Does Your Church Need to Know the Pastor’s Salary?

by: Thom Rainer

0

Tweet

This question comes to the Church Answers’ team and me a few times a month. It often evokes some pretty strong emotions. Can a church member (or, in some cases, guests) look at a church budget and know exactly what everyone on church staff earns?

The tension is between transparency and misunderstanding. On the one hand, transparency is usually a good default posture. Especially in congregational polity, church members have final authority over major decisions. It just makes sense they should have visibility to pastor and staff salaries.

On the other hand, putting detailed staff salaries before all the church members can be a problem for the following reasons:

• Many church members get confused over the term “packages.” For example, pastors with a “package” of $60,000 may only be making $45,000. The difference is the benefits, such as retirement and health insurance. The package is the total cost to the church. The salary (which sometimes includes housing) is what the pastor actually gets. Many church members view the package as the equivalent of a salary, but it definitely is not. In fact, most church members likely do not know their secular-equivalent package in their vocations. In other words, they do not know the costs of their benefits to their employer.
• Visibility of a specific salaries and benefits of pastors and church staff can create tensions among the staff. Can you imagine what it would be like if secular employers posted all the salaries of their employees each month?
• Church members may view the specifics of staff salaries and compare them to their own compensation. That too can be a source of tension.

For these reasons, I lean toward not including specific compensation in a budget that is made available to church members on a regular basis. Depending on church polity, a possible approach to the transparency/misunderstanding tension would be:

• Include total salaries in a single line on the budget.
• Include total benefits in separate line items on the budget. These benefits could be segregated by their respective purpose: health insurance, retirement, etc.
• Show expense reimbursements, such as automobile expenses, as separate items. They should not be included as either compensation or benefits.
• Have a system in place where church members can view individual salaries by appointment, such as meeting with a member of the personnel committee, elders, or specific group responsible for personnel issues.

To be clear, every church is different, and the polity of a church may be the determinative factor in how these matters are handled. Because we get similar questions quite often, we thought this approach might be helpful for some churches.

This issue usually generates some lively discussion.

Read more from Thom.

Tags: Pastor's Salary, Resources, Staff Salary, Thom Rainer, church budget

| What is MyVisionRoom? > | Back to Resourcing >

6 Ways to Maximize Your Budgeting Process

by: Eric Geiger

0

Tweet

Some people believe a budgeting process is a waste of time. I don’t mean the people who have a visceral reaction to budgets and strategy, but there are prudent and wise leaders who view a long budgeting process as bad stewardship. They say things like:

We don’t even know how this year will end.

“We are using this year as a starter for next year, and this year’s story is still being written” is not an unwise or untrue statement.

My budget is irrelevant the first day.

Because things are changing, this is true. Budgets are based on a forecast of the future, and financial forecasters even articulate that the first rule of forecasting is that they are wrong. So why in the world would one invest inordinate amounts of time in a budgeting process?

I agree with their sentiment. A long and complex budgeting process with layers and layers of meetings and communication is overdone and a waste of important time. But before you go overboard with that statement, understand that I am not willing to abandon the budgeting process all together. Instead, I would rather maximize it, make it fruitful, and ensure it is helpful to the team. Here are some thoughts on how not to waste your budgeting process:

1. Start with mission and strategy.

Jack Welch declared that strategy is merely resource allocation, meaning a budget is really a reflection of your strategy. It shows what you value and where you are putting emphasis and focus. Connect any strategic planning you do to your budgeting process. Disconnecting strategic planning from budget planning is not wise. Make budgeting about strategy, not finances.

2. Identify the biggest opportunities for growth and impact.

As you plan, look for the biggest opportunities for growth. Set goals in connection with those opportunities, and plan to finance the biggest opportunities generously.

3. Find waste and re-invest it.

If you and the team have gotten stronger, there is always new waste to pull out of the spending. If you use the budgeting time to uncover expenses that could be better used elsewhere, you are often able to finance the big opportunities. Budgeting lesson: Take funds from what is less fruitful to fund what could be more fruitful. To do that, you must read the next item:

4. Don’t straight-line.

A common mistake in budgeting is to take what you are currently spending in a category and project that for the next year (called straight-lining). Basically, current expenses are copied and pasted as next year’s expenses. But there may be some unwise spending and waste within the category. If you straight-line, you may be straight-lining bad stewardship.

5. Use the time to learn and re-learn.

I learn something new every budgeting cycle. Because people are focused on the type of questions that budgeting raises, the conversations are quick and helpful. Approach budgeting time as a time to learn and re-learn how resources are allocated in light of your strategy.

6. Form a contingency plan.

For the last decade, I have used budgeting to form growth plans. But I have also learned to use that time, the time when everyone is looking deeply into the finances, to form a contingency plan. What will we do if we need to cut 10% from our budget? The plans can be high-level and even on just one page, but I would rather think about a challenging scenario before the chaos of the scenario hits. File the plan away and hopefully you will never need it.

> Read more from Eric

Connect with an Auxano Navigator to learn more about a Generosity Culture in your church.

Tags: Budget Process, Eric Geiger, church budget, church budget process

| What is MyVisionRoom? > | Back to Resourcing >