Ministerial compensation is based on a number of factors. Education and experience are perhaps the most obvious, but they are by no means the only aspects. Here is essential information for putting together a fair salary package.
- Know the cost of living in the area. If it is important to the congregation that the minister lives near the church, that minister must be able to afford rent or mortgage payments for dwellings in the area.
- Find out judicatory minimums and/or guidelines. If your judicatory has set minimums, remember that they are just that: minimums.
- Research what other ministers of similar skill and experience make in the area, both within the denomination and ecumenically. Make sure your church is on par with what others are paying.
- Understand seminary debt. Seminary education is expensive, and many ministers spend much of their careers paying it off.
- Research pieces of a ministerial compensation package. There is much more to a minister’s salary than the take-home amount.
- Offer as many benefits as possible. For example, cover participation in denominational health insurance plans. (Consider paying for family coverage!)
- Be clear about cash salary vs. benefits. Don’t lump everything together. Otherwise, the offer will look much higher than it really is after insurance, pension, etc. come out, and you’ll have a stressed and resentful clergyperson.
- Know what you can offer. Don’t paint a rosier financial health picture than is realistic with the compensation offer. Be honest about what the general fund and reserves will allow in the short and long term.
- Have some grasp of related tax issues for minister and church. Ministers are paid and taxed differently than most people.
- Think creatively about benefits if you reach a monetary impasse. Offer more time away, for instance.
- Consider what part-time ministry would look like, if needed. See “hacks for small churches.”
- Keep in mind that it is expensive to move. Moving companies, house closing expenses, ad valorem tax, and deposits are just some of the many front-end costs of going to a new place.
In coming up with an offer, ask what the church is saying about minister’s worth with this package. And remember that an adequately-paid pastor is more able to focus on the work at hand.
Other financial matters to keep in mind:
- Transferring benefits. Ensure someone at the church knows how to transfer health insurance and pension payments so that the minister has no interruption of coverage.
- Plan for cost of living raises. COLA increases are not based on merit but are intended to account for the rising costs of housing, gas, food, etc. due to inflation.