When Steve Hoden first became pastor of Salem Covenant Church in Oakland, Nebraska, he had one request for the church board: take care of his family.
The church board knew the cost to live in the rural community. So Hoden trusted the board members to do the right thing when it came to setting his compensation. The church, he said, always did.
"We've never talked money for 14 years," said Hoden, who recently retired.
Now the church is looking for Hoden's successor. That includes figuring out how much to pay the new pastor. It's a complicated task. And the church can use all the help it can get, said Jim Goth, chairman of Salem Covenant.
"We're starting all over," he said. "I have no idea what the starting salary for a new pastor should be."
Many churches are in a similar position. Compensation setting is complex, and treasurers and other financial managers must walk alongside board members as they learn how to navigate these complexities. With that in mind, Church Finance Today asked several financial experts and church leaders for their insights into what boards and finance committees need to know about setting pay for pastors.
Look at the big picture
Dan Busby, president of the Evangelical Council for Financial Accountability and an editorial advisor for Church Finance Today, said the first step in setting pastoral compensation is to look at the big picture. That includes looking at the church's budget, the cost of living in the church's community, and the goals for the church's ministry. Using that data, the church can develop a philosophy of compensation that fits their context, Busby said.
Next, he said, they should ask this question: "How do we compensate the pastor so that they want to stay and so that they are not stressed out every minute?"
The goal is to set a compensation package that helps a pastor focus on the church's ministry—and not on how to come up with the money to pay this month's bills.
Research and decision-making
A church should collect data about the cost of living and compensation paid by other similar congregations in their community, as well as the salaries of other local community leaders—including nonclerical jobs. Salary surveys from denominations or other Christian organizations can help as well.
A salary survey is especially helpful for smaller congregations—it can help them make sure their compensation isn't too low. That's always a concern, especially if budgets are tight, Busby said.
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