Doing the “right thing” is not always easy. Sometimes doing the right thing may cost you in terms of money, pride, etc. However, doing the right thing is not only the morally correct thing to do; it is the way God expects his people to act. Webster uses terms like justice, morality and virtue to define doing the right thing.
In financially trying times it is even more difficult for individuals and organizations to do the right thing when it comes to providing adequately for their employees. These months before the first of the year are times to examine church budgets and to plan for the new year.
This is going to be one of the most difficult planning times in recent history for most non-profits. Contribution levels have declined and continue to decline according to most indicators. These factors and others might lead churches to neglect their responsibility to adequately provide for their pastors and staff. Now is the time for churches to do the right thing with regard to their pastor and staff compensation packages.
Let me mention a couple of things to keep in mind as you plan for 2009.
Have your church staff’s salaries kept pace with the cost of living? The Consumer Price Index (CPI), the most commonly used measure of the cost of living, rose 5 percent from June 30, 2007 to June 30, 2008. How does the change in your staff’s compensation compare with the change in the CPI? If the increase did not at least keep up with the cost of living, your employees experienced a loss in purchasing power.
Many churches also provide merit increases to recognize pastoral leadership in achieving church goals. Other considerations—such as completing a course of study that will be valuable to your church’s ministry—may be considered for both clergy and lay employees. Each year, your employee has that much more experience in furthering your ministry.
Another area to keep in mind for ordained ministers is Social Security/Medicare taxes. While the IRS generally considers clergy serving churches as employees for federal income tax purposes, they are considered self-employed by the government for Social Security/Medicare tax purposes and, therefore, must pay their own Social Security/Medicare taxes (15.3 percent of annual compensation).
Churches are not permitted to pay the employer portions of this tax for their pastors as they must do for lay employees. However, most churches assist their ministers by providing them with a Social Security/Medicare tax offset of at least 50 percent of the tax, considered taxable income to the employee. This appears as an annual item separate from salaries in the church budget. While such an offset is taxable income for ministers, it provides a helpful and much appreciated way for a church to assist its ordained staff members.
Lastly, consider the collective sum of all compensation: salary (including housing), benefits (retirement and annuity, health insurance, Social Security/Medicare offset), and ministry-related expenses (automobile, convention, education, books, etc.)
Do the right thing for your ministry staff in your church.
Verlyn Bergen is Resources & Relationships Team Leader for the Baptist General Convention of Missouri.