Parish Offer

Parish Offer pays for local ministry and mission. Individual PCCs do not employ clergy; instead, Parish Offer contributions enable the Diocesan Board of Finance to meets the costs of clergy training, stipends, pensions, housing, and ongoing support. In this way, we can provide appropriate ministry in every community. Whilst the majority of costs relate to paid clergy, there are also support costs for self-supporting ordained and lay ministers and House for Duty clergy.

We need to resource not just current clergy, but those who will lead the Church of the future. Through our Common Fund, we pay for those who will be the future ministers in our parishes – through their selection, training and curacy.

In addition, the Diocesan Board of Finance provides the essential services that support parish ministry, alongside Diocesan Board of Education colleagues who support school leaders and education resources across our 78 church schools. Other resources provided by the DBF include:

• Child and vulnerable adult safeguarding expertise
• Local ministry and Intergenerational Mission teams
• Guidance from Church Buildings, Community Partnership & Development, and Church & Society Link officers
• Pastoral reorganisation advice
• Management of clergy houses and glebe land
• Finance, Generous Giving and Stewardship support.

For 2021, the average cost per paid clergy post is around £63,000. The following chart provides a breakdown of this figure:

In 2021, our incumbents and priests-in-charge receive a stipend of £26,880. Until 2020, Hereford Diocese paid the lowest stipend of all 40 English dioceses. We raised it slightly as the trustees (Bishop’s Council) recognised the need to offer enough to attract and retain the best clergy.

The national Church operates a form of defined benefit scheme for its stipendiary clergy – the Church of England Funded Pension Scheme (CEFPS). The C of E’s Pensions Board has been in regular contact with the actuary and the Pensions Regulator to determine the precise funding requirements for this Scheme. Hereford, like every participating diocese, is required to pay a contribution rate prescribed by the Pensions Board. For a number of years, this has been set at 39.9% of the prior year National Minimum Stipend (NMS), which in 2021 totals just over £10,000.

The 39.9% contribution rate has two components: a future service rate (currently 32.8%) and a deficit contribution (7.1%). In one sense, everyone would like both these components to reduce, but this will depend on various assumptions agreed between the Scheme’s actuary and Pensions Board trustees: future investment returns, expected stipend increases, mortality, and inflation.

On the other hand, we want to ensure that after a lifetime of service in parish ministry, our clergy have reasonable provision for their retirement. A member of clergy completing over 40 years of pensionable service would receive half the previous year’s National Minimum Stipend at their normal retirement date – in 2021, that translates to a pension of just over £12,300 per year – a modest income.

Perhaps a better question is, “Can we afford not to?” With the ‘baby boomer generation’ retiring, the national Church is expecting a shortage of clergy and is trying to increase by up to 50% the number of new ministers being trained and ordained. Even achieving this goal will not maintain current levels over the next few years. So this is perhaps the most important investment that we can be making.

In order to select the right kind of people, there is an intensive selection process at both diocesan and national levels; this needs resourcing.

Pre-ordination maintenance costs (on courses and in colleges) can range from less than £5,000 to over £20,000 per person per year, over 2-3 years. Our curates placed with a training incumbent have a slightly lower stipend, but other costs are broadly similar to priests-in-charge, vicars and rectors.

We should never forget that our many Self Supporting Ministers and Licenced Lay Ministers give generously of their precious time. Without them, we would struggle to maintain ministry in some of our churches. However, there are still costs attached to training, equipping and supporting them in their roles. Initial training for an SSM costs around £8,000 a year, and they benefit from ongoing ministry development, and support from Archdeacons and others.

The Diocesan Board of Finance employs a number of support ministers to enable ministry in our parishes and church schools. It makes sense to share their expertise at diocesan level as this ensures good coordination and value for money.

Prior to the COVID-19 pandemic, the Hereford DBF had forecasted a balanced budget. We targeted savings in the diocesan office by changing the way we do things (in particular reducing agents’ fees, closing offices, seeking external funding and reducing the amount of work we do) and through not replacing a number of diocesan staff. From 2017 to 2020, we have hard decisions to reduce the number of full-time equivalent staff through reorganisation and voluntary redundancy, which has generated cost savings of over £400,000.

This enabled the DBF to prioritise parish ministry posts, although we have overseen a small decrease in this area too. We have also chosen to make some of our historic assets available today rather than just increase in value for tomorrow. We describe this as our ‘Total Return Mission Fund’, and we use this to resource projects with objectives that clearly show how they will grow the local church (through intergenerational mission projects, youth church etc.).

In 2021, we budgeted £4.04m for parish clergy costs, and £0.72m for ministry support costs. This includes clergy development and training, conferences, mission projects, and support minister salaries. Total 2021 Parish Offer commitments of £3.31m will cover 70% of these local ministry and mission costs, although only 54% of total diocesan expenditure of £6.09m. This leaves the Diocesan Board of Finance with a core budget deficit of £(1.02)m for 2021, as illustrated below:

Another way of looking at total income and expenditure is shown below:

The Diocesan Board of Finance receives income from statutory fees, rents, investments and grants.This income significantly subsidises the frontline ministry in our parishes.

The nature of the organisation means that the Hereford DBF does own significant assets. However, the DBF deploys these assets primarily to support parish ministry, or to generate long-term returns from investments. Currently £52m is invested in properties for our parish clergy. The DBF may sell a vicarage or develop glebe when such assets are no longer required for local mission and when market conditions are favourable. The DBF re-invests proceeds from such sales to generate long-term income to support local ministry. However, sometimes the one-off benefit of ‘selling the family silver’ results in a loss in future revenue, and charity regulations specify that sale proceeds can be used only for specific purposes.

In recent years, as Parish Offer contributions have declined, the DBF has had to use some of these proceeds to maintain sufficient liquidity to pay stipends and suppliers. Hence it’s vital that PCCs contribute as generously as they can to ensure that together, we can resource local ministry appropriately.

In 2021, the Hereford Diocesan Board of Finance will send £375,000 to the Archbishops’ Council as part of our Diocese’s share – this covers training for ministry, national church responsibilities, and retired clergy housing costs. In return, we will receive £390,000 split between Lowest Income Community and ‘Transition’ (restructuring) funding. Hence net income from the national church in 2021 is £15,000.

We also benefit from national church expertise, and continue to receive 50% funding for our Intergenerational Missioner project through the Strategic Development Fund.

As you would expect from a charitable organisation with a significant budget and multiple stakeholders, we monitor our financial position closely.

Every year, the trustees in Bishop’s Council ask a dedicated Budget Review Group to scrutinise the annual budget and assumptions, before it goes to Finance Committee for review, and to Bishop’s Council who recommend the budget to Diocesan Synod for approval.

Through the year, the diocesan Finance Team generate monthly management accounts and cash flow forecasts for review by senior management and Finance Committee. The annual statutory report and accounts are subject to external audit and extensive review by Audit and Finance Committee before approval by the full Board of directors and trustees. Once Diocesan Synod approves the annual report and accounts, they are submitted to Companies House and the Charity Commission, and shared publicly on the diocesan website.

As church members, it is primarily our duty and joy to provide the financial resources for local mission and ministry. We know how much those living in our parishes value the contribution we make to the common good, and how much they appreciate our buildings as wonderful examples of heritage, and places where many significant moments of life are marked by prayer. We can invite them to partner with us in finding funds to help maintain the buildings, and some of our wider community events.