Church Executive Compensation Policy (Sample)

The church Executive Compensation Policy (sample) below is available free to download, customize and print at your convenience 24 hours a day, 7 days a week for your church administration office, Human Resources Dept., etc.

A board's determination of the church's senior staff members' compensation is one of its key tasks. Church leaders should never be a part of the decision-making process for determining their own compensation. 

The IRS has parameters for what is permissible for tax exempt churches in setting executive compensation levels. An Executive Compensation policy for the church should set the process for determining and documenting executive compensation.

The policy below for executive compensation is a free and very important tool or guideline to use in your church administration office or Human Resources Department to create a policy and procedure of your own to fit your church specifically.

Policies and procedures are very important because they provide a set of guidelines for governing such things as the church executive compensation. Without them your church would have many questions and would not govern in a proper and organized way for their donors, members, etc. 

The sample Church Executive Compensation Policy below is available free to download and includes:

• Church Name - Insert your church name on the top of your policy and procedure.
• Policy & Procedures and Name of Policy - Insert the full name of your policy and procedure.
• Statement - [Church Name] executive compensation policies are established by the Board of Directors Executive Committee and approved by the full governing Church Board of Directors prior to implementation.
• Responsibilities - 1.Review and approve organizational goals and objectives relevant to the compensation of the Pastor(s) and Assistant Pastor(s) 2. Review his or her performance in light of those goals and objectives 3. Approve parameters for compensation of senior staff 4. Annually review compensation policies and procedures and make recommendations for adjustments 5. Produce an annual compensation report to the full Board of Directors 6. Review and approve any severance 7. Oversee plans for management development and succession 8. Retain and terminate, in its sole discretion, any compensation consultant
• Compensation Philosophy - [Church Name] activities are guided by its mission and community impact agenda, reviewed by the full governing Church Board of Directors on an annual basis to affirm and/or update. The allocation of [Church Name] ‘s available financial and human resources, including this compensation policy, are designed to help achieve outcomes outlined in the mission and community impact agenda.  -   The Church Board of Directors recognizes that achieving this mission requires attracting, retaining and rewarding skilled executives and personnel within appropriate guidelines established by the IRS and good nonprofit governance practices. The Church Board of Directors desired to establish compensation parameters that are competitive in the market, honor our commitment to good stewardship, balanced between short and long-term performance and will serve to motivate mission-driven, successful performance.
• Summary of Process Used to Determine Compensation Practices - Standards for Meeting IRS Guidelines: 1. Total compensation for [Church Name]’s executive(s) must meet the standards under the IRS “intermediate sanctions” regulations. 2. The IRS Intermediate Sanctions regulations apply to “disqualified persons” at 501 ( c ) (3) public charities and 501 ( c ) (4) social welfare organizations. [Church Name] is a 501 ( c ) (3) organization. A disqualified person is someone who is in a position to exercise substantial influence with respect to the organization’s affairs. Disqualified persons for [Church Name] include the Pastor(s) and Assistant Pastor(s) at this time, and may include other senior staff in future years. 3. Compensation, for purposes of intermediate sanctions, includes all remuneration (base pay, any incentive or bonus, if applicable, deferred compensation and benefits). Thus, total compensation compared to the market is the appropriate comparison for intermediate sanctions purposes. Incentive and bonus pay are permissible under intermediate sanctions, as long as the total amount of compensation is reasonable.
• [Church Name] Process: During the 4th quarter of the fiscal year, the full board meets to establish mission-oriented goals for the coming year and allocate financial resources. These goals become the basis for establishing performance goals and metrics for the church as a whole, as well as for departments and individuals. (See Executive Compensation Policy below for more of the process.)
• Signatures - Senior Pastor, Assistant Pastor and Church Board of Directors
• Date Revised - Insert the current date each time the policy is revised/updated.

Church Executive Compensation Policy (Sample)

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