As the Alberta-B.C. district of the Lutheran Church deals with a major financial crisis, parishioners who invested in a troubled fund are being forced to make a difficult decision.
The district’s Church Extension Fund is facing a massive shortfall and has been suspended because of investments that are not returning a profit and investors now have two options.
One is liquidation immediately by selling off assets including churches and other buildings or investment restructuring, while receiving some payback from assets such as the Prince of Peace Manor and Harbour, which is located east of Calgary.
Calgary-based lawyer Francis Taman is part of the team working on the path forward and told 660News there’s been some heart-wrenching reaction.
“We’ve had congregations and individuals say they want to donate their CEF investments to the districts because they don’t want their brothers and sisters to suffer, that’s where things are really heartening in this kind of a situation,” he said.
Taman said there are around 2,600 depositors into the fund, but the actual shortfall is difficult to measure.
“This whole situation is going to be affecting all of us and that’s one of the reasons why we’re working together to try and find the best way forward,” he said.
The fund was established back in 1921 and has enabled the building of churches, senior care facilities and schools, but recent bad investment decisions have put it in disarray.
660News has learned from meetings held in Calgary between investors and representatives from the district’s Board of Governors that both options aren’t easy.
Over 100 people attended three different meetings at Foothills Lutheran Church Thursday and discussions between investors and representatives focused on two main questions: how did it get to this point and how come there wasn’t more notice to investors?
Discussions also revealed the shortfall appears to be in the range of tens of millions of dollars.
If they choose to liquidate, discussions revealed they could get up to half of their investment back immediately.
However if they choose to stay the course, they could get full payment eventually, but that could take years and many of the investors are seniors who may not be able to afford waiting.
Investors also pointed out they hadn’t gotten a financial report about the fund for around two years and representatives said that was because auditors kept requesting information, which delayed the data.
Parishioners also expressed stress at the meetings because of how quickly they are being asked to give their preference of liquidation or staying the course, especially those with little financial background, but representatives said regardless, they need to figure out a solution.
Taman was not present at the meeting, but did say they want to try and rectify the situation soon.
“We’re looking to have feedback in the next couple of days and to evaluate it over the next week or two,” he said. “So hopefully we’ll have a better sense of direction in the next days and weeks coming up as to what our direction is going to be.”
Lutheran Church of Canada President Robert Bugbee told 660News since the district is a separate corporation from the church, the national body can’t come in and take over.
“Even if we wanted to, we wouldn’t be able to step in and seize control of that situation, it’s simply not legally possible,” he said from his base in Winnipeg. “At the same time, we have a spiritual tie to our people across the country, we’re united.”
Bugbee added the church’s east and central districts also have extension funds and have advised those investors that their funds are secure and sound.
“We’ve asked for example the people in charge of those funds in the other parts of the country, that they need to review the aims and the objectives in the investment policies of their funds and they’re quite willing to do that,” he said.
“Our hearts go out to them and we’re really proud of any number of our local churches across the country and in those provinces that are trying to find concrete ways to stand by those people,” Bugbee said.
A source says Deloitte will manage the restructuring of the investments should investors choose not to liquidate and has been working with the district already.