The short answer is: it’s too soon to know what the economic impact will be on churches.  Much will be determined by a number of things:

1. The length of time this crisis requires ‘stay at home’ and ‘social distancing’ orders.
2. The amount of time it takes after the orders have expired for people to feel comfortable return to large gatherings like sporting events and worship services.
3. How well your church was positioned before this crisis hit (including the percentage of online giving vs. in-person giving and the amount of your church’s reserves or ‘rainy day’ fund).
4. How well your church has stayed connected and encouraged people to lean in financially during this time.

Brad Leeper of Generis, the leading generosity consultant to churches in the United States gives this word on the future might look like for your church:  

Dave Travis of Generis.com says that this is a time when smart churches are in the process of “Reset, Reframe, and ReLaunch” when it comes to their church staff.

RESET:  While unfortunate, many churches will make the tough decision to eliminate some staff during this time due to budget concerns.  Churches need to do what they can to care and love those they need to let go.

REFRAME:  Many of your current staff that remain will need to see their role and responsibilities change dramatically, at least for the short term. According to Travis, churches will “value those that identify, coach and resource other leaders more than those that do individual ministry.”  In short, this is an ‘all hands-on wartime footing’ that will require flexibility on the part of every staff member.

RELAUNCH: When this is all said and done, many things about the way we’ve normally ‘done church’ will have changed forever.  Churches will need to relaunch certain ministries in this new reality and at the same time make some of the changes made during the REFRAME period more permanent.  This will bring some stress to many staff people who are unable and/or unwilling to make this shift long-term.

The answer is… maybe.

While it is still early and how this plan will actually help churches is being worked out, here are the specifics as we understand them:

• Most churches and non-profits will be eligible for the program through the CARES act administered through the Small Business Administration.
• For most churches, the loan amount they can receive will be equal to their total average monthly payroll costs between March 2019 and February 2020 multiplied by 2.5.
• The loan is forgivable (you don’t need to repay) if your church retains the same number of people through the loan period as you did over the past year. You can find more information here.

The length of this crisis and the effect of giving in your local church context will help determine whether or not this short-term relief will be sufficient to retain key staff long-term.  You’ll need to work closely with your account, financial advisor, and financial institution to determine the long-term viability of this program for your church.

That’s the question everyone is asking right now.  And the answer will be one that only you can answer for your own church.

We suggest you first take a look at your total budget. Look for cuts that you can make across the board that will help bring your church’s spending down during this period. Look at making adjustments on things such as:

• facility/utility costs 
• programming costs
• conference/travel costs
• renegotiating insurance, mortgage and communication services
• Eliminating non-core ministries and services

Turn over every rock to reduce your operating expenses before making the hard decision to let someone go. Belt-tightening in these areas should be your first priority.  

The harsh reality is that in most churches, personnel costs are usually around 50% of the total budget.

If giving is down substantially, it is only natural that the amount of money available for payroll will also shrink causing you to make some gut-wrenching decisions on staff retention.

There are other transitional options for individual staff members.  But honestly, most all are painful in one way or another.

• FURLOWING STAFF: Furlowing means that you are not laying your staff member off, but you are giving them time off for a period of time (without pay) until this crisis is over.  Note that if you choose this option, you cannot expect (legally) this person to continue to perform their job function.
• MOVING TO PART-TIME: You can reduce staff from full-time to part-time for a period of time to help alleviate some of your personnel expenses.  Check your state mandates for what this means for your benefits packages, etc. before you choose this option.
• SALARY REDUCTION: You can voluntarily or involuntarily reduce compensation across the board for a period of time to help offset lower giving.

Most of these options are band-aids.  They will give you some temporary relief but will not provide long-term stability for your staff or church.

This is probably the toughest decision you’ll have to make: who on your team will stay and who will go?

In reality, this will be different in every church. The hard part is that your church is family, and you are now in a position to determine which of the family you have to communicate the bad news to.

Layoffs in a church setting should really based on a set of facts and realities rather than personal situations, likeability, or friendship.

Your budget will determine the level of staff you need during this next season.

And your ministry plan will determine what ministries (and staff to lead those ministries) will be wise to cutback, quit, or even expand.

As we’ve said, cutting staff is like operating on yourself with no anesthetic.  This will not be easy.  In fact, it will be one of the hardest things you have to do in your ministry career.

Overall, your staff will probably be understanding with your decision. Many are bracing for the news already because of all that is happening.

Our advice is simple: love your staff (both those that remain and those that need to leave for a time or permanently).  Care for their families. Help them with as generous a severance package as possible. Treat them like family (because they are).  

We can help by providing an extended period of care for those you may need to cut.  We will pair them up with a dedicated ministry coach that will help them process the current situation and prepare for the future with ministry career coaching and training.  

We’d love to talk with you about what you’re going through and how we might be able to assist.  You can schedule a 30-minute call with Todd Rhoades using this link to discuss anything related to staffing during this time.

Here are a few things that you should consider when developing a severance package:

1. How long has the employee been on staff?
2. What is their current position?
3. Will the employee have access to any outside unemployment benefits?
4. What amount of resources does the church have available to contribute to a severance package?

There are no ‘standard’ severance package guidelines and can range anywhere from a few weeks to a few months of continued pay.

Some churches start with a model that is utilized many times in the business world: one week of salary for every year they were employed.  (For example, someone that has been on staff for five years would get five weeks severance pay).

Other considerations:

1. Pay for unused vacation time
2. Continuation of benefits (health/life, etc.). Check your state regulations on what you can and cannot offer here as it varies from state to state.
3. Transitional coaching (like what we offer at Chemistry Staffing) can show an extra level or care and concern to help the staff member process the termination and move on to a new ministry role at another church or organization in a healthy way.

Be sure to put all severance package details in writing so that both you and the employee know what to expect.

Under the Federal Unemployment Tax Act (FUTA), churches are exempt from unemployment taxes, which means church employees are not generally eligible to receive unemployment benefits. This is true in nearly all states unless your church has voluntarily paid unemployment taxes.  (Few do). That’s why many churches offer some kind of severance package to laid off employees.

Here are some of the best resources that we know of that will help guide you through this tough season:

• Letting Go of Church Staff (Second Chair Leadership)
• How to Make Budget Cuts in a Healthy Way (ChurchLeaders.com)
• What to Do When Facing a Massive Budget Shortfall (Senior Pastor Central)
• Small Church Pastor Adapt and Recover Kit (Karl Vaters)
• Free 30-Minute Video Call with Todd Rhoades. Let’s talk anything you need to talk about during this time: decisions you are contemplating, how to care for current and laid-off employees, and how to move forward.  You can schedule your time here.