World Council of Churches

A worldwide fellowship of churches seeking unity, a common witness and Christian service

Report of the Finance Committee (revised)

22 February 2006

1. Financial stewardship and management issues: from Harare to Porto Alegre 

The accomplishment of WCC's work during the seven year period depended on the generous contributions by member churches, specialized ministries, congregations and individuals, contributions whether great or small, whether in money terms or by other means. To all who have contributed, the assembly finance committee (AFC) expresses its profound gratitude.

Since 1999, total income of WCC has decreased by 30%, from CHF 61 million to a budget of CHF 41 million in 2006. Membership income has remained stable; the income category which decreased most significantly was income channelled through the WCC to ecumenical partners. A framework budget for 2007 estimates CHF 39 million available income.

During the period 1999 to 2005, the funds and reserves of WCC also decreased by almost CHF 20 million, or 30%. There were at least three factors which caused this. Firstly, following investment gains of CHF 7 million in 1999, investment losses of CHF 6 million were incurred in total from 2000 to 2002. Secondly, in 2000 and 2001 operating deficit budgets were approved and subsequently realized as such. Finally, with CHF 23 million programme fund balances accumulated by 2000, it was necessary that programme funds be used for the purposes for which they were intended. 

In response to the decrease in funds and reserves, a new programme structure with activity-based costing was implemented in 2002, and there was a reduction in staff. Central committee's policy statements of 2003 defining and clarifying funds and reserves categories and reducing investment risk, together with its firm targets for the rebuilding of general reserves then helped to produce breakeven results from 2003 to 2005. 

The actions taken fulfilled important recommendations from the AFC report from Harare which identified the need to establish funds and reserves policies, and to work to improve financial planning.

In 2006, programme funds are estimated to close at CHF 4 million in contrast with the position of CHF 23 million seven years ago. The overall mandate to use accumulated programme funds has been accomplished and therefore the practice of relying on funds to cover current year expenses is at an end. Reinforced planning and accurate budgeting will be essential skills for effective programme management in the forthcoming period. 

The AFC thoroughly concurs with the recommendations of central committee that WCC do less, and do it well. In keeping with the work on the reconfiguration of the ecumenical movement, the WCC is encouraged to sharpen its focus and to communicate its unique role and responsibilities as a global fellowship of churches. 

The AFC recommends that:

  • the new central committee continue to set realistic and responsible annual budgets, reviewing annually the required level of the general reserves, and the long-term capital expenditure and treasury plans. In addition, programme and project plans including clearly documented three-year and one-year objectives and expected outcomes should be submitted for approval as part of three-year rolling plans.
  • the focus on the unique role played by WCC, and the manner in which each of the programmes proposed fulfills aspects of that role, be clearly stated in the plan for 2007 to 2009 which will be presented to central committee in September 2006;
  • to meet this target, an action plan be developed by the staff leadership group immediately following the assembly. Elements of the plan will include the programme priorities identified; consideration of the staffing required for each of these plans; responsible conclusion of certain project work in 2006; and discussion with Regional Ecumenical Organizations and National Councils of Churches of possible options for the transfer to and continuity of other programme projects within the church and ecumenical networks.
  • in the light of the Pre-assembly evaluation, WCC implement a programme planning, monitoring, evaluation and reporting process led by the staff leadership group, permeating the working culture and including the assignment of a professional co-ordinator, the development of database programme management tools and general staff training. 

2. Membership income

Membership contributions of CHF 6.4 million make up only 13% of WCC total income in 2005. Membership income has remained stable, in itself an achievement given the financial difficulties faced by many churches since 1999. The membership campaign reports progress in the increased number of members contributing. At the end of 2005, 75% of member churches contributed, compared with 55% in 1999. Success in this area depends on the building of relationships and clear communication with churches.

The membership campaign target set in Harare of CHF 10 million has proven to be unrealistic in the time period specified. The assembly finance committee expresses its appreciation to the central committee for the implementation of the new membership calculation system, based on fairness and transparency. Under the new system, the target should be attainable in the longer-term.

The AFC affirms that all member churches should contribute at least the minimum fee of CHF 1,000, as a demonstration of their commitment to the fellowship. 

The AFC recommends that:

  • efforts continue to increase the number of churches paying their membership fee;
  • central committee amend the sanction for non-payment of membership contributions, such that a member church be declared non-active after three consecutive years of non-payment (instead of seven), during which no response has been made to WCC communications;
  • the target of CHF 10 million be retained for the long-term, while a target of CHF 7 million should be set for the three-year period 2007 to 2009;
  • assembly delegates encourage their churches to work towards attainment of the short-term and long-terms targets.  

3. New work methods

During 2003 to present, WCC has continued to develop new work methods based on networking, including the establishment of two new subsidiaries in Lebanon and Fiji; the appointment in host organizations of staff whose positions are funded by WCC programmes; and the development of international ecumenical initiatives which operate through a structure of consultants under contract from WCC, placed with host organizations in Africa and Jerusalem. These initiatives also report both to international reference groups and to the programme teams in WCC, creating some uncertainties as to the responsibilities for management decisions. At the same time, there are no reporting lines to the management teams in Geneva. 

While finance and administrative staff have been reduced in Geneva, services are now being required for new organizations-in-formation in the ecumenical centre. 

The AFC recognizes that there are considerable advantages in working methods which leverage the resources in the ecumenical fellowship.

The AFC recommends:

  • that WCC perform cost-benefit analyses of using small, external structures to accomplish our work, taking into account the increased risks highlighted by WCC's auditors;
  • that policies be developed for both the recruitment and management of staff and of staff benefits in the external structures; and
  • that WCC increase the capacity and competence of programme leadership and the management team staff to manage the new work methods.

4. Staffing issues

WCC has also adopted the current market trend of offering temporary contracts to recruits, while almost automatically re-approving extension of contracts for long-serving executives. In 2005, over 32% of staff was over age 55, while only 11% was under 30.

Total salaried staff and consultants on longer-term contracts total 210 headcount, compared with 204 in 2002. If consultants are considered together with staff, a real increase in both headcount and full-time equivalents is reported. This trend is in contrast with guidelines issued by finance committee in 2001 to keep staff numbers at a steady level.

Staff and consultants' costs in relation to contributions rose from 40% in 1999 to 50% in 2002; after the programme readjustment, the ratio dropped to 46% in 2003. In 2006, the ratio is set to rise to about 57%. The finance committee recognizes WCC's evolution towards knowledge-based working structures, but considers that this ratio is relatively high. 

The AFC recommends that:

  • WCC review its staff rules and regulations and personnel policies, covering in particular the following aspects:

renewal of contracts, including reaffirmation of the concept that programme executive staff contracts are not normally renewed more than once (at present, four years plus three years);

the encouragement of the recruitment of competent younger staff who may thus also have their role in the transformation of the organization;

the recruitment procedures be transparent and open to external applicants;

  • Statistics on staff costs, headcount and full-time equivalents be reported regularly in a consistent manner, with written definitions of the staff and consultant categories concerned. 

5. Income strategy

Programme contributions from churches and specialized ministries of CHF 31.3 million make up 65% of WCC total income in 2005. Twenty funding partners provide approximately 90% of the programme contributions. Of those twenty, five contribute almost 60%. 

Although a certain stability was achieved between 2003 to 2005, there is an anticipated decrease of 4% in programme contributions in 2006. The approved budget framework for 2007 anticipates a further reduction of 6%. 

Income strategy continues to work on maintaining relationships with the principal funding partners, efforts which reach an annual focal point at the WCC round table. In addition, staff is also developing strategies for fund-raising among the US constituents and focusing some initial effort on non-traditional funding sources.

The AFC affirms the importance of the continued work in building common understanding and trust with the funding partners.  

6. Buildings

The Ecumenical Institute at Bossey has been entirely renovated during the last three to four years, including renovation of the student residence. The entire cost of the project was CHF 8.4 million, principally financed by long-term fixed interest mortgage loans. Increased income at the Institute has financed the interest expense, and loan repayments over the next five years have been scheduled in WCC's longer-term treasury plans, with the first payments met over the last two years. 

Maintenance plans at the Ecumenical Centre have lagged behind. Action is now required to be taken to ensure satisfactory compliance with local building regulations. 

The AFC recommends that the central committee address both the funding for the deferred maintenance of the Ecumenical Centre and a further financial plan for improvements for maximizing both the use of the building and its income generation potential. 

7. Audit Committee Mandate

The assembly finance committee received a draft audit committee mandate which had been prepared and submitted by the WCC audit committee. The assembly finance committee recognizes the contribution of the professional volunteers who have contributed to the audit committee's work over the last seven years. 

The AFC recommends that the finance committee at its first meeting review the audit committee mandate for adoption by the central committee and appointment of the new committees.

8. WCC Pension Fund

Further to the request of Executive Committee, the assembly finance committee received a report on the current status of the WCC Pension Fund. The WCC Pension Fund had reported a slight lack of coverage of its obligations, and in accordance with Swiss law and further to the advice of actuaries, the Pension Fund Board have restructured the pension plan, introducing new regulations effective from 2006. While staff benefits earned up until 2005 are guaranteed, from 2006 staff retirement benefits are accrued at a reduced rate. 

The AFC recognizes with thanks the work of the members of the Pension Fund Board, and agrees that the WCC should remain in solidarity with the Pension Fund Board, sharing communications where appropriate.