The basic framework for the Diocese of Newark’s budget rests on our stewardship approach to diocesan giving, which is frequently referred to as 50/50 giving. Adopted by the 1989 Diocesan Convention, its two primary objectives are to have a system of diocesan giving that is consistent with our stewardship principles and to create a close relationship between diocesan and congregational finances. Under this approach every congregation and the Diocese has a goal of giving one dollar of income outside the congregation for every dollar of income that is spent inside the congregation. Within the 50% going outside the congregation, there are more specific goals of giving 25% of income to the Diocese and 25% to other outreach. The Diocese has similar goals for giving to the national Church and other outreach.
While other dioceses have tried similar systems in the past, we believe that the Diocese of Newark has the longest history of using this model as opposed to a taxation or assessment model. It should be noted that pledge income is especially important in the Diocese of Newark as it funds over 85% of the budget. In practice this system has worked relatively well. The level of funding from the congregations has generally been sufficient to fund most of the proposed budget. As expected diocesan income has fluctuated as congregational income has fluctuated. This was foreseen and is considered to be one of the strengths of the systems compared to assigning amounts to congregations that may have little relevance to current financial realities. The only year that low income levels resulted in staff reductions was in 2005, and this was probably more due to congregational financial problems in a post-2001 world than to problems with the system itself.
At the same time there have been problems and challenges within the system. In 1989, the idea was that congregations would gradually increase their percentage giving to the Diocese as part of moving towards the 25% goal. Some congregations have done that consistently, while others have not increased the percentage pledge from the 1989 starting point. Another feature of the system is that the diocesan budget is not finalized until the congregations make their pledges, which consists of a percentage pledge and a dollar estimate. Under our canons, pledges are due by December 1st, but consistently 10-20% of the churches miss that deadline. In spite of educational efforts there appears to be a lack of understanding, especially on the part of clergy, that every church can and should meet this deadline.
The adoption of this system in 1989 also required a change in the method of budget preparation. Previously the Diocesan Council adopted budgets in June with assessments assigned to the congregations in September and the budget was adopted by Diocesan Convention in January. Under the new system, the budget is presented to the Council in December or January, again for adoption at the January Convention. For the month before Convention, the Diocese basically operates on the prior year’s budget with an adjustment after the budget is adopted.
The first section in the diocesan budget is outreach with giving to the national Church the first line item. This is done intentionally to illustrate that giving beyond ourselves is our first financial priority. The Diocese of Newark gives 25% of its actual pledge and investment income to the national Church, which is among the highest, if not the highest, percentage giving of all dioceses in the United States.
Since the 1998 Lambeth Conference, the Diocese of Newark has responded to the call to give seven tenths of one percent (or 0.7%) of our pledge and investment income to international outreach. This latter item is part of our commitment to ultimately give 25% of our pledge and investment income to other outreach. For a number of years, the Diocese had been increasing this percentage so that it had reached 8.25% by 2004. In a very difficult 2005 budget that saw three and one half staff positions eliminated, other outreach giving was reduced to 6.5%. Our goal is to begin increasing this in the 2006 budget. In addition to international outreach and funding several specific outreach ministries, the Diocese also provides funding for outreach grants. These funds are administered by the Diocesan Council on recommendation from its outreach committee. We believe that few other dioceses fund this level of outreach through their operating budget.
Diocesan mission and program funding is directed primarily towards those things best done at a diocesan level (such as a camping program) and/or those things that support congregational development. Funding for staff persons is intended to support these areas as well as carry out our institutional responsibilities. Every effort is made to limit operating and administrative expenses to the minimum amount necessary.
The biggest challenge to diocesan finances clearly lies on the income side of the budget, especially pledge income. A significant number of our congregations have been incurring operating deficits. Corrective action in those situations can and has already had an impact on giving to the Diocese. At the same time, a system of diocesan finances based upon good stewardship principles is a sound foundation for the future. An increasingly stronger diocesan-wide commitment to stewardship is clearly the best strategy to meeting financial challenges both at the congregational and diocesan levels.