Staff provide support for programmatic offerings and ministry within congregations. In many congregations, staff expenses represent the largest or second largest line items in a congregation’s budget, as well as a significant source of administrative complexity.
Compensate Employees Fairly and Legally
Anyone who works for a congregation is not only committed to leading and supporting ministry but is also responsible for financially supporting themselves and their families. For the best possible working environment, it is necessary for congregations at a minimum to obey local, state and federal employment law and, beyond that, to pay staff competitively and fairly.
Some congregations have personnel or compensation committees that concern themselves with these issues, reporting either to the finance committee or the congregation council. This personnel team has knowledge of legal issues (like the difference between employees and self-employed or independent contractors) as well as synodical compensation guidelines and general economic conditions.
In addition to determining wages and benefits for each paid position (see “Manage Employee Benefits” below), this team calculates and budgets for raises and cost-of-living adjustments and writes and distributes personnel policies so employees understand their compensation and expectations related to their jobs.
Year-to-year, it is critical that the personnel team stay aware of the congregation’s vision and mission and related staff needs, staff morale, and overall budget trends for income and expenses.
Manage Employee Benefits
As a rule of thumb, employee benefits are projected to cost 25 to 40 percent beyond an employee’s base wage or salary. Benefits are a significant part of total compensation including things like insurance (health, life and disability), pension and FICA contributions, a parsonage or home equity allowance for clergy, paid vacation, continuing education allowance, sabbatical, etc.
For clergy and other staff, most ELCA congregations partner with Portico Benefit Services (the benefits provider for the ELCA) for a package of medical, pension and other benefits. Portico facilitates the process of offering these benefits without having to organize and administer them independently. Your congregation will have an administrative portal through the internet to manage the details of your Portico account including costs and benefits.
Employees should understand that congregations typically are exempt from unemployment insurance, meaning there are no unemployment benefits should there be a layoff.
Correctly Implement Payroll, Withholding and Forms
It is critical to have the correct understanding and the appropriate software to accurately set up and track all the details and nuances related to employee and employer contributions, withholdings and tax deposits. For example, pastors are self-employed for Social Security purposes, while being considered employees for federal income tax. Also, pastors are exempt from having federal tax withheld but may elect to pay their federal tax through conventional withholding anyway. It is important for congregations and pastors to know these laws and to agree about who is doing what.
For withheld income tax and contributions to Social Security and Medicare, there are rules about when congregations need to deposit these taxes and summarize this activity (quarterly, using Form 941). Failure to make timely deposits at the federal and state levels can lead to significant fines and penalties. Rules are also in place for reporting wages and withholding to individuals on W-2 and 1099 forms at the end of the year.
With all these requirements, either outsourcing the job to a payroll services company or automating the process through payroll software is the way to go. These services also provide access to payroll experts that are more knowledgeable about the legal intricacies. Payroll software and services also allow for direct deposit.
Provide Feedback to Resourceful Servants
The Congregational Certificate Program is currently in the pilot phase. If there is a resource that is particularly helpful to you, or one that is not helpful, or if you believe a healthy congregational behavior is missing from our list, we want to know about it.
Use the Congregational Certificate Feedback Survey to guide your specific feedback to us. We will take all this feedback into account as we enhance this site.
Track Your Progress
Track your congregation’s improvement on healthy financial behaviors using the Congregational Portal. Start by indicating your congregation’s current proficiency on the behaviors associated with each of the 5 modules included on this website: Accounting, Finance, Human Resources, Risk Management and Stewardship.
As your congregation implements new behaviors, log in to the portal, find the behavior and indicate your improved proficiency.
To log in, you will need your five-digit congregational ID and the password provided to you to complete your 2016 Annual Report. If you need this information, contact Resourceful Servants at firstname.lastname@example.org.