Calculating Compensation

Determining a fitting compensation package can be a challenge, especially if you don’t know where to begin. MMBB provides the following steps as guidance for agreeing on a compensation package.

Form a Pastoral Relations Committee

A crucial first step in developing a compensation package is forming a Pastoral Relations Committee (PRC). This committee provides a channel for your minister or pastoral staff to communicate openly about their needs. The committee can then conduct the necessary research, work with the minister to design an acceptable package, and advocate for fair compensation.

Size of the PRC

A PRC should be relatively small, three to seven people. This is large enough to foster group interaction and small enough to encourage wide participation. Another reason to have a small group is the importance of maintaining a high trust level and ensuring confidentiality.

Selecting PRC members

Given the sensitive nature of the PRC, it is better to select its members by appointment rather than through formal nominating and election processes. You might ask the minister to provide a suggested list of names to the chairperson of the board. Then, in mutual consultation between the minister and chairperson of the board, make your final selections.

Member qualifications

First and foremost, PRC members are people with whom the pastor has a good relationship. Important characteristics include:

  • People who are supportive of the minister and sensitive to the feelings and needs of both the congregation and minister
  • Good listeners
  • People skilled in human relations and communication
  • People who have integrity with regard to maintaining confidentiality
  • Both men and women of mixed ages

It is best not to have the current chair of the board on the PRC. Nor is it desirable to include members of other committees or church departments simply because they represent those groups. You are not attempting to represent the entire church in this small committee. If input is needed from other groups, the PRC can invite representatives to its meeting and excuse them after a particular topic has been covered.

Consult the Compensation Handbook for Church Staff

Earlier in this guide, we discussed the components a compensation package should include. How do you know if the package you’ve designed is reasonable and fair? Compare it with those of thousands of other church workers nationwide.

Based on a national survey and updated each year, The Compensation Handbook for Church Staff provides reliable compensation breakdowns for part-time, bi-vocational, and full-time church staff. It presents survey data from more than 4,600 churches representing nearly 8,000 staff members. It also adjusts for church size, budget, and geographical setting. Compensation profiles are broken down by categories so that you can compare:

  • Salary
  • Retirement benefits
  • Health insurance coverage
  • Housing/parsonage allowance
  • Life insurance benefits
  • Continuing education

The profiled positions include, but are not limited to:

  • Senior Pastor
  • Associate Pastor
  • Executive/Administrative Pastor
  • Youth Pastor
  • Adult Ministry Director
  • Non-ordained

You’ll find compensation levels based on personnel characteristics that include years employed, denomination, region, and education level. This lets you compare your plan to other churches that have similar attributes and demographics.

The Compensation Handbook for Church Staff is updated annually and can be ordered at YourChurchResources.com.

Compensation Worksheet

The Compensation Handbook for Church Staff provides a worksheet for each staff position. Enter your church’s data in the first column. Then check the reference tables to find the highest/lowest, median/average compensation for comparable positions. Your goal is not to come up with a single number, but rather to identify a compensation range. Once that range is determined, a variety of factors will affect the final level of compensation.

Example: Senior Pastor Worksheet
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Worksheets in The Compensation Handbook for Church Staff help you determine a median range of compensation plus benefits.

Determine how your pastor’s compensation should fit within the range

After establishing a range for base compensation plus benefits, determine where your pastor’s compensation should fit within that range. Refer to the tables and adjust for:

  • Church income, worship attendance, and setting (urban/rural)
  • Pastor’s years of service, education

Plus additional circumstances such as:

  • Cost of living in your area/local economy
  • Pastoral performance, workload
  • Goodwill
  • History of previous raises for the pastor and other staff

If your church is multi-staffed, you may want to set compensation as a percentage of the senior minister’s pay. For example:

  • A staff person responsible for planning, developing, and leading ministries across a broad spectrum of congregational life might receive 75% to 85% of the senior minister’s compensation.
  • Someone responsible for one or two aspects of congregational life and requiring minimal supervision might earn 70% to 80% of that base.
  • Someone with entry-level skills requiring substantial supervision might receive 65% to 75% of a senior minister’s compensation.

After conducting its research and making the appropriate adjustments, the PRC should share its information with the pastor(s).

MMBB provides additional compensation information for ABC churches

For added perspective on national averages in the The Compensation Handbook for Church Staff, MMBB provides annually updates on average and median compensation for each ABC region, as well as for the nation as a whole.

Your church can also ask MMBB to conduct a customized compensation study of pastors at churches like yours within your region. The report will list the high, low, median, and average compensation.

For a copy of the annual update, or a custom compensation analysis request form, call (800) 986-6222 or email service@MMBB.org.

Alternative rules of thumb for determining a fair wage

If you and your pastor want an alternative to basing compensation on national averages, some churches base their pastor’s salary on the average wage in their community for:

  • The CEO of a non-profit organization
  • Or a school principal

Help break a pattern of discriminatory compensation

The average salary for women pastors tends to skew lower because more women than men serve small churches. Nevertheless, female pastors earn 19% less then male pastors with similar levels of education and years of employment. Their annual salary increases are 28% lower, on average.

As a center for teaching fairness and equality, your church should lead by example. Compensate your staff fairly, regardless of gender.

  GENDER
CHARACTERISTICS   Male Female
Average weekend worship attendance   401 232
Average church income   $710,389 $487,019
Average # of years employed   10 9
Average # of paid vacation days   22 25
% College graduate or higher   92% 94%
% Who receive auto reimbursement/allowance   63% 56%
% Ordained   100% 100%
% Supervise one or more people   97% 100%
Average % salary increase (for those who had an increase) this year   4.3% 3.1%
COMPENSATION Data Distribution* Male Female
Base Salary Median $43,567 $39,594
  Average $46,877 $41,572
Housing Median $25,000 $17,000
  Average $27,025 $22,921
Parsonage Median $12,000 -
  Average $14,167 -
Total Compensation Median *$67,044 $50,500
  Average $71,083 $57,517

Women pastors earn 19% less then male pastors with similar education levels and years of employment. They also receive smaller annual increases.
Source: The 2012-2013 Compensation Handbook for Church Staff