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February 9, 2010 | N. Kurt Barnes, chief financial officer of the Episcopal Church, says churches must work together for God’s mission, not “fight about a building at the corner of Sixth and Main.” Drawing upon his experience in business and finance, Barnes helps the church form strategies in response to the global financial crisis. He envisions collaboration at all levels of the church in addressing the challenges. Barnes says this coming together is one of the positive outcomes of the crisis.

Barnes has a bachelor’s degree in economics from Yale University and a master’s degree in economics from Harvard University. He has worked as an economist for the Rand Corporation and an assistant editor at Time Inc.’s Fortune magazine. For 20 years he was a financial officer at Inco Limited (International Nickel Company of Canada.) He also worked at Morgan Stanley as a vice president in the Fiduciary Advisory Group. Barnes has been on the Investment Committee of Amnesty International, USA, and is an ex-officio board member of Episcopal Relief & Development.

He spoke to Faith & Leadership about the financial challenges the Episcopal Church -- and the church as a whole -- are facing.

Q: Coming to your work with the church from the world of finance, what are your ideas about the root causes of the current financial crisis?

The encouragement of risk-taking was a fundamental cause of the banking crisis, the financial crisis. There should be a consideration of risk versus reward in all activities: financial, farming, teaching English -- taking a risk on a new author in teaching, investing in a new product for the market. But in the financial industry, there is an increasing focus on how much risk we can take on and how much risk we can lay off to other people for our benefit.

I don’t exonerate those bankers who encouraged that activity. When I was at Morgan Stanley, gathering assets was important. Making a good return was important. Leveraging the investments was not part of my activity or a lot of the activity with which I dealt. In the same way that I wouldn’t characterize a group of people as being evil, I wouldn’t characterize all bankers or the entire financial world as evil.

Q: Another way to think about it is as a matter of greed.

Certainly some of the people were greedy. I can’t speak for individuals, but it appears that the focus was, “If I’m making more I’ll feel better. If I’m able to generate more, I will be promoted.” If that’s the sole focus of activity, then you’re bound to fail to be a productive member of the community.

Q: Are there particular challenges to the Episcopal Church in this global financial crisis? Are there strategies or solutions you have looked at for resolving the problems?

During the last couple of years people have said, “Never waste a crisis.” At the General Convention this past July, we reassessed our forecast of income from the 110 dioceses around the U.S. and across 16 other countries; we found our revenues to be down something on the order of 4 to 5 percent over the next couple of years. With that income shortfall and with the requirement to have a balanced budget, we realized we would have to substantially reduce spending.

One approach was, don’t hurt staff, don’t reduce staff, reduce non-staff expenses. That’s not reasonable. If staff people are sitting around doing nothing, then there is no ministry going on. Our response was to reduce both.

Unfortunately that meant we reduced our headquarter staff by about 20 percent. That’s on the spending side. We looked at spending and we identified spending cuts.

We looked at activities that we felt could be done by subsidiaries. Could a ministry be achieved at the local level, by a local parish or by individual dioceses? If it could, the work should be done there rather than from church headquarters.

On the revenue side -- and this is not something we’ll achieve in the next two or three years -- the Episcopal Church has not had a broad capital campaign to build its endowment for 25 years.

It does not have a development office. It will now have a development office.

In the last couple of years we created the beginning of a mission-funding office. The office charter is to develop large donations from wealthy individuals for new ministries. After a few years, the church recognized that it needs more than just these limited new programs. It needs to grow its overall endowment and sources of revenue. It’s beginning to think of having a real development office, the way universities or other non-religious, not-for-profits have maintained development offices.

Q: Do most denominations have that kind of development office?

Historically they have not. Like the Episcopal Church, they have relied on endowments established by wealthy parishioners years ago, or on unplanned bequests. The Episcopal Church certainly has not been historically comfortable in asking a parishioner to include the church in his or her will. There are several wealthy Episcopalians who died in the last few years whose probated wills gave minimal amounts to their parishes, probably because the parishioners were never asked. They gave millions of dollars to museums and libraries because they’d been asked. The challenge is to not be afraid to ask. It is a mindset change.

Q: Do you think these parishioners had a perception that the church didn’t need it? Was there an assumption that the church was wealthy?