Pastor Salary
Posted on November 7th, 2005 by catalyst into the Uncategorized categoryThere was an article in the Washington Post discussing the annual salaries of pastors and nonprofit CEO’s. (Odd comparison, since I think pastors and ceo’s serve two completely different functions, but whatever)
Read the article here: When Pay Seems to Charitable
And here are the best quotes:
I love my large church, even though, with more than 7,000 members, I often have to worship from an overflow room. But there is one bothersome downside of attending a megachurch. You’re often put in the position of defending your pastor’s personal finances.
In a look at pastoral pay, including housing, the National Association of Church Business Administration found the average annual salary to be $91,200. The low side in the survey was $13,700 a year, and the high was $249,600.
($91,200 seems like a lot of money to me. But maybe I’m naive.)
And here’s the author’s conclusion:
I’ve never looked at what kind of car my pastor drives, nor do I care what it is. When I give, I look at whether the charity, church or pastor is meeting the needs of the people and communities being served.
I think that’s a good mentality to have. I just wonder whether the church is really meeting the need of the community. I’m skeptical.
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November 7th, 2005 at 7:56 am
Of course you are skeptical, no one ever accused you of being optimistic. But there is cause for concren , it is hard to get away from CBC’s or PF’s corporate approach.PF preaches a sermon series, sermon series becomes available on tape or cd, some secretary takes sermon notes and turns it into a book, book some how gets endorsed by people who think your name is Hank and you collect revenue from book sales. Has any one seen the City Bible Publishing catalouge lately 3/4 of PF’s books are sermon series.
CBC does throw alot of money at community outreach stuff so it’s not totaly inexcusable.
November 7th, 2005 at 8:19 am
“Of course you are skeptical, no one ever accused you of being optimistic.”
So true. So true.
November 7th, 2005 at 8:34 am
Let me also add, that I have no idea how much Pastor Frank makes. The above numbers are just average salaries.
Also, I am not opposed to getting rich. In fact, it’s certainly one of my goals in life. My problem is when people misuse the Bible to convince others to give so you can draw a six figure salary… fires me up a little.
November 7th, 2005 at 11:19 am
I’m not opposed to getting rich either. I hope to be rich myself someday. FWIW, I’ve never seen the high side of $30K/year. We’ve made good use of the resources that blind chance have provided us.
The biggest problem, I think, is that we live in an economic system that’s based on buying and selling things. Churches sell faith and spiritual upkeep, and ethically that can be accessed by anybody sufficiently clever to take the right lessons from thier masters. Historically the nature of salvation and faith are so high that to charge mere money for it - ascribed by some as the root of all evil, as it promotes avarice - would be obscene.
However, the idea that salvation should be available to anybody in exchange for belief - which cannot be charged for - means that pastors are going to go hungry unless donations are given. Pastoring is a full time, 24/7/365 concern. We all want our pastors available when we need them. There wouldn’t be much eccleisa going on if we had to wait for our pastor to have a break from his Burger King job.
So, we donate. And we don’t get nothing in return for this; it’s just not a material thing. We get spiritual care, succor, healing and salvation, which are priceless in thier way, and if we donate judiciously, we make it possible for our pastors (and whoever works for them) to devote 100% of thier time to the vocation.
But taking money for such a thing is the original slipper slope. Too often a fine line gets crossed and congregational leadership becomes congregational control. This is especially poisonous in our capitalistic society, where, too often, monetary success equals worldview validation; the right must be right on something, else they wouldn’t be rich.
In the case of a church like CBC, where the pastor becomes as the church, this toxicity finds its acme. It results in a church that thinks nothing of opening branch “campuses”, stepping on the toes of neighboring churches of every stripe and outlook; a church that looks less like a church an more like a media empire than anything else.
I think it’s unseemly when a pastor of a local church lives like a landed baron when a great many of his parishioners have trouble making it or even finding jobs.
Congregations should provide for thier pastors, but not be so obliged to maintain an extravagant lifestyle. Maybe it’s a bias on my part, but I think that the pastor who lives modestly sets the best example.
When I was growing up, the pastor at my Catholic parish lived in a rectory adjoining the church. It wasn’t a sumptuous place, it was an understated brick house, somewhat modern looking, and hardly shabby. He lived comfortably but modestly.
When the lifestyle of the pastor becomes a continuing subject of remarking and conversation, he’s earning too much.
November 7th, 2005 at 6:17 pm
When Brother Dick ruled the roost, He made sure that his salary was in the middle of what his flock was making. Also he knew your name and really cared about you as a person, not a contributor.
November 7th, 2005 at 6:20 pm
CBC=Matt 23:27-28
” Woe unto you, scribes and Pharisees, hypocrites! for ye are like unto whited sepulchres, which indeed appear beautiful outward, but are within full of dead men’s bones, and of all uncleanness.
Even so ye also outwardly appear righteous unto men, but within ye are full of hypocrisy and iniquity.”
Its all going to fall apart soon.
November 8th, 2005 at 1:20 pm
do you guys understand exactly how much 91K is with NO TAXES? Ministers split their income for tax reporting purposes so their actual taxable income is basically non-existent. So, basically all of that income is TAKE HOME! That’s pretty high. 91 K is approximately 7,500 a month. Think about how much money you have to make at a secular job to take home 7,500 a month . . . depending on state taxes probably 140K a year or so.
November 8th, 2005 at 1:29 pm
Is this true? Do church employees not have to pay taxes?
I’d really love an answer to this question. Because it sounds like an urban legend to me.
November 8th, 2005 at 2:09 pm
Yes, pastors do have to pay taxes, but the rules are different. Now, I’m not a tax expert, but this is how it was explained to me, so if any of this incorrect, please correct my errors POLITELY.
A certain amount of a pastor’s pay can be designated as types of living expenses, primarily housing. All of that pay is considered non-taxable. Typically, churches will designate as much as half of a pastor’s income under the housing expense (etc) category so that only half their paycheck is taxable. The rest falls under other rules in a special income tax bracket, and by the time you’re done figuring deductibles for dependents and such, many pastors end up paying little taxes or even nothing.
I think many people look at a church budget without these facts in mind. They see lines for “housing budget” and “salary” and don’t add them together. And even if they do, they forget that the pastor doesn’t pay taxes on most (if any) of it. To make the equivalent net pay, one would have to be making quite a bit more in a secular job to achieve the same effect.
So when you see a pastor with a “modest” salary of $60k, you have to realize he’s making the low-tax equivalent of a six-figure taxable income.
November 8th, 2005 at 2:56 pm
dear pastor frank,
after reading how much you make i have decided that my brothers are idiots. I would like to be your apprentice, and learn how to avoid paying taxes while being a pastor.
love joel damazio
November 9th, 2005 at 4:51 am
Joel Damazio,
At the risk of encouraging you in a way that will make your brothers hate me a whole lot, that was the funniest thing I’ve read in a long time.
November 9th, 2005 at 7:13 am
FICM,
Thanks for your help. I have a couple other questions though.
Are you suggesting that the church allocates a large portion of the pastor’s salary to “housing”? But that the Pastor can use the money for other purposes. Because while this may happen, I doubt the IRS approves of the practice.
Also, is there a “special” tax bracket for church staff? Such as I’m paying 28% on my salary, but a a pastor making an equal salary pays only 14%?
November 9th, 2005 at 8:02 am
Pastors are allowed to write off any income they use for “housing.” Combine that with the IRS having next to no financial information on Churches and you have essentially an honor system for paying taxes.
Besides the pastors, full time Church Employees pay normal taxes except in certain cases where they can be exempted from paying FICA (social security) tax. However, the honor system mentioned above remains.
The really interesting thing is in exchange for being a tax-exempt organization, churches are not allowed to directly support political candidates or causes. I wonder how long before that rule starts getting enforced….
November 9th, 2005 at 8:05 am
The honor system…in church….?
Is the IRS crazy?
November 9th, 2005 at 8:29 am
Somehow I doubt there is an honor system for churches? The IRS is pretty careful about getting its money. I bet they do audit pastors.
And the IRS in the past has gone after churches for endorsing politicians. This is why you don’t see churches endorsing or opposing politicians, they don’t want to lose their tax exempt status.
FWIW, I tend to think letting pastor’s exempt housing is a good idea. Most pastor’s aren’t getting rich of their church.
However, I also think there should be a cut-off, and if you’re drawing a six-figure salary, you should have to pay taxes.
The IRS should protect the little guy, but keep mega-church pastors from getting rich.
November 9th, 2005 at 6:09 pm
I used to work for a church so while I was not in the special tax bracket, I understand a bit how it works. This does not apply to all church employees, you have to be a licensed minister for it to apply.
They split their income into “Housing Allowance” and “Income”. The whole goal is to try to get the income down as low as possible so the minimum amount of $$ are taken out in taxes. Housing allowance can be designated as Mortgage, Mortgage Insurance, Property Insurance payments, cleaning supplies, any money spent on lawn care equipment, utility payments . . . I believe furniture can also be included in this designation.
So if you figure on a 2,000 a month housing allowance for all of the items listed above and it would equal 24,000 a year. If a pastor is payed (total compensation) about 40,000 and they are married and have children, they will only report official income of 16,000 per year. So, given the deductions they can claim as being head of a household and for their children, they would most likely not have any taxes taken out.
The example above is on the low end of what we’ve been talking about but that is the basic idea.
Interesting, isn’t it? Most pastors that I know do not end up paying any money in taxes. They are not making close to the 91K average.
I definitely agree with FICM’s post about this not being obvious in a church budget. The average person in a church doesn’t understand about these tax laws.
November 9th, 2005 at 10:25 pm
Church employees DO have to pay taxes, they just have huge write-offs if they are a pastor (not just in CBC’s eyes, but the state’s). Also, like 10 pastors from CBC were audited this last year all at the same time. The IRS is watching them.
November 10th, 2005 at 6:00 am
Yeah, I assumed they had to pay taxes. And let’s be honest, while some of the pastor’s at CBC may be making high salaries, the majority of pastor’s struggle to get by… …or they hold conferences and accept speaking fees.
Whatev.
November 10th, 2005 at 6:44 am
Ok here we go, as someone who is intimately familiar with the Clergy Tax situation I can assure you that the income situation for pastors (licensed ministers) is indeed much different than it seems to the untrained eye.
Now keep in mind that the purpose of this is noble. The idea is that a church doesn’t usually have the kind of revenue that a corporation has. Thus they could never compete with the salaries that secular institutions pay. So, the idea is that this Clergy Tax Law exists so that a small congregation can still afford to pay a salary that a pastor and his family can live on.
Here is how it works: A pastor (licensed minister) decides at the beginning of the year what his “Housing Expenses” are. This includes: Mortgage Payments, Insurance, Cleaning Supplies, Utilities, Furniture, and basically ANTHING you “might” buy for your house in the coming year. Sorry, cars and their expenses are not included (except for when used on church business then the standard IRS mileage rate applies).
Now most churches have their own policies in place as to allowing that amount to be set at a reasonable amount so that it doesn’t come back to bit them but who is going to question the finer details of what the pastor says he is going to spend?
So the goal here is to get your “taxable income” down to the smallest amount. Let’s say for instance that a pastor has a salary of 60k. That sound pretty reasonable right? After deducting what is a reasonable housing allowance based on the information above with housing prices being what they are, it is not out of the question for 40k or more of that to be designated as Housing Allowance. Thus the Pastor is taxed as if he made only 20k. Now if you have a family (with it’s tax deductions) and a house (with it’s tax deductions), and a 403b (clergy 401k), you know that almost no tax would be taken out if you only earned 20k. It’s called reducing your tax burden. Now most people loose between 24 -30% of their income to taxes. So, whereas a normal person making 60k loses *around* 15k to taxes the pastor would not. Effectively making that salary 75k.
Now keep in mind this does amount to a “honor system” of sorts for what a “reasonable” amount means. Some pastors with big “starting salaries” jack this up to keep their taxable income low. I mean, who knows…you might put in a 20k swimming pool this year right? You better claim that in case you do.
So, while it is absolutely necessary for smaller churches to survive, some big church pastors take advantage of that. (As do some small ones I know.) And here is why. How many of you knew this already? How many church people do you think know this? So when you find out that your pastor is making only 70k to run a church of 400 people while your dad made 90k as a director at a company responsible for only 150 people it seems pretty low. But effectively their take-home pay is the same, or better. Some pastors are living much better than people in the congregation realize.
Oh and add to that the fact that as clergy you can opt out of Social Security as well, and your income goes even higher.
Most pastors are not getting rich! In fact the church does not attract many people who could be good pastors and leaders because they cannot bring themselves to make the financial sacrifice required in most situations. So we loose most of our good leaders to the business world. BUT SOME PASTORS ARE GETTING RICH! And I know some of them. In fact, there was even a court case a few years ago involving a pastor from a very large church in California. The IRS what questioning the pastor’s housing allowance because it was set at over 65k and they thought that was too much. I believe that the case is still pending or was dropped and was heralded as a big win for the clergy and separation of church and state.
So as for that average annual salary of 91k, pretty much figure that someone has to make *around* 130k (or more depending on their tax bracket) to actually take home the same as a Pastor making 91k. (Although I am sure that average is thrown off by some of those megachurch pastors in that over 200k category) Just imagine if you took home 7,000 a month. Not too shabby huh?
And, if we really want to get into Pastor’s salaries and perks this could be very enlightening as some pastors I know make over the 91k (before taxes) and some pastors don’t even pay their own bills and credit cards.
Am I against megachurches? No!
Am I against Pastors being paid a fair salary equal to their responsibility when they have a successful ministry to people and the community? No!
However, most church members have absolutely no idea how this all works and then blindly approve of these financial items.
November 10th, 2005 at 8:14 am
Fascinating. That comment alone was worth this blog.
I guess it comes down to the “housing allowance” and how honest the pastor is in claimin the allowance. I still think the pastor has to justify the Housing allowance on his/her tax form, and if it looks sketchy the IRS will go after him/her.
Also, the deduction for dependants is something that everyone gets, and it is a good deduction.
I guess for me, this system seems alright. I’m sure some mega-church pastors abuse the tax system, but for the most part it seems designed to help smaller churches support their pastoral staff. Good for them.
November 16th, 2005 at 4:34 pm
Any one who will get off their butt, and put a little thought into their work and doesn’t have to be working for someone else, which seems to be a constant problem for the majority of America, who will take a little risk and start their own company, or the other option is to get off the big idea of having a “safe” salary, and get a sales job can make $7000 a month easily.
I know many business people and also many sales men, who are making bank, but they don’t have set hours and they don’t mind struggling some months for the big payoff the next year. I think too many people have a wrong mindset and just want to be safe and complain about htose who get off their buts and take risks and make a lot of money.
December 2nd, 2005 at 7:30 am
this whole blog makes me sick…oh my word..i can’t believe the judgement and critisim..its so so wrong..i can’t believe that i’m reading this stuff…honour the authority put into your life…let God deal with the details of their lives….this is sick..it grieves my heart..i can only imagine how it affects the heart of God…
December 13th, 2005 at 5:04 pm
I just stumbled across this discussion and wanted to add a few things that do need to be taken into consideration.
1. didn’t that average of 91,000 include benefits like medical, dental, life insurance, etc. This would make the actual take home salary a lot lower.
2. Pastor’s are considered self employed for the sake of taxes. That means they pay the full amount of their FICA taxes which is roughly 15% while an employee at a company only pays half that amount and the employer pays the other half. To opt out of social security (you get one chance to do that) you have to sign off that you are a concientious objector I believe but I know more pastors that did not opt out than did.
3. Retirement: Pastor’s usually don’t get a good retirement package. Most businesses give a pension and a retirement program which means many pastor’s must work longer if they are ever to retire.
4. Salary increases. Depending on the church pastor’s salaries don’t keep up with the increases seen in businesses. In the corporate world I could take another position and work my way up the ladder. That does not happen often in ministry and in fact many pastors have to take salary cuts from time to time depending on how giving is going.
5. Pastor’s generally don’t get into ministry to get rich. In fact based on many of the demands in ministry the dollar per hour rate is much lower. We want to scrutinize every last dollar that our psstor spends thinking he is spending our money yet we would be offended if someone did tha to those who are not ministers. There is definately a double standard here.
Sorry for the long post. Yes the housing allowance is a good deal for pastor’s but they are not stealing from their congregations in general (some could and do take advantage) and do sacrifice a lot. In addition tithing is not to a person or institution but to God. I have to check my motives when I get to the place where I think I bought someone or something with that money. My two cents
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