This article analyses the effects of legislative changes that boosted church funding in the late 20th century on the Evangelical Lutheran Church of Iceland (ELCI). The four main research questions are: What were the effects of these changes in the parishes? What changed in the working environment of the clergy? How did the ELCI react to the changes with rules of procedure? What challenges did this bring about in the relations between clergy and parish council? The study is based on analyses of reports from Parliament and church institutions, as well as reports from parishes and qualitative interviews with four ministers. The conclusion is that the new legislation was pivotal in creating “city churches” in the capital area and in larger towns. The role of the clergy changed in the city with the improved economy. This new role included more managerial tasks, but lines of authority were unclear.

Keywords: Iceland, church funding, church management, clergy