Back in 2003, I became the treasurer for my church. As a CPA, I assumed that I knew everything I needed to know to do the job well. I freaked out when I ran my first payroll and saw we haven’t been withholding Social Security or Medicare from our pastors. This freak out humbled me. I realized how much I had to learn about church finances…and especially clergy taxes.
Because of this experience, I have devoted a significant part of my life to trying to help church treasurers as I believe the church treasurer and the pastor are often the two most important positions in contributing to the success of a church.
In the video, I show how to use the Clergy Compensation Forms I created. It’s not mandatory for a church to use these forms. They are provided as a tool to help. Here’s the three things to share with those setting the budget in a Global Methodist Church:
Health Insurance Premiums on the Rise
It looks like premiums for Global Methodist health insurance will go up 7.5%. This is pretty consistent with what I’ve seen reported around the country (KFF article | SHRM article). As a cheap accountant, every time I see an increase of this size, it makes me wonder what our options are to reduce costs without sacrificing benefits.
What’s the Going Rate for a Pastor or Church Employee?
I’m a big Richard Hammar fan. He’s probably the top clergy tax experts in the country. His organization has also put out a survey to churches asking about what they had for staff as well as the related pay and benefits. You can find that information on www.ChurchSalary.com. They breakdown the data by church size, location, etc. I find this kind of data useful in letting me know how well my church is compensating their employees versus similar churches.
Learning to Negotiate
Money seems to complicate any relationship. Because the Global Methodist denomination doesn’t have any rules about how much a pastor should be compensated, the pastor’s compensation package will need to be negotiated. Here’s some tips for heading into the negotiation:
- Know the Church’s Financial Position: Ignore the budget. Look at the actual income and expenses. Have expenses have been greater than income in recent years? That will be the biggest factor in how free the church will be in giving raises. The next biggest factor would be the level of reserves.
- Know your Number(s): Before negotiating, the church should do the math to see what they can afford without jeopardizing the church’s financial position. This is the top number. The pastor should do the math as well in their household budget to see what they need to care for their personal obligations. This is the bottom number. Hopefully the pastor and the church can agree on a number in between. If the top number is less than the bottom number, that will be a bigger discussion.
- Bringing in a Third Party: This is where a Presiding Elder or someone from the Conference can help…as long as they are seen as neutral. They want both sides to win. In my role as conference treasurer, I knew the church’s financial situation. I also asked the pastor about his situation. I was then able to make a proposal that both sides agreed to.
I hope this all helps!
- Clergy Compensation Form (PDF): https://jctaccounting.com/wp-content/uploads/2023/09/clergy_comp_form.pdf
- Clergy Compensation Form (Excel): https://jctaccounting.com/wp-content/uploads/2023/09/clergy_comp_form_excel.xlsx
- How to Setup QSEHRA (reimburse pastor health premiums with pre-tax dollars): http://jctaccounting.com/2020/08/14/how-to-reimburse-employee-health-costslegally/
- Finding info on Benefits Access: https://youtu.be/EhH89Fes5Oc?si=DVtb4wrLQVLWy34E&t=558
- Setting up Pastor in QuickBooks Payroll: http://jctaccounting.com/2020/12/11/how-do-pay-your-pastor-in-quickbooks/
- Clergy Tax Primer: http://jctaccounting.com/2022/05/24/what-you-need-to-know-about-clergy-taxes/
- Global Methodist FAQ: https://globalmethodist.org/faqs/
- Global Methodist Financial Calculator (2024): https://jctaccounting.com/wp-content/uploads/2023/09/gmc_calculator_2024.xlsx