Guidelines for dealing with money that's not a part of your regular salary.
Editor's Note: In his free ebook, The Minister's Salary, Thom Rainer addresses the issue of "other ministry income"—income ministers receive from services offered at weddings, funerals, revivals, speaking engagements, etc. While some minister's argue that such income is gift income and tax exempt, Rainer stresses that the IRS is clear: "this income is earned in the course of your work and is thus subject to taxation." He then goes on to offer the following best practices, which are based on conversations he's had with dozens of ministers.
Best Practice #1: It is okay to accept other ministry income. You have earned this income by conducting a funeral, officiating a wedding, or speaking somewhere beyond your church. You had to prepare extra work. You sometimes had to give up your weekends, particularly with weddings. It is one extra assignment to a schedule that is already busy.
Best Practice #2: It is generally advisable not to set fees. Leave the amount that you will receive to those you are serving. Sure, that means you will sometimes receive very little and other times receive nothing. But you are already receiving a salary from your church. Fee setting typically sends the wrong message.
Best Practice #3: Be willing to do these services for nothing. There will be some situations where the family or organization has very little financial means. Accept the reality that a certain number of your weddings, funerals, and speaking engagements will result in no outside income. For example, civic organizations and schools rarely will pay someone to speak. And there will be times that it is obvious the family or person cannot pay. Graciously decline any offers they make, and be grateful for the opportunity to minister to them.
Best Practice #4: Always express gratitude for anything you receive. I know a few pastors who take a few minutes to write a brief handwritten note every time they receive an honorarium or stipend. That is a class act that should be emulated by others.
Best Practice #5: Do not anticipate other ministry income in your budget. Other ministry income is unpredictable, uneven, and usually modest in amount. Do not build your financial lifestyle predicting these funds. Decide ahead of time how that money will be used and stick to it. Some ministers put it toward retirement. Some put it toward special savings accounts for items like automobiles. Some put it aside for their children's college fund. Some use it to pay down extra principal on debt. And some give the funds to their spouse for extra spending money.
This post was adapted from the free ebook, The Minister's Salary, by Thom S. Rainer. Dr. Rainer serves as president and CEO of LifeWay Christian Resources. Among his greatest joys are his family: his wife Nellie Jo; three sons, Sam, Art, and Jess; and seven grandchildren. Dr. Rainer can be found on Twitter @ThomRainer and at facebook.com/Thom.S.Rainer.
For help determining fair and reasonable compensation for the entire church staff, see the 2014-2015 Compensation Handbook for Church Staff; for comprehensive help understanding tax laws, see the 2014 Church & Clergy Tax Guide.