s really important to your church? Use the budget template on –line. An annual budget is a requirement of the Charity Commission and should form part of your annual parish report & accounts.

Solutions • Review, review, review... • Constantly review what you are doing and why you are doing it. • Ask questions of your incumbent and PCC. • Suggest better ways... • Look for ways to save money and to be efficient... • But where does your church need to spend more to be more effective?

Streetwise and Savvy • In more detail... • Jan Boyce, Diocesan Accountant.

STREETWISE & SAVVY