On March 11, 2020, after identifying 118,000 cases in 114 countries, the World Health Organization declared COVID-19 a pandemic. Shortly after, we all witnessed something previously thought unthinkable: a global shutdown to stop the spread. Regardless of your personal, professional, political, or even theological position on the matter, everyone is still recovering from the physical, emotional, and mental impact of what happened in 2020. And as much as we all want to move past this moment, the effect of what happened continues to shape the pathway forward, even for churches. Yes, churches are meeting in person and on their campuses, but attendance and engagement have not returned to pre-COVID numbers for many. As the Executive Pastor of Operations of a church in Southern California, in many regards, I see this as a fantastic opportunity to re-engage with the community and pursue the church’s mission with renewed vigor and intensity. However, it also means we cannot apply many of the metrics and statistics previously used to monitor the church’s health—especially the FTE (Full-Time Equivalent) employee-to-congregation ratio in the same way as before.
Church Compensation Health
If you’re new to church budgeting, there are benchmarks that churches use to compare their church’s budget to that of a healthy church. The primary KPIs (Key Performance Indicators) are the percentage of compensation to the total budget and the FTE to congregation ratio. Here’s a quick overview of how to determine both:
- Compensation to Budget Percentage: Calculate the annual sum of the total amount of compensation for the year. Include everything related to compensation like salary, housing, taxes, benefits, etc. Take the total amount of annual compensation and divide it by the total operating budget. A healthy church has somewhere between 45%-55% of its total operating budget dedicated to compensation.
- FTE to Congregation Ratio: Calculating the FTE ratio is a two-step process requiring more time. Start by calculating the number of FTEs. To do that, sum the total annual hours of all employees and divide the total by 2,080 (40 hrs a week x 52 weeks). Step two is to use the average number of people and divide it by the FTE number to produce the ratio. A healthy church ratio is around 75:1.
These KPIs were proven methods for determining the compensation health of a church. But these KPIs were created pre-pandemic. And, depending on when you read this post, that was at least four years ago, and attendance and engagement have yet to return to pre-pandemic numbers.
The COVID Effect
Churches evaluating their compensation totals while building the upcoming budget shouldn’t completely disregard these KPIs but instead put them into proper perspective. Many churches have noticed that while post-pandemic attendance is slowly returning, engagement has not. The lack of engagement is most evident in the need for consistent volunteers – the lifeblood of many Sunday morning ministries. Without enough volunteers, churches have a tough choice: reduce ministry options or fill the vacant spots with employees. Many churches choose to fill the voids with employees – at least temporarily. But increasing the number of employees and adding more hours mean more total compensation. And a higher total compensation changes the KPIs.
Moving Toward Health
Churches with compensation totals outside the healthy church range due to decreased attendance or diminished engagement must still review these essential KPIs. However, they must do so with an eye toward the future. Here are a few questions to consider:
- What incremental change can the church make to move the needle toward healthier percentages or ratios?
- What steps can the church take to bring about greater engagement?
- Is there an area in compensation that is unhealthy that the church is unwilling to address?
Assessing the church’s compensation KPIs is the best way to ensure the church budget provides the plan to utilize every dollar to pursue its mission. Let’s take advantage of this amazing opportunity to reach our community and beyond.
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