DALLAS (BP)–It’s that time of year again. Youth activities are in full swing. Yet a new Sunday School year is just around the corner. And the members of the church budget committee are beginning to meet and plan for the next church year’s budget.
Reviewing and preparing a church budget is a time-consuming project, but these important decisions can affect the ministries and staff of a local church for months and years to come.
The first step in this process is usually reviewing the compensation and benefits for ministers and church staff, and the entity ready to assist church committees through this process is the Southern Baptist Annuity Board.
“While most entities of the Southern Baptist Convention have their focus upon the ‘message’ of the gospel, it is our privilege to focus upon the ‘minister’ of the gospel,” said Annuity Board President O.S. Hawkins. “It is our sacred responsibility and joy to be not only a steward but also an advocate for ministers and church staff members.
“In the role of advocacy, we hope churches remember the New Testament mandate for the local church to provide financial support to those God calls into service,” Hawkins said. “The apostle Paul addressed this issue; as he wrote to the Corinthians, the Lord commands that those who preach the gospel should be supported by those who receive the gospel (1 Cor. 9:14).”
Caring for ministers and staff members includes reviewing compensation and benefits and, if possible, providing regular increases for their overall financial support.
A critical decision churches must make in reviewing compensation is how to pay the minister. “Unfortunately, many churches still use the ‘package approach’ which means they pay their ministers a lump sum and then the minister can divide it any way he chooses,” said Bob Henry, Annuity Board church marketing director. “The lump sum approach is not a good option and usually causes a minister to pay more taxes than may be legally owed.”
A better option is the salary and benefits approach. This includes a three-part model budgeting for ministry-related expenses, protection benefits and personal income.
— Ministry-related expenses. Just as the church has to budget for its utility expenses, a minister has similar “utility” expenses that should not come out of a package amount. Ministry-related expenses can include the use of a personal auto for church business; workshops and conferences that are essential to a pastor’s growth; books and periodicals; continuing education and hospitality expenses.
— Protection benefits. Businesses pay for benefits that protect their employees. While a church is a ministry and not a business, sound business principles should still apply. A benefits plan protects the church as well as the minister, and if paid directly by the church, it can provide significant tax savings for the minister. Protection benefits include medical, life and disability coverage as well as retirement plan contributions and Social Security assistance for ministers.
— Personal income. This is the actual salary the minister receives. It may also include a housing allowance or a parsonage.
“Many churches discover that simply restructuring the way they provide their ‘salary packages’ can save the minister a significant amount of income tax and result in additional disposable income,” Henry said. “A properly structured salary and benefits package can also be used to help offset rising costs.”
To help in the budgeting process, the Annuity Board offers churches a free workbook, “Planning Financial Support.” This resource, including sample policies and forms, offers practical help in setting up the three-part model.
Another valuable resource is a new study comparing the compensation a church gives its minister and employees to that provided by similarly sized congregations. The study is a joint project of 35 Southern Baptist state conventions in cooperation with the Annuity Board and allows the user to create customized reports based on staff position, church size and several other variables.
Both the workbook and the compensation study are available on the Annuity Board’s website at www.absbc.org. Churches can order the workbook by calling 1-800-262-0511.