How it’s negotiated is important

“We are fortunate to have CPAs and administrators from the school and library in our administrative group,” noted John Schrock, Bristol, Ind. Schrock is one of the pastors grateful for lay leaders who are familiar with negotiating compensation packages. Dave Maurer, West Liberty, Ohio, was also positive about achieving a clear understanding with his congregation about compensation.

Other pastors only yearn for their experience. Among the 70 pastors who answered Teleios’ questionnaire on compensation, a Kansas pastor lamented that, “Those responsible for benefits did not talk to me or the other staff one time before finalizing the compensation package.” A Florida pastor, who said the church’s lay leaders had little knowledge about pastoral compensation, wondered where to find resources to help the congregation understand the issues of pastoral benefits, reimbursement, and taxes.

Gratitude, but yearning
The pastors’ responses indicated an overall high level of gratitude for the financial support they receive. Yet, a significant number of pastors wished for more congregational awareness and engagement about pastoral benefit and tax topics.

Negative responses about pay packages most often were about how packages are negotiated rather than the amount of salary and benefits. They yearned for more discussion with lay leaders about topics surrounding benefits and tax issues.

Compensation knowledge
Nearly three-quarters of the pastors said their lay leaders were “educated or somewhat educated” about pastoral compensation and benefits. Maurer of West Liberty, Ohio, said, “It’s an ongoing discussion, but they have a good handle on the process.”

There aren’t tidy solutions that speak to every congregational setting and every pastoral arrangement. But, if compensation is “a work in progress” for pastors and congregations, there are good places for the first step, such as:

• Mennonite Church USA’s Web site
  At www.mennoniteusa.org, see the Leaders section that includes Pastor’s Finances and Pastor/Congregational Relations. These articles give principles of building a compensation package and provide suggested annual guidelines on base salary, education, experience, and expenses. This Web site also links to salary guideline and evaluation software at www.manygifts.org.

• “What to Pay the Pastor”
  This article by Jennifer Shuchman appears in Your Church, at www.Christianitytoday.com. Use her quote to get an administrative committee’s attention: “With a properly structured benefit package, a church can spend $2 to provide a pastor $3 worth of benefits.” Then, provide more information from other sources.

• Crown Ministries
  At www.crown.org, click on Church Finances and Pastor’s Finances, where you’ll find a small collection of articles about pastoral benefits.

• Richard R. Hammar videos
  
  While these www.youtube.com videos are promotional in nature, Hammar provides clear information about the place of taxes and reporting in constructing a benefit package - and they provide another voice for church boards to consider.

• Dan Busby’s Minister’s Tax and Financial Guide
  This book, published by Zondervan, is a favorite of many pastors and church treasurers. Busby also writes a church version.

• Other nonprofits
  If your denomination doesn’t provide pastoral salary and benefit guidelines, checking with other nonprofit organizations may be helpful. A pastor in Oklahoma said his congregation compares his salary with staff in the public school system.

Note
Always consult a qualified tax person if you have questions. Resources listed here should not be considered the last word in tax advice.