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How To Intelligently Provide Financially For Your Pastor & Support Staff
How To Intelligently Provide Financially For Your Pastor & Support Staff

How To Intelligently Provide For Your Clergy And Support Staff In Today’s Challenging Culture

A wig once said “ Lord, since we know you desire your ministers to be humble servants, we will care for their physical needs with this in mind.”

In reality, it is a good thing that no thinking Christian lay person figures that way. Ask yourself these questions however:

         1. Would you be willing to work the hours they work for the pay they receive?
         2. Could you support and educate your family on the salary you pay them?
         3. Are their salaries keeping par with today’s high cost of living?
         4. Considering their education and what similarly educated people earn in 
              similar secular work, are they being fairly compensated?
         5. Could you provide the standard of living you expect of them on the salary and benefits you currently offer?
         6. If you had to give an account of your stewardship before God, would you feel that you have treated them fairly and honestly with your expectations for the compensation you give?

Living expenses have risen nearly 20% in the last five years according to the Consumer Price Index. The Department of Labor also reports that most professionals have had between 12 to 21% salary increases in the same period. How are you doing for your minister and staff?

A church that desires to intelligently provide for their clergy and staff with a fair compensation package should consider salary and benefits for the following areas.

You also may want to investigate information concerning reimbursement policies for clergy, and staff expenses.
Such a policy treats the pastor and staff’s expenses as non-taxable income. This can provide your clergy and staff with a reduced tax burden.

1. Operating/Business: Costs that should be paid expenses that would assist your clergy and staff in making what you pay them go further.

     a. Transportation expense
         Travel to seminars, church conventions, and etc, as well as taking individuals of the church to meetings and such. Auto expenses could run from $1,000 to $5,000 or more than the average 
         member in your church. The IRS allows forty-four and one-half cents per mile for (2006). Certainly you should not expect to offer them less.
     b. Office expenses
         Library books, tech equipment and other items for study and work with your church.

     c. Hospitality and entertainment expenses
         Luncheons and entertainment with church officials, missionaries, and others, in the home or taking them out to eat, etc.

     d. Continuing education expenses
         Seminars, conventions, formal continuing courses of study that can help them stay current for the work of your church, as well as other formal education that they feel will help them as      they minister with you.
2. A realistic take-home salary
     a. Note experience
     b. Educational

     c. Background
     d. Suggestion, note salaries of the area's public school teachers and

3. Housing allowance: Costs that should be paid expenses that would assist
    your clergy and staff to make what you pay them go further (would you like living in the home you provide for them or assist them with owning?).

Many churches today are no longer providing housing because clergy opt for housing allowances instead. This allows the clergy and staff to exclude the designated housing allowance from taxable income. They are also allowed to claim the interest expenses and property taxes on their schedule, a further tax reduction. This provides the opportunity for them to realize home appreciation that can assist, if needed, when retirement or a move should happen. It also provides the satisfaction of owning a home, an important benefit.

       a. Provided housing: is it possible to provide other options?
       b. Assist the minister with owning a home.
       c. A reasonable housing allowance should provide your minister with a home

Utilities : Costs that should be paid expenses that would assist your pastor and staff to make what you pay them go further. Some pay the basic costs, some pay the full costs. 

       a. Home heating expenses
       b. Electric expenses
       c. Water and sewer expenses
       d. Telecommunications expenses
       e.  Internet expenses

4. Reasonable vacation opportunities and holidays
    Refreshment and family time together. A time to recharge them for their work and ministry at your church. It will help them be fresh and less burnt out.

5. Security measures and benefits: Costs that should be paid, expenses that would assist your pastor and staff to make what you pay them go further (we can assist you with these for your minister,  staff, and their families).

       a. Major medical insurance coverage
          Consider including other health benefits such as dental, vision, hearing, etc.
       b. Disability insurance coverage, to pay when they are laid up and cannot minister

       c. Group Life insurance
           We can assist you with coverage offers $10,000 to $250,000 with very little underwriting, a great benefit if a staff  member has a health issue. A big benefit many employees receive with their employers. The cost is below the normal offering  for similar individual insurance. The IRS does require the premium for life insurance provided above $50,000 to be shown as  taxable income. The portion below is non-taxable. We will assist with figures for taxable and non-taxable premium portions. 
       d. Adequate auto insurance coverage
           This would include their auto or provided work auto

       e. Home insurance
           This would include their personal possessions or home insurance if they own their home.

       f.  Coverage for libraries, tech equipment, and other items used by them. These are usually excluded from their home insurance as tools of the profession.

        g. Professional liability and other protection 
           Coverage for them as they minister and guide the church  in general, along with the individuals entrusted to their care.

        h. Long Term Care insurance
           Coverage for extended periods of time when they and their spouse are not able to care for themselves

         i. Pension and retirement care
           What have you planned for your minister when they can longer carry on the work of the church because of health reasons or retirement? Tax deferred annuities allow clergy to deposit money into a tax-deferred plan from their salary that the church can also contribute to. We offer specially designed 403b plans with no administration costs or setup costs as other plan would have.   These 403b plans have unique opportunities for you staff. For clergy, there is an opportunity to draw their housing allowance tax free from the plan  when they are over 59 1/2 and decide to start drawing their retirement funds, whether they continue to work or not.

         j. Embarrassment Fund:
            A sum of money your church can provide for your minister’s spouse and children if they live in provided housing  while ministering with you. Ask yourself, when would you have to ask them to leave to make room for the next minister? What would they live on? Where would you put the new minister if the family of the former minister remains in the provided housing?

         k. Key-person insurance:
             No minister would care to leave their ministry with your church suddenly by death, especially when your church has accepted a new building program or other major projects of ministry under their leadership. When a church experiences the lost of their minister by death, offerings on the average usually decrease 25% to 30% as the congregation seeks to deal with the loss in their own and varying ways. Some may leave the church as they attempt to deal with things, leaving those left behind with financial matters to struggle with that are far too great for them. Others may withhold funds they had given regularly previously as they seek to deal with the loss. From the many churches we deal with, we have seen some churches experience some very sad and trying times after such a loss. We offer several products that can and have made a wonderful difference for those churches that have taken advantage of them, protecting their church in this area.  Please note this location on our site for info on this issue:  http://www.phelpsfinancial.com/risk/religious/church/person

         l. Health and fitness programs
           Consider providing some physical opportunities for personal workouts with consideration for memberships in some area facilities, or provide opportunities at your own location for the pastor, staff and others. A healthy minister and staff will offer a more excellent ministry for your church that is most cost effective and efficient. Ministers and staff as a profession are really careless in this area and need all the encouragement you can give.

Let us know were we might be of assistance as you plan and review these important areas that most lay people expect and take for granted from their employer. The average employer offers benefits that are of a value that is near or more than 35% of employee compensation today.

This has not been designed as all inclusive, nor are we in the business of offering accounting or legal advice; this is given as suggestions to provoke thought and action on these issues to more in depth consideration with your accounting and legal advisors. Our expertise are financial planning, risk management, and insurance. We are available to assist you if you feel that assistance is desired.

Dorr R. Phelps, GP, LUTCF, CPIA, CSA, RFP, CFP
Phelps Financial Services, Inc.
659 Park Meadow Rd., Suite H
Westerville, Ohio 43081
Phone 614-899-6000 Fax 614-899-6022

Website: www.phelpsfinancial.com

Email dphelps@phelpsfinancial.com

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Last updated on Wed, 01/03/2007 - 21:00.
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