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Episcopal Churches across US Feel Pinch of Recession as Pocketbooks Close - I

Episcopal Churches across US Feel Pinch of Recession as Pocketbooks Close
Loss of Income and Endowments Loom in Cathedrals, Parishes
Angry Parishioners say they don't want their money going to Diocese and National Church

Episcopal Dioceses and Parishes Face Worst Financial Crisis since Depression - Part 1

News Analysis

By David W. Virtue
www.virtueonline.org
12/26/2008

It was Christmas Day and The Very Reverend Samuel G. Candler, Dean of the Cathedral in Atlanta, sent out an urgent news appeal. In bold letters he cried: ST. PHILIPS CATHEDRAL IN THE RED.

"I learned today what is required to balance our budget for 2008. The Cathedral of St. Philip needs $949,000 by December 31 in order to meet this year's expenses. There are two ways you can help: If you have not paid your 2008 pledge, please do so by December 31. Secondly, if you can make a special Christmas gift-an additional gift-please do so by the end of the year, as well. We really need it. And the world needs the Cathedral of St. Philip."

Does it? There was a time when the cathedral was in the hands of orthodox believers. The Very Rev. David B. Collins was the dean then and the cathedral throve. No longer. Candler's pro-gay liberal theology has reduced the cathedral in size and prominence. The cathedral is a pale reflection of its former self.

This cathedral is not the only Episcopal institution in trouble. "A deeper and prolonged financial crisis will likely result in a survival-of-the-fittest scenario among local and national faith organizations, which, in turn, will reshape the religious ethos for years to come," said Robert Parhamis, Executive Director of the Baptist Center for Ethics.

A recent study published by The Barna Group found that many Americans have reduced their giving to churches and other non-profit organizations, which could result in donations being billions of dollars less than expected before economic problems erupted.

This is certainly the case with The Episcopal Church.

A Letter from the rector of St. Bartholomew's Episcopal Church in New York City, a landmark social church where the movie "Arthur" was shot, is facing a short fall of $500,000, according to its rector, The Rev. William McD. Tully. In a "state of the church" report on St. Bart's, he issued a "fair warning letter" to the church saying that St. Bart's is being hammered by the national economic crisis.

"We knew it wouldn't be easy in 2008. We downsized the budget and the fundraising goal as we entered the year. We left two clergy positions vacant and squeezed lots of other necessities out of the plan. And as the year has gone on, our concern has deepened. We're facing a deficit that might be as large as $500,000 on a $6.5 million operating budget. Will you do what you can to keep the hope of St. Bart's alive? As the year has gone on, our concern has deepened."

The National Cathedral in Washington came in for terrifying criticism over recent layoffs. One former employee blasted the cathedral's Dean, The Very Rev. Samuel T. Lloyd, saying, "you have done enough (damage), step down.

"Two layoffs in six months, 70 plus employees, their husbands, wives, children, all forced to change their lives amidst angst, shame, worry, and sleeplessness, because of a Dean and Cathedral Chapter that have chosen the wrong course of action over years, not months. Dean Lloyd and Chapter have doubled $enior $taff over the past three years, the result of which is revenues not meeting expenses.

"As I talk to former employees, the great sadness is that such a wonderful place with terrific spirit has been run aground, leaving the poor former employees and current employees to swim on their own to shore while the executive team steps calmly into their lifeboat and is carried away. The Dean, and the Chair of the Cathedral Chapter must resign and new leadership be put into place."

"The centennial celebration ($1.7 million) was almost entirely paid for by "unrestricted contributions". It may not have been in the operating budget, but it was unrestricted, so they could have done anything they wanted with it. They chose to spend it, believing that it would lead to major gift cultivation. They were wrong. As with any organization, they should be held accountable," said a laid-off employee.

The Anglo-Catholic parish, Church of the Ascension in Sierra Madre, California, shows how reliant the whole church budget is on a few pledging units. When they leave, the only option left is to sell part of the property to get them through another few years, until there is nothing left to sell, said a VOL source.

The parish rector, the Rev. Canon Michael A. Bamberger, who has been there since 1985, wrote saying the church faces another budget deficit of massive proportions (approximately 15% to 20% of the budget). VOL's source stated, "Last year we were fortunate to have a year-end outpouring of generosity that offset the anticipated deficit. Now things have changed. The church has approximately 100 pledging units (105 last year, 98 at the beginning of this year, 94 now); the pledged amount is down. Unfortunately, an unbooked tax payment from 2007, a mis-allocated insurance cost, a decrease in pledges and plate offerings, and unexpected other expenses have increased the current deficit to about $22,000, a deficit which the rector projected would grow to about $45,000 by year's end." Difficult times call for difficult solutions, he said.

Here are a few possible solutions for Church of the Ascension:
1. Eliminate the music program and try to make up the remaining deficit through increased or additional pledges; 2. Sell the parking lot to a developer;
3. Sell the parking lot to Gooden School and lease it back for use on Sundays;
4. Sell the Parish House to a developer (or the Parish House and the parking lot);
5. Sell the classrooms to Gooden School and lease them back for use on Sundays;
6. Sell the playground to a developer (or co-develop it, erecting condominiums from which we could derive rental income); or 7. Any combination of the foregoing.

"I don't know that any of the foregoing is desirable, but something must be done as we are not living within our means," the source wrote.

THE Church of the Advent in Boston found itself with some people refusing to pledge because a portion funded the diocese. Wrote the rector, Fr. Allan B. Warren, "Because of this ambiguity in the larger groupings of which we are a part, some people have said to me or to members of a Stewardship Committee, "I won't make a pledge because I don't want any of my money going to the diocese or the national church."

The Church of the Advent has a sizable endowment. "The major part of our endowment came to us some years ago from a woman who was a doctor and a regular Sunday by Sunday communicant for decades. During my time here, we have received several remarkable legacies nearly a half million dollars from a man who was a janitor; a sizable sum from a woman who ran a dress shop. And quite recently, more than three quarters of a million dollars from a man who can only be described as odd." It is not enough, however.

Warren noted, that there is a clear split between what endowment income pays for in the budget and what is paid for by money received from the pledged stewardship commitment from members. Noting costs for heat, light, regular maintenance, cleaning, office expenses, insurance and expenses over which there is no control, Warren said they must be met and paid for simply to keep the church open and operating. "The endowment, therefore, keeps us here and keeps us open. Nothing more."

Putting his best face on why the church should support the diocese and national church, Warren admitted that each year the diocese does any number of things which he thinks are wonderful, and each year the diocese does any number of things which he thinks are stupid and wrong. "Each year the national Episcopal Church does things which I think are terrific and each year the Episcopal Church does things which I think are stupid and wrong."

Then he admitted, "Because of this ambiguity in the larger groupings of which we are a part, some people have said to me or to members of a Stewardship Committee, 'I won't make a pledge because I don't want any of my money going to the diocese or the national church.'"

From St. Mary the Virgin in Times Square, NYC, comes this word of "retrenchment" from its rector, The Rev. Stephen Gerth. "The Board of Trustees reworked the operating budget for the remainder of 2008 and made decisions shaping the operating budget for 2009. The collapse in the United States equity markets in September and October cost Saint Mary's approximately $1.2 million dollars. This was money the trustees had set aside two years ago to fund deficits in the annual operating budget as we continued our steady growth to a balanced budget. The trustees have made substantial and difficult cuts in personnel and program to keep the parish on a prudent path. None of these cuts would have been made if the financial situation were not what it is."

As a result, the trustees eliminated the full-time position of administrative assistant, the half-time position of bookkeeper and the part-time finance office assistant. The music budget for 2009 was cut in half and the associate organist Robert McDermitt was let go.

The Rev. Ronald C. Crocker of St. George's Episcopal Church in Arlington, Virginia, since 1997, told his congregation recently that they will be facing a large deficit situation in 2009. To "solve" the problem of the deficit, the vestry offered a series of solutions, including, reducing their diocesan pledge to cover the shortfall, eliminating the associate rector position, and reducing the hours of other employees, and compensation as appropriate. They also talked about "trimming out" $35,000 of maintenance from the buildings and grounds and taking the Food Pantry costs out of the budget. Other actions include eliminating the sexton position and hiring a cleaning service instead. None of these possibilities are ideal, or even palatable, he said. The church then said it would eliminate the associate rector of St. George's sometime in 2009, because it could not afford two full-time clergy positions. The priest, however, said he felt a moral obligation to maintain the parish's pledge of $55,000 to the diocese. "We are an Episcopal Church wrestling with our identity and cohesion right now."

It is ironic he would send money to finance lawsuits while laying off his associate rector.

Some "'on the ground'" examples of what the future holds come from Trinity Episcopal Church in Newtown, CT, which held a forum on their parish's financial situation. They have found themselves in a place where deep cuts in the budget will be necessary in 2009. With a $230,000 deficit and endowments dwindling due to the current financial atmosphere, the church has three options: deep cuts in ministry and staffing, additional income for 2009, or a combination of the two. St John's in Saginaw, Michigan, reported at its website that they have been taking over $100,000 from of their $1M endowment every year. They now realize this is unsustainable and have started to cut back. The 2009 budget shows only an $80,000 endowment draw down.

The chart of Christ Episcopal Church in Middle Haddam, CT, under the Rev. Mark E. Given shows something happened in 2003. (Guess). Five years later, it is going on life support. Working with the diocese, the parish and the vestry, after considering many options, concluded the following: "We do not plan to close Christ Church. We do not see merging with another parish as a workable option. We are actively exploring partnering with another parish in some form of shared ministry, and have begun preliminary discussions with the leadership of some other parishes. The church will transition from full-time ministry to a ministry that is sustainable with their current pledge income (and depleted endowment)."

At St Martin's Episcopal Church in Fairmont, Minnesota, The Rev. Dr. Winifred Mitchell asked her people bluntly, "Do you want to keep the parish alive and thriving no matter what the cost? Or do you think it is expendable-a church whose time is winding down?"

"What kind of effort am I willing to put in to keep it here for me and for the next generation of Episcopalians?" These questions are vital to our parish. Often, when congregations stop thriving and growing, they first cut programs, especially outreach and those that serve youth and young families. Next is cutting back on paid staff: first a part-time priest, then only occasional supply clergy and volunteer musicians. Usually the last to go is the building, which is by then in some disrepair-a shell left of the life of a once vibrant congregation."

"At St. Martin's, we need prayer and discernment about our future," she said. "We must come to terms with our tough budget situation. We are about to run out of time. We are spending the endowment principle to subsidize half our annual budget. Pledges and plate cover only half of our $124,000 annual expenses. With only about $100,000 left in the endowment, we have a little over a year to continue at the current rate. Then the parish will have to choose what not to pay: a priest's salary and benefits, an organist, or the cost of operating the building."

She then pled, "Can you donate one percent of your net worth to the church to help restore our endowment? "

At least one Episcopal Bishop recognize's that the church's "fragile security is under threat." Bishop Edward S. Little of Northern Indiana, in an address to his 110th Diocesan Convention, said he is convinced that the Episcopal Church's response to whole dioceses and parishes leaving TEC has been both misguided and costly. He said the legal fees, whose price tag already runs in the multiple millions of dollars, "will sow a harvest of bitterness and may well close the door to the reconciliation for which we all yearn."

Certainly bishops' salaries seem criminally high given the poor performance (massive attendance declines) they are experiencing. The highest paid TEC bishop is the Bishop of Southern Ohio who collects a cool $280,000. The lowest paid bishop draws $80,000. At the same time, only ONE diocese has grown out of 100 dioceses based on recent ASA figures.

Perhaps they should they follow the lead of Episcopal Bishops in 1934 when some took pay cuts themselves to share in the coming pain, rather than just cutting the mission staff, as reported in TIME magazine. Then Presiding Bishop James De Wolf Perry began the move for voluntary retrenchments by pruning his $15,000 salary 10%. He had a rich wife with an independent income. New York's small Bishop William Thomas Manning, who also had a rich wife, a fine Bishop's Palace, a salary of $15,000 and a $5,000 "discretionary fund," followed suit. In response to an emergency call for retrenchment from Bishop Perry, Massachusetts became the first diocese to act as a unit in salary cuts. Bishop Henry Knox Sherrill, who got $15,000 per year, joined with 300 Massachusetts clergymen in contributing $28,000 in the form of reduced salaries. Wealthy, 81-year-old Bishop William Lawrence emerged from retirement to lend sage counsel. The general clergy was spared salary adjustments.

"The layman doesn't realize that most of his money is being held this way. He gives to a budget and supposes that if reductions are necessary they will be made proportionately on all items, not on missions alone. ... In some cases the bishops have failed to send their share. What isn't held back by the priest is kept by the bishop. The deep shame of keeping the money lies in the fact that there is no one to protest, to the hurt of men and women who trust us out in the far corners of the world."

The truth is The Episcopal Church is in a particularly poor position to weather a major financial crisis. At the end of the day, it is people in the pews who will keep a church going and not endowments. The Episcopal denomination is particularly vulnerable, given its recent massive losses in attendance. It is presently losing nearly 1,000 members per week. The average age of an Episcopalian is in the mid sixties. The Episcopal Church, which reported an expected budget deficit of $2.5 million for its 2007-2009 budget, said that 2007 and 2008 surpluses could result in a balanced budget. The Episcopal Church endowment fund is reportedly down 30 percent.

The nation's financial crisis cuts across theological ranks, creating a patchwork of reports, most of which are troubling to terrible. Even those bodies that have increased their 2009 budgets have no guarantees that they will meet their paper pledges. Many depend upon a mix of church gifts and endowments.

Given the lag time between the receipt of gifts in churches and churches sending those gifts to partner organizations, the financial picture for denominational and religious non-profits may actually be much worse than what is currently being reported.

A deeper and prolonged financial crisis will likely result in a survival-of-the-fittest scenario among local and national faith organizations, which, in turn, will reshape the religious ethos for years to come, said Parham.

Chuck Warnock, a pastor and writer in Virginia, provided his assessment in a blog post entitled "Recession, the Domino Effect, and Churches." Using the metaphor of knocking over one domino and then watching other ones fall, Warnock reflected on the various indicators of economic problems and what churches and religious organizations should do in response.

Warnock wrote about 10 implications resulting from this crisis, including his belief that "some faith-based organizations will go broke or be downsized," but that the "organizations that survive will not be the largest or the most well-known." He also argued, that "theologies of ministry may get reimagined as choices are made between feeding people physically or feeding them spiritually" and that "new voices will emerge from the wreckage of old models."

A VOL reader reflecting on why people are leaving TEC and the concomitant loss in income said this, "I think the message here is that many of those leaving the TEC were faced with a simple choice. Stay, and watch their churches slowly die due to lack of funds as pledging units dried up and key church leaders left, or leave now and try to grow again. Leaving was a tough choice, having to start again in many cases with no building and no endowment, but in the end it was necessary for the longer term survival of these churches. The theology of TEC has moved into such opposition to traditional Christian beliefs, it was becoming impossible to keep many of their members while they remained under that umbrella. For those remaining, the TEC dioceses will have to start allowing these churches to disassociate themselves from the main TEC organization by diverting pledges and providing real alternative oversight if they want these congregations to exist in ten years time. But the history of TEC says they will view these parishes with horror, with their male only clergy, and would rather see them closed than let them continue in their traditions."

FOOTNOTE: From CANA Bishop David Bena comes this note. "As far as I can determine, we have so far seen no effects of the recession. Tithes and offerings continue in parishes. Gifts continue to come into the CANA office, and we are going ahead with our 2009 budget as planned."

END

Episcopal Dioceses & Parishes Face Worst Financial Crisis sinceDepression : An On-going Series from VirtueOnline.org

Parts 2, 3 and 4 can be viewed here:

Part 2 - http://www.virtueonline.org/portal/modules/news/article.php?storyid=9804

Part 3 - http://www.virtueonline.org/portal/modules/news/article.php?storyid=9983

Part 4 - http://www.virtueonline.org/portal/modules/news/article.php?storyid=10242

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