“What is the typical range that churches allocate for payroll (or salaries) as a percentage of their budget?”
To answer this question for our members, ChurchSalary surveyed over 3,000 churches about their spending on staff salaries and benefits. While these churches represent a fraction of the churches in our entire database, these results are statistically significant and revealing.
What is the norm?
Series Overview
Learn more about how staffing and compensation changes as churches grow. And how your church can adapt.
- Don’t Expect Exponential: Churches and Salaries Grow Logarithmically
- How Much Does the Average Church Spend on Payroll?
- How Many Staff Members Should Your Church Have?
- Three Key Complexity Hurdles That Churches Face
- Connecting the Dots Between Church Metrics and Compensation
Churches allocate an average of 49.1 percent of their overall budget for salaries and/or payroll expenses (+/- 0.59). Depending on the size of the church, the median ranges between 47 and 52 percent (trending higher as budget increases).
Overall, 50 percent of surveyed churches allocate between 40 and 60 percent. This 40 to 60 percent range can be labeled as “the norm.”
Other articles on this topic states that “most churches” allocate between 45 and 55 percent. While this is not a bad advice, we suspect this narrower range reflects a healthy goal rather than reality—i.e., aim for 50 percent and allow for a 5 percent fluctuation. Our data indicates that only 30 percent of churches hit this narrow 45-55 target.
How does spending vary by budget?
The chart below visualizes the distribution of payroll spending within the ten budget ranges currently utilized by ChurchSalary for compensation analysis. The dots correspond to the same quartile or percentile measurements provided in our salary reports: the middle range falls between the green (first quartile) and blue (third quartile) dots. To view precise numbers for each dot, consult this distribution table.
Analyzing this chart may yield interesting insights about payroll spending at your church versus other churches in your budget range.
The overall shape of payroll spending
The chart below reflects the overall distribution of payroll spending among the 3,098 churches surveyed to date.
There are a couple features worth noting in this chart (above). First, there is a steep drop off once you venture outside of the 40 to 60 percent range (the first and third quartiles). It may be wise for churches that find themselves outside the norm to evaluate the size and health of their staff. Second, most of the churches that spend a large portion of their on payroll (+80%) are likely lean solo pastor ministries and/or small churches.
Conclusion
Many church metrics reflect both the best practice and the reality of what it takes to staff and administer a healthy church. They function like a valley surrounded by mountains. You can visualize this by flipping the above distribution chart upside down. Even though it is possible to hike and climb along the slopes, it can be hard and dangerous.
That said, the benchmarks discussed in this series are not prescriptive. Every church is unique and payroll spending at your church will be influenced by a host of factors. The best approach is to connect these dots together in order to understand how they collectively influence staffing and compensation decisions at your church.
Dig deeper
Explore the above charts on payroll spending in more depth and get a sense of the confidence interval of the median (including what this may tell us about a key staffing inflection point) by exploring the bonus charts below.
- Distribution Table | Payroll Spending (at 5 percent intervals)
- Confidence Interval of Median | Payroll Spending
Find more ways to measure and quantify the financial health of your church in these articles from Church Law & Tax.
