A look at 16 years of publicly available statutory accounts from 2008 until 2023, the year before the school closed
New analysis of the 16 years publicly available accounts, between 2008 until 2023, has been carried out and can be accessed via the 2025 year hyperlinks. They will open as standalone PDF documents.
The analysis may assist the reader to assess whether the Board of Directors had sufficient skills, knowledge and experience to manage a diverse organisation of churches, shops and a school and whether Governance and Commercial practices in place were sufficient or weak. The reader may draw their own conclusions as to whether misleading, possibly not fully transparent statements, were legally signed as true statements in many of the years up to 2022.
From the many, to the few
It would not be a surprise if the accounts of the SMC churches were to show an annual surplus as SMC has no paid ministers. True enough, over the 16 years, the many attendees gave regularly from their income and the combined Churches generated a £1.75m Unrestricted Surplus from normal church activities. Looking back, the existential question that needed answered was what to do with the excess after the expenses of “normal” church had been paid. It may appear that the few were able to articulate a forward vision, painting a vision of external outreach that would keep the many giving over the next 20 years, while hiding in plain sight that significant cash transfers were occurring until it could be hidden no longer.
- One unanswered question is how the coffee-shops made such large losses given the extensive use
of volunteers. £0.7 million from the many, to the few. - Conferences may be a legitimate activity of a mission orientated church, was it a deliberate policy to
be loss-making? £0.1 million from the many, to the few. - The school spent every penny of the Special Offerings and Gifts from Individuals given to it. £1.3
million from the many, to the few. - The directors authorised additional withdrawals from General Reserves to fund the losses of the
School. A further £0.9 million from the many, to the few. - In total, £3 million diverted from the many, to the few.
Excluding Property Sales and Legacies, looking only at Congregational General Funds, every £100 of Church cash remaining after core expenses was spent: £22 to Coffee Shops, £32 day-to-day Schooling, £24 to Computer Equipment, £12 to Fixtures and Fittings, £4 to Vehicles, with £6 left for Church use.
Phrasing differently, 94% of Offerings and Property Gains has been spent on Salaries, Equipment and Resourcing commercial ventures.
SMC’s complicated relationship with legal reporting
Firstly the School Restricted Fund
When it comes to the school, the figures reported may appear to suggest that Restricted Fund Expenditure did not fully match the written statements of how the Restricted Fund Income would be spent. Gifts given by Individuals to be “used to provide assisted school places” do not appear to have been paid out direct to families. The reported figures appear show those gifts have funded Operational Costs. If true, this arithmetically has to mean that the school fees reported were reduced by the value of subsidies.
This can be reasonably inferred because when the Expenditure of the School Restricted Fund is reported, the value of assisted school places is shown nowhere. All Restricted Income is spent. No Restricted Funds are retained in any year for future use. The categories listed as to how the Restricted Funds are spent do not contain phrasing that might be understood as paying out bursaries. “School Gifts” only appears in 2 out of the 16 years examined and comprises 1% of Special Gifts and Offerings.
Secondly “Related Parties” and “Close Family of Related Parties”
These are two technical phrases that may be insightful to the reader when thinking about SMC’s relationship with legal reporting. “Related Party” refers to individuals with the ability to control or significantly influence a charity’s operations or financial decisions. This includes key management personnel—those responsible for planning, directing and controlling the charity’s activities—such as trustees and senior staff. It also includes their close family members, such as spouses, domestic partners, children and dependents. The value of transactions involving Related Parties and Close Family are supposed to be reported within the annual accounts.
SMC define Key Management Personnel as Ministers, House Group Leaders, Treasurers, Head Teachers and individuals nominated to the Board of Management. However, roles such as Assistant Ministers, Depute Heads, Senior Teachers and School Governors are not included in their definition. Would an ordinary person attending SMC think such roles were NOT responsible for planning, directing and controlling various parts of church and school activities? Would staffing, pension and Fee-setting decisions have an impact on the household finances of Close family and members of same household of Assistant Ministers, Depute Heads, Senior Teachers and School Governors?
By not defining such roles as key management personnel, the global value of all such transactions has never been reported. The reader can draw their own conclusion around meeting reporting standards.
Reclassifying Expenditure and Restricted Funds
The average reader of the accounts may also be forgiven for being a bit confused about the Special Funds.
In 2007 the Church had a Restricted Building Fund of £72K. The same Fund appears to have gone through 3 name changes since 2007. Its initial formal Charitable Restriction was revoked by the Directors in the 2009 Statutory Accounts. By the end of 2023, there was no Restricted or Unrestricted Designated Fund left, whether called Building, Strategic Planning or Forward Vision. In 2013, the combined activities and expenses of the year led to re-classifying 100% of Church, Shops and School Maintenance Costs as Forward Vision activity (not Unrestricted operational activity as it had been in all previous years). In other words, without reclassifying it, the Unrestricted General Fund Surplus of that year would have been wiped out. The value reclassified was £113K.
Without this 2013 reclassification, continuing with the earlier picture of £100 Congregational generated cash, the Church would have needed to draw £4 more from its historical bank reserves. There would be no Cash left of the £100. The share spent on losses would increase: £25 to Coffee Shops, £36 day-to-day School, £26 to Computer Equipment, £13 to Fixtures and £4 to Vehicles, £0 left for Church.
The School Restricted Fund mystery of unreported value of school places has already been mentioned. The “FIDRA” Restricted Fund also remains unexplained in any detail, neither its sources of income, nor what its funds were spent on. Whatever FIDRA comprised, it managed to spend 90% of its income.
Selling Property to Remain Solvent
In 2014, The Refuge in Wendover and SMC’s part share in a property at Denholm Street, the street where the Black Family lived, were sold for £569K. Two “London” rental properties were bought for £392K. These transactions left £177K, an almost perfect replenishment of the reclassified £113K Maintenance Costs and £57K Neath Extension costs incurred the previous year of 2013.
The FIDRA house and Gorebridge Church were sold in 2017 for £393K and the Pudsey Church in 2022 for £205K - totalling £598K of Cash Received from Property Sales between 2017 and 2023. During this period the Coffee Shops and School had £1.1m Cash shortfalls. Church Core Activities, excluding the School and Coffee Shops, generated cash surpluses of £519K in the same time period. “Only £643K” required to be taken out of the Church cash reserves between 2017 and 2023 to fund the commercial losses arising from Inadequate Fees, Staffing Costs, Redundancies, Transport, Activities and Maintenance. It is up to the reader to make their own assessment whether the value of these Property Sales, properties purchased with the many’s funds, was given away to cover losses generated by the few.
Concluding Thoughts
The reader can decide for themselves whether the analysis provides proof to justify the suggestion that the Coffee Shops and School may have operated inefficiently, that directors may have had little regard for the sacrifices of the congregation when they gave away £3 million of general funds, that there may be questionable transparency around meeting annual reporting requirements and the governance structure.
Scriptural Reflection
The analysis brings to mind Matthew 21:12-13, where Jesus drives out the money changers from the temple, declaring, “My house shall be called a house of prayer, but you have made it a den of thieves.” Matthew 23 v1-35 criticises leaders who impose burdens on others while avoiding responsibility. The chapter is an apt reflection on the SMC leadership of 16 years. Leadership that placed financial and emotional pressure on the congregation while “thieving” giving and property sale proceeds to fund Related Party and Close Family transactions. v24 “Blind guides who strain out a gnat and swallow a camel.”
Final Note: Acknowledging Change while noting Governance Conflicts of Interest Remain
In 2023, a new Board of Directors initiated significant changes. They replaced the auditors, revised misleading statements in the Directors’ Report and repurposed the coffee shops for informal church and community activities. In mid-2024, the school was closed, the introduction of VAT on school fees being cited as the reason - though readers may now have a different set of explanations after the reading of these analyses.
However, two governance concerns remain: The Director documented as the “Person with Significant Control” and Chairperson has been on the Board through all 16 years examined. They are joint and severally liable for all the decisions and lack of decisions made over the previous 15 years. They were also on the Board of Management in the pre-2007 Charitable Trust structure. They are not new or unaware. They have been core to SMC leadership for decades.
Secondly, there are two married couples who are Key Management Personnel. One spouse in each couple is responsible for Financial Management. While Financial Transactions (Salary, Pension, School Fees) and Loss-Making Activities may have ceased, conflicts of interest and concentrated control has not.