Episcopal Church in Cash Crunch: Takes out $60 million "line of credit" to maintain church operations

From here:

First published in The Church of England Newspaper.

The Episcopal Church’s Executive Council has authorized its finance office to seek a $60 million line of credit to support the church’s operations.  The loan will be secured by a mortgage on the church’s headquarters at 815 Second Avenue in New York, and by offering as collateral its unrestricted endowment funds.

The Oct 23-25 meeting in Salt Lake City of the church’s governing council between meetings of its General Convention also voted to cut its budget by 5 per cent next year in response to a $2.1 million shortfall in income.

A memorandum from the church’s Finance Office to the 38 council members stated that diocesan contributions to the national church were expected to be $700,000 below budget, while cuts in spending at the national church offices were expected to depress income also.

To balance its budget, the church will close its retail bookstore located at the Church Center in New York, and cease publication of the Episcopal News Monthly and Quarterly publications, while a further $790,000 would be cut from 2011 Mission Program operations.

In her opening remarks to the council, Presiding Bishop Katherine Jefferts Schori said the “old ways” must change and that “we need some structural change across the Episcopal Church.”  It faced a “life-or-death decision,” she said, according to a report from the Episcopal News Service (ENS).

The presiding bishop defined ‘life” as a “renewed and continually renewing focus on mission” and ‘death’ for the church as “an appeal to old ways and to internal focus.”

“I think we’re in some danger of committing suicide by governance by focusing internally rather than externally,” she said, noting that “dying organisms pay most attention to survival.”

Tensions between the presiding bishop’s staff and the members of council over the church’s financial problems were aired publicly at the meeting.  The $60 million loan is needed to repay a $46.1 million note payable by year’s end, which was used to fund a $10 million purchase of land in Texas for the site of the church’s archives, and $37 million in renovations to the Church Center building in New York.

According to an account given by ENS, the council’s Finances for Ministry committee chairman, Mr. Del Glover, said that only about $500,000 of the $46 million loan’s principal had been paid.  “To the extent that we are not paying debt, we are borrowing money to do the ministry of the church,” he said.

During the Oct 23 business session, Church Treasurer Kurt Barnes objected to Dr. Glover’s creation of a committee to look into the refinancing of the note.   Mr. Barnes said he had been told the committee was to have been merely a council of advice.  But it “never invited my opinion, so I don’t feel it’s a council of advice.”

He charged the committee “acts as if we’ve been asleep.”  The way “it was approached, my staff and I absolutely felt that our intelligence or ability was always being challenged,” Mr. Barnes said. “We give 10 hours a day to this church and then we have other people who say, ‘but you don’t know what you’re doing.’  That’s our problem and if we have misread it, then I am sorry.”

Dr. Glover said Mr. Barnes had misconstrued the council’s actions.  The committee had been appointed in response to council’s concerns over the church’s growing debt, he explained.  However, the presiding bishop told the finance committee not to interfere in the church’s finances.

“The job of Executive Council is to set policy, not to implement it and that’s where the rub has come,” she said, according to ENS.  The committee was guilty of overreaching, she said, adding “I think people have gotten past the anger and the insult … but let’s not have it happen again.”


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