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Maggie Durran: A culture of trust

by
27 October 2011

What advice would you give to a PCC that has used up its reserves, and is considering borrowing from re­stricted funds in order to make up a shortfall in general funds? Is this ever permissible, and are there any penal­ties? The Charity Commis­sioners’ website says that restricted funds should be used only for the purpose for which they are given.

I AM sure that you have already guessed my answer to your question. It is never acceptable to borrow from restricted funds. That does not mean that the Charity Commission is going to send in the charity police to check on you, but the issue is hugely significant: it is a question of trust.

The charity sector is relatively un-policed, unless, on occasion, some­one tells the Charity Commission of a problem. Then court action follows. Until the 1990s, when there was a con­sider­able increase in charity fraud (the National Lottery reported an increase in fraudulent applications from churches, for example) and the Commission began to be pro-active in checking, the whole system ran on trust.

I am afraid that your PCC’s pro­posed approach, of taking an action that they know to be wrong on the chance that they won’t be caught, is stepping outside the culture of trust on which our society and our churches depend.

To a great extent, the maxim “an Englishman’s word is his bond” was an expression of the culture of doing what is right because it is right, not because you might get caught and punished. I expect, in the case of a PCC taking an action that the members know to be legally wrong, they might ul­timately be barred from being charity trustees (PCC members) in future, if they were caught. But the shame of local people knowing what they had done would, to my mind, be the worst punishment.

So, what can you do? I think you should look at all the uncomfortable but legal steps you could take. Here are a few possible courses of action.

Approach the archdeacon, and ask that your diocesan quota be deferred until you can increase stewardship in­come to cover the gap in funds.

Review your income and ex­pen-diture to make a realistic and prag­matic evaluation of your situation, and then run a new stewardship pro­gramme that tells church members about the reality that they face and how increased regular donations might address it.

For the medium to longer term, I would recommend that the church produce its own legacy leaflet for the pews, ensures that Gift Aid envelopes are placed in pews every week, and that every regular contributor has reviewed their Gift Aid commit­ment.

If the PCC can see that, with a little immediate help, the financial situation can be turned around, then consider asking the PCC, and long-term members of the congregation, for interest-free, short-term loans. En­sure that you have a written agree­ment with each person who offers a loan (your diocesan stewardship ad­viser will be able to suggest content and format).

It may be a telling moment: will the PCC make loans, or will it in­crease stewardship giving? If it won’t, why should outside agencies?

I would probably take a belt-and-braces approach, and follow all these suggestions.

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