Healthy Budget Percentages For Thriving Churches

As the leader in your organization responsible for budgeting, it can be intimidating to determine the appropriate budget percentages to allot for facilities, employee compensation, growth, and the many other necessities you manage. What should the highest percentage of your organization’s income go towards? How often should you offer staff raises? Where can you make cuts to offer some margin?

When conducting a compensation analysis, one of the first things we look at to understand the financial health of an organization is what percentage of the budget is spent on total compensation (salary + benefits). There are three data points to consider when determining how much of your budget should be utilized where.

Fact 1: The average church uses 52% of the church budget on compensation. This ranges from 46% to 60% on the high end from Leadership Network’s 2018 compensation survey.     

Fact 2: In faster-growing Churches, the lead pastor’s salary is on average 4% lower and the Church budgets are 25% lower than all other churches surveyed.   

 Fact 3: The older the church, the more full-time employees they have compared to younger churches of the same size and growth rate.  

What Do These 3 Facts Mean For The Health Of My Church?

Using 46% to 60% of the church’s budget on total compensation is a “normal” range for most churches. However, when you combine the level of salary compared to the market and the church’s budget, you create a great barometer of financial health.  

Here are some examples:  

Using the above chart, you can see how just quickly looking at the budget percentage a church uses for compensation combined with how much they are paying individual staff members can show you a lot about their financial health. This does not mean that salaries above the 50th percentile are bad or unhealthy, however, salaries do need to be assessed with overall budget percentages in mind.

While this is only one way to assess your financial health, it’s critical and telling because compensation is typically the largest collective line item in church budgets. These decisions carry a lot of weight for the future of your church’s financial health, the expectations and morale of your staff, and retention amongst your team. Analyze industry standards for similar roles in organizations within the size and scope of your church to better understand how your compensation plan compares to others.

Healthy Salaries Start With Budget Percentages Start 

Ultimately, it is important to consider the church’s overall budget when determining how much to spend on total compensation for all employees. As your church grows or shrinks, your budget and spending need to reflect that. This may seem like an obvious point, but starting with these basics is the best way to ensure your spending is on track to create a maintainable budget for your church.

Interested in more resources on church budgeting? We’ve got tons of resources available on determining the best budget percentages for your church.

At Vanderbloemen, we offer custom compensation reports to show you how your organization compares to others similar to yours. Our data even factors in cost-of-living for the most accurate and detailed information available to Christian organizations. Find out if your benefits rank competitively and schedule a consultation with our team to create a well-rounded compensation plan that leaves your employees feeling fulfilled and cared for. Let us know how we can serve you with your compensation planning and staffing needs.