Principles of Compensation Planning for Clergy:
Like other employers, religious congregations will find it beneficial to have personnel policies in writing so that all staff are assured of equal treatment and the congregation’s staffing needs are made clear. This helps avoid policy decisions made on an adhoc basis or which may lead to allegations of favoritism or discrimination. A personnel committee should oversee and review compensation patterns and develop and administer general personnel policies. They also help clergy clearly understand the provisions and expectations of the church. The policies should cover four major areas.
Ministry-related expenses – Reimbursement or allowance
- Allowable business expenses consistent with IRS rules
- Employee recordkeeping and expense account reporting expectations
- Ministry related mileage
- Conference and convention expenses
- Books, periodicals, software, etc.
- Employee benefits – Taxable or nontaxable
- Medical, life and disability coverage
- Retirement contribution provided by the church
- Educational expense reimbursement
- Personal income
- Salary and any amounts designated as clergy housing allowance
- Social Security allowance for clergy
- Optional tax withholdings for clergy
- Personnel policies
- Sick and sabbatical leave
- Employee classifications
- Work hours and pay periods
- Business use of cell phones and computers
- Procedure for personnel reviews and salary increases
- Salary: The recommended salary ranges are recommended as appropriate for all staff serving our congregations. The salary ranges should be established with information from surveys, compensation and benefit data from nonprofit organizations and governmental bodies, and salary ranges used by other religious denominations and staff serving our congregations. Earnings of professionals in comparable secular positions and non-profit secular positions should also taken into account. During future compensations reviews, the congregations need to recognize the cost-of-living factors. For ordained clergy, the salary is comprised of salary and housing.
Additional Resources – 2014-2015 Compensation Handbook for Church staff
- SECA Allowance: Congregation would pay one half (7.65%) of the US self-employment tax (15.3%) for ministers in lieu of the employer’s share of the FICA tax.
- Professional Expenses: The congregation should provide a professional expense reimbursement or allowance for all religious professionals. They should be set at the greater of 10% or $5,000 of salary (and housing for ministers), pro-rated for part-time religious professionals.
- Professional Development: The principles of compensation planning for clergy call congregations to provide adequate time for professional development for religious professionals, including sabbatical leave, such time not to be confused with vacation. Professional development consists of two types of leave:
- Study Leave: Congregations are urged to provide adequate paid time away each year for religious professionals to enhance their skills and renew their spirit.
- Sabbatical Leave: Congregations are urged to offer the opportunity to accrue one month of sabbatical leave for each year of service for full-time religious professionals. This is generally accrued in a five to seven year cycle.
- Retirement Contribution: Congregations are urged to enroll their employees into a retirement plan. Some retirement benefits received from denominational plans qualify for housing allowance under section 107. On average, congregations will contribute 10-12% of defined compensation each year.(salary, housing, and SS allowance). The church can also provide their staff the opportunity to increase their retirement saving with salary reduction contributions.
- Insurance: Offer a uniform package of insurance benefits to all staff working the minimum qualifying hours.
a. Offer access to a non-taxable health insurance plan to each eligible employee and his/her dependents.
b. offer long-term disability insurance with benefits following 90 days of disability to each eligible employee
c. offer a group-term life insurance policy to each eligible employee
d. offer dental insurance to each eligible employee and dependents
- Vacation: Congregations are urged to provide one month of paid vacation time as a minimum for
each religious professional. Congregations are urged to provide paid vacation to all employees to
match local prevailing standards.