Churches allocate nearly half of their budgets to staff compensation, according to the recently completed 2019 Church Budget Priorities Study from Church Law & Tax.
The finding closely mirrors findings from its predecessor in 2014—but compared to surveys conducted in 1999 and 2009, personnel expenses as a portion of church budgets have been higher in recent years (40 percent in 1999; 38 percent in 2009).
While some may question spending so much on staffing, the new study’s How Churches Spend Their Money Executive Report offers this explanation:
Some may wonder why a church allocates close to half of its budget to staff salaries and not to areas related to ministry. It should be remembered, however, that ministries often involve staff members overseeing those ministries. And while it is important to carefully monitor allocations and staff wages, it needs to be understood that good staffing is often essential to effective ministry.
While the new study researched many of the same areas of past studies (including a breakdown of compensation packages, spending on ministry programs, and giving trends), it also added some other key areas to the research, including:
- Technology. According to the new study, churches now dedicate about 2 percent of their budgets, on average, to areas such as computers, software, and tech support.
- Communications. This budget allocation (e.g., advertising and web design) comes in at, on average, 1.5 percent of the total budget.
- Outsourcing. About as many churches use outsourcing services as don’t—most likely an indication that more churches are turning to various types of outsourcing. “[Outsourcing] is quite possibly a way for churches to afford ministry and accomplish their goals,” the Executive Report points out.
Along with succinctly written survey highlights, the executive report offers many charts detailing various types of budget data according to church size, which allows churches to make helpful comparisons as they evaluate their own budget needs.
While a church’s budget must be uniquely defined by its own values, vision, and circumstances, data comparisons can help shape conversations and assess financial health. “An apparent imbalance in one area may be worth careful examination, offering either an opportunity to affirm a church’s decision to spend more in a key area of ministry—or an opportunity to redeploy precious resources to increase funding for a different ministry area it is called to serve,” write Editors Matthew Branaugh and Chris Lutes in the Executive Report.
Purchase How Churches Spend Their Money: 2019 Executive Report from the Church Law & Tax Store for $9.95. The report is free to Advantage Members of Church Law & Tax.