Monday, August 29, 2011

Join the SBC Ministry and Get Rich?

You bet! Tax breaks, clergy discounts, free condo use; people can’t wait to press bills in your palm, give you free suits, tires, food, vacations. What a life!

Well, not exactly.

Here’s an average Rev. Joe, SBC pastor:

He preached yesterday at an average sized SBC church and saw 125 folks in his 11 am primary worship service. When he gets paid, he receives a salary of $46,000. This includes the one genuine tax break that ordained clergy receives, the housing allowance, which for Joe is $16,000. He is blessed to have his own home, complete with mortgage.

Joe’s church wisely and properly has an accountable reimbursement plan which allows Joe to log his business miles, keep receipts for expenses such as books etc, and receive a reimbursement check that is not taxable as income for either income tax or for Self Employment taxes. Joe expenses $8,000 for the year this way.

The church pays his insurance, for the family, spouse and two kids. This comes to around $8,000 per year and also makes a modest contribution to his retirement account, $5,000, not enough but he's grateful for it.

Salary $30,000
Housing 16,000
Reimbursement 8,000
Health Ins 8,000
Retirement 5,000
Total $67,000

The LifeWay Compensation Study is a handy tool for checking out the pay of SBC clergy and staff. It shows Joe as being slightly above average but then Joe is slightly above average himself and, more importantly, his church is slightly above average.

Joe has knowledgeable members including a CPA who could look in the budget and surmise, rightly, that Joe will pay no income tax at all. This is because of the Housing Allowance which takes that $16,000 chunk off the table for income tax purposes.

The CPA would also understand that Joe would be paying Self Employment taxes on his W-2 salary and also on the $16,000 housing allowance. Those taxes on $46,000 would, at the 2010 rate of 15.3%, total $7,038. He hopes Joe is wise enough to set aside the $600 or so each month to make his quarterly payments of over $1,750.

The CPA doesn't have to get to a calculator to guess that Joe's largest bill, by far, after his mortgage is that tax bill. He is grateful that Joe is responsible with his finances, but then the CPA was the one on the search committee that insisted that the church get a credit report on Joe when they were considering him as their new pastor. Joe checked out OK, paid his bills on time, and had a good credit score.

Joe is in touch with the folks in his church and doesn’t complain about a total compensation package of around $70,000. He understands that just because he has a master’s degree earned by doing three years of post-college graduate study, his pay and benefits are determined not by his education but by the supply and demand for SBC pastors.

Joe is a realist. He knows that the Lord may send him to other churches but the likelihood is that he will pastor average-sized, single staff SBC churches all of his career. He is grateful that his wife will at some point work outside of the home because they will absolutely need that second income to plan for retirement.

Joe has disabused himself of thinking that because he is a pastor that someone, somehow, sometime will be there to take care of him financially. He trusts the Lord for that and watches his expenses. He has also weaned himself away from the attitude of entitlement that he sometimes observes among his colleagues.

So Joe keeps his nose to the grindstone. He doesn’t really have a backup plan, unless he can get called to a megachurch. Alas, there are only 177 SBC megachurches and somewhere over 50,000 SBC ministers.

Join the Christian ministry as an SBC pastor and serve the Lord, be blessed, be satisfied, be frustrated at times; meet wonderful people, gain close friends…but don’t expect to get rich. Just don’t complain about it.

[I welcome any correction, criticism, or observation from folks who are familiar with clergy pay. There may well be something I do not know.]


Anonymous said...

Be sure to send a copy of this post to some of our more infamous bloggers. They seem to think all Baptist pastors are corrupt.

Dave Miller said...

All except me and William, of course.

Anonymous said...

That was laid out really well, William. Well done!

I'm surprised that the average church is 125 in attendance. I thought it was around 75 or so. My understanding is that 70% of SBC churches run around 75 or so.

Even though we get the Housing Allowance, I don't think that people understand that we pay full self-employment tax. Most people don't even think about it. I doubt that they know their work pays for 1/2 of it (fica) for them, and that they are still paying around 8% or so.

Anyway, well done! That is a really great breakdown.


William Thornton said...

Tim, there are several ways to describe the 'average' SBC church. I merely took the average weekly attendance for the entire SBC and divide by the number of churches.

I would have preferred the median sized SBC church but didn't take time to try and chase that stat down. The medial compensation figures would have been preferable also.

One thing about we SBC clergy, we know how to compare what we get paid with others.

Anonymous said...

I sometimes think that church life is a microcosm of the society at large. As we develop a larger affluent class of ministers and churches, they tend to dominate the decision making and policy processes in a way that favors themselves. Often this is to the detriment of the lower echelons of ministers and churches.

The housing allowance issue also points to the greater problem of having a tax code utilized to influence social policy instead of simply generating funds to enable government to carry out its purely constitutional responsibilities.

And by the way, that Social Security tax is an income tax I don't care what kind of smoke and mirrors we use to portray it otherwise.

JL Carver

David Montoya said...

Wow, Joe get's that much! However, I believe it is cheaper to live here in Texas (unless you are employed by the BGCT/TBC then you have a higher standard of living you need to maintain).

By the way, I am thankful for what the church I serve can provide.