Never pay for ministry with your own (after tax) money ever again!

The other day I was talking to a pastor who, and I know this well, is very, very generous. He also has a very high income. I think those are connected but that’s for another day. He mentioned buying repair stuff for his parsonage at the hardware store and that he often “just pays for it” himself. 

Don’t do that!

First of all, if you live in a parsonage, the church should cover expenses related to repairs. In that case, you should either be using a church credit card and turning in receipts or turning in receipts and getting reimbursed. At the very least, use your housing allowance for these costs!

What about when you take a church member out to lunch?

Never use your “own” money!

What about when you buy paper for the printer at home (that you use for work) or buy a book about ministry or leadership?

Never use your “own” money!

What about when you drive across town to visit someone in the hospital?

Never use your “own” money!

There are two ways to manage this. You can have an Accountable Reimbursement or Non-Accountable Reimbursement.

Accountable Reimbursement

With an Accountable Reimbursement plan your employer (the church) reimburses you for expenses and you are accountable (see?) for how that money was spent. You turn in receipts or provide a reimbursement request with details about the money you spent.

Sometimes your church will provide you a credit card that you can use for these expenses and sometimes you have to spend the money and then get reimbursed. Sometimes it’s a hybrid.

If this is where you are, count yourself lucky (or blessed, if you will). This is a privileged place in ministry that I’ve had for some of my ministry and not all. 

If you think it’s a hassle to keep and turn in receipts, try this simple strategy. If you eat out with a staff member or church member or prospect or ministry colleague!, write on your receipt the names of the persons who ate and the purpose of the meeting. Then snap a pic on your phone and save it to your cloud drive like Microsoft or Google Drive. When it’s time to turn in your receipts, voila, they’re all in the same place.

Non-Accountable Reimbursement

In my first two full-time ministry jobs, I could not turn in receipts for spending money on ministry. The church literally said, “This is your total compensation; this is what we can pay for your ministry--including your driving and all your spending on ministry.” That’s ok! That’s what they could afford. So here’s what you do:

Set aside how much of your total compensation is appropriate for housing. Then separate out how much you think you might possibly spend on ministry. I once knew a pastor who made $60,000 “total compensation.” He set aside $30,000 for housing (he owned a home) and $10,000 for ministry expenses. $10,000! That’s over $800 per month! 

His W-2 said $20,000 salary and $30,000 housing allowance.

Well I’ll tell you he was extremely generous. He took church members and visitors and younger pastors out for coffee and lunch all the time and he ALWAYS kept his receipt. In fact, he taught me how to do this. A commentary on Philippians for the upcoming series? MInistry Expense. Travel to the hospital to visit a church member? Ministry Expense. At the end of the year, anything he didn’t spend on ministry, he added to his salary so he appropriately paid tax on it.

All that to say, estimate high! You can always pay tax on the amount you underspend on ministry. By the way, taking your family out to dinner and talking about church? No way, that’s not ministry expense. Don’t screw this up for the rest of us.

Pro Tip: Put your ministry expense money in a separate account and use a debit card for the expenses. Or use a credit card JUST for those expenses and pay the bill out of the separate account. It makes it a lot easier to keep track. For mileage, you can just write yourself a check to “reimburse” yourself for the mileage used. 

I hope this helps. Email me if you have any questions!