Ageing orders have land and property worth billions of euro

Wed, Jun 6, 2012, 01:00

ANALYSIS:GIVEN THE enormous role it played in Irish society until relatively recently, it is no surprise the Irish Catholic Church is the owner of a multibillion euro land and property portfolio.

The assets owned by the State’s 26 dioceses and 160-plus congregations and other distinct Catholic organisations have been accumulated over more than two centuries of providing religious, educational, health and other services to a once devout populace.

The property is held in trust by an array of organisations that now share similar challenges arising from declining and ageing memberships.

Many congregations of nuns, brothers and priests have property portfolios running into tens and hundreds of millions of euro, with average ages for their memberships well past the normal age of retirement.

Most have put in place lay structures through which they hope the assets will continue to be used for faith-linked purposes when the congregations themselves have all but withered away. They have done this while seeking to ensure they retain sufficient resources to look after the welfare of their members, many of whom need nursing care.

While the property portfolios are often huge, it is important to remember many of the buildings are used as hospitals, schools, homes for the disabled etc, and are not available to be used for development purposes. Many of the buildings have been developed with the aid of grants from the State which must be repaid if the buildings are to be freed up for a change of use.

The wind-down of the Catholic infrastructure that played such a key role in Irish life for so long is taking place against the backdrop of the scandal over the abuse suffered by children in Catholic Church-run institutions during the 20th century, and the role of the church in covering up the activities of paedophile priests.

Damages and redress to victims of abuse at the hands of religious, whether diocesan priests or members of the independent congregations, is an issue that could have bankrupted some congregations were it not for the indemnity scheme granted by the State in 2002.

After the landmark 1999 States of Fear documentaries by the late Mary Raftery, the State set up the Residential Institutions Redress Board. The government entered into an indemnity agreement with 18 congregations whereby they would contribute €128 million in cash, property and counselling services, with the State picking up the rest of the redress costs.

However, the costs have proved to be much greater than were earlier envisaged. The latest estimate from the Department of Education is that the redress costs will be about €1.5 billion.

In the wake of the 2009 Ryan report, the government asked the congregations to increase their contribution to half of the estimated final cost, but to date the amount being offered is well short of that. The congregations have offered a further €350 million – about €270 million short of what the Government believes they should pay.

As part of governmental engagement with the congregations, a three-person panel, chaired by the man who is now chairman of the National Asset Management Agency, Frank Daly, was set up to assess the resources held by the 18 groups. The report from this panel, published in November 2009, gives a fascinating insight into the financial position of the orders and the challenges they face.

The assets declared by the 18 congregations had a total value of €3.743 billion (mostly based on valuations made for insurance reasons). The property declared did not include all the assets held by the congregations.

The Sisters of Mercy, one of the more wealthy orders, told the panel it had land and buildings worth €1.032 billion, and financial assets (cash and investments) of €183 million. The order had liabilities and commitments of €204 million, meaning it had net assets of slightly more than €1 billion. These are its assets for the Irish Republic only. It has further undisclosed assets in Northern Ireland.

As is the case with many orders, the sisters are transferring many of their assets to a trust (the Ceist/Educena Trust). The congregations are hoping these trusts, all of which will have stated objectives, will ensure the resources will continue to be used for the purposes the congregations serve after the congregations themselves have become even more diminished.

The 2,088 nuns in the Sisters of Mercy in 2009 had an average age of 74, with three-quarters of the nuns aged over 65, according to the report of the three-person panel.

As well as the property, the report said the order owned 13 other bodies, most of them incorporated, which in turn held assets not included in the figures above. These assets included four hospitals – the Mater, Temple Street, and the National Orthopaedic hospitals, all in Dublin, and the Mercy University Hospital in Cork – which had insurance values of €645 million.

The assets owned by the other congregations are given in the panel. The Christian Brothers had land and buildings worth €262.2 million and financial assets worth €63.2 million. In 2008 the brothers transferred school property with a value of €430 million to the Edmund Rice Schools Trust Ltd, an entity set up to continue the brothers’ work in relation to the provision of Catholic education in Ireland.

There are many other asset-rich congregations that are not covered by the report. The Bon Secours sisters, for example, own a substantial healthcare group. The 2010 accounts for Bon Secours Health System Ltd, which runs private hospitals in Cork, Dublin, Galway and Tralee, show the group produced a surplus of €9.74 million that year, on a turnover of €218.9 million. Rent of €4 million was payable to the order by the group.

The Holy Ghost Fathers have established the Libermann Trust to hold assets such as Blackrock College, Willow Park and other schools and properties. The value of the order’s properties is not publicly available.

Church congregations and their trusts and incorporated bodies are almost invariably charities with specified objectives. This means their property and other assets can only be used for the purposes set out in their charitable mission statements.

That said, the Irish charities sector is lacking in regulation and transparency. The 2009 Charities Act has sections which will require charities to provide financial information to a new Charities Regulatory Authority, which will in turn make the information available to the public. However, the relevant sections of the Act have not been commenced and Minister for Justice and Equality Alan Shatter has said establishment of the new authority is being delayed for budgetary reasons.

Most dioceses (including the Archdiocese of Armagh) do not publish accounts showing their incomes and the value of their assets. However, a substantial amount of information about the finances of the Dublin Archdiocese, which is home to more than 25 per cent of the island’s Catholics, is available.

The property of the dioceses is usually held by diocesan trusts. The trust that holds the property of the Dublin Archdiocese is called the St Laurence O’Toole Diocesan Trust Ltd. As with most trust companies, the publicly available accounts do not give a value for the properties the company holds in trust.

A November 2011 document on the Dublin Archdiocese’s website gives information about its assets and finances. On property, it says the archdiocese has 247 churches, 142 pastoral centres and halls and 468 houses for serving, retired and sick priests.

The document says the 199 parishes in the archdiocese have €41 million in cash, net of borrowings. Income in 2010/2011 was €57 million, with €3.6 million of this from asset sales. Over the period 2001 to 2010 asset sales were €106 million, while building costs were €205 million. Income to the archdiocese is falling year after year.

Its general fund comes from bequests and donations made to the archbishop, to be used at his discretion. He typically receives €1 million to €2 million per year. “No church collections or parish funds have been used to cover the costs of claims arising from the abuse of children by priests,” according to the document.

“In recent years a small number of parishes have made several very large donations from surplus income from sales of property to the general fund. It is likely that within the next few years, some of these donations may be required to meet future claims.”

The diocese has 456 priests in ministry and 112 sick and retired priests. By 2020 the expectation is that the diocese will have 294 priests in ministry.

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