By Forbes
Javier Espinoza
July 16, 2008
http://www.forbes.com/markets/2008/07/16/church-crunch-dollar-face-cx_je_0716autofacescan03.html
The credit crunch has so far affected every walk of life from shop keepers to buyers. And now churches of all denominations seem to be the latest victims of the economic downturn, with some dedicating special prayers to people anxious about debt.
While the Vatican is posting a loss due to a weaker dollar, the Church of England is riding the economic downturn pretty well. But other denominations, like the Evangelical church in Spain, are being affected directly by the weak greenback.
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The Vatican blamed a weak dollar for pushing its first loss in four years, with profits from donations falling 9.1 million euros ($14.4 million), according to figures released by the Holy See. The Catholic Church was particularly affected by the feeble currency as the US was the largest single contributor to Peter's Pence, the collection used by the church for charitable donations, with contributions reaching $19 million.
The Church of England, however, is not doing as bad as the Pope but it still forecasts its dropdown in donations in the first five years and it attributes the fall to the credit crunch.
The Church of England received 516.3 million pounds ($1.03 billion) in donations in 2006, up 4.4% from 2005 and up 4.4% over the last five years. But this year it expects to grow less than 4.0% (between 3.0% and 4.0%) because of the credit crunch, John Preston, Resources and Stewardship Advisor for the church, told Forbes.com.
While the church says 98.8% of its donations come from within the England and therefore are not affected directly by a weak dollar, it is already advising its church goers on how to beat the credit crunch in their Web site with special tips from how to workout a household budget to prayers to those worried about debt.
But the church is also suffering at a personal level. In Spain, for instance, Esteban Mowery, a Baptist pastor from Texas whose salary comes from donations in the United States, told Forbes.com he is struggling more and more. "I get roughly 150 euros ($238) less when I go to the bank because of the currency exchange. That fills my tank twice," Mowery said.
How likely is it for other church denominations to be affected by a weak dollar? "It would obviously depend on how they structure their portfolios around the world. The dollar has weakened considerably and any assets that you hold will fall in value," Peter Scullion, currency analyst at Nomura, told Forbes.com
James Bevan, chief investment officer at CCLA, an invesment management funds that keeps cash for 14,000 faith organizations, said church investors have manages to escape the credit crunch, at least for now. "The reality is at the moment the credit crunch is more to do with the valuation of capital than the delivery of income. We still see significant dividend growth and we expect to pay our investors dividends of more than 10.0%."
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