The author quotes John Dehlin, a former member and frequent critic of the Church, as well as regular critic Sam Brunson. The only space she gives to voices on the other side is the official church spokesman and an area authority seventy. 

Who she doesn’t quote or interview are everyday Latter-day Saints in good standing like us who love and support the Church. Rather, our positions are guessed at or implied by the others quoted. Dehlin claims he knows that the Church’s supporters believe the claims are credible; Brunson says that members are no longer “giving the Church the benefit of the doubt,” and Huntsman says that his lawsuit isn’t for him but for remaining members of the Church.

Dear Michelle, we’re not difficult to find. And if you wanted to know how we feel, you didn’t have to rely on these critics’ guesses. You could have just asked.

But since you didn’t, we thought we would share to help round out your reporting.

The Broader Context 

Since the Nielsen and Huntsman cases have come to light, much information has become available and has helped shape the thinking of Latter-day Saints on these important issues.

The best estimates put the Church’s annual spending at about 4-5% of its savings. That level of spending of a fund’s principal may sound small to nonexperts, but it’s actually in line with what’s needed to continue to maintain the principal through inflation so that spending can stay consistent over time. It’s also precisely the level of spending most universities engage in relative to their endowments.

Nate Oman, a law professor at the College of William and Mary, writes:

The Church [of Jesus Christ] spends at exactly the rate it needs to spend in order to operate indefinitely. … It’s basically behaving exactly the way that we would expect that a large non-profit would behave. By the numbers, it’s normal.

We’ve also learned that Huntsman’s lawsuit has little legal merit and is little more than a publicity stunt. 

So while the Washington Post interviewees guessed that members of the Church were no longer giving the Church the benefit of the doubt, all of this additional information has had the opposite effect on many card-carrying members. 

A closer review of the available evidence has led many of us to conclude that the Church has been managing its finances spectacularly well. It continues to fulfill its religious mission, as evidenced by temple growth. And it continues to fulfill its charitable mission, evidenced by its more than $1 billion donation to humanitarian causes last year alone.

We’ve also learned a lot about the context of these matters. Yes, the Church’s fund is large, but on a per-person basis, it still pales in comparison to funds for non-profits like Harvard and Yale. We’ve learned hints about how wealthy other worldwide faiths are. And we’ve learned just how common honest filing mistakes in complex situations like this can be, along with how average this particular SEC fine was for an investment fund the size of Ensign Peak.

While we didn’t learn any of this from reporting in legacy media, they are readily available facts, and they could and should exert a significant influence on how the public views these matters.

Bona Fides?

Latter-day Saints don’t usually talk about “bona fides.” But church critics talk about it a lot as a way to seemingly give their complaints more credibility. 

In the same way, many have missed the anti-Mormon tropes in the Nielsen “whistleblower” report, such as “tapirs” that revealed the religious animus that motivated the complaint, Boorstein has missed this “bona fide” trope in her reporting this time. 

Everyday faithful Latter-day Saints don’t see our church membership in those terms. Sure, the Church has leaders, but we define ourselves not by the callings we’ve had or the callings our family members have had but by our faith and willingness to strive to keep the Lord’s commandments. 

There is a tremendous egalitarian spirit in the Church, where leaders who are the equivalents of Catholic priests and bishops one week are released and serve as Sunday School teachers or youth leaders the next. 

And in the pinnacle of our worship in the temple, we symbolize that egalitarian spirit by literally wearing the same clothing no matter the cachet of our worldly achievements. This helps explain why the idea that there is any kind of “royalty” in the Church is tremendously off-putting to faithful Latter-day Saints. 

Furthermore, decisions about how church resources are spent are made by prophets and apostles called of God, not self-appointed “Mormon Kennedys” who feel entitled to make those decisions because of their family connections.

How Loud Are Calls for Reform

You wrote that calls for reform are getting louder—and saying you based this on what you’ve seen in blogs and podcasts.

It should go without saying that this is simply not a reliable place to find information about how everyday Latter-day Saints are feeling—another reason why we wish you had just asked us. 

An article we published nine months ago explained:

The Latter-day Saint space online is an interesting one. The Church of Jesus Christ is hierarchical, and so the draw to a space with less institutional oversight was strong for those whose beliefs and behaviors put them on the fringes or outside of Latter-day Saint life, while those who felt well integrated felt no similar push to find emotional and religious validation in online communities. As a result, for nearly twenty years, the most prominent Latter-day Saint spaces online were in tension with the beliefs and practices of the church they sprung from. 

This phenomenon is well known by most practicing, faithful Latter-day Saints in the United States. Noting that Latter-day Saint podcasts and blogs are pushing for reform says little about how in-the-pew Latter-day Saints are feeling on the matter.

And ultimately, it’s reporting like yours that amplifies these voices and makes these calls for reform sound louder than they really are. If, instead, you spoke directly to supportive practicing Latter-day Saints and amplified our voices, these isolated calls for “reform” would not appear so notable. 

We Believe in Privacy

Jesus Christ, on whom we try to model our behavior, was always honest, but He was not transparent in the way the modern word is used. 

On the contrary, Jesus was careful about when, where, and to whom He told certain truths. When he healed, he often instructed those he healed to not tell anyone. 

And when Thomas pushed Jesus to explain where He was going away to, Jesus refused to answer, knowing that it was neither the time nor place to reveal that information.

Scholars have suggested that Christ sought to protect this information in order to prevent needless persecution of His ministry. 

There are many examples in scripture of the importance of sharing information at the right time and place: Abram’s relationship with Sara, Esther’s nationality, and the source of Samson’s strength.

Letting the wrong people know the wrong information can prove disastrous.

Even so, when organizations have arisen specifically to attempt to generate leaks about the Church, the information they’ve found has been pretty ho-hum. 

As everyday members, we are very comfortable with the Church having the flexibility to share the appropriate information at the appropriate time. 

A Historic Mission

Our conviction is that the Church of Jesus Christ has been restored to the earth and will need to continue its work until the end of the world.

Honestly, a common response from the kinds of Latter-day Saints you’re most likely to find at church on Sunday to the news about the Church’s resources has been relief or joy. Senator Mitt Romney typified this when he said he felt “Happy that [the Church of Jesus Christ] not only saved for a rainy day but for a rainy decade.”

This new phase of the Church’s growth has blessed us financially. We can attend a top-20 university for a price that doesn’t put our children into life-long debt. We have storehouses of food and welfare programs we can rely on in our lowest moments. And the financial burden on individual Latter-day Saints for items such as ward-budget has disappeared. The only financial requests left are those mandated by scripture, including tithes and offerings to the poor. 

The Church we love has cared well for its money and teaches us to do the same, and now it can fulfill the mission we want it to with less ongoing financial need from us. 

Old Tropes

We are mindful of the long history of anti-semites utilizing those who deconvert from Judaism in their efforts to marginalize and persecute the Jewish people. From Donin of Paris to Johannes Pfefferkorn to Otto Weininger. 

After his deconversion, Weininger wrote quite negatively about Judaism. His writings were later exploited by Nazis because of the fact that Weininger shared their anti-semitism despite having been Jewish himself. Adolph Hitler once referred to Weininger as one of the only “good Jews” he knew. Dietrich Eckart pointed to Weininger as one of the few Jews who recognized the “problem” of Jewishness. This pattern continues today as anti-semites weaponize the critiques of Jewish intellectuals like Norman Finkelstein and Noam Chomsky.

Latter-day Saints have their own history of deconverts being utilized by the powers that be to harm those who remain. John C. Bennett, Thomas Marsh, and William Law all provided the gristle of anti-Mormon persecution after their deconversions.

A powerful publication like the Washington Post seizing on former Latter-day Saints to criticize our faith for being too rich and powerful feels all too familiar for comfort. 

We understand that not every Latter-day Saint sees things in exactly the same way. And you are certainly free to tell the stories of anyone you choose. But when you are seeking to tell a story that genuinely represents what everyday Latter-day Saints are thinking, sure, ask our critics to guess, but please, ask us too.

The post The Latter-day Saints The Washington Post Forgot appeared first on Public Square Magazine.

Several states away, Utah’s quiet settlements tell a contrasting tale. Influenced by the press-driven moral panic against them and their faith, recently enacted federal laws are starting to take effect. Property held by The Church of Jesus Christ of Latter-day Saints is confiscated, its leaders driven into hiding, and its men are imprisoned. 

The sensationalistic coverage a continent away caused real harm to Latter-day Saints.

This stereotype of Latter-day Saints as dangerous and sexually deviant continues to linger. One might hope that, over time, this style of sensational journalism would have diminished, and national outlets would have recognized Latter-day Saints as a part of the diverse spectrum of American faith. But this bias bares its head in press coverage even today. 

On May 14, 2023, CBS’s “60 Minutes” aired a story highlighting allegations of financial misconduct within the Church, reviving old unsubstantiated allegations, repackaged in a sensational narrative, providing an enticing spectacle for its millions of viewers.

A History of Media Gawking

From its inception in the early 19th century, The Church of Jesus Christ of Latter-day Saints faced intense scrutiny and ridicule from the mainstream press. Founder Joseph Smith’s revelation of the Book of Mormon was dismissed as a fraudulent ‘Gold Bible’ scheme, and his visionary claims were met with skepticism. This hostile media portrayal seeded public suspicion toward the Church, setting a precedent for future depictions.

This trend of sensationalist coverage persisted into the 20th and 21st centuries. A notable instance is the Mark Hofmann forgery scandal in the 1980s, where the media fixated on the Church’s supposed gullibility, overshadowing Hofmann’s crimes. More recently, unverified rumors about sexual practices at Brigham Young University (BYU) were uncritically reported in a major national publication, painting Latter-day Saints as sexual deviants in a manner normally reserved for tabloids.

The media has also disproportionately emphasized the religious affiliation of Latter-day Saints involved in criminal cases. In 2019, when Steven Murdock, a local high councilor, was found guilty of voyeurism, his religious affiliation was highlighted in almost all coverage, even though no other article written about a voyeurism case mentioned the religion of the perpetrator for at least eighteen months prior. Even as victims, Latter-day Saints’ faith is gratuitously discussed, such as an Associated Press report on a tragic cartel ambush involving members of an off-shoot sect, that still managed to name-drop the Church in its title. Or perhaps even more galling is the upcoming “comedy” about the Latter-day Saint missionary who was kidnapped and repeatedly raped. These instances underscore the media’s enduring fascination with the Church and its supposed practices, leading to the sensationalism that continues to manifest today.

What is the Baseline?

What should The Church of Jesus Christ of Latter-day Saints expect in terms of media scrutiny and respect? Accountability for misconduct or harmful practices is a given for any religious or non-profit organization. However, —standards often missed in the sensationalized coverage the Church receives.

Take, for example, media portrayals of Latter-day Saint teachings on sexuality. Stories often depict Latter-day Saints as prudish, repressed, or deviant. In contrast, teachings on sexuality in other religious groups, like Catholicism’s celibacy or Islam’s modesty laws, are typically presented with more nuance and less sensationalism.

A stark discrepancy exists in how media treats controversies within various religious groups. Consider the sexual abuse scandals within the Southern Baptist Convention—systemic issues that receive comparable media attention to isolated incidents involving Latter-day Saints outside leadership. This disparity amplifies minor incidents while often romanticizing unique practices of other religious groups, such as the Amish’s rejection of modern technology or Jainism’s asceticism.

Media coverage often respects doctrines and rituals of other religions more than those of the Latter-day Saints. Islamic rituals during Eid al-Fitr or Hinduism’s Kumbh Mela, for instance, are typically portrayed with reverence, avoiding any portrayal of these practices as strange or outlandish—courtesy Latter-day Saints can only wish for when it comes to their temple endowments.

The media’s role in scrutinizing powerful organizations is essential, but it can’t be assumed that their critical focus is always warranted. Existing biases that amplify a group’s otherness can prove to be a major motivation in how much coverage exists and how that coverage is framed.

Where 60 Minutes Fails

In a world where money now often parallels sexuality as taboo, it’s hardly surprising that The Church of Jesus Christ of Latter-day Saints’ finances have become the new horizon for media gawking. A recent “60 Minutes” story explored claims made by David A. Nielsen, a former church investment manager. Nielsen’s allegations, known for three years, were steeped in esoteric anti-Mormon references, like tapirs, largely overlooked by the media. After years of his claims stagnating, Nielsen’s “60 Minutes” interview added nothing new, mostly expressing his disagreement with the Church’s approach to financial management. His only claim of substance that the Church should lose its non-profit status for the way it manages its finances has been thoroughly and repeatedly debunked. 

Some have taken the “60 Minutes” report seriously and responded in kind. But frankly, unserious journalism does not warrant a serious response. “60 Minutes” did not press Nielsen on how many years’ savings he believed the Church should be allowed to have. They did not ask Nielsen why he believed certain investments were problematic. They did not ask him how he would responsibly scale up long-term humanitarian aid to avoid the detrimental check and dump practice. They didn’t even push him on his internal inconsistencies. They gave him a platform to say he could have done a better job than his old bosses, without even pushing him to explain how. If that constitutes news, I have a certain grocery store chain I worked at when I was 17 that could use a real talking to.

The Church does maintain financial privacy, aligning with best practices, such as using shell companies for real estate development. These privacy practices are in line with the example of Jesus Christ. And the Church does invest wisely in line with Jesus’ teachings. And yes, the Church does have $45 Billion (less than Harvard) even though the Church runs five colleges and universities, not to mention a 17-million member church. “60 Minutes” also couldn’t be bothered to mention, that even if the Church of Jesus Christ did have the spending requirements of non-religious non-profits, they would still be spending more than enough to meet federal requirements. The reality is simply unremarkable. But this unremarkable reality simply doesn’t draw the attention “60 Minutes” hoped for.  

So much like The New York Times gawked at the outsiders for their weird sexual practices, CBS now gawks at the outsiders for their weird financial practices. In a consumeristic, spend-first world, the only people who get a pass are glitzy organizations like Harvard or Gates Foundation. But Latter-day Saints having money? Those polygamists in Utah? That’s weird. We don’t trust them. So they gawk and develop thin pretexts to justify doing so. In the case of “60 Minutes,” they don’t even go to the courtesy of crafting a pretext, but regurgitate old and debunked claims, just because it’s sweeps season, I assume. 

Church leaders certainly make mistakes, including in the financial arena. The most notable recent example was a minor SEC fine for a reporting error, which the Church acknowledged and rectified. And journalists should report on that in its appropriate context. But evidently the actual news wasn’t enough.   

While financial accountability is crucial for all organizations, including religious institutions, justified coverage requires new revelations or substantiated accusations of wrongdoing. Absent these, just like the “Mormon Question” before it, “60 Minutes” charged ahead anyway.

Why Sensationalized Coverage

Several contributing factors emerge when scrutinizing media sensationalism surrounding The Church of Jesus Christ of Latter-day Saints, which include societal misconceptions, historical anti-Latter-day Saint sentiment, and the lucrative nature of sensationalism in the media industry.

It’s important to recognize that the Church isn’t unique in receiving such sensationalist media attention. Certain topics inherently attract readers, and the term “Mormon” in a headline, akin to “Kim Kardashian” or “Nick Cannon,” does generate more pageviews. The objective here is not merely to chastise media outlets for their sensationalist formulas, but rather to identify the discriminatory factors that have put Latter-day Saints in this media predicament. 

The lingering anti-Latter-day Saint sentiment also likely contributes to this issue. The Church, since its inception, has encountered intense scrutiny and opposition. These historical biases which spring from the unfamiliarity and misconceptions of the Church play a significant role in this sensationalism. The Church’s distinctive doctrines, its relatively recent origin compared to other major religions, and its position as an American-founded religion may give journalists the implicit latitude to undermine Latter-day Saint faith in a way they would never consider for other world religions. 

Furthermore, the Church’s stringent moral and sexual codes often put it in conflict with broader societal norms, potentially giving journalists justification to take shortcuts if it could help undermine a church they view as problematic. 

In essence, sensationalism is lucrative; it magnetizes clicks, elevates ratings, and boosts ad revenue. But the reason the Church of Jesus Christ gets caught in the sensationalistic cross hairs in a way few other religions do springs from lingering biases. 

Impact of Sensationalism

In attempting to grab attention, sensationalist media coverage often reduces complex realities to simple, easily digestible narratives. However, these narratives can distort the truth, perpetuating stereotypes and misconceptions about the Church and its adherents. They may frame the Church as secretive, its practices as strange, or its members as blind followers. What should by any objective measure be a largely positive story of a frontier church that has saved responsibly in line with Jesus Christ’s teachings and can now donate more than one billion dollars a year in humanitarian aid is still somehow twisted into a negative story.

Sensationalism in media, although commercially beneficial, can cause significant harm to those targeted by such coverage. The Church of Jesus Christ of Latter-day Saints and its followers are among those adversely affected, facing resultant prejudice, misunderstanding, and potential discrimination. Specifically, such portrayals can have real consequences for Latter-day Saints. Recent studies indicate that public opinion about the Church is lower than for any other faith in the U.S. Numerous Church members have reported experiences of suspicion, bias, or outright hostility due to these pervasive narratives.

The Persecution Complex

The phrase “persecution complex” is often flippantly thrown at Latter-day Saints who express concerns about media bias, misrepresentation, or general disrespect towards their faith. This dismissive label, frequently used by individuals from marginalized groups who wish to maintain social standing within high-status groups, insinuates that any protest of ill-treatment is merely an overreaction or an effort to play the victim.

This dynamic, wherein certain individuals are offered conditional acceptance or privilege on the expectation that they dissociate from their group, endorse dominant values, and possibly even criticize their own group, plays out often and appears to be in play here. The charge of a “persecution complex” allows these individuals to signal their loyalty to those in power, thereby safeguarding their privileged position.

This “persecution complex” accusation, however, neglects the substantial evidence of bias against the Church and its followers. Numerous academic studies reveal that Latter-day Saints encounter tangible prejudice in personal dealings and media depictions. For instance, a Pew Research Center study in 2012 reported that Latter-day Saints face greater discrimination than many other religious groups in the US.

It’s apparent that the narrative concerning The Church of Jesus Christ of Latter-day Saints is frequently more influenced by media sensationalism than by the Church’s own actions or teachings, with the recent ’60 Minutes’ report serving as a clear case in point. 

In the end, the task of countering these distortions falls to all of us. As consumers of news, we must cultivate an informed skepticism, seek out multiple sources, and question narratives that seem designed to shock or titillate. Our collective ability to rise to the challenge will say a lot about us, and perhaps not so much about the subjects of the next sensationalized news story.

The post The “Mormon” Headline: Media’s Lucrative Obsession with Latter-day Saints appeared first on Public Square Magazine.

Despite this seemingly insurmountable obstacle, the early saints demonstrated remarkable perseverance and determination. They started digging the temple’s foundation by hand, inspiring the entire community to join in their efforts. On weekends, they would gather stones from the nearby quarry, while during the week, masons would use these stones to build the walls. After a vandalism incident, some even set up security each night to protect the sacred space.

This all-in effort was rooted in the early saints’ adherence to the law of consecration, which called for members to give all they had to the Church to build up the Kingdom of God. While this approach soon evolved, the all-in ethos never went away. Throughout the 20th century, Latter-day Saints were asked to provide not just tithing and fast offerings but also funds for chapel and temple construction, as well as local congregational and activity budgets. For some, these requests often exceeded the “one-tenth” part indicated in the Old Testament, sometimes to nearly double that.

However, this burden was not to be a permanent feature of Latter-day Saint life. In 1907, then President of the Church Joseph F. Smith prophesied: 

“… We expect to see the day when we will not have to ask you for one dollar of donation for any purpose, except that which you volunteer to give of your own accord because we will have tithes sufficient in the storehouse of the Lord to pay everything that is needful for the advancement of the kingdom of God.” 

Today, this prophecy has been almost entirely fulfilled. Most recently, the request for funds for temple construction and the Perpetual Education Fund have been stopped. Today, the only funds asked of members of the Church are the tithes for the storehouse, which Smith implies will not go away, and fast offerings. Latter-day Saints living today have been the beneficiaries of many of these changes.

The financial situation of The Church of Jesus Christ of Latter-day Saints has been one long (nearly) straight line from poverty to prosperity. And this prosperity has been substantially passed along to members of the Church, not only through the expansive worldwide religious projects building and maintaining temples, chapels, and congregations but also through its welfare program that is the envy of governments around the world. Additionally, the financial demands placed on members have been significantly reduced.

In significant ways, the Church of Jesus Christ’s approach to financial security is a model that should be emulated by other organizations. The Church understands that significant difficulties lie ahead because of prophecies like this one:

And thus, with the sword and by bloodshed the inhabitants of the earth shall mourn; and with famine, and plague, and earthquake, and the thunder of heaven, and the fierce and vivid lightning also, shall the inhabitants of the earth be made to feel the wrath, and indignation, and chastening hand of an Almighty God, until the consumption decreed hath made a full end of all nations …

But whether you believe the prophecies or the science around climate change, which predict increases in famines, plagues, earthquakes, fires, and hurricanes (or both), there is little question that the future will see disasters on a cataclysmic scale. The Church is well-positioned to help in times of crisis.

While many organizations around the country were desperate for government funds to help sustain them during COVID-19, the Church’s universities were able to repeatedly turn down millions of dollars in aid because of the Church’s sound financial position. In fact, during the pandemic’s peak, the Church was able to donate nearly a billion dollars in humanitarian aid, one of the largest humanitarian aid expenditures by an NGO in the world. The Church of Jesus Christ donated more to humanitarian aid than the United Kingdom, a remarkable testament to the Church’s commitment to helping those in need.

Yet, while The Church of Jesus Christ has managed to put itself on a firm financial footing and has started to use that to benefit both the world and its members, there is still much work to be done. The coronavirus pandemic is unlikely to be the last major catastrophe, and when that time comes, The Church of Jesus Christ will need to continue its efforts to achieve true self-sufficiency.

Despite the Church’s significant savings, on a per-person basis, the Church’s savings pale in comparison to those of colleges like Harvard, Yale, and Princeton, which have more than $2,000,000 saved per student. Even the largest estimates of The Church of Jesus Christ’s savings round to 0% of that. 

But how does this all translate into the personal life of Latter-day Saints?

I vividly remember a time back in 1980 when my husband and I were struggling to pay the tithes and offerings required by The Church of Jesus Christ of Latter-day Saints, of which we were faithful members. We had three children and one on the way, and our sub-contracting business was not going well. The house we were living in was almost a freebie provided by an understanding general contractor, and it was the only house in a neighborhood of new homes with an unlandscaped front yard. We were under loads of pressure from our neighbors to do something about the dirt piled out there, but we just couldn’t afford to do anything about it. Not only were we not organized enough to pay an honest tithing (10% of our “increase”), but we also couldn’t manage our fast offerings (to help the poor), the temple fund, the building fund, or our “ward budget.” The ward budget amount had been determined for us by leaders of the ward and stake for operating expenses, and if memory serves, it was about $800 for the year.

But then, we had a little windfall, and we rushed to the bishop with our entire ward budget amount in hand. The next day, after my husband went to work, there was a knock at the door. It was a landscaper. His crew had been doing a job a few blocks away, and they had extra sod and trees. Did we want them? I just laughed. The folks across the street had paid thousands of dollars for their beautiful front landscaping, and we were so broke. He said, “$250 should take care of it.” I froze in place.

“We have topsoil out front, but it hasn’t been graded.”

“We’ll bring our equipment over and grade the soil.”

“I have no one to lay the sod.”

“We’ll do it.”

My blood ran cold. My husband and I had promised each other we wouldn’t spend over $200 without consulting each other. I had no way to reach my husband out on the job. But here was this outlandish miracle staring me in the face. I just meekly said yes. The landscaper’s crew showed up right away and went to work. When my husband came home, he drove right past the house because he didn’t recognize it.

This miracle in response to paying for the ward budget clinched our commitment to keeping the law of tithing. Miracles have continued to the point that even if paying tithing becomes optional, we will continue the practice, and so will many others. On full display here is the Church as the ordained structure to connect its members with God. It is He who is rewarding us.

Despite the progress that has been made over years of effort, it is important to remember that the Church’s financial success is not just about the numbers, but about the lives it touches. Lives like mine. 

There is still much work to be done, and the Lord is far from done blessing those who keep His commandments.

The post A Financial Journey: Fulfilling Prophecy, Blessing Saints appeared first on Public Square Magazine.

Today the Securities and Exchange Commission (SEC) announced a fine against Ensign Peak Advisors (EPA) and The Church of Jesus Christ of Latter-day Saints, of which the EPA fund is an integrated auxiliary. 

This news story has been widely shared and could be misrepresented by Church critics. To better understand the case, we reached out to several knowledgeable securities attorneys, including one of the top securities legal experts in the West, who agreed to speak about the case.  

Below is a quick Q&A for those curious about the story and its broader implications:

What is Ensign Peak Advisors?

EPA is an investment management firm that manages the investment portfolio of The Church of Jesus Christ of Latter-day Saints. The firm was founded in 1997 and is based in Salt Lake City, Utah. EPA manages a diverse investment portfolio that includes publicly traded stocks, bonds, and other assets. EPA was reorganized in 2000 and split into several subsidiary LLCs. 

Why does a Church need an investment management firm?

Like any organization, a church has expenses and income that need to be managed. This firm helps to manage its financial resources and ensure the long-term sustainability of its mission and programs—helping the Church create and manage an investment portfolio that maximizes its financial resources and to help it ultimately further its charitable and exempt purposes. 

EPA has been effective in helping the Church of Jesus Christ maintain a high degree of financial independence and self-sufficiency while planning ahead toward long-term goals. This approach has allowed the Church to support its members and communities around the world while maintaining a strong financial position for the future.

How much money is invested in Ensign Peak?

In its most recent filing (Q4 2022), EPA reported having $44.4 billion invested in stocks and bonds. EPA holds other investments as well, and the total value has been claimed to be more than $100 billion.

What do Ensign Peak Advisors invest in?

EPA has a reputation for sound, conservative investment practices. It invests largely in blue-chip stocks. In its most recent filings, some of its largest investments were in companies such as Apple, UnitedHealth, and Johnson & Johnson. 

Tony Semerad reports for the Salt Lake Tribune that “they (EPA) eschew debt in keeping with the faith’s tenets and steer clear of investments Latter-day Saints consider objectionable, such as tobacco or gambling stocks.”

What is the role of the SEC?

The SEC (Securities and Exchange Commission) is a US federal government agency that is tasked with overseeing the financial markets, including stocks, bonds, and other similar investments. Their role is to ensure fair, orderly, and efficient markets in order to protect investors. 

Why was the SEC investigating Ensign Peak Advisors?

In 2019, the SEC contacted EPA with concerns over EPA’s disclosure reporting practices. Based on the advice of its attorneys, between 2000-2019, each subsidiary LLC had been filing its own form 13F rather than filing one aggregate form. The SEC’s investigation focused on this previous practice of separate reporting.

Based on the SEC’s direction, EPA started reporting through one aggregate report in 2020.

What is form 13F, and why is it important to disclose?

Form 13F is a quarterly report that must be filed by institutional investment managers with more than $100 million in stocks, bonds, and other securities. The information disclosed in form 13F is used by regulators and other market participants to monitor market activities.

Is it unusual for the SEC to investigate an investment management firm?

No. Investigations of this type are quite common, especially for large investment funds. 

Did Ensign Peak Advisors ever hide its stock holdings?

There are no allegations that they did. Each of EPA’s subsidiaries reported their holdings. So all of the fund’s holdings were disclosed through form 13F reports for each individual affiliated entity. EPA and the Church have stated that they believe all of their holdings were reported. 

Were the “shell companies” the EPA used illegal?

There’s no allegation that they were. These companies are the subsidiary LLCs that EPA used to reorganize in 2000. Most shell companies are used for legitimate purposes, particularly in the financial sector. They can be used to legitimately maintain the privacy of investors or better organize financial assets. The SEC’s claim is not that EPA’s organizational scheme was fraudulent, but that using that organization, EPA should have reported differently than they did.

If nothing was hidden and the organization was legal, why was the SEC concerned?

Because the subsidiaries were all under the control of EPA the SEC believed they needed to file one joint form 13F.

No accusations have been made that EPA abused the separate filings to gain advantage, but the separate filings could in theory have made it possible to do so.

Did Ensign Peak Advisors benefit financially from filing separate reports in any other way?

There have been no allegations by the SEC of insider trading, accounting fraud, market manipulation, or other practices relating to the Church’s investment management firm. 

What was the conclusion of the investigation?

The SEC fined EPA and the Church $5 million. 

How does that penalty compare to other penalties? Was it too high or too low?

In the fiscal year 2022, the SEC recovered $4.19 billion in penalties. The average penalty was $5.51 million. 

Is getting fined by the SEC a big problem for an investment fund or relatively common?

Obviously, a fund never wants to be fined. But fines like this are common. About 5% of investment funds are fined by the SEC each year. Experts compare it to a traffic ticket.

These kinds of investigations are also especially common when multiple entities are involved, such as in the case of the EPA. 

Did senior Church leaders know about this reporting approach? 

This question was answered via the Church’s statement and FAQs.  “The Church’s senior leadership received and relied upon legal counsel when it approved of the use of the external companies to make the filings. Ensign Peak handled the mechanics of the filing process. The Church’s senior leadership never prepared or filed the specific reports at issue.”

Is it unusual for a non-profit or religious organization to be penalized by the SEC?

Nonprofit organizations, like for-profit organizations, come in many different varieties. It is not unusual for the SEC to monitor fund activity, whether that fund is ultimately managed by a for-profit or not-for-profit entity. 

Is the Church contesting the penalty?

No. The Church of Jesus Christ has repeatedly stated its desire to work with regulators to ensure they are in compliance with the law and cooperate with the investigation. They jointly came to a negotiated settlement with the SEC.

Does the evidence suggest that Ensign Peak Advisors purposely violated the SEC’s disclosure requirements? Are Ensign Peak Advisors and/or the Church of Jesus Christ culpable for breaking the law?

The SEC’s announcement included nothing of the sort. And these regulations don’t really work that way. As this same lawyer said, “Yes, there are rules that dictate how money managers disclose the existence of funds. But there is no culpability requirement to trigger a penalty or a violation of these rules. Sometimes mistakes are made, and often inadvertently are, but that doesn’t mean there was any intention in the violation and certainly does not mean a crime has been committed. Most penalties imposed by the SEC are the result of unintentional violations.”

The regulatory systems in place by the SEC are very complex—according to one lawyer, “some of the most complex disclosure regimes found anywhere on the planet.” Even very sophisticated financial professionals don’t always fully understand the nuances of those regulations. A large number of fines take place simply because of a misunderstanding of various overlapping rules.  

The Church and EPA obviously hire experts and have to rely upon those experts to give advice regarding compliance with all applicable laws and regulations, including SEC regulations. 

Will this harm the Church’s non-profit status?

No. Non-profit status is based on the mission of the organization and related factors. 

Should Latter-day Saints be worried that the fund is not being managed well?

EPA has a reputation for strong money management. While any fine is obviously disappointing for those involved, experts note that it is more surprising that the SEC hasn’t audited and found errors in the EPA’s reporting practices until now. This suggests a strong history of compliance.

Will tithing money be used to pay the penalty?

No. The penalty will be paid from investment returns.

Will this penalty impact the ability of the Church to fund its mission?

No. Because these funds are coming from investment returns, they won’t have any effect on the Church’s ability to fund its mission.

Should we expect further investigations of Ensign Peak Advisors?

It’s certainly possible. The EPA fund at issue is a large fund. As such, it will continue to be held under scrutiny.

In addition, there have been efforts by detractors to have EPA investigated by both the IRS and the Senate Finance Committee. But experts suggest that these complaints lack legal merit and are not likely to be acted on. 

The current SEC matter against EPA is completely resolved, and EPA’s current reporting practice is considered by the SEC to be in complete compliance.

If these kinds of fines are so common, why has there been so much media coverage?

We can only speculate why individual newsrooms have decided to report on the story, but as media professionals, we see that this story has several elements that would be attractive to journalists that have nothing to do with the severity or unusualness of the matter.

The Church of Jesus Christ is still a curiosity for many Americans, and as a result, articles that can refer to the Church in their headlines generate more traffic. And because of the Church’s position on moral issues, it can be used as a lightning rod in culture war debates, which can motivate both journalists and their readers. Moreover, EPA is considered a large fund and manages a large sum of money.  All these reasons taken together could generate sufficient newsworthiness. 

What changes have Ensign Peak Advisors made to avoid these issues in the future?

This was a narrow issue. And the narrow issue has been fixed for more than three years now. While it is unfortunate that there was ever a misunderstanding about disclosure requirements based on the advice of counsel, it’s also probably unavoidable that in its more than 25-year history EPA would make some mistake on its disclosure requirements. Once again, its overall record on compliance is impeccable.

What do this investigation and penalty say about the Church’s priorities and values? 

Not much. The Church invests in its fund to fulfill its mission, which in addition to its religious mission, includes humanitarian aid that totaled nearly a billion dollars last year. 

While it’s appropriate that the Church expressed regrets for mistakes made, these kinds of fines are commonplace even among organizations doing their best to be in compliance because of the extraordinarily complicated nature of the regulations.

The post Ensign Peak: Clarifying the SEC Announcement appeared first on Public Square Magazine.

In a nutshell, the 60-Minutes story and related articles make a number of unsubstantiated claims about and against the Church for its financial dealings in Australia and in other countries, such as alleged abuse of Australian tax laws and alleged failure to disburse funds to care for the poor and the distressed.

I want to be upfront about why I would offer this opinion piece. I have never done this before.   And there’s no hiding the fact that I love this church, which I have observed as a member over my entire life blessing and helping the poor and distressed in countless places and circumstances. It is hurtful to me and other faithful members of the Church to see the Church unfairly attacked and slandered in this manner. 

I also have a particular connection with Australia and am thankful to have cherished friends (mates) there as a result of my having lived there for three of my high school years from 1968 to 1971.  My parents served as volunteer missionaries for the Church in Adelaide for three years and later in Sydney.  And so, this incomplete and misleading reporting strikes me as being deceptive and harmful to my Aussie brothers and sisters!

Over my 36-year career as a former tax, business, and estate planning attorney/CPA, I observed from my own numerous interactions with church tax professionals related to the dealings of my former clients with the Church that the Church and its tax advisors have always been fastidious about strict compliance with taxation laws and regulations relating to charitable giving.  

Bias bleeding through. The particular slant and prejudice of associated reporters are not hard to identify. For starters, since at least October 2018, the President of The Church of Jesus Christ of Latter-day Saints, Russell M. Nelson, has pleaded with both its members and with news organizations to refer to the Church by its proper name, The Church of Jesus Christ of Latter-day Saints.  As soon as a news story leads out by calling us “The Mormon Church” or “Mormons,” it’s become increasingly clear that this a bright red flag of bias, indicating that this news organization is in attack mode and has no respect for the Church and likely no interest in objective, honest reporting on the topic presented.  In the 60-Minutes story and related articles, that is exactly how the attack starts, by an in-your-face disregard for the correct name of the Church and its members.  Indeed, the article by the Sydney Morning Herald goes so far as to sarcastically refer to the Church’s family of related entities as “Mormon Inc.” To me, this is disrespectful and a true sign of the real smear motive of the author(s).

Even the music and lyrics in the background of the 60 Minutes story are clearly and cleverly orchestrated and calculated to send negative vibes/messages about the Church. Those are matched by creepy video segments of a supposed single young male missionary going door to door by himself for the Church (which clearly never happens since they always go with one or more companions).  To me, these were also big red flags of bias which signal little to no serious intention to give an honest, balanced view of the important subjects being discussed. Throughout the reporting, there are multiple quotes from disaffected former members of the Church, who appear to be their main sources. In fact, Ben Schneiders, who again appears to be the primary force behind these stories, has a history of misleading and inaccurate religious financial reporting and, in the early days of this story, engaged in misleading behavior about the breadth of the investigation.

Which is too bad. Because with the cynical bias removed, this story could be one about tremendous charitable giving organized quickly, run efficiently, and responsive to the incentives of the Australian government.  

There are five key claims made by these news organizations—each of which deserves a forthright response. In what follows, the direct quotes are from the main article in The Sydney Morning Herald, followed by some context notably left out by the journalists involved.

Claim #1: “The global Mormon church has overstated the amount it gives in charity by more than $US 1 billion ($1.56 billion), apparently to make itself appear more generous than it actually is … In public statements, the Church has claimed its global giving through its charity arm, Utah-based Latter-day Saint Charities increased by $US1.35 billion between 2008 and 2020.”

The Herald provides no reference or support for this allegation of what the Church has supposedly said in “public statements.” What this report seems to be missing is that Latter-day Saint Charities is one of multiple organizations through which the Church provides charitable giving—so we should expect the Church’s total charitable giving to be much larger than what is listed in the audited financial statements provided by Latter-day Saint Charities.

I put together the following table summarizing the three audited financial statements referenced in the Herald article: 

Among other things, this table demonstrates that this particular entity of the Church of Jesus Christ has indeed disbursed most of the funds it has received towards charitable causes.

If the desire was to consider and present a complete and honest picture of the Church’s charitable activities, the Herald article could have referenced other public information provided by the Church, such as “Caring for those in Need: 2021 Annual Report of The Church of Jesus Christ of Latter-day Saints.” Why not even mention that report? Referring to this 2021 report, President Dallin H. Oaks, First Counselor in the Church’s First Presidency, provided this summary information in the October 2022 General Conference of The Church: “Our 2021 expenditures for those in need in 188 countries worldwide totaled $906 million—almost a billion dollars. In addition, our members volunteered over 6 million hours of labor in the same cause.”

To reiterate, the charitable activities administered through LDS Charities are only a small part of the expansive outreach and financial disbursements provided by the Church to the poor and the distressed as a result of the generous donations of Latter-day Saints around the world. Any attempt to capture the full picture of the Church’s finances would simply have to pay attention to the many other capital and operational expenditures associated with its work in the world. That includes temples, chapels, missionary work, higher education, church education, and family history, among other things—all of which are enormous investments and none of which are profit-making endeavors.[ref num=”1″]

Is any of this included in the calculations proffered by these articles? Not at all. Thus, the Herald article falls woefully short in giving a complete picture of all the good the Church does throughout the world. Surely these reporters had to know that they were putting the Church in a bad light based on only a very small part of the big picture. 

Claim #2:  “In addition, the Church runs a $US 100 billion, tax-free investment fund, Ensign Peak Advisors, which has quietly built up major stakes in blue-chip firms and now has multibillion-dollar investments in Apple, Microsoft, Amazon, and Google owner Alphabet. It also invests in major weapons manufacturers, including Lockheed Martin, Boeing, and Northrop Grumman. Ensign Peak is supposed to be used to fund charitable and other spending, but former insiders alleged it was almost entirely used to stockpile cash and investments.” One former disaffected member also claims that what the Church has done is “totally unethical, absolutely a case of fraud.”  

Remarkably, these sweeping generalizations about partial truths are made by reporters and interviewees without any reliable evidence. The Herald article states that it has relied upon public filings with the SEC for these claims. Ensign Peak does, in fact, voluntarily file quarterly 13F reports with the SEC, though apparently not required by law to do so. That’s pretty impressive transparency. As of June 30, 2022, total equities of approximately $42 billion are shown in its 13F filing. And yes, it’s likely that this number is even larger when you also consider other holdings such as bonds and international equities.

The reality is that despite the whistle-blower report being made more than three years ago, no fraud has been uncovered or reported. It is, therefore, irresponsible for 60 Minutes Australia and The Herald article to include unsubstantiated claims from disaffected members as to the amount, purposes, or legality of these accumulated investments.  

Given all of the committed expenditures the Church faces in its worldwide religious operations, it is obvious that the Church needs very substantial resources, including for “a rainy day.” Shouldn’t every institution be operated to live within its means and save for “a rainy day”? Every time there is a downturn in the economy, I appreciate so much the wisdom and foresight of our inspired leaders. I wish our US Federal Government would follow this example of living within a budget and getting out of debt. 

The fact the Church has built up a substantial reserve of investments is something positive to be lauded rather than meriting suspicion. If you were to study the history of the Church, you would learn that the Church was burdened with debt and struggling financially in the early 1900s.  I, for one, am thankful to see that the Church has come out of those very difficult financial circumstances to build up a substantial fund for rainy days.

As the Church builds up reserves for all of its programs and for future unforeseen hard times, would these reporters have the Church hold all of these funds in cash?!?  That would be an unwise investment indeed!  As a member, I am thankful the Church is investing its reserves responsibly, including securities, farms, and other real estate investments.

The 60 Minutes piece even contained a silly statement by one of its interviewees speculating that the Church is saving all this money for the time when after Jesus comes.  In all my life, I have never heard a leader of the Church make such a statement, and I am confident the Herald will not find such a verifiable statement anywhere from a general church leader.  Again, this seems to be smear rhetoric intended to harm the good name and reputation of the Church.

Claim #3: “Mormons are required to pay 10 percent of their gross income in tithing, a significant financial impost on followers. Nielsen said this was hard on poorer Mormons, particularly in the developing world, describing it as “an extremely regressive tax.”

This claim is undeniably false. Yes, members of the Church believe that this is a commandment from God, just as it was in ancient times of the Bible (Malachi 3:8-12). And like all commandments, Latter-day Saints are encouraged to follow it. But members pay tithing as a free-will offering (voluntarily) because we have faith that God will compensate us for our sacrifice.[ref num=”2″]

And what about the widow’s mite? (Mark 12:42,44). It seems clear from the ministry of Jesus that He was not about stopping the poor from sacrificing to make a charitable contribution to those even poorer. If that’s how Jesus felt, then why would we suggest otherwise? It is short-sighted and wrong to call tithing a burden upon any member of the Church, no matter how poor, because God’s promises of compensating blessings are indeed true.

It is also important to note that contributions from members of the Church fall into several categories—only one of which (tithing) is mentioned by the Herald article.[ref num=”3″]

Claim #4: “The joint investigation has also uncovered significant evidence of alleged tax minimization and evasion by the Church, including in Australia and Canada where hundreds of millions of dollars are routed through shell companies or other entities to maintain the tax-free status of its income.”

In relation to the above: “The Age and The Sydney Morning Herald revealed in April that the Church in Australia had structured itself to allow its adherents to collect hundreds of millions of dollars in tax exemptions that are not lawfully available to followers of other religions.”

This is yet another spurious charge against the Church, made by reporters who simply have no serious basis for claiming there has been tax evasion. 

If there are lawful ways to use tax laws and regulations to minimize taxes, then that is exactly what any institution or individual should do. There is a difference between tax avoidance (legitimately using tax laws and regulations to minimize a tax bill) and tax evasion (fraudulently avoiding the payment of taxes). As former Federal Circuit Court Judge Learned Hand once said:

Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again, the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike, and all do right, for nobody owes any public duty to pay more than the law demands.[ref num=”4″]

If there is a legitimate way for members of the Church in Australia to receive a tax deduction for their tithes and offerings, then, of course, the Church and the Australian Latter-day Saints should avail themselves of that law or regulation.

In this case, especially, the funds are being rerouted to humanitarian causes precisely the way Australian tax law both allows and incentivizes.

In the 60 Minutes segment, the interviewer pressed and pressed the Assistant Minister for Charities, Andrew Leigh, to agree that the Church was somehow involved in wrongdoing and then tried to make Mr. Leigh look like the big bad government for not being willing to do so.  Mr. Leigh appropriately respected the Church’s privacy. Believe me, if the Church were violating Australian tax law, the Australian government would be all over this.

But more substantively, Latter-day Saint Charity work in Australia appears to be run with striking efficiency. In 2021, the most recent year data is available on the Australia-specific LDS Charitable Trust Fund, it brought in $100,211,557, distributed $131,604,476, and spent $7,810 on overhead.[ref num=”5″]

Claims that this amounts to a “shell company” appear to be based upon evidence such as them not having a visible enough presence in the country or a paid staff.  I have addressed the staffing issues elsewhere in this piece.  As for visibility, I have been given to understand that most of their funds are then distributed to organizations like Red Cross, Water for People, and the World Food Program.

In the end, claiming that donating to humanitarian causes is a “tax minimization strategy” is extraordinarily cynical. I understand that Australian tax law incentivizes donating to humanitarian causes, and the Church has organized its finances in the country to do exactly that. 

Claim #5: It is “inconceivable that the Church was making significant global charitable decisions from Australia.”

According to Australian law, charities that qualify for tax deduction purposes must be run out of Australia. And the recent reporting on this matter takes for granted that this couldn’t possibly be the case—suggesting that because Latter-day Saint Charities Australia has no paid staff, it can’t be led within the country. But this speculation is simply not true. 

The high efficiency of the fund is made possible by the Church’s culture of volunteerism. As Public Square Magazine has confirmed, Paul Gray and Carl Maurer direct the fund. Carl Maurer is from Brisbane, served a mission in Perth, and attended Griffith University in Queensland. He built his career in the swimming pool industry. Paul Gray is from the Sydney area. He attended the University of South Australia and works as an accountant. In addition to his philanthropic work with the Church, he is involved with Australian charities focusing on child safety.

Does Australian law allow these people to coordinate and work with global Latter-day Saint Charities? Clearly, yes. Australian charity expert Krystian Seibert from Swinburne University’s Centre for Social Impact says that qualifying charities can “engage and consult with partner organizations outside Australia.”

This is precisely the type of relationship the Church describes existing when a spokesperson for the Church said it “identified and referred” charitable projects to their Australian counterparts. 

Conclusion. We all understand how media outlets are always looking for new material, especially sensational content that will be eye-catching. But as institutions we look towards for truthful investigation, these journalists have a moral obligation to be fair and unbiased in their reporting. We hope and pray they will reserve judgment and withhold attacks when they don’t have all the facts.  

And when they don’t—when they instead perpetrate a scandalous and dark narrative impugning an entire people and faith community—what are we to think? Rather than suspect fraud on the part of the Church and its leadership, it’s hard not to conclude in this case that 60 Minutes and the authors of the Herald article are the ones working a fraud and deception upon their viewers and readership. 

I obviously trust the Church and its leaders as humble and trustworthy men and women who come from all different professional backgrounds and socio-economic circumstances. Are they perfect?  No, of course not.  But I am persuaded that they are doing their best to ascertain and follow the mind and will of God, and they are trying hard to build the kingdom of God, help the poor and the distressed, and yet to keep sufficient reserves to cover current and future obligations. This is wisdom!  

I am confident that time and honest investigation will continue to vindicate the Church against these wrongful and hurtful allegations—demonstrating that the Church practices what it teaches about being an honorable, honest citizen in the world. As Joseph Smith himself taught, “We believe in being subject to kings, presidents, rulers, and magistrates, in obeying, honoring, and sustaining the law.” 

News organizations should operate in good faith and give the Church some credit and recognize all the wonderful and generous things the Church is doing to lift and bless the world. Come on, mates, what we need here is some fair dinkum reporting!

Notes:

(1)  Here are just some of the many examples of where the resources of the Church are needed: 

• Temples. The Church is a temple-building church.  We members of the Church believe that temples are essential in the Lord’s plan to provide saving and exalting ordinances both for the living and the dead.  And, by the way, the Church is the only one in the world I am aware of that can explain how God can be fair and merciful to the billions of His children who have lived and died without a knowledge of their Savior and Redeemer, Jesus Christ. Temples, of course, are not income-producing properties. And we as a people are gladly making a priority investment in expanding them over the earth. The Church has 169 operating temples located around the world.  Four of those are being renovated.  The Church has an additional 55 temples under construction, and 72 temples announced.  When all the temples announced so far in the world are constructed, there will be 300. And this number will undoubtedly continue to grow each year. Each temple is constructed as the Lord’s house, and, like King Solomon in the Bible, the Church spares no expense in building with the very finest of designs, construction materials, and furnishings.  The Church does not provide numbers publicly regarding the cost to construct these temples, but the cost is obviously enormous, in the millions or tens of millions of dollars depending upon the temple.  And then there obviously has to be a significant annual operating budget to keep each temple functioning in its critically important role. These temples are being built in many countries around the globe, including those where the locally donated tithes and offerings would not cover a fraction of the cost.
• Gathering Scattered Israel—Missionary Work. As with the Apostles of old, the Apostles of our day have also received a divine commission to take the Church’s message of salvation and peace through Christ to every nation, kindred, tongue, and people.  And the leadership of the Church takes this command from the Lord very seriously.  This is reflected in a robust missionary program around the world. Currently, there are approximately 54,500 full-time teaching missionaries serving as volunteers throughout the world and 36,600 Church-service missionaries. While it is true that missionaries pay a portion of their monthly living expenses, this missionary program is very heavily subsidized by the Church, including providing a fleet of cars to many of the teaching missionaries, providing apartments and a monthly food budget, covering medical expenses, and support from mission leaders and office staff in Church-owned properties at 407 different locations around the world.  Again, these are non-income-producing properties. The Church’s missionary program also includes missionary training centers located in various cities around the world, with extensive staffing and other operational costs. These mission-program properties of the Church have large budgets for both capital improvement and operations. 
• Education. The Church heavily subsidizes education through its three BYU campuses (Provo, Utah, Rexburg, Idaho, and Oahu, Hawaii).  Again, the capital improvement and operational budgets for these properties is enormous.  There is also a low-tuition BYU Pathways Worldwide program that provides online education to a current enrollment of approximately 57,000 students around the globe. 
• Family History.  The Church sponsors Family Search and other online programs and phone applications to assist both church members and friends around the world to find and connect to their ancestors and other relatives through the largest genealogical data base in the world.  Accounts are free to everyone.  And the Church owns and supports physical family history centers in many locations, to give hands-on help.
• Religious Education. The Church also sponsors religious education for students, beginning in 9th grade and continuing through the college years at hundreds of seminary and institute buildings around the world.  And yes, you guessed it, more non income-producing properties with enormous annual budgets.
• Houses of Worship. The Church obviously owns thousands of houses of worship around the world. Currently, the Church has approximately 31,300 congregations (called wards) and it supplies buildings and operating budgets for these non income-producing chapels.
• Visitors Centers.  The Church owns and operates visitor centers at multiple locations around the world.
• Other Related Charitable Entities. The Church has other related foundations and entities that are used for the disbursement of funds for humanitarian and charitable purposes.

(2) That means, in the end, members will not miss those funds. As promised by the ancient prophet Malachi, we believe that God will open the windows of heaven and pour out a blessing upon us  In my own life, this promise has been fulfilled, and millions of faithful members around the world would similarly affirm the fulfillment of this promise from God. It also seems clear that God has richly blessed His earthly kingdom to finance and enable His work to be carried out throughout the world

(3) Different categories of contributions include the following: Tithing (10% of our income—these funds are understood by us to go towards buildings and church programs and operations); fast offerings (these funds are contributed by members to the Church for the use by local leaders to care for the poor and needy in their own geographies and congregations); humanitarian contributions to a general fund of the Church, for use by the Church to help many humanitarian causes around the world; missionary fund contributions (these are voluntary contributions to assist with the expenses of the Church’s missionary program—see related discussion herein); temple fund contributions (these funds are applied towards the Church’s numerous temples around the world—see discussion herein); and other contributions.

(4) Helvering v. Gregory, 69 F.2d 809, 810-11, 2d Cir. (1934). Even though the Herald article is talking about Australian taxation, I submit this statement by a US judge is still both applicable and weighty.

(5) This LDS Charitable Trust Fund is a separate entity operating apparently within Australia—distinct from the Latter-Day Saint Charities organization in the US whose numbers are referenced in the earlier table. The Church works through multiple entities in sharing resources around the world. The fund’s published reports also show money being received and then  disbursed for charitable causes.

The post Defamation Down Under: Responding to the Aussie Allegations appeared first on Public Square Magazine.

While there are a number of other effective responses to this challenge to some peoples’ faith, both in this magazine (see Aaron Miller’s essay here) and elsewhere (such as Kathleen Flake’s recent commentary), there are two economically ignorant assumptions that critics of the Church’s finances have often made which have not been challenged but which should be. 

Is Lack of Spending Really Why So Many Suffer?

The first unexamined and problematic assumption is this: The Church has vast resources which they are greedily hoarding or misspending. If it were not for the Church’s greed, they could alleviate a lot of suffering and poverty. If the Church would just write a check, poverty, disease, and a lot of suffering could be greatly reduced.

The first question this raises is who would the Church write a check to? Is there some institution that has the expertise, capacity, and capability to alleviate all the suffering in the world, yet merely lacks sufficient resources? Obviously, there is no such worldly institution. The Church searches far and wide for well-run, effective organizations, and it partners with them anytime that’s possible.

 Resources Follow Solutions—Effective Solutions Attract Resources

You see, lack of money is usually a symptom, not the core problem. That doesn’t mean we should ignore the problem, it just means we need to think carefully about how to solve it; hardly ever is it as simple as writing a check! When it is free to do so, capital chases success and flees failure. This means that lack of resources is rarely the cause of the problem and more often simply a signal pointing to a deeper underlying problem. But because it’s the most simple and obvious one, it’s easy to assume that poverty is the cause rather than an effect.

Nineteenth-century economist Frédéric Bastiat wrote about the key difference between money and wealth (or as he calls it, “riches”). He says confounding the two “is the cause of errors and calamities without number.”

For wealth, according to Bastiat, is not “a little more or a little less money.” Instead, it’s “bread for the hungry, clothes for the naked, fuel to warm you, oil to lengthen the day, a career open to your son, a certain portion for your daughter, a day of rest after fatigue … instruction, independence, dignity, confidence, charity … progress and civilization.” Money, therefore, is the store and symbol of wealth, but not wealth itself.

We are all alarmed at the growing problem of homelessness in many cities across the United States right now.  Many cities have devoted ever-increasing funds to this problem. For example, San Francisco now spends one billion dollars a year on homelessness, and that is on top of all the state and federal programs also devoted to this problem. It’s easy to walk down the street of a wealthy city like San Francisco and shake your head, appalled that there is such poverty among such wealth. You wouldn’t be wrong, but if you assume that homelessness is because of greedy people hoarding their wealth at the expense of the poor, you have missed the point. As journalist Erica Sandberg said, “If our problems could be solved with money, our problems would have been solved a long time ago. It’s not the funding, it’s policy.”

In fact, as Michael Shellenberger has documented, the money spent on solving the problem has actually made it worse, because it misdiagnosed the problem. While housing costs in San Francisco are outrageous, most of the people living on the streets are dealing with drug addiction and other mental illnesses, and no amount of cheap housing can solve that problem. He agrees with Sandberg, claiming that the homelessness problem does not stem from a lack of money or social programs. 

 Oprah Winfrey was deservedly praised for her generosity when she started a lavishly funded all-girls boarding school in South Africa, but she was recently heartbroken to learn of a series of sex scandals in the school. This is not to say that she shouldn’t have opened this school, only to say that even large amounts of money cannot guarantee success. Perhaps even more important than money are accountability, identifying effective solutions, properly implementing them, and diligent follow-through, while being willing to make adjustments as time goes on. This means you will very often start small and then expand from there—while recognizing this hard truth:  The bigger the initial investment, the more likely it is to fail. It is likely for this reason that the Church’s Humanitarian Services continues to grow and expand its reach slowly and surely, rather than quickly-but-ineffectively.

Spending is About the Future, Problems are About the Past

It’s hard to know if an investment will bear fruit. In hindsight, what seems inevitable seemed at the time like something else—perhaps a hugely risky bet worth taking. Apple’s decision to enter an already saturated mobile phone space was controversial at the time, and understandably so. They couldn’t know if they would make any money on their iPhone until after they spent all the money developing it and manufacturing the first production run of their first model. The same thing goes with their next product—if they gave away all their profits as increased salaries or bonuses, they wouldn’t have any money to develop and manufacture their next product. Some companies are too profligate in their spending, and some are too penurious, but since they do not know the future with any certainty, investments are often a difficult decision to make beforehand.

Most of the criticism towards the Church is that it has been too conservative with its spending, but that seems even more difficult to second-guess when we shift from capitalist profits to Christian prophets. If we believe that the leaders of the Church are prophets, seers, and revelators, and we sustain them as such, perhaps it would also be fair to assume that they know more about what is coming, and how best to prepare for it, than we do?

Beyond a Certain Point, It’s Hard to Spend Money Faster than You Earn It

Because most of us are not billionaires, we do not understand how wealth works. (Oddly, sometimes this includes even wealthy people like Utah billionaire Jeff Green who complained that the Church wasn’t doing enough “to alleviate human suffering.” If he and others are sincere in this complaint, then comments like these also betray a misunderstanding of how wealth works.) At some point not only are your daily cares more than adequately supplied, but it becomes very difficult to spend more money than you earn. This is something very few of us can comprehend, since so much of our physical effort, time, and mental energy is consumed by providing for ourselves and our families. We naturally assume that much wealthier people and organizations have similar troubles, but they don’t. 

Jennifer Risher writes about this shift in her own thinking when she and her husband, ground floor investors in both Amazon and Microsoft, suddenly became wealthy. As a friend explained to her:

“Moira likened the experience of sudden wealth to mentioning your love of beef to a friend, then having two thousand head of cattle arrive as a gift to your door. ‘What the hell do you do with two thousand steers?’ she said. ‘You need to know how to deal with them and that’s very different than eating a steak.’”

We also know the opposite example, where lottery winners with no experience managing wealth suddenly get a great deal of money. It’s disheartening how many of them go broke and ruin their lives as well. Their problem was never lack of money, it was the skills to manage the resources they were given.

Before we look at the Church, let’s look at a secular example of an organization devoted to improving the world. The Bill and Melinda Gates Foundation, despite spending $60 billion on grants, has nevertheless more than doubled in size. (Their financial information is disclosed on their website here, but I have distilled that information onto a spreadsheet you can access here, along with some other calculations I make in this article so you can check my math.)

This graph charts the total value of the assets in the Gates foundation. While it does bounce around a bit year to year based on market performance, over time the assets of the foundation have steadily grown. And remember, this growth includes the $60 billion in grants and other expenses that the foundation spent.

Despite a full-time staff devoted to handing out grants, a mandate to spend money, and no shortage of problems in the world, the Gates Foundation has been unable to spend more money than it earns through its investments. They have no need for a “rainy day” fund, but their assets are still growing. They certainly could spend more money, for example by converting their assets to cash and then lighting it on fire, but that would set a poor example with their grantees, whom they expect to actually do some good with the money they give them.

Capital Expenditures are Distinct from Operating Expenses

The second economically ignorant error is thinking of capital expenditures the same way you think of operating expenses.

Our daily bread is the most obvious example of an operating expense. It is spent, and then it is gone. Like the manna in Ancient Israel, you could eat the manna for today, but you could not keep the manna for tomorrow. Tomorrow’s manna had to come tomorrow. No amount of manna today will alleviate the need for manna tomorrow. Food, water consumption, medicine, are all examples of ongoing operating expenses.

Because the same money can be spent on just about anything, you can spend it on operating expenses, or you can spend it on capital expenses. Imagine you are a farmer, but you also have to eat. You can eat your seed corn (operating expenses), or you can plant it (capital expenses). Each bears very different results. One will keep you alive in the near term (operating expenses), but potentially at the expense of starving in the long term (planting that seed for the harvest later in the year.) You have to have a balance, but you absolutely can’t neglect capital expenses or you soon won’t have any resources to spend on operating expenses.

Unlike operating expenses, capital expenses amortize. That means that while you spend the money upfront and once, you can keep using the asset long after you incurred the cost. The farming equivalent is a farmer buying a more efficient tractor. While he has to spend that money upfront, he can use that new tractor for many years, and in many ways, it pays for itself in improved operational efficiencies. In the case of buildings, like temples and even shopping malls, the expense can be spread out over the decades (and even sometimes centuries) of the usable life of the asset, and these assets, in turn, pay spiritual and temporal dividends over that same time period. This is not the case with operating expenses, which recur regularly.

A while ago I visited Saint Peter’s Basilica in Rome, and I was awed at its grandeur and beauty, not to mention the craftsmanship and courage it took to construct. But I couldn’t fail to wonder if all that wealth could have been used to better effect—especially because there were many indigent people nearby begging for alms.

Yet it has stood for 405 years as a testament to the faith of the largest Christian denomination, inspiring and uplifting several lifetimes worth of Catholics worldwide. Constructed over a period of 109 years, it cost 50,000 ducats to build, or about seven billion in today’s dollars, which works out to just over seventeen million per year. With an estimated 1.2 billion Catholics, that works out to less than 1.5 cents per year per currently living Catholic, or if paid in one lump sum for each Catholic, $1.08 per currently living Catholic. (We’re assuming all Catholics who lived before now contribute nothing to its construction.) 

 Or to think of it in reverse, if the Vatican sold off Saint Peter’s Basilica for what it cost, dismantled it and sold off the scrap, then distributed the proceeds to each Catholic, it would give each of them a one-time payment of $5.83.  And what about next year? The building is no longer there to inspire and lift, and the $5.83 would be long gone as well.

City Creek

We can do the same thing with the assets of the Church of Jesus Christ. While there is really no comparison to Saint Peter’s, we can still use math to estimate City Creek shopping center’s financial impact on the average member, as it seems to be the most common financial asset the disaffected currently complain about. 

 It was built for an estimated $1.2 billion. But remember, this is an amortizing capital expense. It opened in 2012 and should easily have a life span of at least 50 years. That means that even if City Creek never recovered that expense through its rents, and even if these funds came from tithing funds (which they did not), the total cost of the project to each member works out to be $72.02, or amortized over its expected useful life, $1.44 per year. Based on the average US salary and a member paying 10% to the Church, withholding your own share of that would mean you pay 9.97% on your increase instead. While you would be disobeying the spirit of the law, and I doubt receive the full blessings of tithing, you would be close enough to 10% that no one else would notice. This makes it seem even more foolish to withhold that 9.97% because you object to the way the 0.03% was spent. 

Put another way, if you have shopped at City Creek and parked at a nearby parking meter, you spent more on parking than your share of the cost of the entire development. And if you bought a pair of shoes while you were there, that would exceed your lifetime share of the cost.

Of course, back in the real world, I am confident that City Creek is earning the Church a healthy return on its investment. At an eight percent average return for most investments, that means your “investment” in City Creek will earn the Church $5.76 a year or $288.06 over the amortized lifetime of the project, or four times the initial expense. And this assumes that the rents do not appreciate and the asset lasts no longer than 50 years, both of which are unlikely.

Two Parables Apply: The Widow’s Mite and the Talents

I am grateful that our church leaders take seriously their sacred responsibility to carefully steward the sacred tithing funds. The widow’s mite is an important parable for all Christian believers, and the Church’s attitude is so refreshing compared to the way governments spend tax dollars that are collected by the force of law, and so often wasted. In comparison, church leaders are careful and trustworthy.

While the widow’s mite is certainly important, the critics of the Church’s finances forget an equally important parable, which is the parable of the talents. The same Monday Morning Money Managers who feel City Creek is wasteful and a poor investment then turn around and criticize the Church for making too much money with their public investment manager, Ensign Peak Advisors. We have already discussed how it is not as simple as it might appear to wisely spend extremely large sums of money, and so then the question becomes, what should the Church do with those excess funds? 

I think everyone agrees that the Church ought to save some portion of its contributions and profits for a rainy day, it’s just some dispute how much they may have set aside. (I expect the impact of COVID-19, and now the war in Ukraine has altered many peoples’ calculations of what is a reasonable reserve.) 

But let’s set that point aside. If the Church should save some of its excess funds against a rainy day, then what should it do with those funds? Should it just keep funds as cash, where it earns barely anything in actual terms, and when corrected for inflation, actually loses money? To do so would correspond to the slothful servant who buried the single talent he was given. The Lord rightfully condemns those who, like the slothful and fearful servant, do not wisely invest what they have been entrusted with to earn the best possible returns. 

By the standard of the parable of the talents, church leaders are wise stewards. By coincidence, the same year that Ensign Peak Advisors was founded is also about when I started working at my first “grown-up” job which included a 401(k) with an employer match. So it’s rather easy for me to compare the performance of my investments with the Church’s over similar time periods. And it’s somewhat depressing for me to admit that this particular Monday Morning Quarterback has been sacked, way behind the line of scrimmage. The Church has earned far better returns on my tithing funds than I could have if I had kept that money and invested it myself.

The Church has always been careful to collect as much income as it can from these sacred tithing funds. When I started as a freshman at BYU in 1988, I was called to be an assistant financial clerk. We still used typewriters to send in tithing reports and used handwritten receipts. Right after we reconciled the financial batch, we would place a phone call and report to the bank the amount of the deposit just before one of the members of the Bishopric went to the bank to make the deposit. Why? I was never told, but in addition to the accountability check on the Bishopric entrusted with those sacred funds, it was also probably because the Church could begin earning interest on those sacred donations within minutes of it being collected. If the Church took that much care to collect a few hours’ worth of interest, they are careful stewards indeed.

 Much of the financial criticism of the Church comes from naïve individuals who do not understand wealth or investing, and who second-guess our inspired leadership’s stewardship of the assets and income the Church has. From my own work in real estate and finance, and working with extremely wealthy people, I reach a very different conclusion. As reflected above, I believe there is a strong and unappreciated rationale confirming that our Church leaders have been good and faithful stewards of the sacred funds with which they have been entrusted.

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But, the story beyond the headline merits a closer look. As you may have read, a whistleblower alleged this week that the Church of Jesus Christ’s investment arm, Ensign Peak Advisors, potentially violated tax law by building a $100 billion investment fund with minimal or zero “charitable” distributions. The whistleblower’s report also alleges that the fund made two “illegal” distributions. 

This article is an analysis of the allegations, the facts as I understand them, and the pressing questions many are asking regarding these and other issues related to church finances. In my estimation, despite the allegations, the facts and applicable law suggest that the Church has not evaded taxes or done anything illegal or improper. 

Many, however, will still wonder whether the Church should distribute more of its reserves to charitable causes, publish more financial information, or if such a large endowment should be taxed. There are many reasonable perspectives on these issues. Below I discuss the potential trade-offs, benefits, and costs associated with such decisions.

Are the Church’s reserve funds illegal or somehow evading taxes?

For tax purposes, as an integrated auxiliary, the investment arm of the Church, Ensign Peak Advisors, is under no obligation to make minimum distributions. The allegations appear to stem from the whistleblower’s misunderstanding of tax law. For unknown reasons, the whistleblower apparently didn’t hire an attorney or a tax expert to help write this report.

One can only assume this is why so many of the conclusions in the whistleblower report diverge from the law. Not only does the whistleblower report misconstrue the definition of “charitable,” but it also applies something called the commensurate test (explained below) in a way never before applied by the IRS, and it fails to give enough evidence to demonstrate that two alleged investment disbursements were in fact improper.

For starters, the federal tax code does not have a minimum disbursement requirement for what are called “public charities,” a category of 501(c)(3) tax-exempt organizations. Churches are public charities by default.

There is a requirement that all 501(c)(3) entities carry out charitable activities that are “commensurate in scope with their resources.” This ostensibly means that a charity cannot merely accumulate assets and remain a charity. The law does not set a fixed threshold for this, though, and the IRS instead takes it on a case-by-case basis, applying the commensurate test very rarely. But, even by the whistleblower’s own admission, each year, the Church is, in fact, spending $6 Billion a year on its tax-exempt activities.

There is an interesting wrinkle in this case, though, that the whistleblower’s claim relies on. Ensign Peak Advisors, the legal entity where The Church of Jesus Christ of Latter-day Saints holds these investments, is exempt as a separate 501(c)(3) Supporting Organization. (Notably, the whistleblower also disputes this status, but without directly addressing how Ensign Peak fails to meet the legal definition. He instead focuses on the “spirit” of the status.) As a Supporting Organization, Ensign Peak is an independent nonprofit. The whistleblower claims that this requires Ensign Peak to pass the commensurate test all on its own—and not as part of the larger whole of the Church.

But according to the IRS’s own definition, Ensign Peak is also an “integrated auxiliary” managed by the Church, a legal treatment that combines their activities in certain ways. This is a critical detail that the whistleblower report only briefly mentions and seems to misunderstand.

If the Church directly held these investments, it would likely pass any legal tests without concern. Does it make a legal difference if Ensign Peak does the investing for the Church as an integrated auxiliary? This difference—a relatively narrow and technical one—has never been questioned by the IRS or a court, according to Sam Brunson, a Latter-day Saint and Loyola law professor who specializes in tax-exempt organizations.

After looking at the facts and allegations involved, Peter J. Reilly, a non-Latter-day Saint CPA and tax specialist, observed in Forbes that “Ensign is not a private foundation. It is an integrated auxiliary of a church. And there is nothing in the tax law that prevents churches from accumulating wealth.” Reilly reached out to Paul Streckfus, another tax expert who runs a trusted publication focusing on tax-exempt organizations. He, too, concluded that the “matter does not merit IRS attention.”

Is saving $1 Billion a year for a “rainy day” fund wrong or abnormal?

What the whistleblower appears to be concerned about is the fact that the Church is investing $1 billion a year in an endowment fund and not distributing it or the interest earned. But is building a reserve endowment illegal or wrong?

Maintaining large financial reserves is actually a common and encouraged practice among nonprofits and governments. Two similarly large organizations show somewhat how the IRS might consider the case. Both The Bill and Melinda Gates Foundation and Harvard University operate with endowments of around $50 billion, roughly ten times their annual budget. The IRS has not considered either one to be in violation of the commensurate test.

If the whistleblower numbers are correct, the Church of Jesus Christ is maintaining an endowment equal to about 16 times its annual budget, a ratio that is within typical practices for endowed 501(c)(3)s. Many private foundations annually distribute a minimum of 5% of their total assets, making endowments equal to 20 times an annual budget very common. So, this practice of keeping a sizeable financial reserve is not likely to violate the commensurate test.

Why would the Church have a rainy-day fund?

Even if Ensign Peak were required to make distributions by law—and as mentioned above, it appears that it is not—when the report says that Ensign Peak Advisors should be distributing its wealth for charitable causes, it appears to misunderstand what the law considers charitable.

Under the federal tax code, any religious purpose is a charitable one by definition, including saving against the Second Coming of Jesus Christ. Though thinly sourced, this was a rationale the whistleblower claimed that Ensign Peak Advisors was using to justify the endowment. As noted by Forbes commenter Peter Reilly, the IRS likely wouldn’t question the legitimacy of this religious purpose.

Of course, the Church likely has many other religious reasons to have an endowment fund and has publicly stated that it saves and makes prudent investments to uphold spiritual teachings. Such a fund might be built to prepare for heavy growth in third-world countries (especially as membership is trending toward the global south and slowing in places like the United States). They might keep such a fund to help, as it often does, after natural disasters that could come with greater frequency due to climate change conditions. A source with first-hand knowledge says the Church thinks about such considerations.

Obviously, rainy day funds are also typically built to prepare for possible future economic downturns. Recently, some state governments have been building sizable “rainy day” funds that together now total more than $70 Billion. Some have wondered if such funds are adequate in the event of another downturn, climate conditions, or other circumstances.

There are even more reasons the Church may want to hold large reserves. Given that major party politicians, and others like the whistleblower, have stated with greater frequency that they would like to see the Church and other religions lose tax-exempt status, this is yet another reason why such institutions might want large reserves. The Church, having had its property confiscated in the 19th century in both Missouri and Utah, also has a historical rationale for building especially large reserves.

What about the two alleged distributions, those must be illegal, right?

The whistleblower alleges that Ensign Peak made large distributions to bail out a failing insurance company and to help fund City Creek Mall. First, there’s some question of whether Ensign Peak made the kind of payment to Beneficial Life Insurance that the whistleblower alleges. It’s more likely that they invested in Beneficial Life. 

This is, in fact, the purpose of Ensign Peak, to make investments in various equity or other financial instruments that will, in turn, generate profit to support the Church’s efforts and mission. It’s not clear how such investments would be improper. As the Deseret News reported, the whistleblower alleges “that Ensign Peak delivered $600 million to Beneficial in 2009. Beneficial made full disclosure to the Utah Department of Insurance that Deseret Management Corp., its owner, provided $594 million to Beneficial during the 2008 financial crisis to strengthen its balance sheet. Those public filings are on file with the Utah Department of Insurance, and the payment was reported in two articles published by the Deseret News at the time. Since 2009, Beneficial has paid dividends of almost a half-billion dollars back to Deseret Management Corp., according to public filings at the Utah Department of Insurance.”

The reporting continues: “The second payment challenged by the Nielsens (the whistleblower and his brother) was made as part of the Church’s City Creek development in Utah’s capital city. The Nielsens alleged that Ensign Peak Advisors improperly sent $1.4 billion from 2010 to 2014 to the Church entity funding City Creek, Property Reserve Inc. The Church did invest in the housing and parking elements of City Creek. Taubman Centers, Inc., a nationally recognized shopping center developer, owns and operates the shopping center.”

The whistleblower says the mall investment came from tithing funds, which contradicts what church leaders said publicly; thus, they claim the Church misled its members. However, even if initial tithing funds were used (and there’s no strong evidence available to claim that they were), there are good reasons that non-invested tithing funds might have been used as an intermediary step until invested assets could be liquidated at a prudent time. This claim, in other words, doesn’t engage in a very sophisticated analysis with regard to how reserve funds and returns might be managed in accordance with sound financial stewardship.

Because investing assets is legal, the remaining issue is that a charity can only invest its assets as long as it doesn’t provide what the law calls an “excess benefit” to particular people in the process. There is no evidence available or provided by the whistleblower that these investments did this.

Last, an audit over any of these legal issues seems very unlikely. Congress requires the IRS to have a stronger case for auditing a church than for other nonprofits. This case doesn’t seem to satisfy that. The size of the endowment, relative to the total activity involved, is common. The two “improper” disbursements can be easily justified as investment activities. Despite all 74 pages in the report, it lacks substance.

Are there other public policy concerns?

The technical, legal issues are not entirely the root of the controversy, though, even if the accusation is coming from a whistleblower. Not even the whistleblower limits the issues to tax law. The online version of his report is addressed not only to the IRS but also to church leadership, members, Congress, and the general public of the United States.

It is clearly intended to raise policy and ethical issues, not just legal ones.

Other questions are:

1.   Should a church hold $100 billion that could otherwise be spent on helping those in need?
2.   Should a church have the freedom to avoid transparency into its finances?
3.   Should a church, especially a wealthy one, pay taxes like the rest of us?

Should a church hold $100 billion that could otherwise be spent on helping those in need?

To answer question one—and taking the whistleblower figures at face value—it’s worth asking how the Church got that much money. Reportedly, it did so by saving and investing about 14% of the annual tithing payments of its members. Turning $12 billion in 1997, plus adding $1 billion per year, would only require a 7–8% annual return to get to $100 billion by 2019. It is not an unlikely scenario. This strategy simply reflects an approach charities use to build an endowment—or what anyone should do to build their savings. 

And here’s the paradox likely unknown to most people: giving money away effectively is generally much harder than earning it. The problem is that people assume that all giving is good giving when that is not remotely true.

A recent study by my colleagues Curtis Child and Eva Witesman showed that in prosocial initiatives, people are prone to assume only good outcomes and not anticipate bad ones. This is despite the reality that unintended negative consequences and waste are a constant risk of philanthropic giving.  Cutting-edge organizations like GiveWell and ImpactMatters are tackling this very issue.

Distributing a huge amount like $100 billion in a way that has a reliable, positive impact would be very, very hard to do and would require a kind of effort far beyond what people realize. The Gates Foundation in 2018 spent about $1 billion on operations to give away $3.7 billion. They are widely regarded as effective stewards of their assets and are having a commendable impact.

This isn’t to say that the Church shouldn’t do more than it already does, but to do it well would probably require increasing expenses for its staff and operations by $1–2 billion per year, which by the whistleblower’s numbers, would be a 30% budget increase.

This is in spite of the already-existing Latter-day Saint Charities arm that has spent $2 billion since 1984 on a wide range of projects, including clean water, refugee assistance, and disaster relief. And, once again, by the whistleblower’s own estimates, the Church is spending $6 billion on its total charitable, educational, and ecclesiastical efforts annually.

Expanding its efforts and spending—humanitarian or otherwise—isn’t a change that could happen immediately but would take years of cultivating expertise and relationships. It appears that over the past several decades, that’s precisely what the Church has been steadily doing: increasing its capacity for non-denominational humanitarian giving (in addition to its own internal church welfare and other philanthropic efforts).

What the Washington Post article really tells us is that having a very large endowment is a relatively new phenomenon for the Church of Jesus Christ after over a century of financial strain. It undoubtedly has new lessons to learn in managing this opportunity. But immediately expecting a historically large and effective grantmaking engine is probably unreasonable.

Should a church have the freedom to avoid transparency into its finances, and should it avoid “opening its books”?

What about the Church providing more transparency into its finances? Criticisms over transparency have dogged the Church for decades, particularly over its fiscal resources. Keeping these figures private from the public is entirely legal, a privilege Congress offers to churches in the spirit of the First Amendment. Disclosing this information would be a voluntary step.

There are, of course, reasons for Congress affording this privilege. Religions want the primary public focus to be its message rather than its money. If people want to focus on money, that’s their prerogative, but churches, understandably, may like to keep the focus elsewhere. Of course, as human nature dictates, the more something is kept secret, the more people and the press want to focus on it.

There are also legal considerations. Many organizations believe that if you’re known to have money, you might become subject to frivolous lawsuits or solicitations of bribes by bad foreign actors in order to operate overseas. There are even fears—not unfounded—that missionaries in foreign countries could be kidnapped for ransom if Church finances are detailed. Of course, now that this information has been leaked, many of these concerns can’t be put back into the bag since the numbers and the scope of holdings are now understood to be large. But that doesn’t mean the Church would want to assist in publishing its holdings to exacerbate such risks or provide exact figures that could create a certain kind of exposure. 

No matter these other considerations, it’s also the case that some simply don’t believe that it’s right for so much financial power to be shielded from public accountability. And many feel that transparency, when appropriately applied, is important and comes with many benefits, like the aforementioned factors of reducing fraud and engendering public trust. There are many American churches that voluntarily disclose annual financial reports to their parishioners. For reasons the Church indirectly explains, it chooses to keep its finances confidential. This is surely a trade-off they have repeatedly considered and will continue to weigh.

Despite the lack of detail, there is other evidence over many years that the money is not being used nefariously or illegally, as alleged. Ask any church employee or lay minister, and they can describe at length the culture of financial controls and of treating church funds as sacred—only to be used with prudence and great care. It’s also fair to argue, as has often been said, that there are just too many CPAs and lawyers, internal and external, to let things get too far out of compliance.

Related to this, and arguably the most revealing, is the fact that those who control these assets are not getting wealthy from them. Part-time volunteer church leaders are not paid. Full-time church leaders are given an annual stipend that is frequently much less than what they were earning prior to their ministry. It’s speculated that some or many of the wealthier full-time leaders simply donate much or all of their money back to the Church. The lack of transparency, whatever its motivation, doesn’t appear to be driven by greed.

Is asking the poor to tithe morally wrong?

The whistleblower’s brother, who co-wrote and publicized the report, says that maintaining such a large endowment especially deceives the poor people who give tithing at great personal cost—the widow’s mite praised by Jesus Christ. Why should they give when their gift isn’t needed by the Church?

First, the brother doesn’t acknowledge in the Washington Post article that the Church has one of the largest private welfare programs in the world, benefiting people in this exact situation. It’s very common that low-income people give what they can in tithing but then receive through a local leader rent money or food assistance well in excess of the tithing paid.

Tithing is a religious principle viewed as an act of faith and sacrifice to God. This is a principle with ancient, biblical roots. But there are also pragmatic benefits to tithe, even for those with little means. In his book, Who Really Cares, Arthur Brooks shares research showing that charitable giving, including religious giving, increases the health and happiness of the giver. One of the ways it does this is by inducing gratitude in the giver—a state of being that psychologists praise for its emotional and physical benefits. Giving even appears to increase future income by an average of $4.35 for every dollar given. Brooks notes that these are gains resulting from charitable giving, not just correlated with them. How the donation is used does not seem to affect these outcomes for the giver.  

In truth, the whistleblower’s claim—repeated in the Washington Post headline and by many others—that the Church misled its member donors is not well supported. While some church members do wonder about the need to tithe, the vast majority of Latter-day Saints primarily tithe as a personal sacrifice to worship God and offer thanks for His blessings in their lives. It is unlikely that many of them feel misled because the primary purpose was fulfilled the moment they donated.

One might hope that tithe payers would demand more transparency from their religious leaders if only to assure against fraud or waste. But church members constantly see the results of their tithing in the form of new temples and chapels being built, budgets allocated for local congregations around the world, and large-scale disaster relief efforts in which they personally participate. Additionally, the Church is audited on a regular basis, both internally and through external auditing firms. As far as many Latter-day Saints are concerned, the lack of fiscal transparency is overwhelmed by the rest of the evidence around them. 

While some have expressed distress over the whistleblower revelations, many church members have reacted to the Washington Post article with positive responses. Church leaders regularly encourage their members to follow prudent financial practices, avoiding debt and saving for the future. They see this endowment as the Church doing what it preaches.

Should wealth escape taxation because it’s owned by a church?

That’s a question that takes us to the United States Constitution itself. The Free Exercise Clause of the First Amendment guarantees freedom of religion from undue government burdens. And taxation is as fundamental a government burden as it gets. So, the question is whether a tax is truly justified.

This is an argument we’ve had for decades—one that goes beyond the federal income tax because churches are also generally exempt from property and sales taxes in every state. Even aside from First Amendment issues, the idea of tax exemption is that exempt entities create more value for a community than what the government could do in their place. That seems to be true of churches, including the Church of Jesus Christ. Strong evidence by a wide range of scholars indicates that regularly attending church services (of any kind) leads to better health, a stronger community bond, and more donations of time and money, including to secular causes. 

What about just taxing the excess wealth of a church? If the money is just sitting around, why not have the government put it to better use?

The money, of course, is not just sitting around. It’s actually invested in lots of businesses and markets, which in turn fuel the economy. Additionally, the idea that the money is ‘just sitting there’ challenges the very idea of an endowment (and personal savings, for that matter), which is to have resources in reserve for growth or unexpected shortfalls.

If a government system could reliably cover every shortfall and fund every growth opportunity in exchange for taxing away a surplus, there might be room for arguing to forbid endowments. But, given the current realities, there’s little suggestion that such a plan would work since the federal government is running a significant deficit, and it’s unlikely the government would bail out a church.

Why not tax huge endowments, where the nonprofits have more than they could ever need?

The federal government is currently testing the idea by taxing large university endowments.  While that tax does not apply to churches, public concern may lead to that outcome (First Amendment issues aside). How churches, including the Church of Jesus Christ, spend their money may be a factor in this discussion.

But the issue here also invites comparing the billions of dollars controlled by the Church with the billions of dollars controlled by individual billionaires or elite private schools. There are interesting arguments that no person or group should control such wealth. But, surely there’s at least some difference between a large church—that’s funded by and accountable to its 17 million members worldwide—and Jeff Bezos or others. It’s not unreasonable to trust a church—dedicated to explicit charitable and ecclesiastical missions—more than a single billionaire focused on building a business or simply personal wealth.

All of this said, just the idea of a $100 billion endowment held by a church will still offend some people. For some, it appears to contradict the humility and generosity that religion claims to foster. But considering all of the above, this may be a judgment made without full context. Moreover, such abundance is a relatively recent phenomenon for the Church, and time will tell how its leaders budget church funds in the years ahead. They at least deserve the opportunity to prove themselves to be trustworthy stewards, as by many well-accepted measures they have been up to now. There are no scandals to date involving fraud or personal enrichment by church leaders, just strong concerns about their frugality and transparency.

In the meantime, Latter-day Saints can appreciate the impressive arc of a church that was once on the cusp of financial ruin and now, thanks to faithful tithing and prudent management, appears to have all it needs and more to carry out what they believe is a divinely-appointed mission.

Note:  The Washington Post reporter commented on this analysis in a tweet here:  https://mobile.twitter.com/dmac1/status/1208116843870851072

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