Connecting the Dots Between Church Metrics and Compensation
Why discuss per person giving in a Church Growth series? How do these metrics and topics relate to church salaries?
Everything is interrelated
Each of the metrics discussed in this series captures the relationship of one or more fundamental aspects of a church—specifically as they relate to staffing and compensation.
There are four basic figures that quantify the size of a church and its staff.
- Total budget, as ChurchSalary uses the term, quantifies the total annual operating budget of a church (minus capital campaigns, pre-K, daycare, private schools, etc.).
- Attendance quantifies the average total attendance, including children.
- Payroll budget quantifies the total amount of money set aside on an annual basis to cover staffing expenses (benefits, salaries, taxes, etc.).
- FTE staff quantifies the number of full-time equivalent staff employed by the church.
The metrics discussed in this series capture the relationship between these four figures.
- Per person giving (PPG) captures the relationship of total budget to attendance.
- Payroll percentage reflects the relationship of total budget to payroll.
- Average employment cost quantifies the average amount of money that the church spends annually on 40 hours of work (in terms of salary and benefits).
- Per person payroll budget estimates the amount of money that each attendee contributes, on average, towards the payroll budget.
The model below captures the relationship of these four key figures—total budget, payroll budget, attendance, and staff size (FTE)—to one another in terms of per person giving, payroll percentage, per person payroll budget, and average employment cost.
Using this model to increase salaries and benefits
There are multiple ways to calculate and reverse engineer each metric and fundamental figure using this model. Each of them captures a way in which churches can improve pay and benefits.
Obviously, budgets, attendance, giving, and a host of other figures are more complicated than this model. This merely a basic model. We find that it is a helpful way to visualize not only which variables impact a church’s ability to pay pastors and staff, but how.
For example, while you can simply divide payroll budget by FTE staff to calculate average employment cost, you can also estimate average employment cost using the following formulas:
- (Payroll Percentage x PPG) x Attendance-to-Staff Ratio
- (59% x $2,824) x 41.56 = $69,245
- (Payroll Budget ÷ Attendance) x Attendance-to-Staff Ratio
- ($708,000 ÷ 425) x 41.56 = $69,234The difference between these calculations is driven by the sensitivity of the attendance-to-staff ratio. As we discussed in the article on this metric, simply rounding the number up or down by a single digit can significantly impact your estimate of staff size. In our example, the precise ratio is 41.564792176… .
- (Total Budget ÷ FTE Staff) x Payroll Percentage
- ($1,200,000 ÷ 10.25) x 59% = $69,073
The bottom line is that each of the church metrics relates to and informs the average employment cost at your church. If you want to improve pay and benefits at your church, one or more of these metrics will need to change.
Using real numbers
To visualize an average American church in 2022, we have inserted some figures into the model below for a hypothetical “First Community Church.” Additionally, we have created an Excel template. Download a copy to model the relationship of these figures at your church.
As an example, if First Community wanted to spend more of their budget on non-payroll expenses—i.e., decrease their payroll percentage—they could maintain their current average employment costs if they decreased the size of their FTE staff to 8.686 people. The math looks like this:
- $1,200,000 x 50% = $600,000
- $600,000 ÷ $69,073 = 8.686
Additionally, First Community could maintain the size of their staff and increase compensation by increasing either their payroll percentage or total budget. For example, if attendance increased to 500 and PPG remained consistent, their total budget would increase to $1.41 million (i.e., $2,824 x 500 = $1,412,000. If their payroll percentage stayed consistent at 59%, that growth would increase the payroll budget to $833,080, which would enable them to increase their average employment cost to $81,276 (i.e., $833,080 ÷ 10.25).
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