Common Fund

Common Fund - update 2021

2021 would have been the third year of our established approach to discerning our Common Fund contributions in accordance with the revised ‘Common Fund – Sharing God’s Generosity’ methodology, underpinned by the People & Places framework,.  At the beginning of 2020, we had anticipated that 2021 would be a year of stability with regard to the basis of calculation and we would be starting to see the benefits of the new approach in terms of growth – as we aspired to an increasingly fair allocation of resources, delivering a more sustainable financial future for the Church of England Birmingham.

The arrival of COVID-19 in March has dashed these hopes and the next 2 years will almost certainly be a time of retrenchment for us all as we look to maintain as steady a ship as possible through these difficult times.  Like our parishes, the financial impact on the DBF has been significant - the DBF is expecting to deliver an unrestricted financial deficit of around £1m in 2020 and a slightly larger deficit of around £1.2m in 2021.  This is after reducing, and/or delaying our planned maintenance and improvement programmes for clergy housing, furloughing staff and cutting back on general expenditure across all areas.  We have been helped by a £1m sustainability funding contribution from the Archbishops’ Council, which is expected to cover our 2020 deficit.  Balancing the 2021 budget will require us to look to our designated reserves to help us bridge the £1.2m gap.

In 2020 we have maintained an overall level of Common Fund close to 80% of the original 2020 Ask.  However, we are anticipating that most parishes will start 2021 significantly poorer in cash terms than they would like, after their sacrifices of 2020. 

Under the established methodology, the calculation of the Financial Contribution element is based on previously reported unrestricted parish income.  The table below shows how the methodology would have worked for 2021 and 2022:

Common Fund payment year

Parish income basis year

Affordability if methodology followed

2021

2019

 

Difficult for parishes to identify cash to pay with

 

2022

2020

 

Difficult for DBF – CF will be significantly less than clergy stipend cost

 

In 2021, this formula says that parishes will be making Common Fund payments calculated on strong 2019 income but out of cash holdings that have been substantially damaged by maintaining Common Fund payments in 2020.  In 2022, the formula assumes that Common Fund payments will be calculated based on 2020 parish income and because of the drop in parish income in 2020, will almost certainly not generate a large enough level of Common Fund Ask to enable the DBF to fund capable ministry at anything like existing current levels.

For this reason, Bishops’ Council and Diocesan Synod have approved the suspension of the formula for 2021 and 2022 to enable us to have much more nuanced and collaborative discussions at parish level to ensure that the level of Common Fund achieved in both years is affordable for parishes and the DBF.   

We have set a maximum and minimum Ask in each of 2021 and 2022 based on the 2020 Ask that was agreed with each parish.  Where there have been changes to the agreed ministry in a parish (for example moving from a full-time to a part-time minister during 2020) or if 2018 income was abnormally high or low, we will adjust the 2020 Ask to reflect this to give us the maximum 2021 Ask.  The minimum 2021 Ask will be set at 75% of the 2020 Ask (or the adjusted figure). 

For 2022, we currently expect to increase these maximum and minimum figures by inflation to reflect increases in the stipend and other costs. Gifts will remain at the discretion of parishes as they always have been, unless they reflect a previous agreement (such as funding an Associate Minister in the parish). 

We plan to carry out a review of the formula during 2021 to ensure that it fully reflects the emerging new Deanery structure and the likely shape of context and oversight ministry, as well as being more robust in the face of a more volatile world. 

If you have any questions in relation to these changes, please speak to thr Archdeacnos, the Director of Fiance Karen Preece or the Diocesan Secretary, Jan Smart.