If you struggle with how to set fair pay for your pastors and church staff, you’re in good company. Setting compensation involves people, emotions and money — making it a challenge for any church leader.

When determining budgets each year, there are usually competing factors to consider. For instance, how does your church handle a downturn in annual giving while seeking to hire new staff? What about an unseen repair to the leaky church basement versus giving well deserved raises? All of these needs are vital to the ministry of your church, but there is only so much in the budget to go around.

As a church leader, you want to empower your pastors and staff. You want them to live into the call God has placed on their lives. But since 45 to 55 percent of a typical church’s total budget goes toward paying personnel, you also need to steward the resources entrusted to you well.

How can you effectively maximize the money invested in compensation? It starts by changing the mindset of your church leadership. Rather than asking, “How much is enough?” begin to ask, “What is fair, or even generous to our staff?”

Such a shift requires a change in a church’s culture — and that requires time. But two immediate steps can be taken to help this transition.

Step #1: Find and Use Good Data

One reason church leaders struggle to set fair pay is because they lack basic information. David Fletcher, who possesses nearly four decades of ministry experience and runs XPastor, a site serving executive pastors, encourages church leaders to use a mix of data sources to set compensation. For example, compare church-specific salary data from a tool like ChurchSalary alongside salary data from the local school district. Telling your congregation a pastor makes an amount similar to a local high school principal gives a range that is more easily understood and can be referenced online without giving an exact dollar amount.

Beginning with this type of information can help church leaders find the balance between the salary budget available and the types of reasonable compensation ranges the church should consider for its pastors and staff.

Step #2: Determine Reasonable Compensation Packages

After you identify your church’s data sources, it’s time for the hard work of deciding on fair compensation for each position.

A tool such as ChurchSalary allows you to dig deeper into the nuances affecting pay and benefits.

On the individual side, how many years of experience does this person possess? How much education did he or she attain? Is this person ordained? What unique gifts and talents does this person offer? What types of benefits, like a clergy housing allowance, might this person receive?

On the church side, what is your weekly attendance? Your annual budget size? Are you located in a high cost-of-living area? Does your church carry significant debt you need to pay down?

Fletcher suggests creating a four-quadrant salary grid for each position in your church. This grid should reflect the very lowest and very highest salary amounts you can and should pay for each position based on your research.

Such a tool can help your church plan salaries both now and in the future. This is especially helpful in situations involving budgeting hardships because it can map out a long-term plan to bring a pastor or staff member into a fairer compensation level. As Fletcher pointed out, honesty and integrity are vital in any conversation about money, but especially when communicating through a financially difficult time.

A four-quadrant salary grid can also be used during healthy financial times to make sure each position is fairly compensated. And creating a four-quadrant salary grid allows you to know how a new hire’s salary might affect the church budget in years to come.

Looking Ahead

As you plan your church’s compensation policies, it’s important to consider outside trends that will affect costs.

The 2019 State of Church Compensation Report indicates employers, in general, expect to pay 3.3 percent more for employer-paid benefits this year. Among churches, the most common benefits provided to employees are paid vacations, health insurance, retirement contributions, housing allowances, and auto allowances.

Health insurance costs, in particular, continue to rise fastest among all benefits. Employers expect to pay, on average, 6 percent more for health benefits in 2019, while employee premiums are forecast to climb 5 percent. Currently, most churches pay an average of $5,547 (or 29 percent of premiums for employees). It’s critical to plan for rising healthcare costs and communicate the value your church provides to each employee.

The average expected raise in 2019 is 3.3 percent, which should slightly outpace the projected 2.5-percent increase in core inflation — good news for pastors and staff, but another cost increase churches must grapple with.

As your church leaders contemplate compensation packages and raises in the year ahead, carefully watch these indicators to see how your plans may need to be adjusted. If adjustments are not possible in the near term, then you should account for how these increases can be addressed over time.

Honoring the Work

The challenges of setting church compensation continue to grow with rising cost-of-living and decreases in annual giving in many churches. But a mindset of faithfulness, paired with good data about church compensation, can help your church set salaries that honor your staff.

While it’s true that “no one goes into ministry for the money,” it’s also a vital and holy ministry of churches to honor the work and call of their pastors and staff. An objective process that uses good data and open communication is a powerful step toward that end.

Tips on Asking for a Raise or Negotiating a Job Offer

Start With a Plan

  • Know who you should approach for a conversation about your salary (usually the executive pastor, a business administrator, another church leader or the church board)
  • Think about the best time to approach your supervisor and ask for the conversation
  • Come prepared to explain the value you add — share new responsibilities you’ve taken on, how your ministry has increased, or what goals you’ve exceeded
  • Know the salaries of employees in similar-sized churches

How to Ask

  • Be confident, not arrogant
  • Respect your supervisor during the conversation
  • Don’t hold your church hostage — don’t give an ultimatum or threaten to leave if you don’t get the increase you are hoping to receive
  • Graciously accept the response, then prayerfully consider if it meets your needs

This article originally appeared in Evangelicals magazine.