26.06.2008
LWF 2006 and 2007 Budgets Register Surplus
Global Trends Have Financial and Operational Consequences for the LWFARUSHA, Tanzania/GENEVA, 26 June 2008 (LWI) - Because of exchange-rate gains, the Lutheran World Federation (LWF) ended the 2006 and 2007 financial years with a surplus for its Geneva Coordination budget. Presenting his report to the LWF Council on 25 June, Treasurer Peter Stoll said the LWF had a surplus of USD 1.2 million for 2006 and USD 2.2 million for 2007.
After 2006, "in 2007 we had another positive year," Stoll reported. All departments had a surplus-the General Secretariat, USD 432,193; the Departments for Theology and Studies (DTS), USD 294,504; Mission and Development (DMD), USD 614,607; and World Service (DWS), USD 840,387, the treasurer told participants in this year's Council meeting. Since the accounts for 2006 presented at the March 2007 Council in Lund, Sweden had not been audited yet, Stoll proposed that the governing body review and approve both the 2006 and 2007 financial statements.
In addition to the Geneva Coordination budget, so-called A budget, the LWF program and project budgets for the past two years were mostly balanced. However, some write-offs amounting to USD 282,943 in 2006 and USD 319,887 in 2007 were necessary.
The Evangelical Lutheran Church in Tanzania (ELCT) is hosting the 25-30 June Council meeting, in the northern town of Arusha. The theme for this year's meeting is "Melting Snow on Mount Kilimanjaro-A Witness of a Suffering Creation."
Consequences for the Global LWF Communion
Stoll pointed out that the LWF as a global communion was affected by global trends, which clearly have an impact not only on the organization's financial situation, but also on its operational risks. These impacts have never been as strong as at present. The largest influence has been that of exchange rate movements, which have had a huge impact on the LWF's financial results and budget planning.
The global economic development also has a strong impact on the ability of some member churches to pay their contributions and contribute to the communion's global activities and the Endowment Fund, noted Stoll.
He went on to say that it was with pain that the LWF learned that since the 2003 Assembly in Winnipeg, Canada, barriers between the global South and Europe and Northern America have been reinforced by such means as complicating visa procedures. This was having a growing impact on the LWF's ability to interview candidates for positions in Geneva.
Total LWF Income over USD 100 Million
According to the treasurer's report, the total income of the LWF for 2007 was USD 102.2 million, compared with USD 91.4 million in 2006.
The 2007 total expenditure was USD 96.8 million, compared with 88.1 million in 2006. As previously, around 80 percent of the funds were earmarked for DWS.
The reserves, i.e. the net assets freely available to the LWF amounted to USD 20.8 million at the end of 2007, according to Stoll. Although the reserves' target level is USD 15 million, "the situation is not quite as good as it looks." The renovation deficit of the LWF-run Augusta Victoria Hospital on the Mount of Olives in East Jerusalem still amounts to USD 5.6 million. There are also some pending tax cases in DWS field programs.
Members' Contributions
Stoll reminded participants of the strong commitment made by church leaders at the last Council meeting in Lund to pay fair membership fees. The contributions have increased steadily over the last decade, and amounted to USD 3.2 million in 2007. Part of the increase is due to a stronger euro.
Around 70 percent of the member churches pay the membership fees, said Stoll. He however noted that there were still too many member churches that do not pay even a partial membership fee. Other member churches, meanwhile, have increased their contribution to the fair level. But much remained to be done before the 90 percent target level by 2010 could be achieved
Currency Management
Stoll told the Council that it was "crucial to manage the different currency flows and treasury funds in such a way that currency losses are minimized while at the same time trying to maximize the interest gains." This is because the LWF receives income mainly in euros; US dollars; Danish, Norwegian and Swedish crowns, and Swiss francs, while expenditure is mainly in USD, EUR and CHF.
In this regard, the treasurer highlighted the cumulative surplus of currency gains/losses of USD 5 million for the period 2001-2007. This surplus has actually been essential "in stabilizing the budget and in covering the regrettable program/project write-offs. We have even succeeded in increasing the reserves." However, when the USD begins to appreciate, the LWF will inevitably suffer some currency losses. Measures will then need to be taken in order to minimize the negative impact of a stronger dollar.
A-Budget Situation Better
The Geneva Coordination budget is currently better than projected three years ago. This is because support from German churches had not decreased as much as previously anticipated. The financial situation of German churches had improved with the economic up-turn in the country over the last two years.
The 2009 projections of the A-budget currently show a balanced result. However, much depends on the development of the Swiss franc, euro and the US dollar.
Eleventh Assembly in 2010
With regard to the 11th Assembly to be held in Stuttgart, Germany in July 2010, Stoll reported that as of 31 December 2007, the 11th Assembly contributions amounted to USD 1.2 million. The current projection was a total Assembly income budget of USD 2.15 million. In 2004, the Council approved and amount of USD 2.3 million for the 11th Assembly budget. The expenditure budget would be adjusted according to this income projection, Stoll indicated, but this would be the task of the 2010 Assembly host church, the Evangelical Church in Württemberg. He warned, however, of the substantial risks related to exchange rate fluctuations.
International Standards
For the first time, LWF accounts have been prepared according to International Financial Reporting Standards (IFRS), Stoll announced. After three years of account adjustments systems, the LWF could now show stakeholders an internationally recognized standard presentation of its accounts, an improvement that should enhance the secretariat's credibility.
Invoking the Council theme, Stoll called for a discussion of "our own impact on climate change," and advocated investing in (carbon dioxide) CO2 compensation for all air travel by LWF staff. This could take the form, for example of a solar energy plant installation on the roof of the Ecumenical Center in Geneva or via DWS field programs. (1,095 words)
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There are an estimated 170 participants in this year's Council meeting including church leaders, officials from LWF partner organizations, invited guests, stewards, interpreters and translators, LWF staff and co-opted staff and accredited media.
The Council is the LWF's governing body meeting between Assemblies held every six years. The current Council was appointed at the July 2003 Tenth Assembly in Winnipeg, Canada. It comprises the President, Treasurer and 48 persons elected by the Assembly. Other members include advisors, lay and ordained persons, representing the different LWF regions.
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