6 Steps to Develop a Solid Budget Plan for Your Church: Prioritizing Compensation Planning is a Key to Financial Stewardship

By Shawn Dorrough, Senior Relationship Manager in Retirement Solutions

Prioritizing Compensation Planning is a Key to Financial Stewardship

As churches evaluate their budget each year, they often seek ways to stretch limited budget dollars to cover a myriad of God-honoring goals — from weekly services and congregational care to missions and ministry outreach.

The biblical obligation to provide well for their pastors and other church staff has always been a priority of churches. Still, this line item has reentered the spotlight as a first concern following the trials many experienced in 2020.

To help churches care for their employees through financial stewardship, GuideStone® makes available our free Compensation Planning Guide, which includes sample forms, templates, worksheets and expense reports. This downloadable workbook aims to help churches develop a solid budgeting plan for the benefit of both the church and staff. 

To help establish a compensation plan that follows best practices, we encourage churches to follow these six essential steps*:

1. Determine the Needs

Churches need to review ministry-related expenses, employee benefits and personal income to determine ministers’ and staff’s compensation needs appropriately.

2. Establish Written Policies

Written policies reduce confusion by forming a standard for current and future actions. They also help ministers and employees clearly understand the provisions and expectations of the church.

3. Provide for Ministry-Related Expenses

Ministers and employees naturally have expenses related to the work they need to accomplish. However, these expenses should never be a burden to them. As such, the expenses should be fully paid for by the church through an accountable reimbursement plan and budget and should not impact any portion of a minister’s or employee’s personal income.

4. Provide Employee Benefits (Including Health and Retirement Benefits)

A strong employee benefit plan includes retirement contributions along with medical, life and disability coverage for ministers and other employees. Making these benefits available is a tangible way to show a church staff that they are cared for — which can help attract quality, new employees and reduce turnover.

5. Determine Personal Income

Several factors should be considered when determining ministers’ and employees’ personal income, such as inflation, Social Security and minister’s housing allowance. Ministry-related expenses and the cost of benefits should not be considered part of personal income.

6. Complete a Compensation Planning Summary

Using the worksheet in the Compensation Planning Guide will help develop a comprehensive compensation plan for a new budget year. 

At GuideStone, we want to help churches in any way we can. Our sincere privilege is to help churches as they seek to care for their pastors as their pastors care for them. 

We encourage every pastor to take time to walk through these compensation planning resources with their leadership and prayerfully consider how the church can effectively use their resources for Kingdom purposes while not forgetting to care financially for their pastor and his family properly.

Download the Compensation Planning Guide now and visit our compensation planning resources page for more information.

*GuideStone provides detailed direction on these six steps within our Compensation Planning Guide.

GuideStone is a leading provider of employee benefits for SBC churches, ministries, organizations and institutions. Visit GuideStone.org to learn more about how they can help you with retirement, insurance, investments and more.

Shawn Dorrough is a Senior Relationship Manager at GuideStone and has been with GuideStone since 2002. Shawn earned his undergraduate degree from Dallas Baptist University and his Master of Business Administration in Finance from Amberton University. He currently speaks across the country serving churches and other ministries in the area of retirement planning.