Contracts, Finances and Sustainability in Transitional Ministry

Our June 2018 TPN gathering included a presentation and discussion around the topic of contracts, finances and sustainability in transitional ministry.

Here is a summary of that content.

I. There are two different ways to approach a transitional role: as an employee or a contractor.

When you are an employee, the contracts and fees are just like a regular pastoral role, though the role may at times be less than full time. The church takes care of your salary, deductions, benefits. One thing to note is that if you have many short term roles and claim the Clergy Residence Deduction, you might attract the attention of the CRA and may lose your “clergy” status for tax purposes.

When you are a contractor, you are essentially functioning as a small business and need to understand your responsibilities as a small business owner, contractor, consultant. More below.

II.  Know your numbers

Whether engaged as a contractor or employee, it is easy to miss out on costs that would normally be covered by the church if you were a regular pastor. For example, employer deductions, denominational events, hospitality expenses, and technology such as cell phone, computer. Prorate this number based on the number of hours per week you are engaged with the church.

If you are functioning as a contractor you will need to do some learning about taxation issues, which will be far different than you are used to as a regular full time pastor. You will also need to keep careful records, including mileage and vehicle expenses, or it will cost you money at tax time.

You need to think in terms of “total cost of a lead pastor” versus simply the salary/housing allowing of the a lead pastor. The cost to the church for a pastor is roughly 20% more than the salary number. If you are a contractor, the larger number is the one you should be using as a reference point for fees.

III. Cover all details in contract

  • All assumptions should be written in and signed off on prior to engagement.
  • Don’t forget about holiday time
  • Be clear on how overages in time worked will be dealt with
  • Establish a clear job description that includes a statement of the limitations of your role. Make this job description public.

To further underscore the above, do not relay on handshakes, verbal agreements or even emails. You need a signed contract.

IV. Considerations for Working Remotely
(Travelling to a location for x days on, x days off)

  • Consider having the church provide housing
  • Be careful and wise with rooms/suites in homes owned or occupied by congregants*
  • Consider travel costs for visits from your spouse if you are generally traveling there alone
  • Make sure your travel costs are truly covered in full
  • Give thought to whether your pay should be hourly or per diem. A good, proven pattern is to have a per diem rate while onsite and an hourly rate when you do work for the church while back home.

*One transitional worker was asked about staying in a congregant’s home at the front end of a contract. Response: I’m open to the possibility, but it will need to be a safe, private place that works whether I am there alone or with my spouse. It also needs to be with people who will not pry for information or need/expect pastoral ministry when I’m off and at home. Reply from the board chair: You better get a hotel.

The intensity of transitional ministry requires a secure refuge where you can truly be “off,” if your ministry is going to be sustainable. Be firm and unapologetic in insisting on this.

V. Additional thoughts:
• Set aside a percentage of your transitional income for the expected downtime, and consider billing at a premium to take that downtime into account
• You may want to bill part time roles at a premium. For example a ½ time role might be your normal rate +10-20%. This is because: a part time role precludes entering a full time contract; it is hard to patch together multiple part time roles into a full time income; working such a patchwork of roles in the contracted time is very difficult due to mental and task “leakage”. Three 1/4 time roles should generate full time pay.
• The setup of your role is critical to success, and is in itself important modeling for the church and a gift to present and future staff at the church.

The place of faith in all of this: Don’t worry. Even if you do all the above carefully and wisely, there will be plenty of room for faith in your work as a transitional pastor! We want transitional pastors who can serve sustainably for the long term. Recognize that this area of contracts and finances is part of your self care, and care for your family.

 

 

1 thought on “Contracts, Finances and Sustainability in Transitional Ministry”

  1. I appreciate the transparency of the above, it was extremely enlightening and eye opening, exciting and nerve-wracking all at the same time. Mostly though, it laid things out clear and transparent for someone like me who sees the next data point as simply an intersection of decision that leads to more questions or leads toward a decision.

    thank you

    Reply

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