The Archbishop of Canterbury was left “irritated” and “embarrassed” after threatening to out-compete payday loans company Wonga, only to find that the Church of England has an indirect investment in the controversial lender worth £75,000.

The slip indicates the complexities of the Church’s investment portfolio, which is managed by 33 Church Commissioners.

With more than £5bn to play with, what other assets does the Church hold and are there any more skeletons in the closet?

Land slip

In 1872 the Church of England was the biggest landowner in Britain, with 2.2 million acres, most of it rented out to farmers. Now it has slipped out of the top ten landlords.

It still has 105,000 acres of agricultural land. The Church also owns around 1,800 residential properties, most of them in the exclusive Hyde Park estate in central London.

The Commissioners are in charge of £321 million worth of commercial property, including the Royal Lancaster hotel near Hyde Park and a 10 per cent stake in Europe’s biggest shopping centre, the Metrocentre in Gateshead.

Some £404m is invested indirectly in real estate around the world through 13 property funds.

Stocks and shares

This is the bit that has got Justin Welby into trouble over Wonga.

In 2012 the Church had just over half of its assets invested in UK and foreign company shares, private equity investment in non-stock market companies, and fixed-interest bonds.

Its official policy on ethical investing is that “the Commissioners do not invest in arms or pornography or in any company whose main business is in gambling, alcohol, tobacco, or home credit provision”.

The reality is slightly complex.

Say you want to invest in a retail group, and a certain percentage of the group’s income comes from top-shelf magazines in newsagents, does it count as part of the pornography industry? How much money do supermarkets have to make from booze to become un-ethical?

Luckily the Church has an Ethical Investment Advisory Group to look into these issues, with frequent recourse to the Bible – FactCheck was pleased to discover that “both the Old and the New Testament have a positive view of alcohol, celebrating it as a gift of God in creation”.

Nevertheless, the advisory group recommends that the Commissioner should not invest in a company that gets more than 5 per cent of its turnover from the production or licensed sale of alcoholic drinks. This figure was recently reduced from a more liberal 25 per cent.

For “strategic military sales” it’s a maximum of 10 per cent of turnover (though there’s zero tolerance of companies that deal in things like nuclear and chemical weapons and mines).

Companies who derive more than 25 per cent of turnover from all forms of gambling are out. The threshold is the same for doorstep lenders, payday loans companies and pawnbrokers.

Pornography is the tightest margin of all. A company has to derive less than 3 per cent of its turnover from porn to have any hope of attracting investment from the Church.

It’s not clear how binding these recommendations are, how often investments come close to breaking through the percentage thresholds, or what happens if the rules are broken. We asked the Church for some clarity but haven’t received a reply yet.

The big picture

The Church Commissioners had £5.5bn of total assets to play with at the end of 2012, according to the latest annual report. That was up from about £5.2bn the year before.

The fund brought in just in £146m of income last year, down a hair’s breadth from the year before.

A nice little earner, and the fund has consistently beaten its own targets and outperformed the market over 20 years. This could be evidence of divine intervention, but the FactCheck needle will have to stay in the middle for now.

Investment income is still not as important to the Church’s finances as charitable giving by parishioners.

The Commissioners only contribute 15p in the pound to the Church’s total income. More than half the money comes from regular giving, donations, grants and fundraising, and that has been the case for many years, as the Church reported in 2010.

The Church has been changing the balance of its portfolio in recent years. Equities and property have fallen as a percentage of total assets, while “alternative strategies” (the yellow bit in the graph) have grown in importance.

This includes private equity – investment in smaller, non-stock market companies – which tends to be less transparent and accountable than investment in public limited companies.

The Church says in its latest annual report: “Our private equity portfolio has significantly outperformed public equity markets since its inception in 1997. We plan to increase our allocation to the asset class going forward.”

By Patrick Worrall