Featured Columns

Demographics Matter

By Don Walter

Chart of naz pastors age distributions
Click the image to view the full-resolution version

The relative size of particular groups in a culture or society has far-reaching implications on their values, economics, politics, and beliefs. Most of us are aware of the swiftness of change in today’s world. If we study demographics and large group behavior trends, we quickly realize our future is not one of stability.

A key demographic those of us in the retirement and benefits world watch is that of the relative size of various age groups. Generally, we’re familiar with the generational sizes of the current USA population. The Builder Generation is aging-out (a nice euphemism for dying), and Baby Boomers are entering retirement age. There is a trough of Baby Busters, followed by an upswing of Generations X, Y, and Z. It is depicted in this graph.

Much has been written on the topic, so I’ll not go into detail. But I believe there is a significant element of this demographic dynamic that should concern the Church of the Nazarene in the USA. It is the aging of the Baby Boom generation, and its impact on our supply of pastors.

Based on information available to my office, it appears that at least 40 percent of our current pastors will be at or beyond retirement age in the next 10 years. Further, the figures would suggest, there is a dip in the number of pastors in the age group immediately behind Boomers that continues to diminish through the younger age categories. We turned this data sample into the Nazarene Pastors Age Distribution chart (see above).

Others who look at this information, along with data on current attendance trends, per capita giving, number of ministerial students, and membership, no doubt have ideas about their impact on the future of our church. I, myself, am uncertain about what all this means; however, there is an element here that seriously concerns me and those with whom I work. It is the “retirement readiness” age of our current cohort of pastors. According to best available data, it appears that while a large percentage of our clergy are nearing retirement age, their financial preparation for retirement is woefully inadequate.

We recently received studies from both Willis Towers Watson and Fidelity Investments addressing this issue of retirement readiness for USA clergy. Both studies, looking at essentially the same data from two different perspectives, concluded there is a gap between the age of our clergy and their ability to retire. At the most recent meeting of the Board of Pensions and Benefits USA at the Global Ministry Center, much time was spent reviewing these studies and seeking to identify solutions.

While we recognize our condition is akin to the situation in our larger culture, we can’t ignore it. For pastors at the higher end of the age spectrum, it may mean the need to work beyond “normal” retirement age. This has implications for pastor-church relationships.

At the same time, many of our younger pastors are not yet taking steps to begin saving for retirement. There are a number of reasons for this, but contrary to popular thought, simply not having adequate salary, while important, is not the single determining factor. Some ministers with low salaries exhibit relatively good saving habits, while some with higher salaries do nothing.

Pensions and Benefits USA has worked to design the Nazarene 403(b) Retirement Savings Plan to make it as easy and affordable to use as possible. There are no minimum contribution or frequency of contribution requirements, and all contributions are immediately vested. Investment choices allow for individuals to be as “hands on” or “hands off” as they wish to be in directing their accounts. Guidance and planning tools are constantly being updated and improved. As a “church plan,” contributions to Nazarene 403(b) accounts by ministers are not subject to either Federal income tax or SECA tax liability. For some, there may even be a tax credit for contributions (See IRS Form 8880). Additionally, distributions at retirement may be designated as ministerial housing allowance.

Given the congregational nature of our church polity, the solution to the problem of inadequate savings for retirement for pastors has to occur in our local churches. Someone in every congregation needs to be concerned enough about his or her pastor’s future to do something. It may be a church treasurer, board member, or another concerned layperson. It may be the pastor. It may be the pastor’s spouse (40 percent of our benefits are paid to surviving spouses). But the bottom line is that retirement is coming someday and failure to adequately prepare will have consequences.

As a young pastor in one of my earliest assignments, I was helped along the way by a church treasurer. She handed me a form on my first Sunday, showed me where to sign, and informed me the church had a policy of putting $35 per month into an account for me in the Nazarene retirement plan. It was pretty clear that though I could opt to not do so (and, at the time, $35 per month would have been a big help), such a decision would not reflect well on my wisdom as a husband and father. The lady was kind, but direct. I will forever be grateful to her. Back then, I didn’t fully understand the importance of what she and the church were doing for me, but it was one of the most loving gestures ever expressed to me as a pastor.

My prayer is that every Nazarene pastor now serving will be able to face the future without fear for financial security in his or her later years. Long ago, one insistent treasurer helped to set me on a positive path toward retirement. I’m believing God has more like her in every church.

Don Walter is director of Pensions and Benefits for the Church of the Nazarene.

Congregational Finances—a Worrisome Trend

By Keith Schwanz

Chart of naz pastors age distributions

My friend talked for almost 90 minutes. A few times I asked clarifying questions, but mostly I just listened. I met him 15 years ago, and never before had I heard him speak with the emotional intensity that saturated our conversation in early 2016. He told me he had discerned it was God’s will to accept the call to the congregation he now served, so he had moved his family to a new city and began to serve as their pastor. Soon after arriving, however, he learned the congregation’s finances were different than what he had been told in the interview process. I realized that much of the passion in his words that afternoon came from his concern about his family’s sudden financial vulnerability and how it might negatively impact his children.

Unfortunately, pastors in many places across America face similar circumstances. I’ve talked with associate pastors who suddenly have had to move because of changes in their congregation’s financial standing. I’ve talked with pastors who have been compelled to find employment outside the church because their congregations needed to reduce expenditures. I started hearing a few stories in 2011, and the frequency continues to grow.

In the past five years, in various ways, I have tried to understand what has happened in hopes of determining an appropriate way forward. I have looked at research in general trends in personal finance. For example, the February 22, 2016, edition of Time magazine had an article that reported, "Today’s old are better off than yesterday’s old, while today’s young are worse off than yesterday’s young."

Maybe our state of ministerial compensation is the result of generational differences in charitable giving. Numerous studies show young adults contribute significantly less to the church than older adults. But this trend did not begin with the Great Recession of 2008. It started with the Baby Boomers—my generation. When boomers were 35 years old, our giving to religious organizations was 20 percent less than what our parents gave when they were 35 (adjusted for inflation). What we see today in generational giving is the continuation of a trajectory started decades ago.

Data like this suggests systemic economic issues as factors in the financial challenges congregations face today.

Economic Pressures

In the summer of 2015, a conversation with a friend about financial challenges in his congregation prompted me to go to the Church of the Nazarene Research Center’s website. There, I found data for my friend’s congregation, and I looked at stats for eight other congregations in the same metro area. In this study, on average, the congregations received, in 2014, just 65 percent of what they received in 2004 (all figures adjusted for inflation). Expenditures declined too, but by a smaller percentage. In 2014, these nine congregations spent 70 percent of what they had spent 10 years before, which represented almost 105 percent of their 2014 income (one congregation spent 136 percent). This means they were using reserve funds to meet these challenging economic times.

After that, I pulled the data for 10 congregations in a metro area in a different part of the country. The numbers revealed that this second group received 62 percent, in 2014, of what they received in giving in 2004. Expenditures were at 65 percent at the end of the decade, which represented 105 percent of their 2014 income.

A Pastoral Response

A pastor can lead a congregation to address financial concerns. Attention to biblical stewardship is needed to help people act responsibly with all financial decisions. John Dickerson, in The Great Evangelical Recession, asks, "Will we spend the next decade working harder and harder at fundraising—or working harder and harder at disciple making?"

Dickerson also talks about a "dollar-centric deformity of the gospel" that has "led to an assumed dependence on the dollar to fulfill a commission that originally had nothing to do with material wealth." A pastor may need to lead the congregation toward ministry not overly dependent on a cash outlay.

Further, congregations probably need to give attention to paying off the mortgages on their church facilities. Given current trends, Dickerson urges congregations to be debt-free within 10 years. The elimination of a “fixed” expenditure like a mortgage will allow congregations to be more nimble in difficult economic times.

Some denominations use a worksheet to determine pastoral compensation. All congregations in a conference, for example, may use the same calculations so that all pastors are compensated uniformly. In the Church of the Nazarene, pastoral compensation is the purview of the local congregation. A district assembly may pass an annual report that describes and recommends appropriate pastoral compensation, but it is not binding. Economic pressure on congregations can have a direct impact on the financial stability of the pastoral family.

A pastor must be wise with her/his own finances. Debt must be eliminated. Savings must be prioritized. Net worth—that is, what is owned (assets) minus what is owed (liabilities), is ultimately the key financial figure—not income. Over time, a person should see an increase in net worth as a basic measure of financial stability.

From my perspective, it seems we are likely to continue to experience profound change in the economics of congregational and pastoral ministry. So far, I have found nothing that suggests we have bottomed out. The swirling continues and there is no easy solution as to how to check the spinning. More change is coming, I’m afraid, but that does not mean we cannot make adjustments that will lessen the impact.

Keith Schwanz is a writer and editor who has previously served in congregational ministry and graduate theological education.

Attendance and Cultural Shifts in the USA/Canada Region

Richard Houseal

Chart of naz pastors age distributions
Click the image to view the full-resolution version

If you compare USA/Canada weekly worship attendance in 2015 with that of 25 years earlier, you would see they are close. In 1990, weekly worship averaged 476,773, while in 2015 it was 475,253. However, attendance peaked in 2005 at 528,073 in the USA/Canada. This means that over the past decade, we actually have experienced a decline in attendance of almost nine percent.

Over the past quarter century, the distribution of those in USA/Canada churches has changed as well. In 1990, 11 Nazarene churches averaged 1,000 or more in worship. At that time, this represented about 3.5 percent of total attendance for the region. In 2015, however, the number of churches averaging 1,000 or more stood at 32, which represents 9.7 percent (1 in 10) of the total attendance for the region. The largest percentage of our churches (28.4 percent) is found in the 100 to 249 in worship attendance category. Another 17.8 percent of our churches are in the 250 to 499 category, and 11.1 percent have between 500 and 999 attending worship.

Chart of naz pastors age distributions
Click the image to view the full-resolution version

The USA/Canada Region still has a lot of small churches—3,800 (75 percent) of 5,059 active churches. Overall, just over 476,000 attend worship in the USA/Canada Region weekly. Of these, about 156,710 (33 percent) worship in churches with attendance of less than 100.

Additionally, the cultural makeup of the region has changed over the past 25 years. In 1990, 88.6 percent of our churches were predominantly white, English-speaking. By 2015, that figure had dropped to 76.6 percent. Predominantly Hispanic congregations showed the biggest increase, going from 3.5 percent of churches in 1990, to 11.6 percent in 2015. Congregations with a predominant cultural group other than white/English-speaking tend to have a smaller attendance; therefore, their proportion of the overall worship attendance is not changing as quickly as their proportion of churches.

Richard Houseal is the senior program manager of Research Services for the Church of the Nazarene.

Subscribe to eNews!