The compensation package is NOT the salary!
Our church is in the market for a new Collegiate/Young Adult pastor. As we were working through the numbers on our budgetary finance committee, one of the members was aghast at how much we budgeted for this new pastor: “Is that how much pastors get paid?!”
The answer is, “No, that’s not how much pastors get paid.”
The numbers we were looking at weren’t just the salary, they were the total compensation package. This number includes health insurance (“Couldn’t we just not give them health insurance?”), travel budget, continuing education, retirement (“Why should we pay for them to retire?”)…
Your pastor is likely an employee, not an independent contractor. And as an employer, the church has to pay the entire compensation package for the pastor. Church members may see the pastor’s pay as a line-item in the budget and think that the pastor is getting rich off the backs of the members: “I don’t make that much money at my job!” Yes. Well, neither does the pastor. In fact, a pastor may be making only $50,000 out of a $75,000 employment package:
$12,000 health and disability insurance (or more with kids)
$5,000 mileage and travel reimbursements
$3,000 continuing education, seminars
$5,000 403(b) match for retirement
Add to this the amount it takes to interview, hire, and move a pastor, and you’re looking at substantial total compensation package.
This can make it very awkward for a pastor going into salary negotiation. Instead of dealing with a Manager or HR professional who understands salary vs. benefits, you may be dealing with church members who are new to the concept, hearing about this for the first time. Or you may be dealing with people who want to “keep the pastor humble.” There may even be people on the church board who have a bone to pick and would love to force the pastor out any way possible.
It can feel downright defensive to have to justify a health benefit and a disability insurance benefit and mileage and a 403(b) match. And this defensive, justifying posture can really derail the entire negotiation!
This is why I believe it’s important to have a standing committee that is educated on these matters. It should be a small subcommittee of the church board. The members should be tasked with reading and bench-marking to become familiar with the overall cost and structure of a competitive compensation package in your area and your denomination. This subcommittee would then make recommendations to the budgetary committee or church board. Ideally, this committee would be bumping the salary every year just to keep up with inflation.
As a pastor, it’s relatively easy to put a standing committee like this in place. And it’s relatively easy to give them resources and benchmarks to look at.
Taking this extra step as much as a year in advance of asking for a pay raise will drastically increase your chances of receiving one!
What are you doing to make sure you have the right structure in place to pay you and all future church employees a fair compensation package?
Do you need to negotiate a better salary? Or better benefits package? You may need a coach to help you. Schedule a free, no obligation 30-minute strategy session to see if Clergy Financial Coaching is right for you!