Though 90 percent of respondents to a Leadership magazine poll of nearly 600 evangelical clergy said it’s appropriate for a pastor to ask for a raise, 65 percent of them have never asked for one.
Why? Thirty-eight percent of the respondents said their churches have no policy for giving pay increases; one in five churches said the pastor receives a cost-of-living raise when the church can afford it; and 13 percent said they hesitated to ask for an increase because they were concerned about shaky church finances.
All too often the pastor is simply reluctant to talk about money, writes Larry Osborne in an article entitled Salary Negotiation For The Hesitant. “Many of us choose to let our distaste for discussing money win out [over our commitment to be open and honest]…We say ‘Thank you’ when we really meant ‘That’s not enough!'”
Financial professional Joseph Rinaldo, Phoenix, AZ, agrees. In his 10-year affiliation with Ministers Life Resources/Minnesota Mutual, he has helped hundreds of clergy families plan their financial futures. “Clergy take a vow of obedience, not poverty. God never said his servants had to be destitute,” he says. But money can be a real pitfall for clergy — and for the congregations they serve. Observes Rinaldo, “If pastors are always falling short of meeting their family’s financial needs, it permeates everything about the ministry.”
Even so, asking to receive what they need is easier said than done for most clergy. Experts on the subject of clergy compensation packages suggest entering salary discussions with two goals in mind: to produce a fair salary and to avoid any hint of an adversarial relationship with the board.
An open exchange
Begin the process by being up front and realistic about your expectations, advises Wayne Barrett in the Abingdon Guide To Funding Ministry. Talk openly to those who make the decisions. “Without an open exchange, pastor and board are left with assumptions and guesswork—a wholly inadequate basis for making decisions,” he says.
Osborne adds, “Most boards are made up of good people who want nothing more than to serve God faithfully and support their pastor. There should be no need to fear being open and honest with such people.”
Goodness doesn’t equate with understanding, however. “Clergy salaries are evaluated by people who may know little about financial matters,” explains Rinaldo, “and are voted on in a public forum by people who may know even less. I am continually surprised, for example, at how many churches are out of compliance with the IRS’ position on whether or not a pastor is self-employed for compensation purposes.”
Furthermore, says Rinaldo, the typical church board is made up of professionals and business people who may base their evaluation of clergy salaries on their knowledge of corporate benefits. “That can work to the detriment of the pastor,” he warns because clergy compensation, which is complex and uniquely taxed by the government, is not similar at all to typical employee benefit programs.
Salary vs. administration
Separating salary from administrative expense can help congregations appreciate the difference between the pastor’s compensation and the cost of running the church.
In other words, says Barrett, churches need to recognize that it’s not what the church pays that matters, it’s what the pastor gets to keep. Osborne adds a simple rule of thumb: “If the money is mine to spend as I please, it’s salary. If it is a reimbursement for the cost of work, or meetings…it is an administrative expense.”
Rinaldo reminds decision makers that the self-employed pay substantially higher social security taxes than people who work as employees. Pastors classified as self-employed by the IRS would do well to have at least one member on the board who understands what it means to pay taxes, social security and health benefits as a self-employed person.
Compare apples to apples
According to Osborne, board and congregational members often don’t know how to compare clergy salaries to those of lay people. Rinaldo believes the classic mistake is comparing clergy to teachers because the education and credentials may be similar. Unlike a pastor, however, “a teacher isn’t on call 24 hours a day,” he explains. “Teachers have free time in the summer and take regular vacations. They have a pension plan and health benefits. There is no way to equate the two jobs.”
Instead, when making a presentation to a church board, Rinaldo compares the clergy position to that of a company CEO. Clergy perform the duties of counselors, teachers, leaders, administrators, employers, ambassadors to the community and students, plus they often have family responsibilities. “After walking board members through a typical clergy work week, I ask, ‘Do any of you want to apply for this position?’ In this way, board members come to see the job as more than sermons and service.”
Seek professional advice
To design a salary package, Rinaldo recommends churches seek the advice of a financial professional who not only understands the components of clergy pay, but also can represent both parties as an outside, independent advisor who is not a member of the church. As a clergy advocate, the professional planner ensures that ministers are adequately compensated for the work they are called to do and have the wherewithal to support their families. As an advisor to the board, he or she can help the congregation find additional sources of funds and recommend qualified tax professionals to help bring benefits and salaries into compliance with IRS rules.
“Churches have Ministers of Music and Ministers of Education. When I work with a church, I position myself as a Minister of Finance,” Rinaldo explains. “I try to learn what direction the ministry is taking and what issues the church faces. I’ve found that if the pastor is cared for and whole financially, the mission of the church is well served.”
Sources used to write this article include: The Abingdon Guide To Funding Ministry, Donald W. Joiner and Norma Wimberly, Abingdon Press; “Salary Negotiation For The Hesitant,” Larry Osborne, available on the Internet at www.christianity.net/leadership and published as “Negotiating A Fair Salary” in Leadership magazine, Winter 1987; “The Truth About Debt And Salaries,” David L. Goetz, Leadership, Spring 1997.
For more information about the services available to congregations and clergy through Congregational Resources™ and Ministers Life Resources call 1-800-328-6124.
Reprinted from the October 1997 issue of The Calling. This Article included for promotional purposes only.
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