Church records $777,000 deficit

The national office of the Anglican Church of Canada has reported a deficit for the fifth straight year in 2007, with a shortfall of $777,195; the amount is $290,768 more than the loss recorded in 2006 of $486,427.

The deficit would have been $1.97 million had General Synod not received a refund last year of $1.17 million from the federal government as part of the revised Indian Residential Schools Settlement Agreement, the financial statements showed. The statements reported revenue of $13.68 million, and expenses of $14.46 million.

General Synod treasurer Peter Blachford said there were a number of reasons for the deficit, but that the biggest cost was related to the transfer of Anglican Book Centre (ABC), the church’s Toronto-based bookstore, to the Lutheran bookseller, Augsburg Fortress Canada.

“We knew we would have to clean up before turning it over to Augsburg,” said Mr. Blachford in an interview.

“Although we wrote down $355,000 worth of obsolete ABC inventory, this did not represent any actual out-of-pocket expenditure.”

Other ABC-related costs included $291,000 in severance packages for employees who either lost their jobs because of the merger or who declined an offer to work for Augsburg Fortress. “A number of employee positions evaporated as a result and we had to give appropriate packages to long-term employees. We accrued all the costs for it and recorded it that year,” said Mr. Blachford.

“Augsburg and General Synod anticipated more store staff accepting offers to work for Augsburg but individuals decided not to; only one stayed. We had packages to pay.” An additional $25,000 was spent for outplacement counselling services for departing employees.

Also, $81,000 (based on average sales) was lost when the bookstore was shut down for six weeks during the transition, inventory counting, and computer training, said Mr. Blachford.

He added that in accordance with its distribution agreements with ABC, diocesan bookrooms and other book retailers were allowed to return unsold merchandise once the deal with Augsburg Fortress was announced.This amounted to $51,656.

Augsburg assumed full control of ABC last June 2007 under an agreement that allowed it to operate the bookstore for a trial period of three years.

Under the renewable arrangement, General Synod will receive revenue from Augsburg for rent of the ABC storefront operation and the lease of the store’s name. The deal avoided the planned closure of the ABC storefront – which had been losing money in recent years – in favour of an Internet and telephone-based retail operation.

Mr. Blachford said a “tremendous amount” of inventory had to be written down because “we found things that had been there for 20 years.”

He added: “These were items that used to always sell, but times have changed and some stock stayed longer. Money is tighter so people are just buying what they need, not what would also be nice to have.”

Other factors that led to the deficit included increased travel costs, said Mr. Blachford, noting that 2007 was “a General Synod year,” with national office management and staff traveling from Toronto to attend the triennial meeting Winnipeg.

Although donations to the Anglican Appeal, the church’s flagship appeal, went up by 1.6 per cent ($438,344 compared to $425,881 in 2006) in 2007, it still fell short of its budgeted revenue target of $550,000, added Mr. Blachford. Proportional giving by some dioceses was also down.

“I’m calling it (2007) a transition year. It was a year of shifting into a new year with a new primate; it was a year to clean up the ABC,” said Mr. Blachford.

At its May meeting, Council of General Synod (CoGS) approved the 2007 financial statements of the General Synod, the Anglican Church of Canada Consolidated Trust Fund and the Anglican Church of Canada Resolution Corporation.

CoGS also agreed that approval of the General Synod’s annual financial statements “not be eligible for placement upon the ‘no-debate’ lists” at meetings.