Economic downturn: Best practices for parish investments and resources for financial assistance

Diocesan staff member Cathy Hobart is the controller for the Diocese of Central New York.

For almost all of us, COVID-19 is the only pandemic we’ve experienced – but we’ve all seen many ups and downs in our economy. James Gould, president of Alesco Advisors ( the investment firm which manages the diocesan Unified Investment Fund (UIF)) wrote on June 24, 2022:

“Periods of economic contraction are not new. Indeed, they occur with great frequency. The U.S. has seen six recessions in the last 42 years. While recessions are usually painful, they often are short-lived… The average length of a recession in the U.S. has been about 15 months. As of this writing, we are not in a recession.”

Your parish leadership is most likely watching the value of the parish investments. In consultation with the Diocesan Investment and Finance Committee, we offer the following best-practice reminders and available options for assistance as you prepare for a potential impact.

Best practices:

  • Invest for the long-term. Assume the parish will be around for a very long time.
  • Keep in mind the expected long-term return on investments when setting the annual draw for operations. As a rule of thumb, that draw should be 4% to 5%, at the most.
  • Maintain broadly diversified investment portfolios. Be aware of the risk levels associated with the investments chosen.
  • Keep operations spending in check, and try to keep investment fees as low as possible. At the same time, depending on the level of investment expertise available to the parish, investment fees may be worth your while.
  • If you draw on reserves to weather a financial short-fall, make a plan to replenish those reserves.

Financial assistance available:

  • The Church Pension Fund offers a temporary waiver of clergy pension assessment for up to four months total. This assistance started in 2020 in response to the pandemic. The four months are cumulative since 2020; any assistance previously granted would count towards the four months. The application can be found here: temporary waiver. The completed application should be returned to the diocesan office to the attention of Cathy Hobart (chobart@cnyepiscopal.org).
  • The Diocesan Board has a procedure and policy for requesting assessment reduction/forgiveness. That policy is found here: Assessment Amendment Policy 2020.

No one knows what will happen in the future. Faithful stewardship of financial resources and being there for each other should help us weather a financial storm together.

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