Global Stock Markets Force Churches to Cut Back on Social Projects

November 14, 2002

Sagging global stock markets have caught churches and church organizations in a double bind, forcing investment income down and making donors reluctant to give because of financial problems, and leading to cuts in social programs.

Dipping into reserves is commonplace for churches. Some have done this for years as routine, but financial advisers point out that selling investments during a slump means losses are crystallized and assets may be surrendered at less than their purchase price.

For the Church Commissioners, the Church of England's main funding body, the effect of the stock market slump has been lessened by their relatively large holdings in property – 28 per cent in 2001. Assets shrunk by 5.7 per cent in 2001 compared with a loss of 8.9 per cent recorded by a national "benchmark" of comparative returns. "In the past the commissioners were criticized for the size of their property holdings, but now it looks decidedly better," said Lou Henderson, a spokesperson for the commissioners. With investments and reserves worth 4 billion pounds sterling at the end of 2001, the commissioners are responsible for stipends of bishops and deans, some clergy pensions and support for parish ministry.

The same financial problems are seen internationally. The World Council of Churches is projecting a deficit for 2002 of CHF (Swiss francs) 7.5 million ($5.2 million) – CHF 1.8 million worse than expected, partly due to reductions in contributions, the WCC said. At the Geneva headquarters of the world's largest church grouping, which has about 180 employees, staff fear drastic cutbacks in jobs and programs following a task group review whose findings are being considered at an officers' meeting on November 14-15. The WCC also has contingency plans to take out a mortgage on its headquarters building, but officers have been instructed to try to avoid using this source of credit "by all means possible."

Episcopal News Service