PROVIDENCE — The results of its annual independent audit are in, and show the diocese continues to meet its day to day financial obligations despite a slight drop in income and a significant one-time capital expense due to the complete renovation of McVinney Auditorium at the chancery last year.
In the annual report of the Central Administration Funds and Catholic Cemetery Operations for the fiscal year ending June 30, 2015, the diocese realized a very modest 2 percent increase in its overall net assets, compared to a more robust 12.6 percent increase the previous year. Michael F. Sabatino, chief financial officer for the Diocese of Providence, attributed this result to a mainly “flat” investment market for FY2015.
While diocesan financial managers did not underperform their benchmarks, market performance on long-term investments last year was essentially flat, after experiencing a 7 percent growth rate the previous fiscal year, Sabatino noted.
Of major concern is that the Catholic Charity Fund Appeal experienced a $114,000 shortfall over the previous year. The diocese depends heavily on the income received through the annual campaign to fund the operations of numerous ministries providing services across a broad spectrum, from caring for senior citizens to funding seminarian education to housing and feeding the underprivileged.
Although last year’s campaign topped $7.7 million, it fell short of its $8 million goal. The diocese has had to redouble its efforts to raise the much-needed funding for its outreach in light of trends which show a continued decline in the number of gifts given by the faithful each year.
“It has become a struggle to maintain the donor database of this fundraising effort and with each passing year, despite our serious efforts, it has become a continuing challenge to raise the funds needed for our works of charity. Yet, the Catholic Charity Appeal is the most important fundraising activity we do on an annual basis for our ministries. We will continue working to improve it,” said Bishop Thomas J. Tobin in a letter announcing the release of the audit report.
The declining revenue from the Appeal is a great concern to those who oversee diocesan finances, including the budgets of individual ministries to ensure they can meet their important mission to help those in need.
“Our budgets are reflecting larger amounts than what we’re raising, so we’re experiencing shortfalls,” said Msgr. Raymond B. Bastia, diocesan secretary for Planning and Financial Services.
To keep pace with these shortfalls, financial managers are looking at areas where cuts can be made to ensure the continued viability of programs.
Sabatino noted that this will be of significant importance for FY2016-2017 as diocesan department directors commence the budgetary process over the next 60 days.
In other areas of this diocesan report the diocesan cemetery operation is in a state of transformation given recent trends in the funeral industry.
“The long-term capital needs of cemeteries are also being addressed as part of the overall plan,” Sabatino said, noting that the Catholic Cemeteries department is currently undergoing an internal reorganization to keep pace with the rapid shift in burial practices, reducing staffing and erecting more mausoleums and columbaria for the interment of cremains.
The diocese also continues to monitor the performance of its pension funds for both priests and lay staff members in an often volatile market.
Although financial markets have fluctuated greatly, the diocese continues to be in line with what its long-term plan calls for in each of those funds.
“We are on pace for long-term stability in both plans,” Msgr. Bastia said.
The McVinney Auditorium renovation project proved much more costly than originally budgeted when contractors encountered asbestos in the walls which had to be carefully removed. In addition, it was determined that a new reinforced roof would be needed to support the separate heating, ventilation and air conditioning system that had to be installed instead of connecting to the chancery’s equipment.
The result is a state-of-the-art performance and gathering venue that the diocese now rents out for Church and community functions in an effort to recover some of the $4.2 million spent on the project.
“The restoration effort has provided us with a beautiful and versatile performance and gathering space that will be a wonderful asset for our diocese and the local community,” Bishop Tobin said.
Perhaps the brightest development outlined in the report is that the diocese continues to chip away at paying down its line of credit, which topped $15 million a little more than a decade ago.
From the proceeds of the sale of unused non-ministerial related properties, the diocese paid down approximately $1 million of its debt, reducing its line of credit to $2,593,692.
A full copy of the audit report is available on the diocesan website at http://www.dioceseofprovidence.org. A User-Friendly format of the financial report will be inserted into the Feb. 25 edition of Rhode Island Catholic.