It was just three weeks into my first call as a minister. Worship and fellowship time had concluded that Sunday, I had walked across the street to the parsonage we lived in, slipped on some tattered shorts and an old T-shirt, cracked open a frosty beverage, and slipped into my comfy chair. At about the same moment I exhaled that sigh of relief that comes after a packed Sunday of work, a parishioner let herself in through the back door to talk to me about a great ministry idea. Ah, the parsonage life.
When it comes to housing, we can all agree that ministers need a place to live. Beyond that, there are many angles, opportunities, and challenges when it comes to whether a church should provide a parsonage or enough of a salary that a minister can own or rent their own home. I hope this article can foster a good discussion about this topic. I’ll give as much objective information as possible, while also interjecting some personal bias along the way (as the introduction might suggest.)
I’ll start by highlighting some terminology I just used. Note that I didn’t frame this as Parsonage vs. Housing Allowance. All ministers, whether they live in a parsonage or own/rent a home, are eligible to designate part of their salary as housing allowance. So framing this as an either/or of parsonage or housing allowance is not accurate and creates confusion.
What is a parsonage?
Whether you call it a parsonage, a manse, or vicarage (for The Vicar of Dibley fans), all of these terms describe a house that a church owns and makes available to their minister while the minister is employed by that congregation. In most cases, the church also covers utilities, maintenance, and lawn care as well.
- Taxes and compensation for the minister: For the minister, the parsonage is considered part of the overall compensation package by these four parties: the minister, the church, the Board of Benefits Services, and the IRS. This usually means that the minister will receive, on average, about 40 percent less cash salary than a peer colleague who owns or rents their own home. The parsonage housing benefit is excluded from their federal income tax, but it is taxable when it comes to Social Security and Medicare taxes. A minister should expect to pay 15.3 percent tax on the fair rental value of their parsonage.
- Location: A parsonage can be anywhere, but it is usually within the neighborhood of the church and most often shares the property footprint of the sanctuary and other church facilities. I’ve seen parsonages that are a few streets away from the church building, many that are right across the street or adjacent to the main church building, and some that are so close to the church that it feels like the minister could look out their bathroom window and wave to the congregants enjoying coffee at fellowship time.
- Taxes and costs for the church: In most cases, because the church owns the property, the parsonage is exempt from property tax. In areas with a high cost of living, this can result in significant savings. However, like with any building ownership, there are expenses. It is the responsibility of the church to update the space, pay for repairs, and cover big routine costs like the occasional new roof, appliances, HVAC systems, etc.
What is the main difference between a minister living in a parsonage or owning/renting their own home?
We’ll get into the weeds with this question in a moment, but the main difference is cash salary. If a church does not provide a parsonage, the cash salary for the minister will be increased to a level that ensures they can afford to own or rent a home in the community in which the church is located. That increased cash salary is also meant to cover the cost of utilities, upkeep, and other home ownership costs.
Parsonage Pros
Let’s start out with some parsonage pros. While I am personally inclined to advocate that ministers should own or rent their own homes, this does not mean that I don’t see numerous points of value for a parsonage living arrangement. Here is my list of parsonage pros.
- Parsonages can be great for younger ministers just starting out. When my wife and I finished seminary, we were in no financial position to put a downpayment on a home. Living in a parsonage for our beginning stretch of ministry gave us a stable and suitable home while we built up our savings.
- Parsonages can be great for mobility. Carey Nieuwhof writes: “While statistics vary, most pastors stay 3 to 7 years in one place before moving on.” While very few ministers or churches desire a short pastoral call, we must honor the statistics in this conversation. It can be a significant relief if a minister doesn’t have to worry about selling a home as they transition to a new call. Knowing colleagues who have had two mortgages to manage because they accepted a new call in a down housing market, I can appreciate how easy it was for me to move from my parsonage when my wife and I accepted new calls early in our careers.
- Parsonages can open hiring possibilities. Imagine this scenario. A church has interviewed a minister in her thirties, the fit is perfect, and both parties would like nothing more than to begin a new chapter of ministry together. The only caveat? The most basic homes in that community start at just over a million dollars and only go up from there. This reality is true from northern New Jersey to Southern California, as well as many other wealthy and/or urban locations. A parsonage opens up the possibility for a minister to live in the community when it might not be realistically possible otherwise.
- Parsonages can free time and resources. If we’re honest, we can admit that owning property can be a liability rather than an asset. From paying bills to maintenance and upkeep, home ownership can drain time and resources. For ministers who prefer to be free from that liability, a parsonage can be a great choice.
- Parsonages can make the difference in viability or closure for some smaller churches. Beyond what we mentioned already about soaring housing costs in some communities, there are also congregations that have very limited resources but do own a parsonage. The ability to provide housing and a lower cash salary is often the difference between being able to call a minister and simply not being able to afford to hire a minister to be on staff at the church.
- Commuting time and cost. For many who live in a parsonage, walking across the street or across the lawn is the entire commute to work. This is a savings of time and money for the minister and can allow for greater flexibility for personal time.
Parsonage Cons
There’s a reason that the majority of churches in the United States have moved away from the parsonage model in favor of the minister owning or renting their own home. In this section, we’ll look at some of the reasons for this shift away from a parsonage arrangement.
- Equity. In the parsonage debate, financial equity rises to the top of the list of cons. Ministers who spend most of their careers living in a parsonage do not build up equity in their home. When it comes time for retirement, in many best-case scenarios, they have to take out a big mortgage to have a place to live, and in worst-case scenarios, they can’t afford an adequate home at all.
- Wage Inequality. On the heels of real estate equity is wage inequality. On paper, the value of a compensation package might look the same for someone who lives in a parsonage as someone who owns a home. But the reality is that those who receive a larger cash salary and own a home are getting paid more than their colleague who lives in a parsonage. Yes, some of the extra salary will go toward expenses, but between building equity and home appreciation, the long-term home owner usually comes out ahead financially.
- The perpetual guest. We noted earlier that churches bear the cost of upkeep and maintenance. The negative side of this is that for a minister and their family, this often means that any change, upgrade, or repair needs to go through a committee of the church. This can often be a slow and frustrating process, making the pastoral family feel like they are guests in their own home.
- Compounding maintenance issues. While some ministers are proactive about maintenance issues, Rev. Greg Town, who has lived in parsonages and has worked with many churches who own them, notes that the opposite can also be true. He writes, “a pastor [can be] so private that church folks don’t feel comfortable going to the parsonage or, in some cases, are never invited. This can make it so that pivotal upkeep and repairs are not readily known to the [building and grounds] committee or consistory, and thus piling issues on top of one another until it’s unavoidable.”
- Disconnect and Sabbath. As Christians, we believe that we have been designed for the rhythm of work and rest, as highlighted in the creation narrative. For ministers especially, whose time is often consumed by work many hours of the day, this disconnect and rest is critical. Living in close proximity to the church and in church-owned housing can often blur the lines during moments of disconnect, leaving the pastor without sabbath and feeling continually depleted.
- Dependence rather than Interdependence. Author Phillip Kennson writes that Christian life together should not reflect dependence, or independence, but rather interdependence. When a minister receives salary, healthcare, and housing from their employer, it creates a significantly dependent relationship. When the minister has agency and choice in where they live—and has a home that is not tied to their employer—it creates a sense of security and well-being.
- Location. This will vary from church to church, but most parsonages are located on church property and tend to be removed from residential neighborhoods, or at least awkwardly situated in a community. Most churches desire that their minister become a part of the community, forming authentic relationships with neighbors. The physical location of many parsonages can often be an unnecessary barrier to this value.
- The needs of family. While the minister is an employee of the congregation, in most cases, the minister’s spouse and children are not. Each family member is entitled to a healthy life beyond the minister’s place of employment, and a parsonage can be prohibitive in this regard. Many pastor’s kids who grew up in a parsonage talk about what it was like to “live in a fishbowl”, and many clergy spouses also report negative experiences of a lack of privacy or autonomy.
- And finally, cat pee. An unnamed minister and his family showed up to his unnamed church’s parsonage with the moving truck after just completing a cross-country move. Upon arrival, they discovered that the upper floor of the home had old furniture still there from the previous tenant. When that furniture was removed, it was discovered that the carpet was covered with an ample amount of cat urine. The carpet had to be removed before any of the minister’s belongings could actually be moved into the house. Talk about a stressful beginning to a new pastor-church relationship. While it would do us well to give our churches the benefit of the doubt, we also know that maintaining a parsonage does not always take priority, and many parsonages can become pretty dumpy after years of neglect.
Creative Solutions
Considering financial health to personal well-being, it is probably clear that I lean toward ministers owning or renting their own homes, rather than the parsonage model of ministry. With that being said, every setting is unique, and there is no single perfect model for doing ministry. In some situations, as highlighted in the “pros” section, it simply might not be possible for a church or a minister to shift away from a parsonage arrangement. Here are a few thoughts about how churches and ministers might bridge the gap if they have a parsonage.
- Rent out the parsonage: Is an increased salary cost the biggest barrier? The church might consider renting out their parsonage to a tenant. The revenue from the rent payments may cover or even surpass the necessary increase in salary. Assuming that the church owns the parsonage and it is not debt-financed, rental income is not subject to taxes. For more detailed information, see page 32 of the Church and Nonprofit Tax and Financial Guide produced by the ECFA.
- Sell the parsonage: It might be freeing for the church to not deal with property upkeep or tenants (in a rental situation), and potentially put their pastor in a more challenging living situation. In some circumstances, if the pastor is able to afford their own home, the sale of the parsonage could be invested, and the returns might cover the additional salary needed to compensate the minister appropriately.
- Equity Allowance: In a situation where a parsonage is necessary, consider building in an equity allowance for the minister, above and beyond the base salary. This additional income could be saved and invested, mimicking the building of equity in a home, and creating extra savings should they need to purchase a home in the future. While this would add an increased financial responsibility to the church, and tax considerations for the minister, the appropriate increase would be much less than a salary package that did not include a parsonage.
- One option is that the minister could use the salary increase to make employee contributions for this amount into their 403(b) retirement plan. This would give it a similar tax benefit as a housing allowance, while also making those savings eligible for the housing allowance in retirement.
- The downside to a 403(b) strategy is that those funds won’t be easily accessible if the minister needs to purchase a home before retirement. With this consideration, it might be more beneficial for the minister to pay taxes on the extra income, and simply save and invest in a way that can make the cash more accessible in the near-term.
- Clear Guidelines: Much of the stress that comes with a parsonage can be avoided by being intentional and proactive. Does the church have a realistic budget and practice of updating and maintaining the house? Is there a discretionary budget for the minister and family to spend on the parsonage without going through a committee? Are there clear boundaries set about how the congregation should and shouldn’t engage with the property? By simply creating and communicating these policies, many of the issues previously mentioned can be prevented. “Is there open and regular opportunity for feedback from the pastor to the consistory about any issues and needs of the parsonage?” asks Rev. Greg Town. “Setting up regular opportunities for feedback (and hearing feedback about the state of the parsonage without getting defensive or uptight or frugal), makes it easier for the pastor to bring any issues to the attention of church leaders.” He also notes that interim periods between pastors can be a good opportunity to review parsonage guidelines. Having an open and honest discussion about expectations and guidelines with a new pastoral family during the hiring process and regularly thereafter increases the workability of the arrangement.
Back to the main question
Where should a minister live? There isn’t one right answer to this question, but becoming aware of the pros and cons of each scenario will help all parties make the healthiest and most workable decision. The worst thing a church or a minister can do is to “do it the way we’ve always done it” without putting critical thought into the matter. Careless housing decisions can lead to bitter and unhealthy pastor-congregation relationships, while careful and thoughtful decisions on the matter can cause long-term flourishing and well-being.
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