Wednesday, November 21, 2018

Hey Fletch … I was at the Smart Money for Church Salaries workshop in Washington DC. Michael Martin from the Evangelical Council for Financial Accountability suggested I ask you a question that he and I were discussing. On pastoral compensation, do you have any good resources for helping pastors with a house down payment, especially in high cost of living areas? Or any churches that you know that do this well?

DRF—It was great to have you at the DC event and to hear from you. I have talked with church leaders in many areas of the country with extremely high housing costs, such as DC, SoCal, San Francisco, Boston, and Seattle.

There are many ways which churches use to help pastors:

  1. For new staff, some churches do a “signing bonus.” This is taxable income but can help get a pastor into a home.
  2. For existing staff, some churches do a 4-year “forgivable loan.” This may provide some or all of the down payment for a house. It is, again, taxable income. As each year’s interest and principle is forgiven, the pastor pays tax on just that part. If the pastor leaves before the end of the loan, the remainder of the loan can be repaid to the church.
  3. Some churches become co-owners with the pastor. This is complicated and has lots of issues with it.
  4. Some churches give a supplement to the pay of certain pastors to help with buying a home. This is essentially extra taxable income so they can own a home close to the church. The benefit of doing this is that it separates out regular pay from a home ownership allowance.

For the second and third options, consult an attorney to see what is legal and workable in your state.