'Giving to Grow' in Practice Webinar: Questions and answers

These questions and answers relate to the webinar that was held online 15 August 2022.

Around 270 people joined the event. Questions were submitted before, during and after the live event, all of which have been answered and published below. A few questions have been merged to avoid duplication, and we have grouped together related matters. The presentation slides and two appendices (Income Base Template and Giving to Grow Template) are available for download.

Q1. How is assessable income calculated?

The Congregational Finance staff in the National Offices use each congregation's annual accounts to calculate the assessable income figure for the whole Charge, in line with the Regulations. The team also includes income received in the year from the Consolidated Fabric, Stipend and other Endowment Funds, and Glebe income earned in the year.

The assessable income figure is then used in the subsequent calculation, along with the total cost of all Minister(s) of Word and Sacrament allocated to that Charge, to determine each Charge's total contribution under the Giving to Grow scheme.

Sections 13 and 14 of the new Giving to Grow Regulations provide a comprehensive list of both assessable and non-assessable income.

Q2. Will congregations receive a breakdown of how assessable income is calculated?

The Regulations are quite comprehensive in terms of what income is assessable and what income is not, so this provides transparency in terms of approach. The pack of information sent to congregations with their statement in December will provide the congregation's income base assessment. A template income base assessment is attached to the covering email and is available for download as Appendix 1.

Q3. Can we be provided with the template used to calculate assessable income?

This is provided as an attachment to the covering email and as a download as Appendix 1 – Income Base Template.

Q4. Can we also be provided with a template to calculate our congregation's Giving to Grow contribution?

We have included an attachment as Appendix 2 – Giving to Grow Template – which a Treasurer kindly sent us. This could be used to estimate Giving to Grow under various scenarios for financial planning and modelling. Please be aware that it is unlikely to produce the exact amount per the statement. This is because the income base includes not only the income included in the annual accounts but also Stipend Endowments, other endowments, Glebe rents, Consolidated Fabric Fund income and other rents received in the year under assessment i.e. for 2023, those received in 2022.

Q5. How is a congregation's Giving to Grow contribution calculated?

Sections 16-19 of the Giving to Grow Regulations outline the calculation process and components as follows:

16. The Contribution calculated for each Charge is the sum of the following three components:

(a) Ministry Here: 50% of the Charge's Income Base, but not exceeding the cost of the Charge's allocated post(s) of Minister of Word and Sacrament (MoWS) at the maximum of the stipend scale. This allocation shall be based on the number of full-time equivalent posts of Minister of Word and Sacrament allocated to that Charge as at 31 August in the year of calculation.

(b) Ministry Elsewhere: 35% of the Charge's Excess Income. This component shall not exceed 1.5 times the Cost of the Charge's allocated posts of Ministry of Word and Sacrament

(c) Shared Activities: 10% of the Charge's Income Base.

17. The total Contribution for the Charge shall be apportioned among each Congregation in the Charge on a pro-rata income basis, that is in proportion to the contribution of income each congregation makes to the total income of the Charge.

18. All income received from the Consolidated Stipend Fund or Glebe Rent shall be deducted from the Congregation's Contribution.

19. If the Congregation's Contribution is calculated to be less than its stipend endowment income, the required Contribution shall be increased to equal the amount of the stipend endowment income.

Q6. Where do we find the Giving to Grow Regulations?

The regulations are available for download or can be viewed at the bottom of the Giving to Grow page.

A recording of the Giving to Grow webinar of 10 May 2022 which was hosted by the Assembly Trustees is also available on that page.

Q7. Why can't the assessment be based on free cash flow, taking into account those cases, for example, where a Charge is paying back a loan from ‘121'?

The Review Group looked at a number of ways of doing this, including other denominations, and concluded that the income-based approach was the fairest. The problem with using ‘free cash' is that it is open to interpretation and is based on one point in the year (the Balance Sheet date), rather than the income figure which is based on the full year.

Q8. Why are contributions based on income? Where major repairs are needed, this will severely compromise a congregation's ability to pay their Giving to Grow contribution. Would not assessment be better based on ‘reasonable profit'?

The Review Group considered this in some detail, but concluded that there are too many different scenarios of expenditure, different trading ventures etc, to use ‘profit' as a measure.

Congregations with holdings in the Consolidated Fabric Fund are encouraged to get in touch with the General Trustees at gtfinance@churchofscotland.org.uk to apply to use that money if needed. Monies held in this Fund's capital account can be used for major schemes of repairs or renovations, and revenue can be used to pay towards day-to-day maintenance costs, eg heat, light, buildings insurance, maintenance. An online webinar for congregations with holdings in the Consolidated Fabric Fund was held in June 2022 and is available to view on YouTube.

If a congregation has a restricted fund for a significant building project eg a new roof, that income would not be assessable.

Q9. While churches can control most items of expenditure, the cost of energy is going to increase exponentially and will significantly impact on ability to pay. (If congregations are in the Church of Scotland scheme, gas will rise in April 2024 and electricity in October 2023.) In light of this, should the purely income-based approach be revisited?

There is discussion with the General Trustees to look at this situation overall. The GTs can offer their Energy Consultant to review a congregation's use of energy. For further information, please email gtenergy@churchofscotland.org.uk.

Many Local Councils across Scotland are looking to set up ‘Warm Banks' this winter to provide comfortable spaces for people struggling to heat their homes. Furthermore, congregations may want to consider holding joint services wherever possible over the winter to reduce the burden of energy costs.

More information on energy matters is expected to be issued from the Church Offices over the coming month.

Q10. What happens if a congregation cannot afford to pay their Giving to Grow contribution?

In the first instance, the congregation should contact the Presbytery to make them aware of the situation. The Giving to Grow Regulations specify that Presbytery dispensation is needed if a Standing Order is being cancelled. This ensures that the Presbytery is aware of any issues and can support you. The Congregational Finance team and the Stewardship Team can support congregations in a range of ways.

Q11. My congregation's income is roughly £38k, so it would be expected to pay £19k under Giving to Grow, but annual expenditure is £40k so it doesn't have the £19k.

Giving to Grow is based on assessable income and it takes expenditure into account to calculate the net income, under limited circumstances. Sections 13 and 14 of the Giving to Grow regulations have more information on this. If the congregation does not have the funds available to pay their contribution then please contact Presbytery in the first instance and then our Stewardship and Congregational Finance teams who can support you in different ways.

Q12. Can you confirm whether funds held in the Consolidated Fabric Fund are assessable?

It is only the revenue earned on the Fund within the year that is assessed and any drawdowns are excluded from the calculation of assessable income.

Q13. It was mentioned that Consolidated Fabric Fund income was classed as assessable, so is this simply added to the general income to create a total and then used or is it separate and you pay 50% of this?

This revenue forms part of the total assessable income which is then used as the basis for the Giving to Grow calculation.

Q14. We have a fund restricted to fabric repairs only. Is this assessable?

Fabric income is assessable under the Giving to Grow Regulations. The income will be included in the assessment if it is designated as Restricted Income. (See next question)

Q15. Is assessable income only based on General Fund income or does it include Fabric Fund, Sunday School, Guild, etc?

In general, fabric income is assessable unless there is a larger capital project ongoing. Organisations' income is not assessed unless it is a specific donation to the general funds of the congregation from one of the connected organisations. Life & Work income isn't assessed. Rental income is assessed after the first £10,000. We would exclude any expenditure that specifically relates to the renting out of the property.

Q16. How is Investment portfolio income assessed, given the financial turmoil?

Income received by congregations during the course of a year is assessed. The income from investments will clearly fluctuate depending on the performance of the financial markets. The assessment will be based on whatever level of income is received.

Q17. What is Endowment Income?

Stipend Endowment income is probably the most common form of endowment income for congregations. This comes from the sale of Glebe land. Units are purchased in the Endowment Fund and income is earned on this which is deducted from the cost of a congregation's contribution. It's not applicable to every congregation. Feel free to check whether your congregation has purchased units in this Fund.

Q18. We have had fundraising during the year for an update of our AV system. Should this be shown separately from normal income e.g. as restricted income and restricted expenditure? Will this take it out of assessed income?

It is likely that these funds should be shown separately in the annual accounts. However, it depends on the manner in which the funds were raised as to whether they should be in a designated fund (i.e. unrestricted funds being restricted for a specific purpose by trustees) or restricted fund (i.e. restricted by the donor). What is useful in relation to income raised for capital projects is to include a narrative to the movement in funds and the Trustee report note which explains the context around why the funds were raised. This allows us to ascertain whether this income falls outwith the income base.

Q19. Is money which is regularly given to a separate fund to support overseas mission assessable income for Giving to Grow?

The Congregational Finance team would require more detail around the specifics but, generally speaking, monies which are gifted for other charitable purposes and third-party donations would not be assessed for Giving to Grow.

Q20. Are financial donations or grants paid to a congregation for a foodbank which is run by a congregation included in assessable income?

Grant funding is excluded from the Income Base calculation. Appeals for donations to a foodbank are also excluded.

Q21. Are compliance costs deducted from assessable income calculations eg gas servicing, electrical checks, fire safety etc?

Giving to Grow is an income-based system. The ‘compliance' costs cannot be deducted.

Q22. Please explain Example 3 in the presentation which relates to a single congregation Charge with a part-time (50%) Minister of Word and Sacrament (MoWS) and income of £100,000.

The third worked example in the webinar was as follows:

Scenario: A single congregation with a 50% ministry (MoWS) and income of £100,000

*Ministry Here:

£45,000 x 50% = £22,500

Ministry Elsewhere:

£55,000 (£100k - £45k) x 35% = £19,250

Shared Activities:

£100,000 x 10% = £10,000

Total = £51,750

*The ‘Ministry Here' calculation could be expanded a little to show some of the background thinking:

This Charge's total assessable income is £100,000. According to the Regulations, the ‘Ministry Here' contribution should be set at 50% of a Charge's income base so, in this example, 50% of the Charge's income base comes to £50,000. However, the ‘Ministry Here' contribution must not exceed the cost of the Charge's allocated MoWS post. As this Charge has a 50% MoWS, its related costs are only £22,500 (ie half of the maximum full-time stipend of £45,000). This is the calculation shown in the example. This Charge's ‘Ministry Here' figure represents the full cost of its MoWS.

Using another similar example, but where the Charge's income base is lower and MoWS figure higher:

Scenario: A single congregation with a 75% ministry (MoWS) and income of £50,000

Ministry Here:

£50,000 x 50% = £25,000

* £25,000 is the maximum this congregation can pay towards its ‘Ministry Here' costs, as the figure is capped at 50% of its income base, even although its actual MoWS costs are £33,750 [£45,000 x 75%].

Ministry Elsewhere:

(There is no excess income) = £0

Shared Activities:

£50,000 x 10% = £5,000

Total = £30,000

Q23. How will the contribution be calculated for a congregation which has no Minister and no permission to call a Minister, but where a Locum is paid to provide cover?

For vacant congregations, the congregational finance team will look at whether a new Presbytery Plan has been approved. If there is no imminent linkage or union, then the Ministry posts allocated under the Presbytery's Plan will be used to calculate the Giving to Grow contribution and then the Vacancy Allowance will be deducted from it. If a congregation has no permission to call a minister, then it is probably in Guardianship, in which case, the FTE used in the Giving to Grow calculation would be 0.25 and Guardianship Allowance (which is set and applied the same way as vacancy allowance) would then be deducted.

Q24. What is the Vacancy Allowance?

The Vacancy Allowance is currently £933 per month, so £11,196 per annum. The figure is slightly higher in a linked Charge. This is intended to cover the cost of a Locum minister to provide a Sunday Service and two days' pastoral cover.

Q25. Congregations in the Presbytery of International Charges pay their own ministry and property costs. It would be helpful to see relevant examples for this context, including a congregation supported by the Salvesen Trust and one where ministry costs exceed the stipend figure used in Scotland.

Relevant examples will be sent direct to the Charges within this Presbytery.

Q26. Will being part of a linkage or a union make any difference to the assessment for a congregation?

When a congregation enters a linkage or is united, the Giving to Grow calculations will be recalculated. When a union takes place, the congregations involved receive a statement to the date of union; a further statement will be issued to the united congregation from the date of union. There is no real difference in terms of assessment, but the amounts payable differ depending on if it is a linkage or a union. Under a union, the contribution would be payable by the new united Charge. In a linkage, the contribution for the Charge is allocated to each congregation based on the proportion of assessable income they bring into the total income base for the Charge.

Q27. If our congregation is part of a grouping or cluster arrangement, is the assessment impact the same as in a linkage?

No. Groupings/clusters are informal arrangements and do not impinge on the Giving to Grow calculations. If any of these groupings were to become formally adjusted linkages or unions at some point, then the Giving to Grow calculations would take account of this.

Q28. If a Local Mission Church is part of a union, is Giving to Grow calculated for the united Charge?

Giving to Grow would be calculated for the Charge which encompasses the Local Mission Church. Any assessable income of the Local Mission Church would be included in the Charge's income base and the contribution payable would be from the Charge.

Q29. What about a congregation under Guardianship?

The FTE for congregations under Guardianship is 0.25 of a Minister of Word and Sacrament. The Guardianship Allowance is the same as the Vacancy Allowance.

Q30. How does having an Ordained Local Minister affect the calculation?

Ordained Local Ministers (OLMs) are not inducted as the Minister of a Charge, therefore it is likely that the Charge would have a Minister of Word and Sacrament on which the ‘Ministry Here' element would be calculated. Where OLMs are entitled to receive remuneration, this will be funded nationally out of ‘Ministry Elsewhere' contributions. If there is no inducted MoWS, it could be that the Charge is vacant or under Guardianship and, in these cases, the ‘Ministry Here' element would be based on the allocated FTE of MoWS per the Presbytery plan, regardless of whether or not there is an OLM working within the Charge.

Q31. Are we able to find out the assessable income of a Charge with which Presbytery is proposing a linkage?

If entering into a linkage with another congregation(s), we would suggest seeking a conversation with the Treasurer(s) of the congregation(s). Good open dialogue is encouraged. Of course, whilst financial sustainability and planning are important, the focus of Presbytery Plans should primarily be around mission.

Q32. Will recalculations be made during the year at the point when Presbytery Planning readjustments take place, or do we have to wait to the following year for the recalculation to take effect?

If there's a linkage or union, the Congregational Finance staff will recalculate and reissue the Giving to Grow contribution. Changes to the Charge's FTE (for Ministers of Word and Sacrament) will not lead to a recalculation; these will only be done once a year in August. The Vacancy Allowance will be applied/disapplied throughout the year, as is the current practice.

Q33. How will the Giving to Grow contribution be calculated in the case of two congregations, each currently with their own Minister on unrestricted tenure, being linked and allocated just one Minister under the Presbytery Plan?

The Giving to Grow contribution will be based on the actual Minister(s) of Word and Sacrament in post. It is only when a vacancy arises (and thereafter once filled) that we would use the posts per the Presbytery Plan, as that will be the allocation which is recruited.

Q34. Our congregation is linked with another. Will the calculation of the cost of the Minister be 50/50 per congregation?

The Giving to Grow contribution for the linked Charge will be calculated based on the cost of the Minister(s) of Word and Sacrament for the Charge and the income base of the Charge. The full Charge's Giving to Grow contribution is then allocated to each congregation using the percentage of assessable income they bring into the Charge.

For example, if Congregation A has assessable income of £60,0000 and Congregation B has assessable income of £40,000, Congregation A would pay 60% of the Charge's contribution and Congregation B would pay 40%. The contribution could be split 50/50 if both congregations in the linked Charge had the same level of assessable income.

Q35. Will the Giving to Grow contribution figure for 2023 be based on the congregation's 2021 accounts?

Yes.

Q36. When will the FTE figure for 2023 be made available to Treasurers? Do we have to wait until the approval of Presbytery Plans?

The FTE figure for 2023 is calculated based on what has been allocated at 31 August 2022 and it will be communicated to congregations on the 2023 contribution statement which is sent out in December.

Q37. Our Church is in a linkage and has one FTE Minister of Word and Sacrament. At present, each congregation receives its own annual contribution figure. Will the new Giving to Grow costs only be sent to the largest Congregation?

No. Every congregation will continue to receive its own statement which will show that congregation's Giving to Grow contribution for the year. Each congregation within a linkage will pay proportionately, according to their income, for the Minister(s) of Word and Sacrament allocated to the linked Charge. (See point 17 of the Regulations.)

Q38. If, within a Charge of two linked congregations, one congregation's Giving to Grow contribution shows an increase of £8,000 compared to their Ministries and Mission contribution in 2022 and one shows a reduction of £6,000, will the Transition Funding passed to Presbytery be £8,000 or £2,000?

The Transition Funding will be calculated based on the £8,000 increase. It is intended to help those congregations who experience an increase in contributions under Giving to Grow. However, this Funding is then applied by each Presbytery who will determine how the money is to be distributed.

Q39. How do congregations apply to Presbytery for Transition Funding?

Each Presbytery will be informed of the total Transition Funding available to them and will use their local knowledge to apply the funds as appropriate. This Funding is not a pot which is open for application, as such. It's specifically intended for congregations who are paying more under the Giving to Grow system. Each Presbytery will determine how to administer this Funding, but it would do no harm for a congregation to get in touch with Presbytery to provide any relevant information if there is a case to be made.

Q40. Is there a process for challenging a Presbytery's assessment of the Transition Funding?

Transition Funding is calculated by taking the sum total of increases in Contributions for Congregations within a Presbytery between the last year of the previous Contribution system (2022) and that current year's requirement. Presbytery can then use this to reduce the proposed Contributions for individual Congregations before these are finalised for the following year. There is no basis in the Regulations for appealing Presbytery's application of the Transition Funding.

Q41. The discontinuation of the Presbytery Discretionary Allowance leaves me thinking that Presbyteries and congregations are being discriminated against in favour of central funds, even taking into account Transition Funding being directed to new Presbyteries.

The Presbytery Discretionary Allowance actually over-collected, with more being taken from Congregations in order to give Presbytery a discretionary fund. The rationale of the Giving to Grow system is to leave more money overall with congregations. The Discretionary Allowance did benefit central funds in a way, as it was often used by Presbyteries to offset overdue debts. This won't be an option under the new system.

Q42. By moving away from having scales in favour of a simple assessment, does this mean a change of policy in that the total contribution received by the Church of Scotland nationally will be entirely dependent on congregational income as opposed to budgeting to meet a particular level of income? If this is the case, what is the impact on financial planning?

It is the case that the new Giving to Grow system reflects a change of approach, being dependent on congregational income and the number of Ministry posts. If congregational income drops, then the income to the National budget drops and expenditure will need to be reduced accordingly.

Q43. What does S&F mean?

S&F is an abbreviation of ‘Stewardship and Finance' and refers to the Stewardship and Finance Department based within the National Offices.

Q44. Our congregation has limited experience/expertise in financial planning, so how can we do this effectively?

The Congregational Finance team can assist congregations with working out different scenarios, budgeting or working out the impact of Presbytery Plans. Treasurers can possibly look back at the congregation's assessable income from the previous year, consider the congregation's financial situation since then and work out best and worst-case scenarios from there.