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Diocese of Eastern Michigan Operating within a global Economic Financial Crisis 4 Year Financial Outlook June 2009

Diocese of Eastern Michigan Operating within a global Economic Financial Crisis 4 Year Financial Outlook June 2009. Why are we here?. Current global financial crisis is impacting everyone - Governments - Corporations - Individuals - Not for Profit Organizations

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Diocese of Eastern Michigan Operating within a global Economic Financial Crisis 4 Year Financial Outlook June 2009

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  1. Diocese of Eastern MichiganOperating within a global Economic Financial Crisis4 Year Financial OutlookJune 2009

  2. Why are we here? Current global financial crisis is impacting everyone- Governments- Corporations- Individuals- Not for Profit Organizations How is the Diocese of Eastern Michigan impacted?- Revenue- Investments & Reserves- Future Operations

  3. Investment Performance Oct. 2007 1549 S&P 500 Performance Dramatic downturn in stock market impacting value of investment and retirement portfolios Feb. 2009 735

  4. Job Loss in Michigan 2010 Peak Jobless rate has risen 7% points since Jan 2008 in Michigan- projected to be14% average 2009 and 15% in 2010 Source: Michigan.gov

  5. Financial PerformanceWhere are we today 2008 results - $25,600 increase in operating reserves- Includes additional reserves apportionment for Bishop Search, General Convention and Copier purchase - $19,000 2009 results as of May 31 - $6,700 increase in operating reserves- Diocese of Michigan has modified funding distribution for 2009- Congregation contribution at 8.9% including Prior Year Tithes- Full year estimate projected at breakeven Ministry positions remain funded from CDRF, McElroy, Parish Contribution and Mutual Ministry Team (MMT) repayments - $152,000 in 2009

  6. Financial CrisisImpact on Revenue Unrestricted endowment income will not recover from investment losses in 2008 in the short term- direct impact on revenue starting in 2010 Funds held outside of Diocese have reduced funding in 2009- Growth & Income, Trethaway Downs, Tannahill, McElroy Economic downturn may impact congregational income- congregational contributions may decline over next 2 years- distribution to convocations may decline

  7. Millions $ 4 Qtr Moving Average Episcopal Endowment Fund Distribution is 5% of Average Fund Balance for 4 Quarters- 2009 based on average fund balance from July 2007 to June 2008 - $4.5 Million- 2009 income to Diocese is $230,000 Fund Balance has been impacted due to drop in financial markets in 2008, continuing into 2009- Negative 40% return on investment since Jan ‘08- Slow recovery projected for next few months, current balance $3.2 Million- 2010 income to Diocese projected to be $164,000

  8. Operating Fund Balances Long Term Reserves2009 Bishop Search 20,000 Lambeth 5,000 Capital Fund 8,000 Total 33,000

  9. 2010 -2012 Financial ConsiderationsDiocesan Operations Congregation Contribution will drop due to economic climate Reduced Income from Endowment funds Ministry positions continue to be funded outside of operating account- CDRF, McElroy, Mutual Ministry repayments - $164,000- Assistant to the Bishop for Ministry Development full time starting in 2010- Additional source of revenue required starting in 2010 Additional reserves for future expenses minimized- Establish fund for 2012 General Convention - $24,000 estimated cost- Delay additional funding for Bishop Search and Lambeth Conference until 2012- Capital projects delayed, critical replacement only

  10. 2010 Diocesan OperationsDisbursements - $914,000

  11. Congregation Contributions

  12. Revised 3 Year Cash Flow

  13. Operating Account Operating Fund Balance at end of 2012 reaches minimum level

  14. Thousands $ Long Term Development FundsStanding Committee Average of 28% decline in Investment Fund performance since Dec 2007 Adequate funds to 2012 but not expected to regain investment loss in short term Minimum balance to be retained for LT growth CDRF & McElroy at minimum levels in 2012 ’07 ’08 ’09 ’10 ’11 12McElroy ’07 ’08 ’09 ’10 ’11 12CDRF ’07 ’08 ’09 ’10 ’11 12Loans & Grants

  15. Summary We are well positioned to manage through financial downturn in the short term (2010 - 2012) We will not recover investment losses in short term Extent to which economic downturn impact congregations is still unknown New funds will be required to fully implement new ministry development model Build up of reserves for future large expenditures will continue in 2012 but at a slower pace

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