Interview: Balancing the books in an extraordinary year
Melanie Roberts asks Nicholas Cottam CB OBE, registrar of St Paul’s Cathedral how he manages one of London’s leading sights of worship and tourist attractions against a backdrop of both planned and unplanned events
Nicholas Cottam is more modest than you might expect a man in his position to be: “I am not a businessman and I wouldn’t pretend to be one.” Whilst researching the retired Major General beforehand I was amused to read on Wikipedia that 'in retirement he became Registrar of St Paul’s Cathedral'. This is a full time position which involves the fine balance of running a foundation primarily for the delivery of worship but which is also, most definitely, an enterprise. This is a familiar combination which rings true for many charities: while not exactly a business in the corporate sense, as Nicholas says, “We have to be business-like in our approach.”
“There has been a church on this site for 1400 years (since AD 604). The current building is the third cathedral and the fifth church, and we are here first and foremost to serve the Diocese of London. We should really be called London Cathedral. St Paul’s has for a long time become the focal point on many an occasion for Londoners to express themselves, the aftermath of the 7/7 bombings being one such time. More recently, the Cathedral became the impromptu host to the Occupy camp. It is a working church, with 1700 services annually - four a day during the week and five on a Sunday. Whilst the regular congregation is quite small, we welcome around a million worshippers and pilgrims a year."
The delivery of worship is a huge effort run by ‘the Chapter’, of which the Dean is the senior member, plus 7 to 8 regular clergy and some 190 volunteers. I am surprised to learn that whilst this is the Bishop of London's seat, he is not involved with the daily organisation of the Cathedral. So how do they balance this with probably another million of tourists coming through their doors each year? This is the more commercial aspect, and where I feel bound to ask Nicholas about the £15 admission ticket. "We absolutely do not charge anyone who comes here to worship. But it would be irresponsible not to ask for a fee to support this historic monument from those whose sole purpose is one of sightseeing. St Paul's has received no public funding since the ‘coal’ tax was lifted in 1710 (this funded much of its rebuild post the Great Fire in 1666). Nor do we have a large endowment that we can fall back on. The Cathedral is therefore heavily reliant on the income generated by tourism and, like so many institutions today, must move with the times and be innovative in its approach.”
Rightly or wrongly, I had always thought you would have to be properly ‘grand’ to hold a service at St Paul’s, considering the prestigious state funerals, royal weddings and Jubilee celebrations that have taken place there. Yet last year’s services ranged from the low key memorial for the theologian, Revd John Stott CBE to that of the rather more flamboyant fashion designer, Alexander McQueen. “We are acutely conscious of our duty to serve the young in London, as demonstrated by the recent ‘Ambassadors 2012’ service where 2050 young people came to represent the youth of today.” I am not surprised to hear that St Paul’s hosted a service on the eve of the Paralympics, rather more extraordinary was the fact that they allowed wheelchair basketball to be played under the dome. “We have the space and are open to such ideas” says Nicholas refreshingly. Even more remarkable was the presentation in the Cathedral of the Templeton Prize to the Buddhist spiritual leader, the Dalai Lama, a reminder of the openness of the Church of England in embracing all faiths.
So if 80% of the Cathedral’s annual income comes from tourism, how does one of London’s top-ranked tourist attractions cope when things go wrong? “Visitors not coming is one of the biggest risks we face,” Nicholas admits. And what a year it has been. “We had been warned that we should expect a drop in visitors during the Olympics and Paralympics, and had 7 years to plan for such an event, but the Occupy camp took hold overnight, and as a result of the two combined we suffered a 20% hit to our annual income. Whilst the Cathedral might be accused of making mistakes over Occupy, we are a business too, and we got that part right. With our reserves, the trustees set a clear investment policy and importantly we were able to leave our long-term volatile and more illiquid assets untouched so that we weren’t forced to sell equities or property, for example, at the wrong point in the economic cycle. It is essential to employ good budgeting and we build up a minimum of 9 months’ reserves to ensure we can keep going in the face of adversity. At the end of 2010, we were in good surplus, but recent events have changed that and we are facing at least two years of ‘belt-tightening’ to rebuild the buffer.” It is a tough situation for any organisation to overcome, but that is exactly why it is so vital to have sufficient reserves. Nicholas goes on to explain that, like many other charities and companies today, they are also grappling with a defined benefit pension scheme for the lay staff that is in deficit. So that’s another thing for him to worry about.
We also discuss the enormous fund-raising effort in aid of the Cathedral run by the St Paul’s Foundation, a fund kept entirely separate from the daily running costs. The most recent refurbishment cost £42 million and was financed entirely by the generosity of both individuals and companies. However, with some of the largest donors being financial organisations, this did not escape controversy set against a ‘bash the bankers’ backdrop from which the clergy has, at times, tried to keep its distance. Nonetheless, this was ultimately a huge success, and has restored the Cathedral to magnificent glory.
I ask Nicholas how he evaluates the balance between restoration and progress. Who decides that it is time for a complete revamp? “As it happens, it was the ‘Surveyor to the Fabric’ (surely one of the more obscure job titles) who felt it was time to carry out such an overhaul, but now that is complete, we must look to the future. Like many businesses, we are conscious of our carbon footprint and our current focus is on the roof and the way we collect rainwater. Ultimately we are hoping to put technology in place that makes cost savings, even though the improvements themselves are an immediate expense. We are about to put in place sMeasure energy analysis...” I have to stop him there as I am now distinctly out of my comfort zone (apparently this is all about energy management). “But we never start a project until we have raised the funds to complete it,” he adds.
I am already feeling guilty for taking up Nicholas’ busy time. There is so much else for which he is responsible: education and debate play a key part in the cathedral’s role, from the thriving St Paul's Cathedral Choir School located in the east of the Cathedral to the adult education group and, of course, the St Paul’s Institute which provides a forum for ethical and theological deliberation. “In any one year, we have up to 27,000 school children coming through our doors. Given our location in the heart of the City, it is vital that we are at the forefront of debate.”
I imagine that, like me, Nicholas feels most fortunate to sit at a desk overlooking Sir Christopher Wren’s masterpiece. On the church’s front steps, it is now hard to detect any trace of the once prominent campsite, although its memory is still vivid and continues to provoke discussion. For now, at least, St Paul’s has put an eventful year behind it. The Cathedral is busy, with a hub of tourists clamouring to visit this thriving institution. By the end of our meeting, what is clear to me is that Nicholas Cottam is most definitely a businessman. What he is not, though, is ‘in retirement’.
This article first appeared in Sarasin & Partners House Report, Quarter 4, 2012.
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Melanie is a Senior Associate Partner at Sarasin & Partners.
Prior to joining Sarasin & Partners in 2011, Melanie spent 16 years at Newton Investment Management as a fund manager of charity, private client and pension fund portfolios. She qualified with a degree in Modern Languages from Durham University and is an Associate of the CFA Society of the UK. Melanie is primarily responsible for the management of charity and pension fund portfolios.Read more articles by this author