Investment losses from last year’s global market decline left the church’s national office with a budget deficit of $1.55 million at the end of 2022, a financial statement released to General Synod shows.
The deficit occurred despite an operational surplus of $346,000. Total revenue for General Synod in 2022 was $9.75 million, down by more than $37,900 from the previous year. Expenses were $9.40 million, or $882,000 higher than last year.
In the financial management committee’s report to General Synod June 30, treasurer and CFO Amal Attia said investment losses, however, made “that surplus a deficit and that is as a result of the nosedive that the entire investment portfolio [took] for everybody.” Investment losses of $1.77 million and a $250,000 provision for potential legal settlements left the budget awash in red ink, despite more than $123,000 in undesignated legacies. Market losses from unrealized investments, Attia added, were “not anything in our control.”
Stock and other investment markets around the world experienced declines in 2022 due to a number of factors going back to the economic recession that followed the COVID-19 pandemic, which later resulted in soaring inflation and global supply chain problems. Russia’s invasion of Ukraine in February 2022 also caused selloffs in many financial markets.
A key reason for the increase in expenses, Attia said, was the resumption of travel by General Synod staff as the pandemic eased.
Last year’s financial results stand in stark contrast to those for 2021, when an operational surplus of more than $1.26 million combined with investment income of $2.53 million for a total budget surplus of more than $4.36 million, the statement shows.
Attia described the $250,000 provision for legal settlements as a “precautionary measure” in light of the fact that, as detailed in notes to the consolidated financial statements, General Synod is a “defendant or co-defendant with several dioceses in a number of legal claims.” While potential liability with respect to the claims cannot be determined, the notes add, General Synod “believes it has good defenses to these claims or adequate insurance coverage for any successful claims.”
In discussion that followed Attia’s presentation to General Synod, Archbishop David Edwards of the diocese of Fredericton expressed concerns about investment in rental properties mentioned in the committee’s report. Edwards said that real estate investment trusts can cause problems in the housing market, the effects of which are felt particularly among those with lower incomes.
“Often lower-income people fall out at the bottom of the housing market and become unhoused, so I have a concern around that,” Edwards said. “Yes, it’s a good investment, maybe. But what have we put in place to make sure that it’s not exploitative in any way?”
Attia said she had confirmed with Connor, Clark and Lunn Private Capital—the firm that manages General Synod’s investment portfolio—that General Synod is not investing in housing but rather commercial building, which she said “has been giving a very rewarding return on rentals.”
“We are not buying at all any of those buildings,” Attia added. “We are holding shares in a big portfolio of assets of commercial [building] … mainly here in Calgary. I made that inquiry and I made sure that we are safe. It’s not housing at all.”
Resolutions to approve the audited consolidated financial statements of General Synod and the General Synod Consolidated Trust Fund for the fiscal year ending Dec. 31, 2022 both carried.
