Financial Challenges to the Small Church in the Twenty-First Century

Churches that run less than 300 in worship will face new challenges in the twenty-first century. First, it needs to be said that there is nothing wrong with churches that run 300 or less in worship. Many people prefer this size church and think it is best able to carry out real ministry. Certainly it is easier to have a comprehensive and inclusive ministry in a small church. One needs to bear in mind that churches running 300 or less in worship make up 85-90% of all churches in the United States. In fact, most churches will run 100 or less in worship.

Most of the challenges to the smaller church are spiritual problems. One of the great challenges to the smaller church is financial, but even that challenge is ultimately a spiritual matter. While one may wonder why I am writing about the church and money and may think that such a topic is inappropriate, I disagree. Church finances are the numerical value of ministry and without it, the doors of the church would close. Jesus said “where your treasure is, there your heart will be also.” (Matthew 6:2, NASB) How Christians support their church financially determines if that church can do ministry in today’s world.

It seems to this writer that a minimal annual budget for any church is around $200,000.00 per year. This budget allows a church to pay it bills, pay its minister a minimally adequate salary, perhaps support one or two part time staff members and have enough money to carry out various ministries. Nevertheless, even a budget this size is a strain.

As boring as it may sound, buildings have to be maintained and utilities have to be paid. Smaller churches tend to let their property run down. It does not reflect well on God’s people to worship in buildings that are in need of repair. Damaged roofs, poorly painted walls, molded brick and uncut grass says to the community that we do not love God enough to keep up his property. Everything a church does reflects their view of God, even how they care for the property that God has given them. Therefore, any budget must adequately take care of the physical property. This can cost as much as 50% of the smaller budget. Some may say that this is as good argument for not owning property. Admittedly, some churches in urban areas can do without buildings but must churches cannot do so. Adequate facilities do not exist in small towns and rural areas. In fact, in those places Church buildings can be used for community purposes since those communities have no public buildings. Church property tells a community that God’s people reside here and are neighbors. It is an instrument, a tool for ministry. But it is a tool that must be taken care of or it becomes an unwanted statement to the community as well.

The second highest cost in a church is personnel. If a church wants a full time pastor, then they must provide an adequate salary. In connectional churches, this may not be as great an issue because the denomination pays the salary or pays part of it. However, in independent and autonomous churches such as Baptist churches, the church pays the salary. According to some surveys, the average salary of American pastors, including housing, is $40,000.00 per year. Most often the housing is a church provided parsonage. For a family of four, this would be barely adequate to pay the bills and feed the family. What most church members do not understand is the tax structure imposed on ministers. For federal income tax, the minister is considered an employee but for Social Security, he is considered self employed and must pay self employment taxes. He gets fewer breaks on his income tax and has to pay the full 15.63% on his self employment tax. Furthermore, if he lives in a parsonage, he has to pay self employment taxes on the fair rental value of the parsonage. That means he will pay between 20-25% of his cash income on Social Security taxes. Then he has federal and state income taxes. Suddenly a $40,000.00 salary does not seem like much.

If a Church pays a housing allowance so that the pastor can buy a house, then the church should pay enough to match the housing market of their particular area. A housing allowance would be an increase of $10,000.00 to 20,000.00 per year or more!

A Church has a biblical obligation to take care of their pastor. It does no good if a pastor is constantly distracted by the lack of funds to take care of his family. This obligation includes, not only a liveable salary but health insurance. There is a crisis in the cost of health insurance. For a man forty years of age with a family, health insurance will cost $14,000 a year or higher. And when a pastor reaches fifty years of age, it is even higher. Many smaller churches do not have enough to pay insurance and salary. While there are some creative ways to reduce cost, this will remain a crisis for most churches.

Even if a pastor’s wife works outside the home, the financial picture for churches is a challenge. A pastor’s wife may have to subsidize the church’s salary to make ends meet and that is ok. But, unfortunately, too many churches include this as part of the financial equation and often expect the wife to work. This is poor financial planning for the church.

A church running less than 100 in worship will have problems meeting its financial needs. However, if a church runs 150 or more, staff members will be necessary unless church members have the time to act as minister of music, secretary and minister to students. It has been my experience that most church members work long hours and have very little time for an unpaid part time job. So, if a church is to have a secretary and a part time ministry staff person, the personnel costs go up significantly.

The infrastructure needed to carry on the ministry of a local church is costly. Literature for teaching Bible study and discipleship does not come cheap. Music and other aids used in worship all cost the church. While the pastor carries out long hours of ministry to the church including preaching, teaching and giving biblical counsel, there is the larger ministry of the church to the world. A church that is not ministering to its community and carrying on the missionary mandate is not meeting its biblical call. Ministry and missions are imperatives of the church and they must be carried out. But, like everything else, ministry and missions cost money. Often it is in the area of ministry and missions where churchs fail to meet their obligations.

I believe that most churches, including very small churches, have more than enough financial resources to carry out the work of the church. The problem is that many Christians do not rise to the occasion and this is the spiritual problem. Any pastor will tell you that you can count on about $1,000.00 per worshiper per year. Some studies show as low as $800.00 per year. George Barna says that among committed Evangelicals, the amount is about $1,400 per worshiper per year. Most people will spend more money on fast food in a year than they will give to the church. (For a summary of stewardship information see Barna research. Also see Barna's stewardship summary )

While many do not believe in tithing, tithing is a Biblical solution to church financial problems. The church was modeled after the synagogue. In the New Testament era, a synagogue could be started if there were at least ten adult male Jews present. Part of the reason was that ten men tithing could support the president of the synagogue with a living salary. I personally believe in tithing. Tithing certainly does not preclude cheerful giving. All tithers should give their tithe cheerfully. And it does not prevent us from giving more than a tithe. But in almost every church if the average church member tithed, finances would not be a challenge.

However, there are many churches in rural areas that will continue to have financial pressures even if all members tithe. Churches in areas where the population is sparse or declining, may not be able to sustain the kind of ministry it has in the past. Churches pride themselves on having a full time minister. But there may come a time when they cannot afford one. Every church deserves a called, well trained and committed minister. And there are many great pastors who are bi-vocational. But most pastors are not trained to be bi-vocational and do not feel called to be bi-vocational. If a church is too small to call a full time pastor, what can they do? I think that many churches need to consider sharing a pastor. This can come in several forms. Years ago, churches were often quarter time or half time. They met once a month or twice a month with a pastor who was on a circuit between two to four churches. While this is a possibility, a more modern version of this might be possible. If a pastor were centrally located among two or more churches, he could give adequate ministry to multiple churches. He could preach at least two churches on a Sunday and maybe more. The churches would have to change their view of ministry. They may have to do more hospital and home visits to make up for the pastor when he is not in the community. But if this model was followed, churches could have an adequately paid, well-trained pastor who could preach and teach and guide the churches to do fruitful ministry.

It is sad to think that money could be the cause of smaller church failures. Most smaller churches that shut their doors do so because they cannot pay their bills. Some churches need to close because the community is gone. But more often than not, a hole is left in a community when a church closes its doors for good. Church members and pastors need to take a long term approach to the life of their church. They need to insure that the next generation will have a place to worship and a vital community of faith that bears witness to the Gospel of Jesus Christ.