What to know about Accountable Reimbursement Plans
November 17, 2020 / By Rev. Susan Ranous
When your Staff Pastor Parish Relations Committee prepares the Clergy Compensation form each year, it includes lines for expense reimbursements. It is split between continuing education for the pastor and other expenses reimbursements.
The Conference does suggest a minimum accountable reimbursement amount based on the percentage of appointment. Of course, the church and the pastor can come to an agreement for a higher amount.
There should be an agreement between the pastor and the Staff Pastor Parish Relations Committee. There are samples available on gcfa.org. I have attached pdfs of those samples to this email. The short form Accountable Reimbursement Policy is pretty basic; and there is a long form policy as well. These should be reviewed carefully and prepared and signed as the pastor and church comes to an agreement. There are various expenses that could be included in the reimbursable expenses. They include:
1. Mileage (at the standard federal mileage rate), parking and tolls
2. Office supplies and postage
3. Office equipment, computer and software
4. Books, subscriptions journals
5. Professional dues
6. Business gifts and religious materials
7. Continuing education
8. Meals/entertainment required for church business
9. Travel fares, lodging and meals while on business for he the church.
Examples of proper reimbursement items and improper reimbursement items are also attached to this email.
These costs would generally not include personal travel or meals or costs for the pastor if there is no “church” purpose.
If the ARP is used to purchase a computer or books, etc., that computer and those books become the property of the church. They are not the property of the pastor.
The pastor must submit vouchers with receipts requesting reimbursement, and these requests should happen within 60 days. The church should never write a check to the pastor to use for their expenses, without receipts and documentation. Doing this results in that amount becoming taxable income to the pastor.
Of course, this makes any expenses submitted by the pastor for reimbursement subject to review by church members and some privacy may be lost. These funds belong to the church and may not be given outright to the pastor at year-end if there is money left unspent.
The policy is funded out of the church’s budget This policy and the amounts budgeted must be reviewed. These expenses can be reimbursed to the pastor if the pastor has paid for the expenses himself or herself, ore the expense can be paid directly. The IRS requires actual receipts for any amount over $25. The documentation should show (or be written on the receipt itself) what was purchased, the amount, the date, the place and the business nature of the expenses.
The expenses should be reviewed by someone for approval once submitted by the pastor. One method is to have the chair of SPPRC review and approve the submitted expenses and then the treasurer handles payment. This avoids any conflict that may arise concerning the appropriateness of a given expenses if all responsibility is given to the treasurer. It is important for some with credibility and response to carefully review all the submitted requests for reimbursement to ensure their appropriateness. Also, someone needs to be in charge of monitoring all expenses to ensure budget compliance, timely reporting, return of any advances, etc.
If the pastor makes a confidential visit to a parishioner, he or she can write “private” or “confidential visit with church member”.
A business expense is one that is directly related to the purposes and goals of the organization and is reasonably necessary to fulfill these goals. They cannot be personal expense of the pastor. As an example, it wouldn’t be proper for a pastor to claim a travel reimbursement for the expense of visiting a sick relative who is not a member of the church and who lives 100 miles away, even if part of the purpose of the trip is to give spiritual comfort. If a pastor went on a two week vacation with his/her family and also preached at two churches during the trip, reimbursement for the travel vacation expenses would not be proper. Some of the expenses related to preaching might be appropriate if the pastor obtained approval for this and the pastor incurred additional expenses preaching at those churches.
If the church and the pastor disagree on whether funds should be expended, this suggests a conflict between the pastor and the SPRC or treasurer. The best way is to review them, discuss them and come to an agreement.
Often a concern is raised when a new pastor is appointed July 1st and the entire year’s accountable reimbursement policy was spent by the outgoing pastor prior to June 30th. SPRC and the treasurer and the outgoing pastor need to make sure this does not occur.