DALLAS (BP)–It happens every year all over the country — budget committees meeting to decide salary and benefits for their minister and other staff members and employees. In small and large churches, committees wrestle with the tough questions of providing their staff adequate salary, insurance coverage, retirement and other benefits.
Too often churches find it more convenient to use a “package” approach and give their pastor a lump sum of money thus requiring the minister to then plan and pay for his benefits out of his own pocket. With today’s rising costs and complexity of insurance programs, investment plans, taxes and retirement planning, the minister is often placed in the difficult position of deciding where and how to provide his own and his family’s benefits.
GuideStone Financial Resources is sensitive to the complexity of this issue, President O. S. Hawkins said.
“We encourage church budget committees to consider restructuring salary packages in order to provide the pastor and church employees adequate pay while the church takes on the responsibility for funding the cost of protection and retirement benefits,” Hawkins said. “To simply provide a ‘lump sum of money’ and then require the minister to cover the cost of benefits out of that sum is a disservice to the minister and to the church, and often a pastor discovers he doesn’t have enough money for adequate coverage. This can also leave the church in a vulnerable position.”
Another issue to consider when structuring salary packages is taxes.
Bob Henry, head of GuideStone’s church retirement marketing department, noted, “Many churches are discovering that by simply restructuring the way they provide their ‘salary package’ they can save their minister a significant amount of self-employment and income tax, which can result in additional disposable income. For example, by restructuring the salary package to separate salary and housing from benefits, a pastor whose salary package is $40,000 could save over $2,000 in taxes.
“How a church pays its employees is often as important as the amount of money the church pays them,” Henry said.
Today, many churches are discovering the distinct advantages of using a step-by-step budget approach to achieve sound financial planning benefiting the church and church staff members alike. Clearly written policies about ministry-related expenses and benefits relieve unnecessary worry and stress for ministers and their staff.
GuideStone offers church budget committees a resource, the Planning Financial Support workbook, which provides a step-by-step budget plan that is easy to follow and includes sample polices and forms.
The workbook cites six steps to financial support planning:
— Determine the needs.
— Establish written financial support policies.
— Provide for ministry-related expenses.
— Provide employee benefits.
— Determine personal income.
— Complete a financial support worksheet.
“The Planning Financial Support workbook is a free resource and one of the most valuable tools available to our local churches and the pastors standing at the crossroads,” Henry said. The workbook can be ordered by calling 1-800-262-0511 or by visiting GuideStone’s website at www.GuideStone.org.
Along with the workbook, another useful tool is the 2004 Compensation Study compiled by 41 Southern Baptist state conventions in cooperation with GuideStone Financial Resources. Surveys were mailed to churches and the statistical information has been compiled and is available on GuideStone’s website. A new survey will be conducted in early 2006.
“The compensation study gives customized salary and benefit information for several positions within a church,” Henry said. “It is an easy-to-use tool that allows the user to identify the average salary and benefits package for a specific position by church size, even within a geographic area, and provides valuable insight as a committee contemplates its options.”
Henry added that a final consideration is the “safety net” GuideStone provides for every church whose pastor and staff participate in GuideStone’s retirement plan. “Eligible church retirement participants can receive a disability income benefit and a survivor protection benefit at no additional cost if there is a monthly contribution to their retirement account.”
The survivor’s benefit up to $100,000 is payable to the beneficiary in the case of a participant’s death. The protection benefit provides an income up to $500 per month if the participant becomes disabled. In addition, state Baptist conventions also provide eligible retirement plan participants up to $210 per year in matching contributions in the GuideStone plan.
“In today’s uncertain world, sound retirement planning and adequate coverage is more important than ever,” Hawkins said. “GuideStone’s staff stands ready to assist Southern Baptist churches as they seek to care for the needs of their pastor and staff.”
Curtis D. Sharp is executive officer for denominational and public relations services at GuideStone Financial Resources, SBC.