Setting reasonable and fair compensation for employees is important whether the organization is a for-profit or nonprofit entity, like a church. But, as CPA Elaine Sommerville notes in Church Compensation, the stakes for nonprofits and churches are much higher.
“A significant difference between businesses and churches is the potential tax consequences,” says Sommerville. “Businesses usually can keep operating, even when they run afoul of the tax rules. Churches, however, face tax penalties and the loss of tax exemption … both of which can threaten their very existence.”
For this reason alone, setting reasonable compensation in churches is a critical task. It involves both objective and subjective components. Tools like ChurchSalary provide the objective component: data relevant to churches. But the subjective element requires skill and discernment.
Once you have salary data, what are you supposed to do with it? How can you take general data and use it to create a compensation package that’s right for your unique context and the employee’s skills and experience?
This “next step” after salary data is so important, which is why we’re bringing in veteran executive pastor David Fletcher of XPastor to host a webinar on Wednesday, October 24, at 12 p.m. Eastern (11 a.m. Central) that provides guidance.
“I Have Salary Data—Now What? An Insider’s Look at Setting Reasonable Church Compensation”is a free one-hour webinar. In it, Fletcher will discuss practical and effective ways churches can (and should) use data to set reasonable compensation. Fletcher will help pastors and church leaders understand where to get reliable information, how to make sense of it, and how to use it in a manner that honors God, honors people, and helps congregations flourish. Join us!
Samuel Ogles is associate editor and special project manager for Church Law & Tax. He is the project leader for ChurchSalary.
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