Pastoral Compensation—Proper and God-pleasing

By Donald Shoemaker

Pastor Emeritus of Grace Community Church of Seal Beach, California

shoemaker@gracesealbeach.org

“The elders who direct the affairs of the church well are worthy of double honor, especially those whose work is preaching and teaching.  For Scripture says, ’Do not muzzle an ox while it is treading out the grain,’ and ‘The worker deserves his wages.’” – 1 Timothy 5:17-18 (NIV)

Neither then nor today have most Christian leaders received financial compensation for their service.  But many others are “career pastors” or have other paid roles in the local church.  A given church has hired them with the expectation that such “career” people are what the church needs and should be compensated for their services.

What financial obligations do we have to our pastors?  And do we approach these obligations with joy or with reluctance?

Before getting deeper into that topic, I want to stress how important it is for churches to demonstrate leadership in good and honorable ways.   Churches should be the engines of healthy change, not the cabooses (have you ever seen a caboose—once the last car on a freight train?).  Accommodations for those with disabilities?  The church should already lead the way and not wait for a city agency to come along and tell them what they must do.  The same is true with pastoral compensation and other matters of pastoral care.

The Bible gives the principle of compensating someone as he is “worthy.”  Let’s ask, does our compensation package express what the pastor is truly “worth”?

Here are my convictions[1](they are intended to fit full-time pastoral roles and would need adjustments to fit other compensated roles in the church).

1. Salary

A pastor’s salary should be commensurate with the pastor’s training, years of experience and level of achievement.  As compared to what?  Certainly as compared to similar pastoral positions in the area.[2]  But also to similar secular positions, such as education.  Why shouldn’t the senior pastor earn what a principal earns at a local school of similar size?

The salary should never include the costs of doing ministry.  Not only is this wrong in itself, but it gives the impression the pastor is earning more than he really earns.

The salary should also include reimbursement of one-half of Self-Employment Tax (“Social Security”).[3]  A pastor is considered self-employed by the IRS for Social Security purposes.  The tax is currently 15.3%.  If the pastor were considered an employee, the church would have to pay half of that.  This is a matter of equity.

2. “Fringe” Benefits

• Health, dental and vision insurance paid totally or in part by the church (here’s an idea if this is something new: start 50/50 and move up to 90% paid by the church). Remember that this fringe benefit saves the pastor a significant amount of tax, as it also does for workers in secular jobs.
• Vacation time of two to four weeks, four being appropriate for the senior pastor.
• Identified holiday time off, or “CTO” if the pastor must work on a holiday. The church I served thoughtfully added the Monday after Easter to the list, which now totals twelve days.
• Sick pay of 10 days per year that can be accumulated up to a reasonable limit.
• Bereavement pay.
• Maternity and paternity leave (this can be covered by sick pay or vacation pay) for up to six months.
• Term life insurance of $50,000.
• A defined-contribution retirement program. The church should match the pastor’s pre-tax contribution up to 5%, perhaps phasing this in over the first three years of service.

3. Professional Expenses

• The church should cover all reasonable costs of doing ministry. This includes professional library and computer-related tools, expenses for conferences, ministerial dues, periodicals, a mobile phone for ministry use, and more.
• An accountable “Petty Cash” system is a wise way to cover smaller expenses, like lunch with a prospect or a book or the cost of attending a meeting.
• Reimbursement of mileage for the work-related use of the pastor’s vehicle (this must be the per-mile rate established by the IRS and cannot include commuting).
• All professional expenses should be supported in writing to be honorable and to avoid taxes. Avoid any taxable schemes like “$200 a month for auto”.

4. Professional Improvement

• A paid Sabbatical of three to six months every seventh year of service to provide for concentrated professional growth and improvement.[4]
• Cost of continuing education.

5. Community Service

• Encourage the pastor to be involved in meaningful community service and cover any expenses involved (such as membership fees for community organizations).
• Provide 10 days of compensation for Jury Duty. Some pastoral work can be accomplished during Jury Duty, but be sure the pastor isn’t expected to perform two jobs during this period.

6. Debt Retirement

• If the pastor is paying off a student loan for seminary or other graduate studies, the church should view itself as the beneficiary of this training and pay the monthly expense of this debt.

All of this is to fairly compensate the pastor who is serving honorably and well.  The church has to set its own measurement standards to evaluate this.  Job descriptions are essential for holding a pastor accountable to agreed-upon performance points.  They also protect a pastor from unestablished expectations.

I have talked about financial and related responsibilities a church has toward its pastor.  There are other responsibilities!  Protecting church leaders against unfair criticism, a process for handling grievances, clear job expectations, striving for a spirit of “shalom” in the church, and protecting the pastor’s family from unnecessary intrusions and criticisms are among these.

None said it better than the Apostle Paul: “Respect those who work hard among you, who are over you in the Lord and who admonish you.  Hold them in the highest regard in love because of their work.  Live in peace with each other.” – 1 Thessalonians 5:12-13

ENDNOTES:

[1] (Introduction) Several of my points follow generally the compensation policies set forth in the employee handbook of Grace Community Church of Seal Beach, where I served as senior pastor from 1984 to 2012.

[2] (Compensation) One compensation study I read covered such a broad geographical area as to be almost meaningless (what hath Arizona to do with Orange County, California?).  It also gave no consideration to the pastor’s education.

[3] (Compensation) The church should require its pastors to be in the Social Security program.  They cannot “opt out” because (1) chances are strong they will not provide for comparable retirement income on their own, and (2) more important, pastors (and their denomination) do not have the required moral objections to government programs like Social Security.

[4] (Professional Improvement) Some churches never think of a retirement plan or a sabbatical since they don’t expect a pastor to stay long and they treat him accordingly. Taking unfair advantage of a pastor is a clear violation of scripture (1 Timothy 5:17-18).