THE Church Commissioners have survived the worst of the economic turmoil brought about by the coronavirus: their £8.7-billion fund is mostly back to where it stood before the pandemic hit.
Global stock markets collapsed by about 30 per cent in March, as countries went into lockdown and economies were effectively suspended. In many places, however, including the UK, there has since been a significant bounce-back, which has mitigated much of the earlier losses.
The Commissioners have experienced much of this recovery themselves: the value of their equities investments has increased by 20 per cent since the March crash.
Although this is less than the 30-per-cent recoveries seen worldwide, the 20-per-cent recovery has broadly cancelled out the losses seen at the start of the Covid-19 crisis.
Because the Commissioners’ stocks are diversified and include fewer publicly listed equities than the average fund, they did not drop as precipitously as the wider market did. A spokesman for the Commissioners explained on Tuesday that their fund was, by nature, more diversified, and better protected from stock-market crashes.
“In recent years, we have been making a number of adjustments which makes our fund more defensive and has helped prepare us for turbulent markets,” the spokesman said. “This means we are less impacted than some, although clearly not immune from the large market falls we saw at the beginning of the crisis.
“Markets have since rebounded with paper losses in public equities substantially reduced by a rebound of approximately 30 per cent.”
Despite this, caution is still considered necessary, and the ongoing impact of coronavirus on the economy could reduce the money that the Commissioners are able to release to fund the Church of England in the future.
The Commissioners were still committed to distributing about £900 million between now and 2022, but it was too early to say if the fund was out of the woods, the spokesman warned. “We remain cautious, bearing in mind not just volatility but what the Governor [of the Bank of England] is saying will be the worst recession for 300 years.
“This will have an impact on the growth in our portfolio — growth which underpins our ability to make sustainable distributions. While the coronavirus had undoubtedly had a significant impact on economic activity and investment markets in the short term, it is still too early to tell the longer-term effects.”
Away from the stock markets, property makes up 29 per cent of the Commissioners’ assets, and its value has been badly hit by the pandemic. Commercial properties were closed for some weeks during the lockdown, and, as many large landlords have, the Commissioners have offered rent holidays to some tenants, reducing the revenues normally expected from residential properties.
“We will always balance the need and desire to support sustainable business with our fiduciary duty,” the spokesman said. “We have to meet the needs of our beneficiaries, and have to focus the support we are able to provide where it is most needed.”
Although the picture is not too gloomy for the Commissioners, the wider C of E is expected to face serious economic turmoil. Revenue from visitor numbers for cathedrals has entirely dried up, while parishes have been unable to hire out parish halls or other buildings, or receive donations from collections during suspended Sunday services.
In a document sent to members of the General Synod this week, it was revealed that the total income from parish-share receipts by each diocese had fallen significantly. On average, each diocese received 11 per cent less in April and 8.6 per cent less in May, in comparison with last year.
The paper, by John Spence, who chairs the Archbishops’ Council’s Finance Committee, notes that these falls, while “sobering”, are less than some forecasts at the start of the crisis.
The impact on parishes is even less clear, Mr Spence says, although congregations that largely give by standing order will tend to fare better than those where giving is mostly through collections.
Shortly after the lockdown began in March, the Archbishops’ Council and the Church Commissioners announced a joint package of about £75 million in short-term liquidity funding for dioceses and cathedrals. Most of this entailed the deferral of payments from the dioceses to cover clergy stipends, and the paying of regular distributions to dioceses up front in a lump sum this year rather than in instalments (News, 3 April).
Despite these efforts, some dioceses have drawn on the Government’s furlough scheme to save on staffing costs, while others have begun discussions on leaving vacancies open for longer or reducing stipendiary posts (News, 1 May).
Several have warned that, even with the temporary breathing space given by the furlough scheme or the Church’s liquidity funding, longer-term bailouts from the national C of E will be required.