What Percentage of Budget is Average for Salaries

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What Percentage of Budget is Average for Salaries

by Bob
(houston)

What is the average % of salaries in a church budget?

vickey's reply

It kind of depends...

Dan Busby, CPA, states that employees of churches may receive reasonable compensation for their efforts. Excessive compensation can result in private inurnment and may jeopardize the tax-exempt status of the church.

Reasonable compensation is based on what would ordinarily be paid for like services by a like organization under similar circumstances. Taken from Zondervan 2012 Church and Nonprofit Tax and Financial Guide

So a new church may see a big percentage of its income go for the staff salaries, but a more established church may pay their staff the same amount and it be a lot smaller percentage.

However, most "experts" say no more than 50 percent should go for salaries in a typical church. In a small ot start up church it may go as high as 90 percent, but in a large church it should be closer to 40 percent.

Know the answer? Face the same situation? Please post your answer or comment by using the "comment" link below. Thank you!

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What Percentage of Budget is Average for Salaries

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Jan 14, 2011
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Church Salaries
by: Anonymous

Vicky,

For clarity sake, in your article on salaries as a percentage of the church budget you stated that a pastor's salary should be no more that 50% of the church budget. Do you mean that if the church budget is $1 million, the pastor's salary should be no more than $500k? Please clarify. Thank you!

Feb 05, 2011
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Excessive Compensation
by: Vickey

No. That is where reasonable compensation comes into play. As I stated above "excessive compensation can result in private inurnment and may jeopardize the tax-exempt status of the church".

Tip: If you are paying your Pastor with a actual percentage of your church's total offerings (which is frowned on by the IRS, but not actually illegal) you better put a cap amount in your church minutes or the IRS will holler "private inurement" and could penalize and/or prosecute the pastor and board members...no matter how little the percentage is.

Feb 17, 2011
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other staff
by: Jason

The 50% benchmark is also including all salaries, not just the senior pastor. This would include all pastors and staff.

Apr 07, 2011
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What goes into "salary"?
by: Pastor Matt

Question: When computing percentage of budget allocated for salary, do you include all staff expenses? Base salary, housing, mileage reimbursement, continuing ed, meals reimbursement, conference expenses, etc.? That would be helpful to know in comparing where our church stands. Thanks.

May 30, 2011
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Answer
by: Anonymous

Yes. All salaries and benefits.

Sep 01, 2011
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Taxable Income
by: Anonymous

Question: When computing percentage of budget allocated for salary, do you include all staff expenses? Base salary, housing, mileage reimbursement, continuing ed, meals reimbursement, conference expenses, etc.? That would be helpful to know in comparing where our church stands. Thanks.

Mileage Reimbursement is an expense of the church. As long as you reimburse mileage, meals, etc. in accordance with the accountable reimbursement plan on www.irs.gov it is not included in the taxable income of that employee, therefore it should not be included in their salary as it becomes an expense of the church. Determining whether an expense should be a part of ones salary or not should be dependent upon whether or not its included in taxable income.

Sep 03, 2011
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Pastor Salary Question
by: Anonymous

Our church brings in roughly $300,000.00 annually from tithes and offerings. Our minister receives approximate $150,000.00 in salary PLUS he receives funds for continuing education, travel and has a discretionary budget of roughly $8,000.00. We have approximately 150 members, no building, no school and a full time staff of one person. Is this appropriate compensation?

Sep 23, 2011
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Sign me up!
by: Mike

Wow! Can I be next in line. Actually, it is WAY out of line! I challenge you and your congregation to go another direction. Have your pastor get a real job (secular employment), assign church leaders to share in visiting sick, etc, and you have a bunch of cash to really minister in your community and around the world! Pay $100 per week for sermon prep and delievery. It is ministry, not a profession.

Sep 24, 2011
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Re: Mike
by: Rev. Can

Mike, I'm with you on most of what you're saying; however, your language is a bit interesting. Are you suggesting that ministry isn't a profession? As one who works in full-time ministry, I don't agree with that at all! Those who are operating in line with God's desires for their church are working professionals who experience all the same things others with, as you suggested, "real" jobs experience. This pastor should take a major pay cut, 50% of the church's income should not go towards the pastor--especially when the church doesn't have a mortgage, other staff, building, or any other major financial obligations. Where is the desire for growth?
Simply giving $100 for sermon prep is unacceptable as well. There is far more that goes into the functioning of a church than preaching on Sunday morning & visiting the sick.
However, it doesn't sound like this church can be doing much more than those two with this sort of budget. In my opinion, this should be revisited.

Oct 11, 2011
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Budget Percentages - comments?
by: Anonymous

As a percentage of monies spent in our church:
Personnel - 76%
Administrative (non personnel) - 18%
Outreach - 4%
Ministries/Programs - 2%

My thought is way too much for personnel.
Also, only 2% for ministries???

Nov 04, 2011
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Compensation Percentage
by: Admin guy

Hello,

Here's a question re: an established church that has a $5M budget and 50+ employees. Is the 50% benchmark for staff compensation/benes in comparison to the unrestricted revenue, or to the unrestricted AND temporarily restricted revenue, or to the total budgeted expenses? Thanks for your help!

Dec 06, 2011
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response
by: Pastor K

In response to the previous question, the data I've seen over the years is generally based on general fund income, which usually equates to unrestricted income. That's a bit problematic when a church has a high number of designated categories, which almost always equate to restricted accounts (building fund, youth, missions are three common accounts)

With regard to a previous poster who suggested 100/week was appropriate for sermon prep has either never prepared a sermon or is exceedingly lazy in his preparation. I commonly spend 10-25 hours per week in study and preparation, with my recent average around 15 hours. More importantly the idea is unscriptural.

Jan 30, 2012
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Real Job?
by: Anonymous

thats an IGNORANT statement. when Pastors such as myself go to school and obtain professional degrees sometimes resulting in thousands of dollars of debt, PHD's etc....which most church prefer, We are expected to know how to do everything,be at everything and be there for everybody, and someone says get a real Job? YOU GET A LIFE, and maybe an education and make your own money so you dont have to worry about someoneelse making theirs.

Jan 31, 2012
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Pastor's "Job"
by: Vickey

Okay.

I try not to censor the comments that are posted.
But I do not allow links to other sites without prior permission, personal emails and telephone numbers (the web is not a safe place to post personal information) and I will not allow offense language or comments.

Mike, I let yours through because even though I strongly disagree with your comment...you are titled to your opinion.

But as a last word on that subject...my pastor "works" 24/7.

Most of you know of my husband's illness. Spoken from a person who has called my pastor in the middle of the night and all hours of the day many times to come and pray for Kevin, I am thankful that my church can support my pastor so that he does not have to get a secular "job".

I wish we could pay him ten times more than we do! In my humble opinion...he would rightfully deserve every penny for all he does.

He along with most pastors are not in their "profession" for the money, but because God has called them to shepherd our souls.
In that you are correct Mike...it is a very special ministry.

However, that does not mean they should struggle financially.

1 Timothy 5:18 says: "Thou shalt not muzzle the ox that treadeth out the corn. And, The labourer is worthy of his reward."

So, I am asking that all further comments be about the originally asked question:

What Percentage of Budget is Average for Salaries?

Remember though that what might be considered average for your church might not be considered "average" for someone else's church.

For example, because of the higher cost of living, a pastor in New York City would need a higher wage than one in my state of Oklahoma.

Church size also plays a big factor in that decision.

A good resource for that decision is The 2012-2013 Compensation Handbook for Church Staff

Feb 02, 2012
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Mikes Comment NEW
by: Steve

I would have to agree with Mike. The condition of the modern organized Church is pathetic. When you combine the modern organized church with private Christian schools you basically create a closed system where Christians can withdraw completely from the great commission and simply pay others to fulfill it for them. When 50 - 90% of the money given to churches goes to buy groceries, automobiles, housing, education, etc.. for able bodied people something is wrong. Nothing is left for any real outreach. You would be far better off investing the money yourself. For example, did you know that when you give $100 to the Gideons International, 100% goes to bibles which are then delivered directly into the hands of men, women and children all over the world by people who pay 100% of their own expenses. That's what I call a good investment.

Obviously people that make a living from the gospel will disagree. But keep in mind that they are the same people telling you that tithing is a new testament doctrine when everyone knows it is not.

If you want to find out what the problem is just follow the money. The love of it has always been the root of all kinds of evil.

Feb 03, 2012
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15 church attendees $44,000 salary NEW
by: Karen

I have been researching this question. I am on our church steering committee and we have a meeting coming up where I was going to address the issue of the pastors salary. We are a small church that use to be a couple hundred people 20 years ago. My family and I love our church family and we are growing spiritually however the church has dwindled to an average of 15 people (including kids) on any given Sunday. We are renting a local town hall by the hour on Sundays. Due to healthy 'givers' and a few tithers who rarely attend we collect about $55,000 per year. The pastor receives $24,000. for a housing allowance and $20,000 for salary for a total of $44,000. I am not in agreement with this since we are only shrinking year to year. I am going to propose that we pay the pastor for the work he does and use the balance to rent a space on a busy street where we can get some exposure and have a space for ministering to the neighbourhood. Once our attendance goes up we can pay him more. Honestly we are all mature Christians so there isn't that much 'work' involving the flock. I would say that we could all share in doing the sermans as well and it would make a welcome change. Any input would be appreciated.

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