Saturday, September 16, 2006

Negotiating Terms of Call: a final thought about housing

Or, What about a manse?

When churches provide housing for their pastor-- usually called a "manse" or "parsonage"-- it creates a peculiar situation for the pastor, as far as his salary package goes.

To begin with, this is technically income: a material benefit, in this case free housing, is offered as a part of his payment.  However, whatever it represents as income is eligible to be sheltered as "housing allowance" and therefore isn't taxed.  (To understand this more clearly, cross-reference the list of what is included as housing allowance with the list of limits on housing allowance.)

This is important when considering the common question, "which is better: a parsonage/manse or a larger salary package?" because in most cases the decrease in salary correlates to the value of the provided housing.  In the immediate value, then, choosing whether to accept a manse or parsonage (if one is offered) or to buy or rent housing is a material wash.

One important factor, though, is the availability of housing in the area of your church.  You will want to live relatively nearby to your church's property; there are a dozen reasons for this, which I won't go into here.  If houses are for sale in an established area, however, they may be more expensive than what you can afford.  If your church is in an expensive neighborhood and they have a parsonage available, you should seriously consider using it.

There is also the intangible relational capital that you'll spend if you refuse a manse or parsonage.  By turning down the offer of housing, you are suggesting that it is in some way inadequate or no good.  You may be rejecting a treasured piece of property with a significant history for your new congregation.  And you may be putting the church in a difficult financial position, since they will have to maintain a property they own whether you occupy it or not.  While you may have good reasons for wanting to live elsewhere-- you're afraid of being "too available", for example, or you like doing renovations and you doubt the congregation will allow it-- you should rethink these in light of the message you're sending by refusing such an offer.

Another consideration with regard to a parsonage is its long-term effect.  The real advantage of owning your home instead of renting (or living in a parsonage) is that you build equity as you pay off the mortgage.  The longer you own your own home, the more of it you own-- and eventually you will have paid it off.  Traditionally, this has coincided roughly with retirement: you finish college or graduate school in your early to mid-twenties, then get married; after struggling through the early years of work for low pay, you finally begin to save up enough to buy a home in your late twenties or early thirties, taking out a 30-year mortgage to do so; perhaps a move to a larger home happens once or twice, and you eventually pay off your home in your mid-sixties, just in time to retire.

When you rent, you lose all sense of equity.  And when you live in a manse, you also lose any equity that you might otherwise gain.  So one of the things you should include in your negotiations, if you will be living in a church-provided home, is an increase in contribution to your retirement savings.  (I'll be talking about retirement savings in broader terms in another post.)  I would recommend calculating-- or having someone else calculate-- the per-year equity value of the housing provided and ask for that (after all, your church is gaining that amount, or already has, so they should be in a position to afford it).

In other words, if you were taking the cash instead of provided housing, and investing it into a mortgage, how much equity would you be accumulating?  That is what you should work toward in your negotiation of the housing allowance portion of your salary package.

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