Pastor Receives $130k Severence Package - Has This Ever Happened to You?!
- Posted by: Todd
- Posted on: Mon, June 19, 2006
- Viewed 492
- (17) comments so far
The congregation of First Presbyterian Church has agreed to pay nearly $130,000 as part of a separation agreement with its longtime pastor, the Rev. Charles A. “Chuck” Jones III.
On June 4, the congregation voted 140-32 to dissolve its relationship with Jones. Bill Davenport, a church member who helped negotiate the separation agreement, said some members felt it was time for a change.
“There was a vocal group that thought it was time for Chuck to move on,” Davenport said.
Jones said Saturday that the agreement “happened some time ago” and that he has not seen any communication from the church since. He declined to comment further.
“I don’t think it’s appropriate at this point after all that’s happened,” he said.
Davenport said he thought Jones had done a very good job and supported him. But, Davenport said, Jones “did not want to make a fight” that could have led to a split in the congregation.
“There comes a time in any organization when, rather than have a major split, you just move on,” Davenport said.
Under the agreement, the church, at 701 Beach Drive NE, is paying Jones for accrued sick leave and vacation, as well as salary, housing allowance, pension dues and Social Security taxes through May 2007, according to a letter from Carlen Maddux, clerk for the church’s session, or governing board.
Davenport said Jones’ relationship with the church ended around the end of May. The church has now started a search for an interim pastor and a permanent pastor.
The payment to Jones was based on the presbytery’s guidelines, Davenport said, which take factors such as length of service into account. Jones has been pastor of the church for just over 10 years.
Jones announced his decision to resign in November, saying he was searching for a new job because of “unrest and concern” from some members of his congregation.
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Today’s question: Have you ever received a severance package? If so, how was it figured, and (in your opinion), was it fair?
I'm wondering how many pastors have ever received a 'separation agreement' or a severance package when leaving their church. I've heard that some do, but I'd be interested in hearing some details. Here's an article on one pastor's package from the St. Petersburg Times...
Comments
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Health Insurance on Mon, September 22, 2008
Greatly written indeed… I really enjoyed your article and found it to be very informative, keep up the good work, I’ll be coming back to read any of your future articles..
Thank you,
Health Insurance
Harvey Mechanic, Attorney (New York) on Fri, October 17, 2008
It is against IRS regulations for a 501(c)3 organization to give
“severance pay” or any substantial gift to an outgoing employee
unless it is required by a long-standing employment contract. Such
payments would be a prohibited use of funds as the funds would not
be used for the benefit of the organization or pursuant to the
exempt purposes of the organization and even worse, may be
considered by the IRS to be a distribution similar to a profit
distribution to an insider. Of course nonprofits, by definition,
may not distribute profits or surpluses to its employees or other
insiders.
I do not know of any section of the code or regs that specifically
addresses the issue of a gift to someone going out the door. I did
write in an earlier answer on http://www.allexperts.com that a severance
payment is allowed to be given to someone going out the door if
there was something of equal value given to the employer by the
employee, such as the agreement to terminate an existing employment
contract. I believe that, otherwise, the IRS would be able to apply
the excess benefit transaction rules. Please note that the IRS
defines a gift to an employee as compensation. IRC 102(c) provides
that generally gifts are not income. However, see pdf page 15 of
http://www.irs.gov/pub/irs-tege/eotopick99.pdf which discusses gift tax
law in connection to grants by a nonprofit organization to an
individual. Therein: “Transfers made in connection with employment
constitute gifts only in the extraordinary instance.”
The IRS could state that compensation additions for no additional
work in return would come under the excess benefit transaction
rules. The IRS could then assess Intermediate Sanctions which is
usually in the form of Excise Tax on Excess Benefit Transactions.
An IRS article about that is at:
http://www.irs.gov/pub/irs-tege/eotopice04.pdf
The U.S. Supreme Court explains one of the main requirements of
section 501(c)(3) of the Internal Revenue Code, “A nonprofit entity
is ordinarily understood to differ from a for-profit corporation
principally because it “is barred from distributing its net
earnings, if any, to individuals who exercise control over it, such
as members, officers, directors, or trustees.’’Camps
Newfound/Owatonna v. Town of Harrison Maine, 520 U.S. 564, 117
S.Ct. 1590, 137 L.Ed.2d 852 (1997)
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