It’s budget time in our churches again. I recall a vulnerable church I served that tried every year to raise my salary according to their judicatory’s guidelines. I really appreciated that! But one year, when we assembled and studied the numbers, I started to cry when I saw what was happening to the rest of the budget: it was shrinking.
I suddenly recognized that, every year, as I drew a little more salary for cost of living and health insurance, other areas of the budget were getting chipped away. Membership decline had effected our revenue stream and there had been sustained cuts to program and mission. The budget was now so lean that, although I could still come to work and get paid, there was no money to do anything once I got there!
What I was experiencing may be quietly happening in your church, too. The percentage of your church’s budget devoted to payroll may be inching up year by year.
Recently I read in this study about what is happening with church payrolls in relation to total budgets. In 2009, churches overall were allocating about 38% of their budgets to payroll. Researchers think it was this low because churches had taken drastic steps to freeze or cut their payrolls after the 2008 market crash. But today, church payrolls have increased to nearly 60% of total church budgets. The healthy range is considered to be from 40-60% of total budget.
I’ve watched payrolls in my own churches rise because of health care costs, judicatory expectations, and the desire to attract and keep qualified leaders. But meanwhile, other parts of the budget, like direct mission and support for the wider church, may have no one to advocate for them.
Many congregations want to do right by their pastors, and pastors deserve to be paid well. By professional standards, for our level of education (which many are paying down debt on) our salaries are pretty humble, and we work hard for them.
But the ratio of payroll to total budget is important to pay attention to. If it is sneaking upward, it may indicate that your church, while still employing a pastor, is losing its ability to fund significant programs or mission in your community. This is even more detrimental if the pastor is primarily in the building caring for his/her own flock.
Some things a church may need to consider are:
What are members giving and is there room for growth? In a struggling church, some are certainly already giving sacrificially, but others could probably improve.
Does your staffing configuration, from clergy to custodian, need to be re-evaluated? This can be a sensitive question when beloved employees are part of the equation, but maintaining a sustainable budget is a worthy goal. That may mean cutting some staff hours or asking for some volunteer service from the congregation.
Here’s a handy tool by Dan Hotchkiss that I found at the Alban Institute website. It encourages a congregation to analyze its budget for health and sustainability. Check it out!