How much should pastors be paid?
Pastors often at a financial disadvantage, white paper finds
June 9th, 2017 / By: Michael Foust / comments
It happens often in Southern Baptist life: A church offers a prospective pastor a salary it thinks is reasonable, and the pastor—not wanting to appear greedy—grudgingly accepts.
But down the road, when tax season arrives or when retirement approaches, the pastor realizes he should have spoken up.
It is a financial disconnect that Christian Messemer, a certified financial planner and a Ph.D. candidate at Southwestern Baptist Theological Seminary, hopes to help solve.
Messemer has penned a white paper that details some of the common misperceptions about pastors’ salaries and how both sides—the pastor and the church—can work together to prevent personal financial disaster in the future.
For some congregations, this could mean offering a larger financial package, but for other churches it might mean giving the minister freedom to get a second job. GuideStone Financial Resources is offering the paper, titled “A Shift Toward Total Compensation,” as a free resource on its website, GuideStone.org/TotalComp.
The biggest misunderstanding, Messemer writes in the paper, is the difference between gross wages and total compensation, and how pastors are at a disadvantage when compared to employees in other professions.
“In private and public sector jobs there is a substantial dollar difference between an employee’s gross wage and an employee’s total compensation,” he writes.
Gross wage is the amount an employee is paid prior to personal deductions for taxes, insurance and retirement. Total compensation includes gross wages but also benefits from the employer such as health insurance, life insurance and retirement contributions.
Often, churches use a gross wage model of payment, whereby a pastor is given a salary and is responsible for his insurance and retirement. This means if a pastor’s gross wage is $35,000, he would be left with far less than his total compensation counterpart after paying for his taxes and his benefits. By contrast, an employer in the public or private sector might have a $35,000 gross salary but also $15,000 in employer-paid benefits for a total compensation package of $50,000.
Messemer became interested in the subject through conversations with seminary friends who knew of his financial background. Also, Messemer’s wife works as an executive in human resources.
“I became a go-to for friends who were working through the financial implications of taking a church position,” Messemer told the TEXAN. “Over time I noticed important similarities: First, my friends were all taking church positions where they were the only pastor on staff. Second, the churches used a gross wage method, whereby the church agrees to a set salary, but the pastor chooses how it is divided. Third, the churches assumed the pastors they hired knew how to best advocate for themselves and how to best allocate their funds, so churches opted for a hands-off approach.”
Too often, Messemer said, pastors are not knowledgeable in personal finances.
He also acknowledged that some churches won’t be able to pay their pastors more than they already do.
“In those cases, I hope that these churches realize the need for reclassifying their pastors as bi-vocational and allow them to pursue additional employment opportunities that would provide much-needed financial benefits,” Messemer said.
The 30-plus-page paper includes financial worksheets to assist pastors and churches in determining a salary.
Messemer notes that about 1,800 retired Southern Baptist ministers, workers and their widows are assisted financially through GuideStone’s Mission: Dignity ministry, which helps retired ministers and their widows meet basic needs. This year’s Mission: Dignity Sunday throughout the SBC is June 25.
Timothy E. Head, executive officer for denominational and public relations at GuideStone, called Messemer’s paper a “good resource for churches and pastors as they seek assistance in structuring pay and benefits.”
“We see Christian and his work as a great complement to the work we do at GuideStone,” Head told the TEXAN. “Our vision at GuideStone is to honor the Lord by being a life-long partner with our participants in enhancing their financial security.”
GuideStone has other free resources at GuideStone.org/CompensationPlanning that churches can use “as they seek to honor the Lord by providing for their pastors,” Head said. Among those resources are the Compensation Planning Guide workbook, the Ministers Tax Guide and the biannual compensation survey that is undertaken jointly by GuideStone and LifeWay Christian Resources.