the 2011 accounts

Struthers Memorial Church and the 2011 accounts

Introduction “God's work done in God's way will never lack God's supply” This quote from Hudson Taylor was often repeated by Hugh Black in times of prosperity in Struthers Memorial Church - and also at times we were led to believe there was prosperity but later discovered there was not. Presumably, at a time Struthers Memorial Church is in significant debt and financial decline, we have to believe this quote carries a principle which still applies. Is it still the claim of the SMC leadership that in their churches God's work is being done in God's way? The evidence of God's supply we were told to look for now seems to be less obvious. As a Scottish charitable company Struthers Memorial Church are obliged to make their annual report and accounts publicly available. We placed articles on this website about the 2009 and the 2010 set of accounts. This article is looking at the recently available accounts for the year up to the end of 2011. We think it is right and proper that anyone who is interested can consider, discuss and ask questions about information which has been made publicly available and provides some insight into what is happening in Struthers Memorial Church.
Facts lifted from the 2011 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 2011 was as follows.

During 2011	income	expenditure	difference
The 11 churches	£440,584.00	£330,883.00	£109,701.00
The book and foodshops	£382,895.00	£405,529.00	- £22,634.00
Cedars School of Excellence	£466,032.00	£545,643.00	- £79,602.00
Church conferences	£92,516.00	£92,892.00	- £376.00
Other minor income sources exist such as from investments
Declared total	£ 1,387,190.00	£1,377,947.00	£9,243.00

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 2011. · Property · Money in the bank · Debts owed by the charity

Property
at the end of 2011 the value of church owned property was claimed to be £ 2,349,668 (although it is admitted a professional valuation has not been carried out since 1993)
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 At the end of 2011 the money in the church bank account was: £ 128,207 (which would cover approximately 5 weeks charity 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
by the end of 2011 the church owed creditors: due after more than one year £ 64,196 due within one year £ 158,664 TOTAL owed to creditors on 31 Dec 2011 £ 222,860
So the Struthers charity still has debts outstanding of just below a quarter of a million pounds. The charity has not identified who it owes this money to; and what terms and conditions, or privileges within the organisation, are attached to these loans. The charity claims to have “repaid” debts during the year. The debt has reduced by £156,287. But there is no transaction, or set of transactions, in the expenditure part of these accounts identifying any expenditure as relating to any obvious debt repayment. We would ask the church treasurer to explain this anomaly. If £156,287 was “repaid” where are the repayment transactions recorded? Are these claimed debt repayments included in the 2011 accounts or not?

Issues previously raised and still not answered in the 2011 R&A
Some very important questions arising from the 2009 and 2010 report and accounts have not been clarified in the 2011 report and accounts - or in any other document or information that has yet been made public. The reasons behind these questions are outlined in the previous articles and we repeat the key, as yet unanswered, questions here:
No information has been made available indicating how grants for assisted places in the fee paying school are awarded. How much of the total "assisted funding" grant has gone to help with the school fees of children whose parents belong to Struthers Church? Who is benefiting from assisted funding? How many of the beneficiaries have a link to the directors and their families? How many of the beneficiaries are inside the church? How many of the beneficiaries are outside the church? How much of the total “assisted funding" grant has gone to help with the school 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”? What test is applied to establish “inadequate personal funding”? Who is a “member” of Struthers Memorial Church. Is it just the 6 directors who have membership and rights in the charitable company as is indicated in the Struthers company articles of association sections 1-19? Is there any membership system or records and does this system also include listings of those banned from membership or from attending Struthers services open to the public? Is it a mistake to refer to “God working in the lives of members” and “new members” on page 4 of the Report & Accounts? Clearly they cannot be members of the charitable company as defined in its incorporation documents so to what does this refer? Is there another kind of membership operating in the Struthers charitable company other than that described in its incorporating document? 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"? 30 months on from our first asking this it seems as yet there is no time-scale or plan to achieve this. It is starting to look like this is simply an oft repeated aspiration. What is the strategic planning fund for? Why has Struthers set aside a huge amount of money for strategic planning? What or who is this money intended for? The charity runs something they call “Fidra operations” in Greenock. Who are the beneficiaries of this use of the charities funds and what are the charitable purposes of these “operations”? Do Fidra operations provide charitable benefit to the public; or just benefit to a few selected people in SMC? How many unsold New Dawn Books have the church in stock? The value of these books is given as the cost of having them printed (i.e. not the purchase price shown on the cover which would probably be much higher) Even so the printing cost of these still unsold books, paid for using church funds, is given as £49,966 (page13)

The continuing subsidy to the school

In our article on "the generous gift" we have indicated that in 2009 there was, in addition to the other school income sources, a subsidy taken from the 11 churches collection plates and given to the school amounting in 2009 to £158,142. This seemed to be a surprise to a number of people who have contacted us who believed the claim had been made that the school fees fully covered all the school expenses. The equivalent figure reported in the 2010 accounts was £83,949 transferred from church collection plate income to subsidise the school. In 2011 this figure was £79,602. So if the school had 100 pupils this would equate to a subsidy of nearly £800 for each pupil from the church collection plate income of all the 11 churches during 2011. So it seems the astonishing generosity and support for private education continues. How much of the school fees income figure is also being paid for by grants paying individuals fees from other church collection income is not revealed in the accounts. Who is in receipt of that fees assistance and how they came to receive it (since it is clearly stated on page 3 of the R&A no applications for fees help will be considered) remains a mystery known only to the executive and those they choose to share it with. But apparently it is not thought appropriate to share this information with those actually paying towards the provision of these private school places through their tithing and regular giving to each of their local Struthers Churches.

The Decline in Church Collection Income
In the 2010 accounts there was a statement on page 4: “Overall donation income fell from £605,280 by 4.2% to £580,185” In the 2011 accounts there is a statement on page 4: “Donation income and associated tax recovery fell by 5.6% from £466,924 to £440,584”
Interestingly the first quotation uses the 2010 figure including the large legacy received that year and the second quote uses the 2010 figure without the legacy. So a casual reading of the two sets of accounts - and looking just at the two percentage figures given - implies that the collection plate income has dropped overall by about 9 or 10%. What this - perhaps accidentally – conceals is that the income of the church has fallen from £605,280 in 2009 to £440,584 in 2011. A fall of £164,696. This is a decline in just two years of over a quarter - 27.21% This combined with the continuing heavy subsidy required by the school and the second year of losses by the bookshops indicate a serious problem which the report does not seem either to acknowledge or address – far less indicate what the plans are to fix. The conference income between 2009 and 2011 also dropped by 19.5%. The extent and degree of this income decline would have a lot of churches rightly in alarm and setting out what changes they propose to manage the charity through this crisis. The implication of this dramatic churches income drop is either:
1) that a lot of people are leaving Struthers and as a result the number of active givers has dropped significantly in 2 years or 2) there are many of the people who are still attending not giving in anything like the degree they gave in the past.
The figures in the Report and Accounts show a major loss of income from the Struthers churches in a very short time and no charity - particulalry one with the huge number of employees they now claim to have - can be casual about such a huge financial decline and risk to its future. Yet this problem has not been mentioned in either set of accounts as a huge challenge and a serious risk the charity is facing right now. In fact on the same page as these figures are given it is claimed: “church attendances remain strong” and “new members [are] joining the charity”. If that is true then the reduction in giving by the existing members must be even more dramatic than these figures make it appear. If that is not true then such a false and misleading statement should not be in the report and accounts of a Christian organisation. It was also disappointing that even though those who operate this website warned a year ago that there was a serious underlying income decline – and it has now gotten worse – no mention of that issue, or assurances that this was being recognised and dealt with, have been forthcoming. It does go some way to explain the somewhat frenetic outreach activity in recent months as advertised and reported on the new Struthers Cumbernauld website. We can also hope that as well as trying to address this Struthers decline by setting out to recruit new supporters. - that the leadership also take the chance to review and rethink their treatment of, and ability to retain, those already in their congregations.
The second year of losses in the coffee shops
Despite losses in 2010, and the expensive management the charity assures us all is in place, the coffee shops lost even more money trading in 2011. The reported losses increased from -£15,810 in 2010 to -£22,634 in 2011. Yet despite this worsening the shops still managed to give away £981 in gifts and donations (page 11). That seems very generous for part of an organisation loosing so much money. Are these gifts going to people outside of the organisation? Or are these gifts going to people within the charity, or even those running the charity? The use of volunteer help alongside the paid staff in the running of these shops does make the coffee shop losses harder to understand.
Submitting to those in charge
On page 3 of the R&A the issue of Risk and Risk Management is mentioned. We have no reason to doubt the ability of anyone involved in risk assessment. Yet there is an obvious problem when this comes up against the oft repeated Struthers teaching of “submission to those who have charge over you”. This part of a verse from Hebrews 13:17 is often quoted by the SMC leadership - we believe in a way that is out of context. This instruction cannot apply in isolation from all the other New Testament leadership requirements. So it does not apply unless all the biblical requirements applying to leaders - and which they have to be under to safeguard the people - are in place. If the full set of new testament leadership requirements are not in place it becomes a very dangerous verse to follow as the controls and limits on the power of the person in charge are unclear. So - in that context how does risk assessment get done properly if the person in charge of it is a loyal adherent and therefore “submitted” in this way and so expected to be in slavish obedience to the Struthers church leadership? How can someone do their job in that context? Given the odd context of the way Struthers present this teaching - it may be better if such advice was taken from those with no such potential relationship conflict. Likewise how can professional services, or procurement for the charity, be managed without influence and favouritism in a context where the directors also have spiritual authority over all those involved and claim to be in a position to arbitrate right and wrong in peoples lives – sometimes mistakenly and harmfully as has now been widely testified to. What steps have the directors taken to ensure – for example - that there is no inappropriate preference given in appointments to jobs in the charity; or that there is proper following of procurement procedures? Certain steps, such as obtaining at least 2 quotes for purchases or services are good practice (and in some cases required according to charity guidelines) before significant expenditure is committed to by the directors. Are there any current risk issues around these areas which have been brought to the directors attention?
A claim that seems to be simply wrong
On page 4 of the 2011 R&A it is stated : “the vast majority of incoming funds to the charity remain by way of personal giving at services run by the charity...” We cannot see any way that statement is correct
The income of SMC was		£ 1,387,190
of that School fees were		£ 466,032
coffee shop income was		£ 382,895
and personal giving at services was		£ 440,584
So to claim the “vast majority of funds come from personal giving at services” is clearly wrong. The vast majority of the charity's income comes from trading via school fees and the food shops. The % of the total charity income from personal giving at services is only 32%. So why is this claim being made? For some of us who left Struthers some years ago this would have been true at the time we were in membership. We were part of a church which was funded in this way and (as far as we knew) most of the time expended its resources in running churches and outreach. It was far from a perfect church but we were never presented with a convincing case why the organisation focus should move from that church model to mainly trading and providing privately funded education. The idea that this is not what Struthers is now is a quaint notion but not one that stands up to scrutiny. The numbers tell us where the vast majority of incoming funds now come from. More so in the last 2 years as the church collection plate income has plummeted. We believe the misleading claim should be removed from any future Report and Accounts. We also think this misleading comment should have been noticed and removed by those producing, or signing off, or auditing these accounts.
Loans have been “repaid”
We have been advocates of Struthers reducing its level of debt though it still remains high at the end of 2011 at nearly a quarter of a million pounds. However the claim on page 4 of the accounts is that: A number of bank and interest free loans were “repaid” during the year Well – we know how much money the company had at the start of the year and we know the income for 2011. We also know the expenditure from the accounts was £1,377,947.00 and the end of year modest surplus was £9,243.00 So the question is - if these loans were “repaid” as claimed where are the transactions that show those repayments? We can see all the expenditure by cost centre (down to postage stamps in some cases) on page 11 and it adds up (as it must) to the total expenditure of the charity. So which of these expenditure entries are part of the £156,287 “repaid”? If debt was “repaid” surely the transactions must appear. £156,287 of “repayments” could hardly be omitted from the accounts. Or do the directors of the charity know of some other way debts can be “repaid” off the books? Or is “repaid” not the right description? The words in this case do not seem to match the numbers so we would ask the church treasurer to explain how this has been done.
Disappearing restricted funds
In 2008 restricted funds were £238,000 In 2011 they were £4,000 Have these 2008 restricted funds been spent on the areas that the restricted funds were given for? Or has there been a decision to use these restricted funds as if they were unrestricted? If so - has the charity received advice that that can be done? Is it legal to do this? Have the auditors or risk assessors given a view on this? If this can be done then what in charity law does “restricted” actually mean?
Appearing staff
Page 12 of the 2010 R&A gives the “the average monthly number of staff during the year” figures as 2009 29 2010 31 Page 12 of the 2011 R&A gives the staff figures as 2010 43 2011 45 So the 2010 staff figure (in both cases stated to be “the average monthly number of staff during the year”) has been reported as both 31 and 43! This is a staggering change to make in a set of accounts without any attempt to explain what is being done. Why has the figure for 2010 been changed? Were the 2010 accounts badly wrong? This makes it appear so. Alternatively why has the number of employees jumped initially by 12 and now by 14? Our guess is that the directors have decided to show the leaders of the churches as employees – though it is confirmed all are unpaid. Yet the congregation and the public should not have to guess what is going on and numbers should not be changed from previous R&A with no explanation. One upside of this (if we are correct) is that we do believe the church leaders are staff of the charity and even though non-salaried should all have contracts and leadership guidelines to operate under which clearly delineate their rights, responsibilities and boundaries as leaders of SMC churches. This document should also be available to all those in their congregations so they understand the situation in their church and can know when a leader, dealing with them or their families, is acting beyond their authority and guidelines. We believe all salaries of charity employees should be made public as should all the recruitment policies which Struthers operate so that people can be assured all salaried jobs have been, and will be, filled using a fair and proper, open and accoutable recruitment process. Otherwise people may believe that sometimes jobs paying undisclosed salaries are being gifted to the close friends and family members of those running the charitable company with no opportunity for others (who may be as well or better qualified) to apply. On the other hand if the executive believe they have awarded jobs without any real recruitment process because God has told them who to appoint as salaried employees - regardless of their close relationship to some of these people - they should come out publicly and say so. We think the Office of the Scottish Charity Regulator could advise them whether that is an acceptable approach. We believe that everyone, both inside and outside of the Struthers organisation, should be able to know when dealing with people from SMC if they are an employee of the charity.
Conclusion
As we indicated last year - we believe there should be full disclosure of all planned spending in the form of a proposed budget for the year ahead. This should outline the nature and detail of the charities proposed spending and activities before people are asked to give. However much the SMC leaders decry and disrespect those posting on the RickRoss forum one warning it gives to them is clear. When people leave their churches hurt and upset it may be that replacing them is not at all easy. It may have been better to have got beside those same people ahead of time and listen to them, take what they are telling you seriously, and try to make sure they fully understand, and are prepared to support (without threats of divine retribution) what is happening in your church. Clearly - ideally we would not want the possibility of further financial decline to be the reason the SMC leadership became a bit more open to spending time with all those in their congregations who give them money and support them. It may be however that this is a means by which some of those currently in the congregations get the chance to be given some of the encouragement and support they need. Perhaps if the leaders take this task seriously these people still in their congregations will not become those who agree with those now posting on the RickRoss forum that the SMC leadership did not seem to care whether they were in their churches or not. Imperfect as a motivation it may be - but we do hope it leads to change and a situation where there will never be anyone again who feels the need to share bad experiences of Struthers on the forum. We all want that. 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. Any refusal to do this should be reported to the Office of the Scottish Charity Regulator. We as interested members of the public assert our right to discuss openly and freely the report and accounts of any charity or any other publicly accountable organisation. In becoming a charity, and gaining the financial and legal benefits of that status, we assume the Struthers Memorial Church executive to have agreed to any and all lawful public scrutiny and public discussion of their charity and its activities. If the Struthers Memorial Church executive believe anything in this article is outside of that proper scrutiny then we would be very interested to hear from them what they claim that might be. 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. If there are any figures which have been incorrectly transcribed from the accounts we will be happy to change these as soon as we are made aware of them. This article contains only the opinions and understanding of the writers based on our reading of the Struthers Memorial Church Report and Accounts 2009 to 2011 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, 2010 & 2011 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.