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Thursday, July 14, 2011

Ask the Matriarch - Ministry Expense Reimbursement

Clergy compensation issues can be sticky enough on their own, but what about ministry expenses, which - as one of our matriarchs points out - is really a separate issue? What happens when ministry expenses go up but reimbursement for those expenses doesn't? Here is our question for this week:
Talk to me about the line item(s) for ministerial expenses in your church. How is a figure determined? What guidelines are used? How are adjustments made? I serve a congregation that is affiliated with a loosely structured denomination; the denomination gives no guidelines for ministerial reimbursement. The ministerial expense line item at my church was adjusted downward (by 20%) several years ago (during my tenure) when a number of other budget cuts were made; the figure has not been revisited since then. This line item covers mileage, books, continuing education, hospitality, and other professional expenses. Over the last few years, mileage has taken a bigger and bigger cut of the line item - the reimbursement rate for mileage has risen by more than $.10/gallon since I began serving this congregation. Given this fact, I now have less and less left each year for continuing education (the terms of my call grant me two weeks of it a year). I feel I need to approach the Pastor Relations Committee about requesting that the Budget Committee approve an increase for next year, but it would be helpful for me to know how this works in other congregations and denominations, and what, if any, guidelines you use.

Muthah+ responds:
This one is a tough one for several reasons because it has to do with those invariables in the way we are paid and the various ways that our denominations make provisions.
In my last parish which was out of my denomination, I had to negotiate this part of my payment in a way I was unfamiliar and I didn't do it especially well.  My denomination had fairly clear guidelines about such costs, the last parish didn't.
But in this case, I would take it to your committee and explain to them that you are losing money by working for them.  Explain what you need to break even on your expenses.  If you have a couple of years of accounting to use as your evidence, take it.  Most congregations don't want to take advantage of their clergy.  Usually they are unaware of the effect their cuts on the reality of their clergy's lives. And many pew sitters are unaware that continuing ed.  is something that they are going to benefit from.
 It would also be good to provide some alternative cuts (ie. to heating or a/c budgets) which would mean the congregation might be a bit uncomfortable,  (smile when you say it!) and they might catch on. 
Also you need to show them that the cost to attend a conference is greater, the cost of travel to get there is greater, etc.

Sue writes:
I've been at my present pastoral charge for ten years. When I started, I had line item on the budget for "Minister's Discretionary Fund" set at $400. Its purpose is for me to have funds to use to meet with parishioners who don't want to meet either at home or at the church, so we can go out for coffee or lucnh and I don't have to either pay for it myself or claim it through another budget line. Other uses are for things like Admin Assistant Day flowers and other unexpected costs related to being out in the community. It really is my discretion that determines the use of the money. 

It helps with confidentiality at times, in that I simply tally up the amount spent at year end in VERY vague terms (ie: lunch with client = $40). No one asks who the "client" was or where we went. The congregation trusts me to use the money wisely. At year end, my total is tallied, and whatever amount I have used from the total is reimbursed to maintain the $400 for the coming year. In other words, if I only used $200 of the fund, that much is given to me Jan 1 so that I can start the year with a full budget.

My present discretionary amount is $600 per year. This discretionary line is entirely separate from Cont. Ed, Books, Mileage, Phone and salary. Each of these has its own line under "Minister Expenses."

Sharon offers:
In the United Church of Christ, clergy compensation guidelines are calculated and suggested to local churches by each conference. Sometimes these include expense reimbursement guidelines which I use as a guide.     
The question today is about expense reimbursements rather than clergy compensation.  That is a very important distinction.  Do what you can to separate them in the budget document so that people don't lump in reimbursements with "how much we pay our pastor."
The best time to educate the congregation and claim what you need is with the initial contract/covenant negotiations.  At that time, stipulate "conference guidelines" rather than a dollar amount for things like vacation time, sabbatical leave, and continuing education time and expenses.  Never, ever believe a well-meaning group of church leaders who say they will significantly increase any of this later if you agree to less now.
Also, look for any expense reimbursement line items that can be stated as things rather than money.  My covenant states that the congregation will send me to General Synod (UCC national gathering) which meets every two years.  Until it got moved to Tampa, I was going to Hawaii this year!  Other things might be "two journal subscriptions" and "10 professional books" and "2 lunches per month with parishioners."  Know what you need and want in your ministry and ask for it.  If you have a Pastor/Parish Relations Committee (I don't), educate them about how these reimbursements benefit pastor and congregation, and then they will be able to advocate for you.
Generate creative alternatives.  I don't need maternity leave at this time in my life, so my covenant states that I get a week of grandparent leave at the birth of each grandchild.  You might need more books if you are just starting out, or you might need an extra week of vacation some year instead of a raise.  
A term that is helpful to use:  "This is the cost of doing ministry." Lately in my congregation, I say: "This is the cost of supporting a full-time pastor."  If we get to the point of making a budget cut that cuts something is in our initial call covenant, that is called "breaking the covenant" which is more serious than playing with numbers. Show them an itemized list of what that $100 (or $1000) a year line item will -- and will not -- reimburse.  Adjust your own ministry and their expectations accordingly if they can't reimburse what it costs you to do what you do. 
The list:  A full-time professional pastor can expect to be reimbursed for all of her local travel (mileage, parking, tolls), some books and journals, some hospitality to members (meals), trips to wider church meetings, and all of the materials and stuff you buy for Sunday School, confirmation, etc.  You can estimate the cost of those for budgeting purposes, but try not to get all of those lumped into one line item dollar amount that can be misunderstood and easily cut.  No one wins if the budget bottom line works, but the pastor is stressed and resentful over it.

And finally, welcome to our newest matriarch, Kathryn, who writes:
In the PC(USA) every Presbytery (geographical grouping of churches) has minimum requirements for the ordained clergy and Directors of Education. In our Presbytery, Continuing Education ($800) is the only reimbursable account with a minimum dollar amount specifically tied to it. Mileage is the current IRS allowable rate but there is no recommended budget amount. Different churches handle it in different ways but in our Presbytery most folks have a professional expense allowance in addition to the mileage and continuing education line items.

Obviously I am working in a very different system than you are, but I have found when it comes to money conversations, if I can outline why I need the increase it goes a lot better than if I just ask for a percentage increase without any explanation. Also, I think I would ask to have the mileage separated out into a different account.

If you go over on mileage, that is far easier to explain (there was that funeral on the opposite coast, Suzi Jo had heart surgery in Tijuana, etc...). If you go over on an account that is mileage and con ed then the con ed is always going to get blamed. Let's face it, that revgalblogpals cabin upgrade to the balcony suite is a little harder to get sympathy for than an overrun of hospital visits.

Wow! What a wealth of wisdom from our matriarchs! Thank you! What about the rest of you? Please share your thoughts and your experiences in the comments section.

Our queue remains empty. Have a question you'd like the matriarchs to discuss? Write us at askthematriarch[at]gmail[dot]com.


  1. These items are broken out differently in my congregation (as recommended by my synod). I have a line for "professional expenses" that covers books, shirts and things I buy for sermons, classes, etc. There is a separate line item for continuing education. I get a standard auto allowance of $250/month. One of the things I struggle with is returning receipts for that first item mentioned. For a while, I kept 90% of the receipts and used them as tax deductions, but now the IRS is only allowing me to count 60% of my total work expenses toward taxes (new tax bracket). So, I'm turning in closer to 60% of the receipts now. That's hard when I know we (the congregation) are struggling financially, but I am a big believer in being honest about the costs of being a pastor (financial and otherwise). I can see the writing on the wall that there will be no raise for me in the next year (or maybe two) and I will be asking for an additional week of vacation as compensation.

    I think you have to be upfront with what the financial demands of the job are. Otherwise, people are surprised when a future pastor is.

  2. I agree with the advice. In my former presbytery, I was told that no matter how much the congregation had budgeted for mileage reimbursement, I would be reimbursed for my actual expenses, even if they exceeded the budgeted amount. (Remember that a budget is a plan.) Break each item out as several have advised.

    If you are practicing good stewardship of their funds, then this should be evident in your discussion of the expenses.

    I don't believe in not asking for reimbursement of legitimate expenses. If you want, you can make a contribution equal to the expense, but the church needs to know the real cost of ministry.

    I know of one pastor who tithed 10% of his income back to the church he served. The congregation wanted to cut his salary. He then said that he would have to cut his tithe. While I really don't recommend that approach, I know that often governing boards don't have a clue how much pastors tithe back to the congregation.

  3. LIke Kathryn, I have the presbytery guidelines in my favor, and my presbytery says that full time pastors get $1500 for continuing education. It used to be lumped together with professional expenses (books, taking people out to lunch, bribing people to show up to meetings, mileage, etc) but just this year was separated out to two line items. My professional expense line item is still extremely generous (until you have to buy the youth leaders dinner every time you want all of them to be somewhere at the same time!)...but I confess that I never turn in mileage. I use that line for hospitality and books and such, and I track mileage for Presbytery meetings and deal with that on my taxes. Other than that, I don't bother. Then again, I rarely drive more than 20-30 miles for anything other than Presbytery or con-ed, so the time-to-reimbursement-ratio is not worth it to me.

  4. Our (Episcopal)diocese has guidelines for covering these expenses. I am reimbursed at the IRS for mileage--there is a line item in the budget which I have never exceeded; I have a separate account for other "professional expenses" including books, entertainment related to work, etc. The continuing ed allowance is set by the diocese and is also a separate account. And the discretionary account is separate from all these and to be used for helping those in need.

    I think it is really helpful to have things broken out this way--it makes it clean and clear for everyone . Given the way the price of gas fluctuates (mostly upward) it is especially helpful to have that as its own line.

  5. I contracted with a parish with the IRS amt for milage but then I was told that I could only be paid for the milage IN the parish. Since I lived 40 miles away, it was very expensive to be their pastor. They would not help me with milage for the commute.

  6. These are great thoughts, y'all, on breaking things out. In my congregation, we have everything lumped together and it never even occurred to me to advocate for separating mileage from other professional expenses, or to further delineate the professional expense line item.

  7. I'm glad this is today's Ask the Matriarch because I met with my charge treasurer two nights ago to go over reimbursements at the church, and my head is still swimming!

    In previous congregations where I've interned, the churches have all had credit cards that the paid staff could use. These churches (one is 180 members; the other is 40 members) don't have a credit card and want me to put everything on my card and turn in receipts... is this typical for churches their size? I'm a little bit worried about whether their turn-around time will be fast enough for me to pay my bills as they're due. Any thoughts from the matriarchs?

    And finally, Muthah+, I think that the reason your parish wouldn't help with the commuting expenses is because the IRS won't let them do so. The way it was explained to me is that you subtract the number of miles driving from home to church, since the reimbursement can only be from your place of business (the church) to other business-related places (e.g., the hospital). But that sucks for your 40 mile commute!

  8. Muthuah+, Diane is indeed correct about the IRS rules, they can't give you mileage for commuting...but if you do "business" on the way (a hospital visit?) then the whole trip is reimburseable. There is a whole IRS publication on the matter.

  9. To the original question - My ministry covenant specifies the following expenses (again not compensation)
    Continuing education - $800
    required meetings and conferences - $400
    Books and publications - $300
    Cell phone - $60/month
    mileage - actual miles at current IRS rate

    I do simply turn in receipts for all these expenses, and for other things I end up purchasing and get a reimbursement check monthly. It hasn't been a problem in my context, but I can imagine a situation in which the Pastor's reimbursements were put on the lowest priority of bill paying.

  10. Diane, my congregation (200 members) won't let us have a credit card either (we've asked). So we all use our credit cards and get reimbursed. Our treasurers are timely, though - any delay is usually on my end, as tallying up all my receipts often becomes less urgent than other work I need to do.

  11. Thanks to Diane for mentioning the credit card idea. My church has just started the call process so I'm going to suggest it to the tresurer as a way of simplifying things.

    I believe we pay our pastor's cell phone bill direct, and get the bill direct from the operator - so that is one less bit of paper to fill out.

  12. Remember to keep meticulous records of mileage. I used to have a log book that I kept in my car, but now I use an iPhone app (BizXpenseTracker). I try to include enough details so that I remember why it was not a "commuting" expense. If it's an event or other work-related appointment it's OK. It only takes getting audited once to know what "adequate documentation" for the IRS looks like. Because my dad had kept mileage for his business, I had a leg up.

  13. Glad to know I'm not the only one with a church credit card... and earthchick, I'm probably with you in being the one late to turn in receipts. I won't be this month (so many moving expenses!) but I do need to watch that for myself!

    Unfinsymphony, thanks for the iphone app recommendation. I have a handwritten log in my car, but using my phone might be way more convenient!


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