the 2010 accounts

Struthers Memorial Church and the 2010 accounts

Introduction As a Scottish charitable company Struthers Memorial Church are obliged to make their annual report and accounts publicly available. We placed an article on this website about the 2009 set of accounts in July 2011. This article is looking at the most recently issued accounts for 2010 - the situation as it was up to 14 months ago. We think it is right and proper that anyone who is interested can consider and discuss information which has been made publicly available and provides some insight into what is happening in Struthers Memorial Church. We very much welcome the statement made by the leader of the SMC churches, Grace Gault in her sermon of 12 March 2011 in relation to SMC: “We are manifestly open...we are totally above board. We have nothing to hide.”
Facts lifted from the 2010 Report & Accounts
In our view the church has 4 easily understood cost centres The 11 churches The book and food-shops The Cedars School of Excellence Church Conferences The reported income and expenditure for each of these in 2010 was as follows.

During 2010	income	expenditure	difference
The 11 churches	£ 466,924	£ 359,131	£ 107,793
The book and foodshops	£ 383,560	£ 399,370	£ -15,810
Cedars School of Excellence	£ 435,753	£ 519,702	£ -83,949
Church conferences	£ 104,247	£ 101,178	£ 3,069
Other income sources exist such as from investments £ 5,343 and during 2010 one very large legacy of £ 113,261
Declared total	£ 1,509,088	£ 1,382,336	£ 126,752

All figures come from the report and accounts.

There are also 3 other major factors to consider when looking at the income and expenditure within SMC in 2010. · Property · Money in the bank · Debts owed by the charity

Property
at the end of 2010 the church owned property was valued at £ 2,406,745
Money in the bank
The cash bank balance (R&A page 9) At the end of 2009 the money in the church bank account was: £ 11,914 At the end of 2010 the money in the church bank account was: £ 157,084 (which would cover approximately 6 weeks expenditure)
Debts owed by the charity (R&A page 14 note 10)
at the start of 2009 the church owed creditors: due after more than one year £ 109,775 due within one year £ 85,634 TOTAL owed to creditors on 1 Jan 2009 £ 195,409
by the start of 2010 the church owed creditors: due after more than one year £ 268,495 due within one year £ 114,780 TOTAL owed to creditors on 1 Jan 2010 £ 383,275
by the end of 2010 the church owed creditors: due after more than one year £ 183,258 due within one year £ 195,899 TOTAL owed to creditors on 31 Dec 2010 £ 379,147

In other words according to the last set of accounts the church has published they show the charity had at that point debts amounting to more than three hundred and seventy nine thousand pounds

Issues & questions arising from the 2010 Report & Accounts

Some very important questions arising from the 2009 report and accounts have not been clarified in the 2010 report and accounts - or in any other document or website that has yet been made public. The reasons behind these questions are outlined in the previous article and we repeat the key, as yet unanswered, questions here.

1 THE GRANT MAKING POLICY FOR ASSISTED PLACES IN THE SCHOOL
What is the total amount paid out in the grants for assistance with school fees? It is claimed grants have been made but no figures are given. This will enable those who give money to Struthers Church to know how much of the total reported school income of £435,753 is actually coming from: fee paying parents people giving donations specified for the school and how much is coming from church funds (via a fees grant)
In our article on "the generous gift" we have indicated that in 2009 there was, in addition to these 3 school income sources, a subsidy from the churches collections to the school amounting in 2009 to £158,142. The equivalant figure reported in the 2010 accounts was £83,949 transferred from church collection plate income to subsidise the school.
If “no response to applications for funding" is the declared policy of the SMC directors how do cases deserving of sponsorship come to their attention? Is the system for establishing needs and allocations fair and open to scrutiny? Or is there the danger that the assistance has been awarded in a way which looks after people who are more likely to be already linked to the Directors friends, families or church members? How much of the total "assisted funding" grant has gone to help with the fees of children whose parents belong to Struthers Church? How much of the total "assisted funding" grant has gone to help with the fees of children from low income families who would be in receipt of government benefits? Is that what is meant by sponsorship to “households with inadequate personal funding”?
2 DEFINITION OF MEMBERSHIP IN THE NEW STRUTHERS CHARITABLE COMPANY
Who is and who is not a member of the new Struthers Memorial Church company established 19 December 2007? Is there a membership system or records? Does this system also include listings of those banned from membership? Or are the only real “members" the 6 directors and their nominees who become directors - as outlined in the articles of association section 1-19? Who is entitled to attend the AGM or any other members meetings? Who is entitiled to vote at the AGM?
3 THE FREE RESERVES POLICY
In the 2010 accounts page 4 it is stated (as it was last year): "The directors recognise that the low level of reserves is not ideal and therefore pursues a policy of maintaining free reserves at a level to cover at least 3 months running costs." The SMC directors committed in their 2009 public report and accounts to pursue a policy to have in place this level of "free reserves". Now - 26 months on - has it yet achieved this policy? If the organisation is not yet there in March 2012 – by what date are the SMC Directors currently planning to be debt free and in the position to say they have implemented their declared policy of having 3 months running costs available in "free reserves"? This would seem to be important to have in place particularly because of the cashflow needs associated with having 31 church employees; or if there were, for example, suddenly unexpected building maintainance and repair costs in one of the church properties.
4 THE STRATEGIC PLANNING FUND
There is an entry in the Report and Accounts on page 14 indicating that £105,257 has been set aside by the church for "strategic planning". Is this a notional amount reflecting money raised in collections going into what was apparently called the “forward vision fund”? Is this money held as cash separately from other funds? It does not appear so since there is no cash entry for this sum. Has it simply been collected, used as general cashflow and is now shown as a restricted fund to be replenished later?
5 THE "FIDRA" PROPERTY
Fidra Operations (Ardgowan Street, Greenock) Funds are given and used to provide and maintain the Fidra property (R&A page 14 section 11) The restricted fund for this now stands at £15,566 including a transfer during 2010 from general church funds of £18,626 for “Fidra Operations". What that activity is, and how it relates to the objectives of the charity, is still not made clear in the Report and Accounts. We think the directors should make it more transparent what that activity is and who in the church, or outside the church, is benefiting from that fund? We had hoped that the answer may have been very simple and very straightforward but it appears not to be. We are happy to share what we know about what this is; and would be happier if the church executive would simply come out and tell us all. To the best of our understanding: “Fidra” is a house in Greenock owned by the church. It is a residential building which was rumored to be intended originally for special educational support in relation to the church school but that does not seem to have happened. It now seems to be home to some of the people who attend the church. Some of these people have moved there from homes they owned in other towns where they still work. The people living in the “Fidra” house have jobs and income. About 5 people at any one time have chosen to move to live there, each in one rented room of this property. And they eat with the rest of the people living in the nearby communal house where some of the other church members live together. So do people (who can afford it and are given permission to) move to “Fidra” supposedly for their spiritual benefit? Or is this arrangement for the financial benefit of the church in some hard to follow way?
In either case - why is the church spending considerable money on providing and maintaining a property which houses people with their own jobs and incomes who are already, apparently, paying rent to be there? Are people being actively encouraged by their church leaders to leave behind, or rent out, their own property to go and live there? Why is the church spending so much money in 2009 and again in 2010 to provide rented accomodation - it seems at a loss - for about 5 church members who seem to have no obvious need of financial support?
If people find this use of church funds to be odd and bewildering that would not be surprising. What do people in other branch churches, and all the other financial contributors to the church, gain from this use of their giving? What charitable objectives of the organisation does it seek to provide?
6 BOOKS PUBLISHED BY THE CHURCH
"Stocks are valued at the lower of cost and net realisable value. Books written by Hugh B Black and published by the fellowship are valued at the cost of production." (R&A page 10 section 1 stocks): Whatever the actual number of unsold New Dawn books which were printed and published by the church - the cost to the church of printing those that remain unsold was given in 2009 as £49,718. One particular surprise in the 2010 accounts was that this figure has now risen to £50,326. Unless there is some unexplained accounting reason for this - it implies that in the midst of a situation where the church had serious outstanding loans and significant debts they were still - in 2010 - printing more books and adding to the already huge New Dawn Books stockpile.
7 CASH IN THE BANK AND LOANS

During 2009 Struthers Memorial Church declared a total income of £1,478,070 at the end of 2009 the church had £11,914 in its bank account and debts owed by the church were given as totaling £383,275

During 2010 Struthers Memorial Church declared a total income of £1,509,088 at the end of 2010 the church had £157,084 in its bank account and debts owed by the church were given as totaling £379,147
In our article on the 2009 accounts we asked for the treasurer to tell the congregations in Struthers if the 2009 surprisingly poor cash and loan situation has improved or worsened. The answer by the end of 2010 was the cash had improved but the debts had remained as serious. However there is an important consideration when looking at this. The 2010 report and accounts acknowledge there was one “significant” legacy in 2010 of £113,261. Clearly a legacy is a one-off occurence and when they will be given, and how much they will be, cannot be predicted. If that one-off legacy income had not been received the underlying situation would have been very much worse.
Income would have been £1,395,827 (£82,000 down on the previous year) Operating profit would have been £13,491 (barely breaking even) And the cash in the bank would have been £43,823 (which would run the church for about a week and a half)

8 THE DECLINE IN CHURCH COLLECTION INCOME
Even more concerning for the people involved in Struthers is the staggering decline in church collection income. There is a statement in the R&A page 4: “overall donation income fell from £605,280 by 4.2% to £580,185” We would not dispute that but the more important figure is on page 8 under offerings and donations plus tax recovery. This is the income figure excluding the one-off legacy income.
2009 church offerings & donations income was £583,812 2010 church offerings & donations income was £466,924 (£116,888 less) That is a reduction in like for like giving by the people in the Struthers churches of about 21% in one year.
We think this should have been mentioned, and the reasons for it explained, in the Annual Report. If this carried through at this level to 2011 (and there was no substantial legacy) then the church will have had a very lean year. If the decline in giving continued downward then the church could by now have a serious problem. Of course because of the way Struthers church choose to release information to the public that actually means any such problem will be afflicting the church right now in the first months of 2012. The outcome of 2011 will be known and the consequences for the church income, the church debt and the church employees will all be working itself out now. The executive will have these current figures and we hope all those attending and contributing will also have been informed of them.
Our Hope
We are a website run by Christians and we want there to be proper biblical accountability of the Stuthers executive to those attending their churches and their financial supporters. We believe there should be full disclosure of all planned spending, and the nature and detail of that spending, before people are asked to give. It is not in our power to deliver that to them; however we can do 2 things: We encourage the Struthers leadership to do things this way for the good of everyone involved in the charity. We provide as much infomation as we can find in the public domain to let people in Struthers make informed decisions about their involvement - and that of their families - on the basis of at least some information. Many of us in the Latigo214 team feel that in our time in the Struthers organisation we sometimes did not get information which it was important for us to know; and we were discouraged from asking about governance issues by a general hostility from the leadership towards talking about it. We hope these days are past. We hope, whatever you may think - or are being told to think - of the motives of the people preparing these articles, that there is information here that helps those attending understand more about what is happening in SMC.
As Christians we trust in God. If God wants SMC to continue in its present form and without any reform to its approach then He can provide the legacies and the miracles to bring SMC back to financial strength. He is God and will do whatever He wants to do. It is not up to us what happens in Struthers Memorial Church. Nor do we want it to be - God will decide. He will deliver SMC from this financial situation, or He will not, and in doing so we believe His will shall be accomplished. We are observing - not involved. Struthers contributors are very much involved (though often not in control of decisions about church spending) so we hope having access to information in the public domain helps. The accounts we now have are 14 months old. To quote again from “the Petitor” on the Rick Ross forum:
The accounts are of course historical, so the situation may have improved but, then again, it might have got worse!"
We will all find out eventually when the figures for 2011 are published - as the law requires - likely around September this year.
Responsibility
Finally - if financial problems come we all need to recognise that, as the leader of the charity indicated in her sermon of 12 March 2011 referring to Struthers: “it’s not a democracy” We think it is very important that people understand that this is the view of the SMC charity directors and is their teaching. So there can be no doubt as to where responsibility lies for any and all of the decisions that have resulted in any financial problems. If there are problems they have arisen from the spending decisions of the executive and are totally and completely their responsibility. In SMC it is made clear where decision making power resides, and while that concerns us - as we have made pretty clear on this website - that is the situation and unlikely to change short of a very serious crisis leading to change. But it means whatever happens is not the fault of those with no responsibility - it will be the fault of those who have claimed God has given them all the responsibility. If you are asked to help in some way - perhaps to give more money or to volunteer more of your time to help get the church through a difficult financial situation we encourage you to do what God is telling you to do. That will not change where the responsibility lies for creating the problems. If financial problems occur do not be surprised - these will have come from decisions to spend too much, in too many areas, while income is plummeting. Unless God brings very significant new income the church may have to: borrow more - which with the level of 2010 debt would be very unwise (and probably very difficult) to do or downscale its activities We are not prophesying anything and we do not claim any knowledge of what is going to happen - we are just reading the numbers.
Notes: If anyone wants a copy of the church report and accounts they can request it from the Struthers Memorial Church office. All charities have a legal obligation to provide this to any member of the public on request. If anyone thinks this article contains any errors of fact please let us know and we will be happy to consider any relevant information brought to our attention. This article contains only the opinions and understanding of the writers based on our reading of the Struthers Memorial Church Report and Accounts and we do not in any respect claim our analysis to be correct or official. We have given our opinions and quoted the figures from the 2009 and 2010 Report and Accounts from which we have derived those opinions. The legal and moral responsibility for providing actual figures to the membership and the public for all the items discussed in this article lies fully and only with the Directors of Struthers Memorial Church.