A transfer member can add more than $32 to pastoral compensation, according to a study presented at the recent annual meeting of the Association for the Study of Religion, Economics and Culture in Arlington, Va.

The study, “Is Higher Calling Enough? Incentive Compensation in the Church,” finds strong evidence that pastoral compensation conforms to standard business models.

The authors, Jay Hartzell of the University of Texas at Austin, Christopher Parsons of the University of North Carolina and David Yermack of New York University, admit that such incentives seem unlikely for clergy. “Strong pay-for-performance incentives might damage a minister’s spiritual credibility with a congregation that expects intrinsic motivation to be sufficient,” they write.

But, using data from 727 churches and 2,201 ministers who served in the United Methodist Oklahoma Annual Conference between 1961 and 2003, the authors conclude that financial incentives impact pastors’ “effort and the service they provide to parishioners.” The data was taken from conference journals.

Study conclusions

Among the study’s conclusions:

• Compensation for ministers follows patterns similar to chief executive officers in a business.
• Although the overall level of ministerial pay is modest, it responds significantly to increases and decreases in parish membership.
• The annual conference uses ministerial assignment as a way to reward productive clergy “with plum appointments that bring higher total compensation.”

The Rev. Craig Stinson, director of connectional ministries and congregational development for the Oklahoma Conference, says he finds the study “fun and interesting,” although he’s not sure about the cause and effects related to the study’s assumptions, noting that some of the data extracted from the conference journals may not be complete.

“If we have sown spiritual seed among you, is it too much if we reap a material harvest from you? If others have this right of support from you, shouldn't we have it all the more?”
--I Corinthians 9:11-12

But he is intrigued that another discipline is being used to look at the church.  “I think that’s interesting and healthy and I am excited by people who are applying their own field of knowledge to the church,” Stinson says. “We’re all trying to figure out why some churches are growing and some churches aren’t.”

Oklahoma clergy members are not “in it for the money.” During the period studied, “mean clergy compensation declined during much of the 1960s and 1970s, before sharply increasing in the 1980s and growing at a more moderate rate from the late 1980s onward,” the report says. During the entire period, per capita income grew faster than clerical pay.

In 2008 dollars, the median pastor compensation is about $36,900, within a range between $22,651 and $49,586. A few pastors earn in excess of $100,000, with the sample maximum of more than $238,000 received by the head of a large church in an urban area, according to the study data.

Role for incentives

The authors begin their paper by citing part of the ninth chapter of I Corinthians: “If we have sown spiritual seed among you, is it too much if we reap a material harvest from you? If others have this right of support from you, shouldn't we have it all the more?”

Even for pastoral pay, “there is a role for monetary incentives,” says Hartzell, an active member of St. John’s United Methodist Church in Austin.

If an incentive is to work, however, there must be a way to measure the output of a minister’s actions.

Membership changes – transfers within The United Methodist Church, transfers between denominations or transfers in and out of the Christian faith – can be an indicator. “While a minister likely has little to do with a person’s decision to embrace or reject an entire religion, he or she may be the dominant factor in a congregant’s decision,” the report says.

Members requiring the least effort by the minister and the congregation are those who already are United Methodist, Hartzell points out. “You just need to get them to believe this is the right Methodist church to them,” he says.

At the conference level, however, the goal is to increase member numbers, not just shuffle them around. “The big church wants to grow the pie, make the overall conference larger and stronger,” he explains. Factoring that goal into promotion decisions provides “a kind of balance” to incentives related to the transfer of members among local congregations.

“Taken together, our results suggest an interesting overall pattern for rewarding

pay for performance,” the study says. “While a minister is in place at a local church, his or her pay changes depend on changes in membership, especially members that come from or leave to other United Methodist Churches. These effects are more pronounced for churches where membership changes are expected to be cleaner signals of the minister’s effort.

“However, these rewards may seem counterproductive in the eyes of the supervising conference cabinet, which views membership transfers among churches as a zero-sum game and is more interested in growing the size of the entire denomination.”

Attendance and giving

The study does not find a significant link between church revenues and a pastor’s compensation. But evidence exists related to church attendance and giving. “In general, in good times, people go to church less but they give more,” Hartzell explains. “In bad times, they go to the church more and give less.”

The data, she notes, covers only one of the denomination’s 62 U.S. conferences. “Therefore, I don’t know how it relates to other annual conferences or the church in general,” she says. “But it might be worth a study.”

Hartzell says he would be happy to share the study’s findings with the denomination.

Both Hartzell and Parsons were preacher’s kids. Parsons’ father is a Baptist minister and after Hartzell’s father died, his mother remarried and he spent his teen years with his stepfather, the Rev. Denny Hook of the Oklahoma Conference. Hook, now retired, assisted with data collection for the paper.

The authors also hope this study will be the first in a sequence using the Oklahoma data. “It’s very rare that you can see such a long history of people’s careers,” Hartzell says.

The full study is available here.

*Bloom is a United Methodist News Service news writer based in New York.

News media contact: Linda Bloom, New York, (646) 369-3759 or newsdesk@umcom.org.

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Resources

Incentive pay study (PDF)

Jay Hartzell bio

Oklahoma Conference

Board of Higher Education and Ministry