Danish National Church criticized for lax lending practices, audit reveals concerns

When borrowing money, it is standard practice to provide a guarantee that you can repay the loan. However, this does not appear to be the case within the Danish National Church, according to reports. Six out of ten dioceses in Denmark have been criticized by the state audit office for lending money to parishes and deaneries without ensuring that these groups provided sufficient documentation to confirm they could repay it.

In Denmark, a parish is the smallest unit of the church, typically encompassing a local area with one church, managed by a parish council elected by church members. Parishes can request loans for needs like housing for pastors or church renovations, but instead of borrowing from banks, they go directly to the diocese for loans.

Concerns have arisen as these loans have not undergone the necessary credit checks, prompting the state auditors to investigate. This oversight is considered a serious issue by officials, as it could potentially lead to increased church taxes.

The audit indicates that the situation is particularly dire in the Haderslev diocese, which has lent 103 million kroner without adequate credit evaluation. This unique lending system faced harsh criticism from a social science professor, who questioned whether it is prudent for the church to lend to itself. He stated that dioceses may not be qualified to operate as lenders.

Haderslev’s diocese acknowledged the lapse, attributing it to missing a rule change from 2020 that requires documentation of credit status. They expressed a commitment to rectify the identified issues and maintain that they believe they are capable of managing their lending operations responsibly, as they only lend to churches and clergy. The church minister has stated that diocesan councils are taking actions to address the criticism received.