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Change of status gives hope in Kingsway saga

02 November 2006

ONE OF the biggest churches in Britain is set to become a charitable company next month, so that it will not breach Charity Commisson guidelines in handling the millions of pounds it raises annually from its 10,000 Sunday worshippers.

Receivers were sent in to the Kingsway International Christian Centre (KICC), London, two years ago, after the Charity Comissioners started to worry about “aspects of the management”. But 14 months on, the congregation had become frustrated with the receivers. Their leaders threatened to abandon their £25-million assets and start again.

Thousands of the congregation, fed up with the delay in appointing new trustees, said they would march in protest to Trafalgar Square after service on 8 March. But a last- minute agreement has defused the situation. Staff said they were “delighted” by the news.

The receiver, KPMG, was sent in to manage the Hackney-based church in December 2002. The head of the Commission’s investigation team in London, David Rich, said at the time that this was a “temporary and protective measure”.

A statement from Kingsway said that the receivers were still there and had found nothing wrong, and were having a bad effect on the church.

Under charity law, the church has to pay the costs of having the receivers. Their agreed fee was £140,000, but could go higher.

Morale low
In the statement, KICC said that, under the temporary management, restrictions on promotion meant that numbers at the annual conference were down; the Charity Commissioners’ actions had cast aspersions on the intelligence of the leadership; income was down from £7.7 million to £6 million last year (the senior pastor had not been paid, nor had employees received Christmas bonuses); and the church had been discredited in the media, and morale among congregation and staff was low.

The church also said that there was no evidence of fraud, financial impropriety or financial irregularity that would have necessitated the appointment of receivers.

Call for independent inquiry
The Association for Charities called for an independent inquiry into the way in which the Charities Commissioners intervened in the running of KICC. It said that some of the rules governing charities should not apply to churches. The chairman of the Association, John Weth, said that he was drafting a report to the Government. Among other things, it would say that the costs of implementing the present regulations were prohibitive.

“The financial reporting arrangements are not designed for churches and other religious organisations. They have difficulty in complying with regulations that were never drawn up with the intention of forcing them on to churches,” he said.

In a press release, the Association said that hundreds of thousands of pounds of charity money might have been inappropriately used — not as a result of any action or inaction on the part of the KICC’s trustees, but as a result of the fees and expenses charged by the receivers and managers. “It appears that the church charity had a well-managed set of financial procedures and controls to ensure that the funds received were properly accounted for and used, prior to the appointment of the receivers.”

Finbar O’Connell, the KPMG Corporate Recovery Partner who was appointed KICC’s interim manager in November 2002, said on Tuesday that he had a good relationship with Pastor Matthews, the leader of KICC.

He said that the congregation had not realised that the new trustees needed time to finalise their decision, and that this frustration had “come through”. “They said that if the hold-up did not stop, then they would march.”

He said that the issues that had brought in the Commissioners were the result of KICC’s moving from a small charity to become the largest independent church in Britain. “I believe that when the interim management is over, KICC will be a huge advert for independent churches. They will come out of this stronger than when they went in.”

A spokesman for the Charity Commission said that while the Commission aimed to take account of the circumstances of individual charities, it could not accept the handling by a charity of large financial transactions in cash.

“More generally, we have recognised that some aspects of charity governance are not a good fit for churches.” The Commission was working with the African and Carribean Evangelical Alliance and others to develop “a model governing document for churches”, he said.

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