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Background

Diocesan Stipends Funds (DSF) were established in every diocese in 1949. DSF could be funded from a variety of sources including grants, legacies, donations et al. DSF was held and managed by the Church Commissioners on behalf of each diocese. The purposes for which DSF could be used were further defined under the Diocesan Stipends Fund Measure 1953; this measure states that income from DSF can only be used to pay clergy stipends, national insurance, pension contributions and repair and maintenance of clergy houses. It is permitted to invest DSF capital in the provision and improvement of clergy housing, although most dioceses use their Parsonage Fund for this purpose.

Until 1976 many incumbents received income from parish glebe assets which belonged to the incumbent for as long as they were in post. Inevitably some parishes were much wealthier than others in respect of glebe so it was decided that by the Endowment and Glebe Measure 1976 all glebe assets would be transferred into the care and management of the dioceses as endowment funds within the DSF, the intention being that the income could be spread equitably amongst the clergy. DSF then became the responsibility of Diocesan Boards of Finance (DBFs) rather than the Church Commissioners.

Some dioceses have managed DSF more actively and effectively than others. Investment returns over the years have enabled some dioceses to increase the capital value of DSFs well above inflation even after using income for the payment of clergy stipends. In 2016 General Synod passed a measure which allowed DBFs to adopt Total Return Accounting (TRA); this allowed them to transfer capital gains on DSFs to the income account, under strict actuarial rules that would ensure that capital values, after allowing for inflation, would be maintained for future generations.

However since 2016 only ten dioceses have adopted TRA; only twelve dioceses are generating reasonable income from DSF and only twenty-three are making reasonable investment gains on DSF. Fewer than fourteen dioceses are making any significant use of DSF to pay stipends and some of these have even used DSF for other than the restricted purposes, which is illegal.

Figures for 2021 (forty dioceses)

Total Value DSF 1st Jan                                                                   £1,489,771,000

Total Value DSF 31st Dec                                                                 £1,639,099,000

Total Income Generated                                                                   £26,130,000 (1.8%)

Total Investment Gain                                                                        £151,748,000 (10.1%)

Total Expenditure on Stipends                                                          £32,803,000 (2.2%)

DSF is by far the largest endowment fund held by most dioceses and should be an important source of funds for paying parish clergy stipends. Many dioceses are neglecting these funds which total some £1.6 billion. A spreadsheet showing how dioceses have invested and are committing their stipends funds is at the end of this section.

Commentary on financial performance in 2021 (see spreadsheet for more detail)

Income

Dioceses* failing to generate 1.0%

Birmingham, Blackburn, Bristol, Canterbury, Carlisle, Chester, Chichester, Derby, Ely, Guildford, Leeds, Lichfield, Liverpool, Manchester, Portsmouth, Rochester, Sheffield, Southwark, Southwell, St Albans, St Edmundsbury, Winchester, York                              (total 23)

58% of dioceses are failing to generate a reasonable income from DSF. Some of these dioceses are generating no income at all.

Investment Gains

Dioceses* failing to make 5% gain

Birmingham, Chichester, Liverpool, Norwich, Salisbury, Sheffield, Southwell, St Edmundsbury, Winchester                                (total 9)

*Dioceses in italics appear on both lists

23% of dioceses are failing to make reasonable investment gains on DSF. Those dioceses which are on both of the above lists are neglecting a very important endowment fund which was put into their care by parishes almost fifty years ago.

Expenditure on Stipends

Dioceses failing to spend 1.7% on stipends (ie the average income)

Birmingham, Blackburn, Bristol, Canterbury, Carlisle, Chester, Chichester, Derby, Durham, Ely, Exeter, Guildford, Leeds, Lichfield, Liverpool, London, Manchester, Newcastle, Portsmouth, Rochester, Salisbury, Sheffield, Southwark, Southwell, St Albans, St Edmundsbury, Truro, Winchester, York                  (total 29)

73% of dioceses are ignoring this vital source of parish clergy stipends thereby placing an even greater burden on parish share

Given that dioceses are there to support parishes and provide clergy, this is a serious failure of prudent financial management and charity trusteeship

Total Return Accounting

Dioceses using TRA

Value

1-Jan

Income Gain Stipends Value

31-Dec

Income

%

Gain % Stipend

%

£’000 £’000 £’000 £’000 £’000
Bath & Wells 32,899 996 2,721 1,720 37,315 1.8 15.7 4.0
Chelmsford 82,503 1,443 7,513 2,888 88,435 1.7 9.1 3.5
Coventry 66,642 2,136 5,234 3,647 70,365 3.2 7.9 5.5
Gloucester 24,644 1,667 3,712 1,647 28,256 6.3 15.1 6.7
Hereford 21,117 353 2,847 657 23,732 1.7 13.5 3.1
Leicester 45,941 996 2,721 1,720 47,462 2.2 5.9 3.7
Lincoln 78,321 2,225 3,889 4,000 80,435 2.8 5.0 5.1
Oxford 106,484 2,360 16,127 6,971 117,518 2.2 15.1 6.5
Truro 34,445 867 4,136 21 39,114 2.5 12.0 0.1
Worcester 46,391 1,389 4,265 3,400 48,857 3.0 9.2 7.3
Total 539,387 13,903 55,621 26,261 581,522 2.6 10.3 4.9

These ten dioceses that have adopted TRA by 2021 generate better income and investment gains than the average. We have been told that three more dioceses (we know that one is St Albans) have adopted TRA in 2022. This means that the accounts for 2023 will reflect this and bring the total of dioceses using TRA up to 13 out of the 40 dioceses so far. Generally they generate more funds to pay clergy stipends than other dioceses although Truro did not do so during 2021. A greater concern is that, whilst these dioceses have applied income and gains from TRA to paying stipends, they have not made a commensurate reduction in parish share demand. In fact Oxford attempted to use DSF to fund projects that had no relation to clergy stipends, until it was pointed out to them that this was illegal.

Possible Actions

  • Challenge those dioceses that are on the low income and/or low gains list
  • Challenge those dioceses that are failing to use DSF to pay parish clergy stipends
  • Ask those dioceses that do not adopt TRA, why they are ignoring this important facility which can generate more funds for parish clergy stipends
  • Seek transparency from those dioceses using TRA to show how income from DSF has been used within the parish share calculations
  • Ask these dioceses why they have not used proceeds from TRA to either (i) appoint more clergy or (ii) reduce parish share demand
  • Challenge any of these dioceses which are cutting clergy and/or restructuring and claiming that this is for financial reasons.
  • Keep some sort of data bank on the different dioceses and their practice.  

When the General Synod met in February 2023, Save the Parish held a very successful ‘fringe’ event.  A range of Synod members, including John Spence, the Church of England’s Head of Finance, and his deputy came to hear what three of our financial scrutiny team had to say about finance and figures in the Church, and improving the husbandry of a charity’s financial resources.  If you would like to watch it for yourself – you can find it online at https://youtu.be/45nrep1IvWk

(Last updated: 18/03/2023 )