Coronavirus Costs
Well didn’t things escalate quickly with this horrible, deadly virus?
As well as all the personal issues with sick family and friends, not to mention self-isolation and lockdown, this has of course been a very challenging time for church leadership teams. Here are some personal notes which may just be of some interest or even help to others.
We met physically (a real meeting, remember them?) just a few weeks ago in the middle of March. At that stage we were still contemplating running one worship service on a Sunday (big-ish church, small-ish congregation, so OK with physical distancing…) but the next day we had advice from On High that services would no longer be possible. A week later and the church premises were shut completely.
What to do about paid staff?
First and foremost the pastoral team including our youth worker are busier than ever arranging pastoral support networks and meeting (virtually of course) with the minister, being inventive organising meetings for the youth, etc. Also realising that those email lists were not really up to date, and as for the joys of working with GDPR…
Our caretaker and cleaner – well ever since the church had to be shut up there is no work to do. Furloughing seems to be the answer from the date of closure under the Government’s Coronavirus Job Retention Scheme. More on that later.
The bookings administrators. Initially there was work to do contacting all hirers of the premises and dealing with the remaining invoicing and debt collection. These two very part time jobs were therefore phased out with one going onto furlough at the end of March and the other from sometime next week.
As for our secretarial support, this role is fully occupied supporting our minister with email letters to the congregation, service sheets and emails, not to mention the usual wise counsel.
In summary it is important to treat each individual differently, according to their own specific work situation. If a job has genuinely ceased, albeit temporarily, you would in ordinary times be faced with laying off the employee concerned. Furloughing, a word which has all of a sudden become part of our everyday language, is now for this limited period the way of keeping the job open and the employee on the books until the work returns.
We decided to use the following principles:
Reassuring all staff of our intention that they will continue to be supported and paid
We will use the Government support package where possible
Where we do this, we will pay the extra 20%
What will the financial impact be?
There is a thought process here and it is a moving picture as none of us knows really how long this is going on for or what exactly the impact on our church finances will be. I’ve done some initial workings involving educated guesswork, and it does not make for pretty reading.
Loss of revenue from external lettings. This is the big one for us, and I’m estimating 6 months’ worth of income might be lost.
Reduction in regular giving – ie Sunday offertory. This is bound to have an impact, but hopefully those using the envelope scheme will remember to put their donations aside.
Will people stop their standing orders? This is our largest source of income and hopefully this will hold up OK.
Church café, oh dear this was going really well both as a centre of fellowship and (as a much less important benefit) an income source. Fortunately for us, run by an amazing team of volunteers, but how long will it be closed – maybe 4 months?
Other issues to consider include reduced income from things like: Gift Aid, fundraising events, church groups meeting on the premises.
On the plus side, there is the furlough scheme which should cover 80% of the salary costs. Lots of details have been released about this, but as yet there is no mechanism to sign up for it and we await the special HMRC portal being launched. It is promised by the end of April, is it too much to hope for that funds will start flowing back to employers before having to pay out April salaries? We shall see.
We will also benefit of course from reduced utility bills as the church is shut. However, my current rough estimate of our potential net losses amounts to a very painful five figure sum beginning with a 2.
On top of that, we also have some reserves in managed investments, and I haven’t dared look at how much value has been wiped off these. We’ve always said these investments are “for the long term” and we’ve benefitted greatly from them over the years, but still I fear this is going to hurt.
Thoughts
We are fortunate enough to have some reserves to carry us through this very difficult period. Church treasurers have been encouraged by both the Charity Commission and the Church On High for many years to develop robust reserves policies, party of course to deal with the “rainy day” situation, but some churches will be better prepared than others to withstand this deluge of Biblical proportions.
What support is available to churches apart from the furloughing scheme?
Well there is the promise of up to two weeks Statutory Sick
Pay being refunded in full for any staff off due to the effects of Covid-19. Also under the Time to Pay scheme HMRC are promising to be very receptive to requests to delay payments of taxes including PAYE/NI. Importantly most churches will be part of a denomination or network and there may well be assistance to be found here. To this end, communications within your network will be vital.
There may be a moral question about whether it is right for churches to take advantage of the furlough scheme. In my view we are not in the same position as premier league football clubs for example. Most churches are more like small local businesses facing very serious consequences of losing significant elements of their income, and this piece of Government support is there specifically to enable us as employers to keep jobs open until we reach the other side of the crisis.
Current guidance
Charity Commission: https://www.gov.uk/government/news/coronavirus-covid-19-guidance-for-the-charity-sector
Coronavirus Job Retention Scheme: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-schem