Pandemic year ends with surplus—but cuts likely at national office from 2022, CoGS hears

Despite the difficulties and uncertainties brought by the COVID-19 pandemic, General Synod is projected to end the year with a substantial surplus, Council of General Synod (CoGS) heard Nov. 7. However, proportional giving from dioceses—General Synod’s largest source of revenue—is expected to continue declining, and program cuts will likely be necessary between 2022-2025.

CoGS voted to pass the 2021 operational and capital budgets after a presentation by General Synod treasurer Hanna Goschy during the council’s virtual meeting.

Goschy noted that the 2020 surplus is due almost entirely to the effects of the COVID-19 pandemic. “Virtually all travel in 2020 has been suspended, This results in some significant expense savings,” she told the council, noting that along with an absence of staff, committee and governance-related travel, meetings of CoGS and the House of Bishops had both been held virtually this year.

Along with travel savings, General Synod received two months of the Canada Emergency Wage Subsidy and had “some savings in staff costs.”

For 2020, proportional giving from dioceses “is expected to lag budget, but not by much,” Goschy said. “The primate was in conversation with many diocesan bishops earlier during the year, I’ve been in conversation with many diocesan finance officers…, and many of the dioceses affirmed their commitments for 2020. So I think that speaks incredibly to the commitment and support of General Synod ministries by dioceses across the country. It’s just amazing.”

Looking forward to 2021, however, a different picture emerges. “Total revenues [for the 2021 budget] are planned at $8.7 million, expenses at $9.4 [million]. There is a deficit of $622,000 before transfers, and then transfers from reserves and appreciation of $643,000, with a very, very small surplus planned at $21,000. So there’s quite a big transfer from reserve,” Goschy told CoGS.

The decline in revenue reflects expectations of a decrease in proportional giving from dioceses, contributions that account for 88% of General Synod’s net revenue in the 2020 budget.

Ongoing decline in proportional giving has been raised at previous meetings of CoGS, and a continuing decrease was expected even before the pandemic.

“What we’ve seen in the past two years was a really significant drop in proportional giving. As certain dioceses have faced some challenges in their own finances, they have not been able to contribute to a level, perhaps, that they have in the past,” Goschy said. The forecast for diocesan contributions in 2020 is $7.4 million dollars, which falls $119,000 short of the budget.

Proportional giving in 2021 is budgeted for about $6.4 million, a 15% decrease from 2020. However, this also includes a $1 million contingency. “That contingency is really large, and hopefully it’ll be large enough. The [amount of] proportional gifts by dioceses is less certain for 2021 than it has been in the past, and that’s just because I haven’t received proportional giving reports from everyone,” said Goschy.

Typically, Goschy said, dioceses send General Synod a proportional giving report outlining their commitment for the following year. This creates a lag of two years, so that the 2021 budget would be based on 2019 financial results. “But the reality is that many dioceses don’t know what’s going to happen in 2021, so I did not receive many reports,” said Goschy. “The best that I could do was look at past history, estimate some dioceses based on what I know is going on in their area locally, make some estimates based on what certain dioceses have told me.”

Goschy said General Synod has so far been managing the decrease in proportional giving by decreasing its salaries and benefits expenses, and by not replacing staff who have retired or resigned their positions. She noted that General Synod had gone from a head count of 50 full-time staff in 2019 to 43 full-time positions in the 2021 budget.

Assuming a 2% decrease annually in proportional giving, the budget for diocesan contributions would total just $5.9 million in 2025.

During a response time, Canon David Harrison raised the question of whether 2021 would be the last year “that we will be able to have a net benefit from reserves, and in fact…program cuts starting [in] 2022 and getting deeper are in fact the reality we’re facing?”

The presumption that proportional giving would continue to decline indicates that cuts will be necessary in 2022-2025, Goschy said, adding that “that was the case even a year ago before COVID hit.” Goschy said she hoped to see the Strategic Planning Working Group and Proportional Giving Task Force—which will be charged with assessing the system for diocesan contributions—working together to answer that question.

Goschy pointed out that General Synod “doesn’t have a whole lot of levers to pull in response to decreases in revenues,” and noted that the three main areas of expense that could be reduced are staff salaries, travel and funding for the Council of the North. Salaries and benefits make up 44% of General Synod’s expenses. Council of the North grants account for 23% of expenses, and travel accounts for 11%.

“Where are you going to cut if you have to cut? I can’t say that today. There’s going to have to be a lot of work done and some careful thinking before we have to decide on that. We’re going to have to be very responsible, and obviously the budgeting has to be in line with the work of the strategic planning group.”

Goschy also noted during her presentation that the overall travel budget had been decreased for 2021, both to reduce costs and due to the uncertainty of when travel can resume because of COVID-19.

In addition to diocesan contributions, General Synod’s net revenue comes from Resources for Mission (2%) and other sources (10%)—such as rent for shared space in the church’s national office, investments and revenue from ABC Publishing.

In addition to passing the budget, CoGS also voted to sign a non-binding memorandum of understanding with an ecumenical partner to look into relocating into a shared work space. The memorandum opens up the future possibility for the church’s national office to move from its current location at 80 Hayden St., Toronto, to a new location, which would be leased from and shared with an ecumenical partner.