It's almost October and you know what that means? Pastor Appreciation Month!
What a great opportunity to show your pastor(s) some much-needed gratitude. They can always use a little encouragement.
Pastors have a tough job. We hold them to the highest standard. We criticize them when they don't do exactly what we think they should. They are always on call and often underpaid.
Yet, they do it all because they are called by God.
Yes, their reward is in heaven. But let's show them our thanks for their self-sacrifice.
Having said that, there are some things you should be aware of before handing your pastor a check.
We want to bless our pastor, not burden him. We also want to obey the law.
Here's a few things you should know about Pastor Appreciation Gifts:
(Almost) All gifts are taxable to the pastor
Just about every gift given by the church to a pastor should be considered taxable income. The pastor is considered an employee of the church by the IRS.
First, let's define gift. In this case, we are talking about anything transferred to the pastor that is not an expense reimbursement. If your church has an Accountable Reimbursement Plan, then all church expense reimbursements are considered nontaxable to the recipient (pastor).
So, if it's not a reimbursement, it may be taxable. This includes things like: cash, gift certificates, and any items which exceed $100 in value.
We gave a taxable gift, what do we do now?
If you give a nontaxable gift, no further action is necessary.
But, let's say you decided your pastor should get a $500 bonus because he works so hard and you love him. That's great! What's the next step?
First, it needs to be recorded. Record the gift in your accounting software so you can track the transaction.
Second, report the gift as income on his W-2. It should be included in the wages section of the W-2 or optionally in box 14.
Lastly, make sure the pastor knows the gift is taxable income. Most pastors are required to pay estimated taxes (approximately quarterly) and they can use this information to more accurately calculate the taxes they owe.
Budgeted Bonus vs. Love Offering vs. Direct Gift - does it matter?
It may.
So far, we've discussed the matter of taxable income for the recipient (pastor). But, the other matter at hand is tax deduction of the gift by the donor.
But first, let's discuss the effect on the pastor.
A gift given from the general church budget is definitely considered taxable income.
A gift received from a Love Offering is most likely taxable. This is because the gift nearly always is intended as compensation for services rendered. It's possible to get around this but difficult to prove your case.
Direct gifts from church members are more likely to be considered nontaxable, especially if they are relatively small and handed directly to the pastor.
Now, let's talk about tax deductions for the donor.
All donations (tithes/offerings) given to the church for general use at the church's discretion are tax-deductible to the donor. So, a budgeted bonus would definitely be considered a tax deduction to the donors.
A love offering may not be considered tax deductible. Generally, if the donor specifies the restricted target of the donation, then they are exercising control over the donation and it is not tax deductible.
Direct gifts to pastors are also not tax deductible. In fact, if you give over the a certain threshold (which is a lot), you may be liable for the gift tax.
Creative Ideas for Pastor Appreciation Gifts
A few years ago, Lifeway published an article which I found very helpful. Here's the list of ideas they published in that article (I especially like #1, 4, and 10):
1. Write Lots of Letters
On Sunday before Pastor Appreciation Day, distribute stamped envelopes addressed to the pastor. An instruction note invites each church member to write and mail a personal note of encouragement and appreciation to the pastor during the week.
2. Customize a T-shirt
Order a "Best Pastor in _______" T-shirt, cap or plaque, and present it with flourish .
3. Create Original Art
Laminate bookmarks created by the children in your church, featuring their art and signatures. Allow kids to present the bookmarks to the pastor personally.
4. Place Your Church in a Frame
Prepare a beautifully framed photo or painting of the church building.
Even better: take a group photo of church members in front of the building. Use extra wide matting and ask every church member to sign the mat before adding glass.
5. Purchase Helpful Commentaries
Purchase a full set of Bible commentaries.
Allow various groups, such as Bible classes, committees or church organizations, to present one book of the set, individually wrapped with their personal notes of appreciation on the inside pages.
6. Make a Video Presentation
Create a presentation of photos and video of the pastor(s) in action during the past year. Set it to music and play it as a pre-service video.
7. Give Public Thanks
Take out a full-page ad in your local newspaper, featuring a photo of your pastor and a declaration of your church's love and appreciation.
Even better: Add every member's signature on the ad.
8. Do an Office Makeover
Do a surprise office makeover, with the pastor's wife's input, of course. Consider fresh paint, updated décor, new furniture and even a computer or technology upgrade.
9. Supply Favorite Things
Think of one small thing your pastor enjoys, such as M&Ms, fishing lures, coffee, etc. Ask each member to bring that item on Sunday, i.e. one bag, any size, of M&Ms. Supply extras for guests or forgetful members.
10. Celebrate 30 Days of Pastor Appreciation
Use an October calendar to schedule volunteers for a month-long schedule of surprise treats.
Each day of the month, the pastor will receive a surprise token of appreciation from a church member, committee or group within the church. The tributes can vary widely. Some ideas include: a balloon delivery, a shoe shine, an apple pie or a gift certificate. After a whole month of pleasant surprises, won't your pastor feel appreciated?
And won't God be honored by your acts of love for His servant? Don't forget to include a sincere note with specific reasons you appreciate the minister's spiritual leadership, dedication, time and commitment.
Don't Jeopardize Your Tax Exempt Status!
Always, always, always make sure the total compensation for a pastor is considered "reasonable".
What is reasonable? Well, that's a complicated subject which requires much more discussion space than we have here.
But, suffice it to say, the pastor should not be compensated well above what would be considered reasonable to do his job. If you think this may be the case, do some research or get some help.
Final Thoughts
The fact that you are reading this article means you care about your pastor and want to show him your appreciation. Thank you for that!
You should show that appreciation in many ways: spoken word, notes, recognition, and gifts.
As long as the tangible gifts are within a "reasonable" amount of compensation, by all means, you should bless your pastor.
Just make sure you understand the proper and legal way to handle these gifts. Your pastor and your church will be better off if you do.
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