There has been considerable interest on my previous posts dealing with pastors’ salaries. One of the most common questions that I am asked is: “How do churches determine the salary of a pastor?”
In this article, I offer the five most common ways churches establish the pay level of a pastor. I am offering these five approaches from an informational perspective rather than evaluating them. Also, many churches use some combination of these factors.
- The pastor’s salary at the previous church. By far, more churches use the pastor’s previous salary as benchmark to establish the new salary. For example, if a pastor has an income of $50,000 at his current church, his prospective church may offer him $55,000, or a 10% increase.
- The previous pastor’s salary. The second most common benchmark to determine a pastor’s salary is the previous pastor’s salary. Allow me to make an editorial comment here. If you are a pastor who has been declining raises for a few years, you could be hurting your church and the next pastor. There could very well be a big gap between your current salary and the compensation needed for the next pastor.
- Experience. Simply stated, most pastors’ salaries increase with increasing years of ministry experience.
- Education. I have observed this factor decrease in importance over the past 15 years. I don’t see nearly as many churches requiring a doctor’s degree as they did in the past. And I am seeing fewer churches require a seminary master’s degree, though that degree is still important for many churches.
- Demographics of church. The specific demographics to which I refer are family income levels. I know one church that used the estimated median family income of its congregation as the base to determine the pastor’s salary. They would then adjust by other factors such as experience and education.
These factors all have their strengths and their weaknesses. I have noted in previous posts some resources that could help your church to offer your pastor a fair salary.
I would love to hear from you about these five most common approaches. I would also appreciate input about other ways your church determines the pastor’s salary. Finally, it would be great to get input regarding other church staff positions. Thanks for your feedback. I look forward to hearing from you.
How are salaries determined for ministry leaders in your church?
Posted on December 6, 2014
With nearly 40 years of ministry experience, Thom Rainer has spent a lifetime committed to the growth and health of local churches across North America.
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70 Comments
Thom, thanks for your informative information, tips and insights.
I love it when you are negotiating with a pastor selection committee for a the pastor position of a prospective church and they say, “We can’t pay you as much as we like right now, but the church grows – and you bring in more people – then we can increase your salary.” I always feel like saying, “Well, how much ‘per head,’ do you think you will increase my salary?” Sense they want a “hired hand” instead of a pastor, maybe we should talk in rancher terms as if we are dealing with cattle instead of caring for the well-being of people with souls!
Dennis Hester, author of Pastor We Need to Talk, “How Congregations and Pastors Can Solve Their Problems Before it is Too Late.”
I’m glad you used the word “negotiating” Dennis. Pastor’s should remember that they are temporarily part of a two way negotiation on behalf of their whole family. Know what your family needs today and don’t be shy about it because your first job is to lead your family before you lead that church family.
All –
I am in Atlanta all day today. I may not get to respond to most of your comments today. Thanks for your understanding.
I would add affordability; how much the church can afford. Seeing that the majority of churches are small churches they may not be able to compete with previous pastorate, maintain the previous pastor’s salary or even pay median income of the church. Prospective pastors should consider this in negotiations because I have seen many churches in financial difficulty and ruin by paying more than their budget can afford.
My church pays me a full time salary but realizes it is not enough. Therefore they allow me to hold a part time job. It has been five years without a raise because the church could not afford it. But we have seen a gradual increase in attendance and offering to the point that an financially weak church is now more sound financially than it has been in the past 15 years. I give God all the credit all that has been done. It is t because of me. It has been despite me. I would be hard pressed to leave this wonderful church.
Stupid smart phone. I meant that it isn’t because if me in the next to last line.
Honesty is a key ingredient for both the prospective pastor and the church. I agree that both need to ask themselves those hard questions about affordability before moving forward. Although the bottom line should not be the bottom dollar, it will clearly be an important factor in the decision.
Dr. Rainer has been good about discussing this on his blog. If you expect the pastor’s wife to work, give her a pay package of her own. Don’t be cheap and not pay her. Also, pay her social security and retirement match. You don’t know if in 30 years she will even be able to collect a %age of the husband’s social security. Also, he could be dead and she could have remarried.
I wrote this dealing with the pastor’s wife because it is unlikely that a female pastor’s husband would be in this predicament.
You have to head up the cost of the whole package. Salary, retirement 401(k)/403(b) match/contribution. The number of years to be fully vested. Social security and Medicare (the half paid by the employer) or is the pastor declared an independent contractor? Health insurance paid or subsidised? Housing allowance. The cost of living in an area makes a large difference too. Also, if the pastor is paying off student loans, you need to think about helping with those with pre tax money.
I suggest you Consult a non-profit employment lawyer or CPA about how to get the pay package to pass all IRS rules and minimise the tax bill.
Good point about consulting a CPA. That goes for both the church employer/search cmt as well as the candidate. The salary package usually has language that needs clarification before you end up on the same page.
Mark,
Legally a pastor cannot be a 1099 employee, therefore they are not contractors ever. Pastors must be paid on a W-2. However, the church does not take out any withholding and the pastor files as self employed. A wise pastor will file to have his ministry income tax exempt within the first 2 years of ministry and pay no taxes on ministry income.
Dan
Thanks
I’m amazed at how many churches expect their pastor to either live in poverty or be supported by his wife. Often I see a full time position posted but the compensation offered is definitely not a full time salary. If a search committee asks if your wife is planning to work, that’s usually a red flag.
Thanks, Adam.
We use Lifeway’s Compensation custom survey as our benchmark for all pastoral postions. (I strongley encourage churches to participate in this survey) Additionally we use resources to look at the cost of living differences from the candidates current city and our city.
In my 40+ years of ministry it is rare that you find two churches who compensate their pastors in the same manner. Therefore we created a template that includes all the possibilities we have encountered.
As a church with many employees we cannot be creatitve in compensation packages. We populate one column of the template with the current compensation and benefit structure of the candidate. A second column is how our church compensates. The third column is created that shows differences which will result in a salary adjustment to fairly compare compensation packages.
Education, experience, skill set and the above information is used to arrive at an appropriate structure.
It is a good source. Thanks, Lee.
As a father of two sons that pursued the ministry I was saddened by the small salary our student pastors are being paid. Not so much the pay from the church’s, but the amount of debt that was acquired by having to attend the private college to qualify for a low paying positions.
They have both now left the ministry and have a mountain of debt for a degree that leaves them no advantage in the real world. Maybe a post on options for less expensive education? Maybe it could help the next ministry leader inform their eager youth.
Thanks for your posts!
Thank you as well, Randy.
^ This this this. So much this. The amount of debt required to get a student pastor degree and then the low pay they then get is simply unsustainable going into the future. My lead pastor makes almost three times my salary and our worship pastor makes 30% more than I do. How should a student pastor talk to their lead pastor or elders about a raise?
Not sure if this is still the case but many years ago, the church of God(Clev)used a predetermined salary range based upon the membership role. In addition,it was expected that additional monies would be provided for housing costs.
One of the downsides to this method was that pastors never wanted to clean up their membership roles.To do so meant a potential reduction in salary.Therefore it was not uncommon to have quite a few still listed as members who had moved away or moved on to glory!
Wow.
Here is our criteria, in order of importance:
1. Competency – how successful are they at their job?
2. Cost of replacement – how much would it cost to replace them? If they resigned tomorrow, and we wanted someone of equal competence in this position, how much would it cost us to hire that person?
3. Scope of responsibility – how much of the church’s ministry do they oversee? How many staff/volunteers do they oversee and work with? What is the scope and weight of their oversight?
4. Comparison – what do other people of the same position get paid in our area and nation-wide?
5. Years of Experience – how long have they been doing this?
6. Need – what are their unique family needs at this point?
Good info. Thanks, David.
Plz talk about pay for worship leaders and band.
I can do that in a separate post, M.
I would also be interested in a brief discussion on this topic. Looking forward to that post! Thanks.
I was on the budget and finance committee for 17 years at my church. I was the treasurer twelve of those years. We used the salary studies from Guidestone/SBC to help us in making salary adjustments based on church size, budget, and years of experience for the pastor.
I will also mention that we looked at the needs of the pastor, 1 child versus 5 children, for example and calculated his spendable income to ensure he could support his family.
The one thing a church must do is to support their pastors/elders to ensure they can support their families without worrying about meeting their bills. This must be considered in regards to the lifestyle they choose, but if their lifestyle is within reason, than the church has a biblical responsibility to support their pastors/elders that are in full time roles. Otherwise, they are distracting the pastors/elders from focusing entirely on their families and the ministry God has called them to, and the church is placing them in a position to be more easily tempted with filthy lucre.
Great insights, Dan. Thank you.
Does a pastor salary bacis on tithing of the church.
Can anyone give a biblical comment on if a Pastor should be handling his own church funds without a financial team?
If he & his wife should be handling the money themselves of the tithes & offerings? Any biblical approach to that?