Finance

Income
Expenditure
Interchurch aid funds
General council fund
Reserves and investments

The period from Seoul 1989 to Debrecen 1997 may be seen as perhaps the most prosperous period in the financial life of the Alliance, although it has not been without problems, particularly in more recent years. The Alliance has always worked under serious financial constraints. Member churches expect much of WARC but, for a variety of reasons, they do not come forward with the financial support needed. During the 22nd general council, reference was made time and time again to the financial situation. It was clear to the delegates that the tasks described in the report "The Alliance in the Nineties" could "only be accomplished if the Reformed churches are willing to make greater commitments to the work of WARC in terms of time and energy as well as financial resources." (From Ottawa to Seoul, p.115). The Alliance had experienced serious financial difficulties prior to the general council. It was hoped that, with the new sense of direction generated at Seoul, things would change. The new executive committee took up its task in 1990 with enthusiasm and proceeded to implement the mandate of Seoul.

Income

The major requirement for the implementation of the proposed programmes and the employment of additional staff was to increase the income of the Alliance for the general budget and to seek earmarked grants for specific purposes. The strong commitment of a number of member churches and church related organizations brought a positive and promising result, as can be seen from the increased income during subsequent years.

General income from member church contributions

There is a great regional imbalance in the ability of member churches to contribute, which reflects the inequalities in the world economy. The bulk of the general income came from member churches in Europe (and in Germany in particular) and North America. The substantial increase in general income during the nineties was mainly due to increases in European contributions.

In 1990 Europe contributed CHF537,845 (67.5% of the yearly total) this went up to CHF1,076,705 (74.5% of the total) in 1993, but dropped back to CHF947,594 (76% of the total) in 1995. 74% of the European contribution in 1995 came from member churches in Germany.

The Caribbean and North American area contributed between CHF317,251 (22% of the total) in 1993 and CHF224,996 (28% of the yearly total) in 1990.

Strained budgets in the churches of the northern hemisphere and unfavourable exchange rates between the Swiss franc and other currencies decreased the income in recent years.

The other regions contributed in the years 1990-1995 as follows:

The general income showed a respectable increase during the first period but then decreased again. Only in 1992 and 1993 was it sufficient - together with earmarked funds - completely to cover the yearly expenditure. Despite a great deal of effort, it was at no time sufficient to cover the cost of the Alliance's operations by itself.

Another worrying statistic is the number of member churches paying their membership dues. On average, only about half of the membership contributed to the general budget of the Alliance: between 42% in 1994 and 55% in 1991.

The vast differences in size, circumstances and resources of the member churches makes it very difficult to fix an appropriate level of contribution. The executive committee in taking up the mandate of the 22nd general council adopted the principle in 1990 that all member churches should contribute the sum of CHF0,025 per member, with the sum of CHF500 as a minimum. This guideline did not work, despite reminders being sent out. Measures need to be taken to remedy the situation so that more regular income can be secured in the future.

Of course, it is not easy for many churches, particularly some in the southern hemisphere, to make contributions. Lack of adequate resources, currency problems and other obstacles hinder their ability to pay. Even in the economically better-off countries churches struggle to balance their budgets. Perhaps also psychological perceptions play a part (sending money to Switzerland, such a rich country?)

The very limited financial resources available continue to be of great concern and the 23rd general council, in its shaping of programmes and policies, needs to reflect on how best the Alliance may continue its work. For example, could the general council consider introducing a written commitment by each member church in the form of a pledge showing the sum to be contributed to the Alliance each year?

Ear-marked Income for Programmes, Staff Recruitment and Secondment

To secure new staff appointments and to cover programme expenses it was necessary to raise additional earmarked funds and to seek staff secondments. Fortunately, due to the generosity of member churches and other donors, this proved to be successful and made possible a considerable expansion in activities over the period.

On the programme level financial assistance was secured enabling four staff positions to be added:

• Assistant to the general secretary (in 1991): (German Churches Development Service, KED)
• Executive secretary for PACT (in 1992): (Netherlands Reformed Church; Reformed Churches in the Netherlands; German Churches Development Service, KED)
• Communications secretary (in 1993): (Church of Scotland; Evangelical-Reformed Church, Leer; Church of Lippe)
• Coordinator for youth concerns (in 1995): (seconded by the Mission Covenant Church of Sweden and the Mission Covenant Youth for the period 1995-1997)

All the subsidies listed are limited to the period of the current contract of the above-mentioned staff and will then terminate unless a renewal is negotiated.

The Presbyterian Church (USA) has participated in the funding of the position of the secretary of the department of cooperation and witness, for which we are most grateful. Unfortunately, over the years, the grants has been reduced and no commitment has been received beyond October 1998. It is hoped that this funding will be renewed.

The earmarked funds received in support of staff and programmes came to CHF756,130 in 1995. This represented 36% of the total expenses, indicating that in 1995 only 63% of the expenses could be covered by the general income from membership contributions. The financial operation of the Alliance is very far from self-supporting.

It should be noted that, in spite of the considerable expansion of the programme staff during the period from Seoul to Debrecen, only one new support staff position was created. An additional administrative assistant was added to the staff in 1992.

Expenditure

The total expenditure in the annual accounts reflects the increased level of activity in the Alliance and the additional staff employed:

The decrease in expenditure in 1995 and 1996 is a result of the reduced income. Special efforts had to be made to trim the budgets in those years.

In 1997, the central staff of the Alliance, an international body representing 208 member churches with 70 million members, consists of the general secretary, six programme staff and six administrative staff. This is a modest level of staffing. Given the work to be done by the Alliance, it should represent the minimum. However, faced with serious constraints due to reduced income it is questionable how even this level of staffing can be secured for the future.

Interchurch aid funds

In 1990, following the recommendation of the 22nd general council two interchurch aid funds were established: the partnership fund (serving the needs of churches in the southern hemisphere) and the central and eastern European fund. Generous contributions by member churches, ecumenical donors, parishes and individuals allowed the funds to operate successfully and contributed to the ministry of the member churches. The two funds are reported on in detail elsewhere in this volume.

Partnership Fund

During the period 1991-1996 the partnership fund received a total income of CHF6,801,730 and the partnership fund committee approved grants for 187 projects to 56 member churches in 50 countries in Africa, Asia, Latin America and the Pacific, with a total amount of CHF5,825,081.

Central and eastern European fund

During the period 1992-1996 the fund received a total income of CHF3,595,520 and the central and eastern European fund committee approved grants for 79 projects to 12 churches in 12 countries, with a total amount of CHF2,569,917.

General council fund

With great appreciation it can be reported that the general council fund after the meeting at Seoul was able to carry forward a balance of CHF119,013 as of January 1990. As agreed 10% of the annual income from membership fees is allocated to the fund. Over the years the balance was built up and stands at CHF1,032,839 as of January 1996. This income will of course not be sufficient to cover the anticipated expenses of the general council meeting at Debrecen and earmarked income needs to be found to balance the budget.

Reserves and investments

The Alliance has never been blessed with adequate investments or reserves, which could serve as a safety net in case of deficits in the annual accounts.

As at 31 December 1995, the reserves show a balance of CHF305,748, from which the deficit for 1995 (CHF133,778) needs to be deducted.

It is interesting to note, however, that the investment portfolio at the end of 1989 was valued at CHF446,000, together with a further CHF125,000 in various cash accounts. Six years later, at December 31 1995, the portfolio stands at CHF2.7 million and cash and short term deposits amount to a further CHF1 million.

This reflects the substantial growth in WARC activities over the period, the development of the interchurch aid funds, and the building-up of the general council fund; but it also represents excellent stewardship of the Alliance's resources by the bank, the United Overseas Bank (UOB), and the finance staff of the Alliance. The former general treasurer, Jean-François Rochette, was employed by the UOB and managed the investments himself. When he left the bank it was decided to leave the portfolio with the UOB and to give them discretion to manage the portfolio within investment policy guidelines approved by the executive committee. This they have done very successfully.

In the early 1990s portfolio management was in the unusual situation of obtaining better returns on short-term deposits than on long-term investments in bonds and shares. Good use of these good returns was made to improve resources. Now that longer-term holdings are again more beneficial, as much as possible is being invested, though this requires careful cash flow management to maximize returns, particularly at a time when Swiss interest rates are very low and the US dollar is only beginning to move upwards again against major European currencies.

In 1992, the executive committee agreed on investment policy guidelines safeguarding the investments and at the same time providing ethically orientated guidelines for the portfolio management. These are the basis for the portfolio management by the UOB and appear to be working satisfactorily.

Conclusion

It should be noted with great appreciation that the successful implementation of the many programmes and activities during the years since Seoul has only been possible due to the generous and untiring commitment of many member churches, ecumenical donors, parishes and individuals. However, the financial stability of the Alliance is not at all assured and there is a great deal of uncertainty about what can be carried forward beyond 1997 in terms of staff and activities.