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At first they wanted to debate my salary publicly at the open board meeting. I thought I preserved my dignity by convincing the board to discuss it with me in private. I was wrong.

Two board members walked into my office, closed the door behind them, folded their arms sternly across their chests, and said to me, "How much do you want?"

There has to be a better way to establish a pastor's salary.

It has been years since that uncomfortable confrontation, and I now serve on the staff of my denomination. My job includes advising churches and pastors when they face uncertainty about money.

One such church was New Hope in Adel, Iowa, a successful church plant that was preparing to call their first senior pastor. Since the church planter was funded by the denomination, establishing a pastor's salary package was new ground.

New Hope's leaders were employed mostly in business. They knew that a fair and competitive wage would be needed. They also knew from their business experience that benefits and perks comprise an important part of the package. They asked me for advice.

I offered New Hope's leaders three methods for establishing a pay package that would compensate the pastor in proportion to his or her peers. The question is which set of peers: peers in the community, peers in the church, or peers in ministry? I told them to look at all three.

The first method acknowledges that a pastor compares in many ways to a teacher—in duties, continuing education, and role in the community. The salary package, therefore, should equate to what a local teacher with comparable education and experience would be paid. In addition, because a teacher's health insurance, social security, and often pension contribution are included, a local church should compensate for these as well.

Since teachers with master's degrees and tenure are often paid significantly more than those without, this method often causes churches to recognize the commitment, in time and money, that a seminary graduate has made to enter the ministry. It also rewards pastors who have built experience.

The second method is to average the salaries of the church's leadership board. I reason with the board that most churches feel their pastor is at least equally valuable to a church as the other leaders. Therefore, a survey of the lay leaders' incomes, including social security and benefits, is an equitable way to determine what a pastor's peers within the church are making.

Incidentally, since many church boards are comprised of a community's esteemed members—doctors, professors, businessmen—more than once I've seen a sly smile slip across the face of a board member at this suggestion. Suddenly the stingy CEO recants his frugal limitations on the pastor's salary rather than expose his own considerable income.

The third method is to survey Protestant churches in the area (Protestants, unlike Catholic priests, do not take oaths of poverty) to discover what pastors are being paid. This enables a church to factor in the cost of living in their area, rather than depending on denominational averages that may be inflated by salaries in California or deflated by those in Mississippi. Again, it is important when surveying to consider the entire payment package—insurance, housing, reimbursed expenses, etc.

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