Is Your Church Giving Raises This Year?

An interesting post recently surfaced in the Church Admin discussion group hosted on Yahoo:

"Situation: Our church is currently very close to our income and expense

budget for the current year (fiscal year end in December). Last year, the board chose NOT to give any pay increases, but this year, some of them want to do so in next year's budget.

One board member feels that since some of our congregants are out of work, that we shouldn't give salary increases, even though according to our budget projections, there is no financial reason not to. He is very vocal that we shouldn't even consider raising anyone's pay.

Is anyone willing to share whether or not they are giving pay increases, and the rationale behind their decision? I'm especially interested in hearing from churches who are doing okay at meeting their budgets, and whether or not they are considering pay increases."

The administrator's question is an interesting one. If the economy is beginning to thaw–and there is still debate about whether that's actually the case–then should churches currently meeting their budgets consider pay raises for staff? Our 2010-2011 Compensation Handbook for Church Staff, which surveyed nearly 5,000 churches across the country, showed a small decline in salaries in 2009 (after a slight gain in 2008). This means many church staff members haven't received a bump up in pay in quite some time.

Here's how other church leaders responded to the question:

From a church in Oregon:

"For the previous two years we did not give pay raises but for the upcoming fiscal year (July) we are giving a 2% raise. During the previous two years we worked hard to reduce spending and this fiscal year we are well ahead income versus expense."

From a church in North Carolina:

"Our church has not given any raises for the past two years, even though we did fine as far as revenue to expenses by year end (had a slight net income); however, we did not make budget. We actually reduced spending to approximately 95-97% of approved budget for both years. I know our Staff-Parish wants to recommend a slight increase for 2011, but is going to wait until the fall to make that recommendation. Even if a 2-3% increase is approved, we will most likely wait until year end to see if we can implement the increases."

From a church in Minnesota:

"We also froze salaries last year, but will do everything we can to give raises this year.. In my opinion, the notion that church employees do not get a raise because some of the members are without jobs is a little weak. Even if your local/regional employment rate is triple the nations (30%), it still means that 70% are still employed and probably got raises. I don't know of any company around here who froze salaries for more then one year. In addition, as you fall behind in comparison to the surrounding job market, it will be harder to attract replacement staff and for the budget to recover to accommodate comparable salaries into the future. It may be an easy way out to not give salary increases and appease those that think we shouldn't pay church staff that much, but I think we need to do a better job of educating our congregations that during tough times we count on church staff even more. Giving them less and expecting more is not the best way to keep staff motivated and feeling valued."

From a church in Maryland:

"We have, for a long time, felt that staff deserve-at the very least-a cost of living raise.then add any merit increases on top of that. Then hard times hit. In '07 and '08 we gave just cost of living (no merit increase). Then in '09 we gave no raises. Finally in '10 we reduced staff compensation by 4.1%. In return, we furlough staff one day per month. Given the offering income for the first six months of '10, I don't foresee any justification for even restoring that 4.1%. Consequently, I'm anticipating that we will eliminate at least one full time staff position (out of 9 full-time and 4 part-time)within the next 12 months.

Lest we feel that the large churches are unaffected by this, I just read a piece in the Washington Post that reports that the National Cathedral in D.C. has laid off 100 of 170 staff and reduced its annual budget from $27M to $13M. They're even considering selling off some of their rare book collection (might as well since they've already gotten rid of the curator).

As to your issue, if you have the money, I don't see how you can justify giving your staff anything less than cost of living increases."

From a church in Indiana:

"We are blessed! For the first time in the 14 years I've been handling the finances here, the staff did not receive wage increases in the fiscal year just ended. While we fell slightly short of budget income, the staff had worked so diligently all year at containing expenses that we had a significant fiscal surplus. Our Board of Administration very generously voted to use a portion of that to give all of the staff a fiscal-year- end financial gift. We also received small increases for the coming year."

How is your church handling this question in 2010? Are you behind budget and facing no increases? Are you meeting–or exceeding–budget and wrestling with how to handle raises?

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is published with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations."

Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

Recent Posts
Subscribe to Church, Law & Tax
20 Finance Questions Churches Ask

20 Finance Questions Churches Ask

Richard Hammar shares his answers to 20 of the most widely asked and relevant tax and finance questions for church leaders.
Does Your Church Owe Taxes on Alternative Revenue?

Does Your Church Owe Taxes on Alternative Revenue?

How unrelated business income, and the possible taxes owed from it, works for churches.