We now have an insight to their actions. Examining their rationale can begin a process of identifying the real issues and how to solve them.
We need to face up to the underlying issues and deal with them without prejudice and examine the issues without becoming defensive.
The first issue is to be forthright about our financial situation. We must behave responsibly to ensure the viability of this church and the survival of the congregation. We need to interpret the financial picture from a management perspective. What does it mean and what can we do about it.
Let me state very clearly the narrative presented by the church executive that the church will be bankrupt within two to three years is ABSOLUTELY FALSE.
As a registered charitable institution the Church has to file their annual financial statements with the Canada Revenue Agency. These numbers are indisputable.
The record is available on-line from 2017 to 2021. We see that at the height of Covid-19, on Sept20, 2020, when the sale of the church property was first raised with the congregation, the operating surplus was $9,284. The following year the operating surplus was $5,997. The numbers for 2022 have yet to be made public.
Moreover the church recorded cash assets of $823,986 in 2020 and $812,052 in 2021. The church also has a trust account for the columbarium, which is separate from church operating funds and contained $79,088 in 2021.
The church property itself has a cost value of $1,473,279 which now has a net depreciated value of $881,884.
The council is well aware that the church is a not-for-profit charitable organization and therefore it does not pay taxes on its income or municipal taxes on its property.
The financial statements that are relevant to the yearly health of the church are the ones that pertain to the yearly revenue and the yearly cost for running the church. The physical asset of the church property is a separate item as is the investment portfolio of the church i.e. the unrestricted long term cash investments are a separate item.
The problem with their bookkeeping is that the PK financial statements include amortization as an expense item. This is a relevant number for a tax paying business, as it allows it to reduce its revenue for tax purposes. It is not relevant at all for a charitable organization like St. Peter’s church which does not pay taxes. Similarly, the unrestricted cash assets are invested, (wisely we hope) and they generate an interest income for our recorded revenue. Obviously with the bank interest rate being 1-2 % these funds were invested prudently in the market. (they yielded 6.7% in 2021). However, should they incur an unrealized loss in book value it should be left in the investment portfolio and not be reflected as a loss in our operating revenue.
Our total revenue in 2021 was $270,986. Our operating cost excluding amortization was $264,989.
We have been fortunate to have secured the Salvation Army as a tenant that has boosted our rental revenue to $108,225. And we also benefited from the Federal Government COVID-19 support payments in 2020, and 2021 of $30,661.
We know that the Salvation army will probably end their tenancy in April of 2024. And the Covid support payment has already stopped. Fortunately we have the ability to replace these by pursuing other lease options. We identified these in our business plans which we shared with the council and the membership. We know that we can tailor our operation to suit our needs. Whether it be administration, or the pastor, or the music director, our finances will dictate what we should do.
Our operations budget will be balanced. There is no fear of imminent bankruptcy.
There is no business case for selling the church.
On an even more positive note, our church has been recommended for heritage designation by both the Toronto Preservation Board and the North York Community Council. This designation opens the door to government funding for the various building deficiencies that the council identified.
The resolution to sell the church should be denied.
Väino Einola
