How much should religious groups pay their leaders?

How much should religious groups pay their leaders? December 28, 2018

THE QUESTION:

How much should local religious congregations, agencies, and charities pay their leaders?

THE GUY’S ANSWER:

This topic is brought to mind by three simultaneous articles published in December. In the first, The New York Times “Ethicist” column responded to an anonymous employee of a non-profit agency that works on consumer rights and economic literacy who’s upset that due to a  financial crisis its management cut the staff by a fourth.

This was said to be necessary to protect the long-term future. But the employee is “hurt” and considering a protest after learning top officials’ pay and perks consume a fourth of the budget. The president even gets a company car. The employee thinks top incomes are “seemingly” out of line and an “injustice” to other staffers.

In response, New York University philosophy Professor Kwame Anthony Appiah said non-profits, like for-profit companies, may realistically need to pay the going rate to get talented executives. But high pay is always “worrisome” for a charity, plus this agency might have been wiser to trim executive pay in order to limit layoffs.

Churches also face money questions. The Rev. John Gray of Relentless Church in Greenville, S.C., gave his wife for their wedding anniversary a $220,000 Lambourghini Urus SUV (650 horsepower, 0 to 62 miles per hour in 3.6 seconds, top speed of 190 m.p.h.). She gave Gray a costly Rolex watch. After Christian Websites sizzled with hostile comments, Gray tearfully responded that he spent his own (obviously handsome) income, not church donations, and noted he gets added money from his Oprah Winfrey Network show and a book deal.

A different problem is old-fashioned embezzlement from church accounts diverted to personal use, $80,000 or more in a case just filed against Jerrell Altic, a minister at Houston’s prominent First Baptist Church from 2011 to 2017. This raises obvious questions about this church’s fiscal management and financial transparency with its members.

Misuse of non-profits’ income can get you in a pack of trouble with the Feds. Remember the downfall of televangelist Jim Bakker, sentenced to 45 years in prison in 1989 by a federal judge (later reduced to 8 years) for defrauding the public and also spending donations for personal use, most notoriously $265,000 in hush money to a women who had sexual accusations against Bakker.  (Sound familiar)?

Basic financial information for U.S. non-profits is publicly available because they must file an annual Internal Revenue Service Form 990, “Return of Organizations Exempt From Income Tax.” Each filing is readily searchable at www.guidestar.org and charities are further monitored on sites like www.charitynavigator.org. The Form 990 makes public the “reportable compensation” of the top five employees or trustees earning $100,000 or more. Individual states may have parallel statutes.

However, no 990 filing is required from a local church, church-related agency, or “integrated auxiliary.”  In those cases, donors must rely upon the entity’s self-reporting or accreditation by groups like the Evangelical Council for Financial Accountability (www.ecfa.org).

So, then:  What is reasonable compensation with religious and charitable organizations?  Donors assessing an agency will reasonably have cause for concern if officials make as much or more than those holding comparable posts in for-profit businesses. We see regular articles about leaders of churches and charities pulling in big bucks, which appears scandalous even if not a violation of IRS standards.

The Guy is friends with a wealthy businessman who became the C.E.O. of a needy “parachurch” ministry and decided to work for free. The local clergy of many or most churches get only modest pay, especially considering their long years of training and the burdens they carry. Many ministry staffers willingly accept lower than average pay for similar duties elsewhere to help an organization they believe in.

Payscale.com lists average salaries of a modest $61,935 for executive directors of non-profit organizations, $90,564 for mid-career Jewish rabbis, and $49,898 for Protestant ministers (who often get housing). The number for Catholic priests (usually with housing plus meals) was only $38,460, and higher pay needed to support wives and children is one argument for Catholicism’s ban on married priests.

The National Council of Nonprofits reminds agencies that federal tax exemption requires that  compensation be “reasonable” and not “excessive” – subjective terms with no numbers attached. It advises those setting salaries and benefits to research data from non-profits in the same or a similar area with comparable budgets. State-level associations of non-profits issue regular surveys on compensation, as do many Protestant denominations to advise local congregations in setting terms with a new pastor. Oddly, the Federal Trade Commission forced the American Guild of Organists to stop providing such guidance on church musicians.

After long years reporting on religious organizations, The Guy offers a concluding word of advice to well-meaning donors:  Do not give a dime to your house of worship, or to any ministry or any secular charity, unless it regularly provides a full, open accounting of income, outgo, and reserve assets, and better yet with an annual professional audit. Original sin, anyone?

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