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Ministers

Ministers' Housing Allowance Upheld

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Ministers' Housing Allowance Upheld

On November 13, 2014, the Seventh Circuit Court of Appeals in Chicago vacated the decision by the Federal District Court of Wisconsin declaring the housing allowance unconstitutional and instructed the District Court to dismiss it.

The Court of Appeals ruled that the organization bringing the suit, the Freedom From Religion Foundation (FFRF) lacked the legal right — known as “standing” — to challenge the housing allowance.

The Court listed several reasons the FFRF lacked standing, most succinctly stating that “The plaintiffs here argue that they have standing because they were denied a benefit (a tax exemption for their employer-provided housing allowance) that is conditioned on religious affiliation. This argument fails, however, for a simple reason. The plaintiffs were never denied the parsonage exemption because they never asked for it. Without a request, there can be no denial.”

The Seventh Circuit panel did not address the housing allowance’s constitutionality. “We think it important to allow the IRS and Tax Court to interpret the boundaries of a tax provision before we assess its constitutionality,” their opinion stated MMBB Financial Services signed onto an amicus or friend-of-the-court brief with a diverse array of religious organizations in support of the housing allowance. Filed in April 2014, the brief asked the appellate court to uphold the housing allowance based on several arguments.

  • Ministers are typically expected to live near the church they serve; in smaller
    congregations ministers often function as the building’s primary caretaker.

  • Ministers are on call day and night and are frequently expected to open their homes to church events, meetings with parishioners and out-of-town guests like visiting missionaries.

  • Ministers often face frequent moves and limited choice, especially if they are poorly paid.

  • The housing allowance reduces discrimination among religions that rely extensively upon church-owned parsonages by reimbursing the minister for housing expenses when the church does not own a parsonage.

Reprinted from MMBB.ORG

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The Code of Ethics for ABC Ministers

The Code of Ethics for ABC Ministers

A series of reflections on the Code of Ethics presented in letter form addressed to congregational members of American Baptist Churches in the USA by Rev. Joe Kutter. Additional commentary provided by Rev. Patti Duckworth. This the first letter of six.

Behavior You Can Expect From Your Pastoral Leader

By Dr. Joe Kutter

Dear American Baptists:

I am writing primarily to those among us who are not ordained, to the “Lay Folk” who sustain our churches and our ministries. But I want to talk about “The Ordained,” those frequently called “Ministers.” I want to talk about your pastor and the others who serve Christ and you through the agencies of the church.

Ministers, you are more than welcome to read these short letters because I will be talking about you, and you may want to improve or correct the things that I say. Please feel free. (joe.kutter@abccr.org) Actually, as you may know, I’ll be talking about us since I am a member of the cohort of the ordained.

About what will we be talking? I want to introduce you, the Lay Folks, to a short document called, “The Covenant and Code of Ethics for Ministerial Leaders of American Baptist Churches.” (With that title, it should be a best seller!)

Now some lay person is asking, “Why? Isn’t that a boring paper for ministers? What does it have to do with me? The short answer is, “Yes, it is for ministers, and it has everything to do with you!” It describes the behavior that you can expect from your pastoral leader as she or he relates to you, to your church, and to your community. It describes the standards to which we aspire. It describes your minister at his or her very best.

(Spoiler Alert: You may be surprised to learn that our ethical standards are a bit at variance from what you may expect.)

This is a “Code of Ethics,” not a statement of faith. We will talk more about behavior and less about belief, though the two are intimately connected. We will talk about ethics rather than theology.

Why write this series? I have served Christ and Church as an ordained minister since 1971, 39 years as a pastor and four years as the Executive Director of the American Baptist Ministers Council. I am proud of my colleagues in ministry. I am proud of the standards to which we aspire. When one of us slips up, the rumor mills run wild. In some cases, the headlines scream in deafening decibels, and they probably should. In recent decades, a number of tragic scandals have caused immeasurable harm to thousands of people, and the reputation of all clergy persons has been stained. Too many of you wonder if the ordained among us can be trusted.

My first response is this. The overwhelming majority of our ordained colleagues are women and men of irreproachable integrity. They seek to do the right things in the right ways at the right times.

It is true, we have been disappointed from time to time to learn of a leader who violated our trust and the standards of behavior to which we hold ourselves accountable. That tragic reality acknowledged, most of our ordained leaders engage ministry with honor and integrity, and I want you to know the basic standards that form the foundation of our ethical lives.

So, with the next letter, I’ll begin to walk you through our code of ethics. I want you to share my pride and trust in our ordained leaders.

[CLICK HERE TO READ ALL SIX INSTALLMENTS]

The Pastor’s Salary Package and Business Expenses

The Pastor’s Salary Package and Business Expenses

I was recently asked for advice in negotiating a pastor’s salary package for 2017. That request reminded me of an excellent, free resource that MMBB publishes, the title of which is “Guide to Negotiating Pastor Compensation.” I have uploaded a copy on our web site for easy access at www.abcnw.org/pastors-compensation-guide.

Often there is confusion as to what constitutes the pastor’s salary and what is a benefits package, and what is simply business expense and is not considered compensation. This MMBB guide helps in sorting out these details.

For example, the “Cash Compensation” aspects of a pastors salary includes “cash salary, “housing allowance” as well as “social security offset” and “equity allowance”.

Section 107 of the Internal Revenue Code allows ordained ministers to exclude from federally taxed income some or all of the cost of providing their principal residence. A church that fails to establish a portion of pastoral compensation as housing allowance is penalizing the pastor by increasing his, or her, tax burden. The amount designated as housing allowance needs to be established and recorded in the board’s business meetings prior to the start of the new year. Consult the Compensation Guide for more details.

Some churches confuse Pastor’s Benefits with Cash Compensation. These cover expenses that are essential for maintaining employee health and morale. Typically these fall in four categories and pastors do not pay taxes on them: 1) Retirement savings, 2) Life insurance, 3) Disability insurance and 4) Health insurance.

Then there are a good number or expenses that pastors incur through simply carrying out the duties of their ministry. These should be reimbursed through an “Accountable Plan” as the pastor submits receipts for each expense. Typically these fall into several categories: 1) Business-related travel and auto use, 2) Hospitality 3) Conference attendance 4) Continuing education 5) Subscriptions/books/periodicals 6) Fees and dues for professional associations, and 6) Work-related cellphone use.

Unfortunately, there are times when churches, usually under financial duress, lump these last items under compensation when they are not. Yes, they are part of the cost of having a pastor, but they should not be considered as part of the salary package.

I commend this resource to our pastors and churches as you make financial plans for 2017. Our region accountant, Cherie’ Vidovich, is also available to answer additional questions that you may have in this arena.