How to Pay Church Interns by Stipend

Paying church interns by stipend seems to be a common practice, so I’ve been looking at that in this 3-part series. Today you’ll learn how to pay church interns by stipend. But first, one last test:

Pay Church Interns by Stipend

Are They a Volunteer?

OK, so they failed the intern and contractor tests. Can’t we just call them a volunteer then? After all:

The DOL regulations do however allow nonprofits to pay for volunteer expenses, reasonable benefits, and a nominal fee, or any combination thereof, without losing their status as volunteers.” – Ellen Aldridge for Blue Avocado

According this blog post referencing the Department of Labor, you only have a volunteer if :

  1. You have not provided compensation of any sort (such as money, room & board, etc. though they may qualify for a ‘stipend’)
  2. They have no expectations of benefits in the future
  3. They work less than the equivalent of full-time occupation
  4. They haven’t displaced a regular employee
  5. Their services are offered freely (without pressure or coercion, which also means they can quit at any time)
  6. Their services are the kind typically associated with volunteer work

If they fail even one of these items, then you really should pay them as an employee that is subject to minimum wage & overtime requirements (and not a volunteer with stipend).

How to Pay Church Interns by Stipend

Everything I read was cautionary and used strong language to discourage the practice. And your local state laws may be even more strict than the federal definitions. But if you’ve plowed through all of the above and still want to pay church interns by stipend, then read this Blue Avocado blog post. My summary:

  • the stipend cannot exceed 20% of what you’d pay an employee for the same job
  • the stipend cannot be tied to a time card
  • the stipend cannot be tied to performance or productivity
  • if the stipends add up to more than $600 in a calendar year, it must be reported by 1099 as income to the volunteer

If this is all new information for you and you may have been doing it the wrong way, you should really consult with a CPA to either solidify what you’re doing or go back and correct what’s been done.