Shadow economies in pastoral ministry

A few years ago, I came across the idea of a "shadow economy," which is an economic structure that is parallel to, but also outside of, the "official" economy. This can be tantamount to a straight-out black market, where the economic activity is illegal—or it can be something that is not outright illegal, but it is certainly "off the books" as far as reported income goes, and even as far as something that people think of as part of their own economic equation.

(Two very helpful sources in learning more about shadow economies are: a book entitled Working In The Shadows by Gabriel Thompson, and an episode from the radio program and podcast Freakonomics Radio, called "How Deep Is The Shadow Economy?")

Our economic structure is not exactly favorable to shadow economies, but it doesn't prevent them either. And they are very present in the church and Kingdom, as well. In some cultures (especially in highly churched cultures, such as the American south), pastors are particularly frequent recipients of the benefits of a shadow economy.

We could think of this in a Jeff Foxworthy-style way: if any of the following have ever happened to you, you might be part of a shadow economy!

• If you have ever been given a car...
• If you've ever received some cash with the encouragement to take your wife out to dinner...
• If you have been given a gift (for Christmas, pastor appreciation Sunday, or some other occasion) that was collected from all or most of the congregation...
• If someone from the church has volunteered to clean your house/mow your lawn/etc....
• If you've been given bags or boxes full of clothes for your children...

...then you've received the benefits of a shadow economy in your church.

Again, let me qualify: these are not wrong or illegal, and in almost every case you don't need to worry about reporting them on your taxes as income. (See this FAQ from the IRS on gifts.) If your church—or individual members in your congregation—are able to be generous with you as their pastor in one of these ways (or dozens of others), you should be thankful!

Why bring it up? Because shadow economies can make a difference in how you understand your terms of call. I can think of at least four ways that this is true. All of these are real-life examples.

Example 1

Pastor Bill is paid $xx,xxx annually by his congregation in housing and salary. In most years, this is barely enough for Bill and his family to get by on, and money is fairly tight for them. However, there are a couple of families in their church that are always on the watch for extraordinary expenses for Pastor Bill, and who step up and help out when these show up.

When Pastor Bill's wife delivered their baby, one of these families began to buy disposable diapers, wipes, and baby formula for Bill's family a couple of times a month. For the first couple of years of the baby's life, Pastor Bill never had to buy a single diaper or can of formula!

In this case, the shadow economy served Pastor Bill in a very beneficial way, including saving hundreds (or probably thousands) of dollars in regular expenses because of the diapers, wipes, and formula.

Example 2

Pastor Joe is a minister for First Church, which pays him $xx,xxx annually in housing and salary. Much like Pastor Bill, Joe and his family find his salary enough—but barely so—and they are grateful that they, too, have a few families who are especially generous. In Joe's case, the elders at his church are attuned to his needs, and have given him very generous "bonuses" and other gifts through the years. In one case, they gave Joe $4,000 when the engine in his car needed to be replaced.

Joe and his wife want to buy a house close to First Church, but the real estate there is not inexpensive. Though they have saved enough for a down-payment, and are confident that they could afford the monthly payment, Joe and his wife cannot qualify for a home loan because the bank sees the amount of income claimed on his taxes as risky. Yet, when Joe explains this to his elders and requests that they consider a raise, they are reluctant—isn't their generosity enough? Hasn't the church taken good care of Joe and his family?

Of course the answer is that they have taken care of him and his family—and yet, this is an example of the shadow economy working against Joe.

Example 3

Pastor Mike is a candidate for a new pastorate, and he feels called to serve them; likewise, the congregation has extended a call to Mike, and now he is negotiating the terms of his new call.

One elder in the church, Phil, works with a missionary agency. Phil and the others who work with that missionary agency all live nearby to the headquarters, and they have an elaborate volunteer structure. Phil and his fellow missionaries regularly have volunteers who fix their cars, repair their furniture, or do work on their homes. Even the homes in that neighborhood have been sold by one generation of missionaries to another at prices far below the market rate. Phil is a beneficiary to an extensive shadow economy—however, Phil has lived within that shadow economy for so long that he doesn't recognize how much he benefits.

Phil therefore cannot understand why Pastor Mike "needs" as much in salary and housing as Mike claims that he needs. Even though Mike has given full disclosure to the elders of his monthly expenses and most of the elders agree that his expenses are reasonable for a family like Mike's, Phil is insistent and votes against Mike's salary package being, as he says, "way too high."

Though Phil is out-voted, this puts Phil and Mike on rocky ground from the start and it is a long while before the tension of this rough start eases between them. Here's another example where a shadow economy can work against a pastor—and while this one is from outside the congregation, it is still within the local Christian community.

Example 4

Pastor Jim was called to serve Community Church following a challenging season in the congregation's history. Jim brings a great stability to the church, and during his years of service he helps them regain a firm foundation in Christ and begin to rebuild.
Jim served as a navy chaplain for a full career before coming to Community Church, and consequently had a nice retirement pension from his military service. When Community Church called Jim to be their pastor, he agreed to take a minimal salary—far less than he could have afforded were it not for his military pension. Were it not for Jim's ability to do this, Community Church would probably not have been able to afford to pay any pastor, and this was one of the key factors in their turn-around.

When Pastor Jim retired from ministry at Community Church, they extended a call to Pastor Adam. However, because of a number of years without having to pay a full pastor's salary, Community Church struggled for several years of Pastor Adam's ministry to pay him enough to live on; they were forced to cut expenses elsewhere, and many in the church didn't understand why the church was cutting out what they perceived as "vital expenses." Consequently, some in the congregation suspected Pastor Adam of not being supportive of the same kinds of ministry that they were, and his early years of service there were difficult in a number of ways.

This example is more complex, because Pastor Jim's retirement pension from his chaplaincy was not part of a shadow economy, but in a sense it sort of created one within the church. Pastor Jim was essentially a bi-vocational pastor, but he neither acted like one nor was he treated like one—except when it came to his pay.

[I feel that I should mention this as a sort of disclaimer: in ALL of the examples above, the effects of the shadow economies were overcome and the pastors described had fruitful ministries in their congregations.]

Closing Thoughts

The tricky part about shadow economies is that they are, by definition, almost impossible to quantify. You cannot "count" the financial benefits, nor can you easily calculate the financial costs, that shadow economies create.

This leaves me with very little advice on handling them. Mainly, you can be aware of them. There may be times when you can point them out to others in a way that lends clarity to a discussion (especially regarding terms of call). You might ask a search committee about them, though you will likely have to explain what you mean and what you are asking about (this will require extreme tact, lest you appear to be asking about "off the books" perks and/or how big your Christmas gift will be!).

But you can have your eyes open, at very least. Knowing that these are factors in many ministry circumstances can be enough, perhaps, to help you navigate these waters more carefully.