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Use central funds to subsidise growth, not decline, says task group

16 January 2015

by a staff reporter


THE present method of distributing central church funds to the dioceses should be scrapped, says a new report, one of the set released this week as part of the Archbishops' programme of renewal and reform.

Resourcing the Future, produced by a task group chaired by John Spence, finance chair of the Archbishops' Council, says that the present formulae for allocating grants from the Church Commissioners - about £50 million a year, or four per cent of the Church's annual income - is "not fit for purpose" since, paradoxically, it rewards decline and penalises growth.

Instead, says the report, from 2017 dioceses should be ranked according to average income, and the money redistributed accordingly. Half of central funds would go to projects that showed "significant growth potential", half to mission in the poorest areas. Dioceses will be encouraged to bid for money for particular projects.

In future, if the Archbishops' Council has concerns that a diocese is failing to achieve its stated goals, or if it cannot show that money is being directed to the poorest communities, all or part of its funding could be withheld.

The report is bullish about the future: in its opening paragraphs, it states: "The question is not 'How do we limit expenditure to address our steadily diminishing resources?' That is the management of decline. The issue is 'What investment must we make to achieve the ambition of growth?'"

Part of the answer is an assumption that, eventually, growing parishes and dioceses will be able to fund their own mission. Already, 95 per cent of the Church's income comes from direct giving. Poorer communities, however, struggle to cover their costs, and have difficulty in attracting and funding clergy. This is where central funding should be redirected, says the report.

In the mean time, however, the report talks about preparing a case for transitional funding to be provided by the Church Commissioners. Spread over ten years, this will provide a cushion for those dioceses whose funding is cut under the new system.

At present, central funds are provided to the dioceses under what is known as the Darlow formula. This calculates the needs of parishes based on financial need and attendance. Thus, if attendance in parishes in a diocese decline, the allocation of central funding goes up.

Looking at one sample (anonymous) diocese, the report concludes: "Across the whole diocese, more subsidy is being put into parishes that are less deprived but declining, than those that are more deprived but growing. . .

"One cannot know exactly where the Darlow funding is being spent, as there is very little accountability over its expenditure or impact. But it is clear that it is not being explicitly targeted on mission work in poorer communities; nor is it proactively supporting growth. It helps lock dioceses into a position of subsidised decline." 

Since 2002, £420 million has been allocated through the Darlow formula. Alongside this, an additional £75 million has been disbursed through mission development funding, some through a formula, the rest in response to bids for specific initiatives.

Resourcing the Future concludes that the formula-based funding should cease, since it "blunts its edge in terms of the funding being used to invest in new growth opportunities". In future, all mission development funds should be bid for, "linked to dioceses' plans for mission and growth, and in a way in which encourages evaluation of outcomes, sustainability and shared learning".

The report looks at the Sheffield formula, which attempts to balance the numbers of stipendiary clergy between dioceses. This, too, is "unfit for purpose". 

"The Sheffield formula also focuses solely on stipendiary clergy, ignoring different forms of ministry. It takes too much account of historic structures rather than current demographic factors. As a result, the Darlow formula (which seeks to distribute ministry support to help poorer dioceses afford their Sheffield allocation) does not target funds on the poorest communities."

It concludes: "The proposals to align the national funding more closely with dioceses' plans, with the bias to the poorest communities, should help contribute to greater equity of ministerial provision across the country."

In a blog to accompany publication of the report, Mr Spence summed up the object of the week's activity: "We are here to help every parish, deanery, and diocese achieve its goals. The totality of the reports published this week represent a coordinated response to a proven and vital need."


Key recommendations:

 In future, all of the funding distributed to dioceses should be investment for mission and growth. Half of the sum available should be earmarked for the support and development of mission in the poorest communities. Half should be for the pro-active investment in new growth opportunities.

 The funding to support and develop mission in deprived communities should be distributed to dioceses through a process involving objective measures of need and through conversations with dioceses. This will ensure targeting on the poorest and effective cohesion with diocesan plans.

 The funding for pro-active investment in growth should be available for all dioceses to apply for, on a matched funding basis, with a bias in the distribution to the poorest.

 The transition to the new funding arrangements should be done carefully over a ten-year period, but we hope that additional distributions from the Church Commissioners can be found to accelerate the build-up of funding available for proactive investment in growth.

 We hope also that additional national funding can be made available to provide extra investment across the Church for recruiting and training church leaders. In addition there should be greater investment in national Church infrastructure, and activity which can improve the mission of the whole Church.



Can money alone turn around the Church's decline?

No. But decisions about funding need to be part of the solution. Money enables mission activity to take place. Church growth often costs money to sustain and develop. Spending less on supporting activities associated with decline liberates funds for intentional investment and encourages fresh thinking about how to advance mission and growth.


Will the funding changes benefit the poorest communities?

Yes. The present formula takes no account of deprivation. Moreover, the evidence shows that the national funding currently given to 'poorer dioceses' (in the form of the 'Darlow funding') does not consistently find its way to the poorest communities in those dioceses. A significant amount of the funding goes to support parishes which are not poor but which cannot afford their ministry costs because they are in decline. Our very broad estimate is that only a third of the total funding currently allocated to dioceses goes to the poorest communities. Our proposals will increase this to 50%. Further, the other 50%, which will be for proactive investment in growth across the country, also has a bias to the poor.


Will the new measure of need used to distribute funding to dioceses for the support of mission in the poorest communities disadvantage rural areas?

No. The measure of need is centred on the average income of the residents in the diocese, with a small modification to give extra help to dioceses with significant pockets of low income. The less income an area has, the less likely its churches will have sufficient resources to undertake their mission. Assessing average residents' income will enable an objective comparison of need across all areas of the country - urban and rural.


Why does the calculation for allocating funding between dioceses for mission in the poorest communities take no account of diocesan wealth or investment income?

The funding for mission in poorest communities aims to do exactly what it says - fund mission in the poorest communities. The previous formula took into account a number of church-related factors, with the result that it was never clear whether a diocese was receiving funding because it ministered to poor communities, or because of issues relating to its own management. (The more ineffective a diocese was in managing its resources the more funding the previous formula would give it.). The new allocation system will mean that the Church can be sure that funding is allocated to the most deprived communities. Investment income will continue to be taken into account in the formula system which apportions national Church expenditure between dioceses, and the funding for proactive investment in growth opportunities will take note of the other funds available to dioceses, to ensure the funding awarded is demonstrably providing additional value.


Why are there no proposals to direct funding towards areas where it is hard to sustain mission and ministry for reasons other than poverty (e.g. areas where there are significant numbers of other faiths)?

It is for dioceses to make detailed decisions about which of their parishes need financial support. The national funding represents only a small proportion of most dioceses' total income, and we believe that the greatest impact national funds can provide is for mission in the poorest communities.


Should the national funding have greater emphasis on investment in growth in view of the Church's persistent decline? Why should national funding support mission in the poorest communities? Isn't that the responsibility of dioceses?

We believe all the national funding distributed to dioceses is investment in growth, with some earmarked to support mission in the poorest communities and some used in other parts of the country where there are opportunities for growth. This reflects the Church's 'bias to the poor' and recognises the challenges of undertaking mission in the poorest communities. Sustainable growth must include growth in the poorest communities.


There is a welcome emphasis on greater mutual accountability between dioceses - how exactly will this work?

The detail will be discussed with dioceses themselves but we envisage a process for distributing the funding for mission in the poorest communities whereby: a) dioceses are given an indication of their funding; b) they decide their plans for spending it; c) they share their ideas with other dioceses as part of a peer review process to help reach a common understanding of the desired outcomes of the funding; d) the money is allocated and spent; and e) subsequently dioceses share learning on their use of their funding. Money would only be withheld from a diocese if there were serious concerns about its failure to achieve what it planned to do or if there was a lack of evidence that the monies were being directed to the poorest communities.


Is there a risk that the proposals about accountability will lead to a more 'centralist' approach?

The aim of our proposals is to support dioceses' plans for mission and growth. This involves dismantling the current central planning systems which have influenced national funding decisions. There is not a 'Church of England' strategy; there are 42 diocesan strategies. Our proposals will ensure national funding supports those strategies where there is most need and opportunity. The evaluation of dioceses' use of funding will be undertaken by peer review so that dioceses can learn from each other how they are deploying the Church's resources and so develop stronger mutual accountability.


Does the funding earmarked for proactive investment in growth opportunities also have to be used in the poorest communities?

No. Dioceses should support their greatest growth opportunities wherever they are. However, we believe there should be some bias to the poor in the distribution of national funding - and wherever financial support is provided care is taken to ensure that it genuinely supplements local resources.


What do you mean by 'proactive investment in new growth opportunities'?

It will be for dioceses to decide. It is not a push towards 'novelty'; tried and tested mission activity will be supported, for example, where there is opportunity to support it in new settings (e.g. as a result of population shifts). The focus is on extending the Church's reach - in whatever form and in whatever setting that dioceses believe will make a significant difference to the Church's mission. "New opportunities" needs to be taken in the broadest sense; they could include major expansion at an existing church whose ambition is being limited by finance.


Is this the national Church pushing an agenda on dioceses to conform mission to certain activity?

No. There is no such agenda in the national church. These changes will help dioceses take control and pursue their own visions, whatever that may be. Dioceses will be able, in each funding stream, to receive funds which fit with their own strategic priorities. This may include support for mission enablers, administrators, prophets, pastors, evangelists, visionaries, risk-takers, apologists and pioneers.


Will the focus on evaluation mean that the riskier projects are cut out? What about those with benefits which are hard to measure, or mainly have benefits in the long term? Or indeed initiatives where God may surprise us?

The focus on evaluation will mean that the Church can have confidence that its mutually shared resources are being stewarded effectively. High risk and long-term projects can receive funds if the potential benefit can be shown to be worth the risk. Funding decisions need to be informed by a clear view of what it is hoped will be achieved, acknowledging that God can always surprise us.


Does the Church know enough about the causes of church growth to ensure that any significant investment in funding is well-spent?

The evidence base relating to church growth has increased significantly over recent years as a result of the church growth research programme (http://www.churchgrowthresearch.org.uk/). Nobody pretends that there is a simple relationship between cause and effect but there is a growing amount of information about what is likely to support growth - or likely to maintain decline. Funding decisions can and should be informed by this information so that the Church's money is put to best effect.


Will the prospect of the Church Commissioners making more money available for distribution risk creating more financial dependency and reducing giving levels?

Our proposals involve a shift from a formulaic subsidy system to one which directs funding to where there is genuine need to support mission in the poorest communities. The peer review process governing the distribution of funding to dioceses for this purpose will have the specific aim of promoting dioceses' financial strength and sustainability. The funding given to dioceses for proactive investment in growth will be distributed on a matched funding basis so that there is a commitment at the outset to the financial sustainability of any new mission work supported.


Do dioceses have the capacity to take forward their ambitions to increase their number of ministers and make other necessary changes to advance their mission and growth?

A number of diocesan leadership teams have expressed a desire to improve their capacity to be strategic about their mission activity and leadership requirements, given the huge range of day-to-day issues that face them. We propose that some national funding should be earmarked to support diocesan teams so they have increased capacity to develop and deliver their plans for change. There will need to be discussions with dioceses about what would best help them.


Is the transition to the new funding arrangement too long in view of the seriousness of the Church's decline?

An orderly transition is required so that dioceses do not face sudden large swings in their funding levels which will undermine their mission and growth plans. Most dioceses will face minor changes; the ten year period allows an orderly transition for all. The 'cost' of the transition arrangements, if no extra funding is available, is that there will be not be as much money available as we would like in the short-term for proactive investment in new growth opportunities. We hope therefore that the Church Commissioners will be able to make some more money available to help speed up the pace of change.


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