In Temporal Matters the Church Practices What it Preaches – and That’s a Wonderful Thing

Church finances have been in the news recently as a former employee of the Church of Jesus Christ of Latter-day Saints filed an IRS complaint alleging that the church should lose its tax-exempt status because it had not disbursed money from its Ensign Peak investment fund for charitable or religious purposes. 

The Church responded, stating:

“Claims being currently circulated are based on a narrow perspective and limited information. The church complies with all applicable law governing our donations, investments, taxes and reserves. We continue to welcome the opportunity to work with officials to address questions they may have.”

Here are some of my thoughts on the issue:

Legal Questions: I am a CPA, but my experience is with individual taxes and I know very little about the complicated laws governing tax-exempt organizations.  However, experts in that area of tax law seem to agree that the church hasn’t broken any laws. 

For example, Peter J. Reilly, in an article in Forbes magazine states, “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.” 

Professor Phillip Hackney, also quoted in Forbes, adds “…the church pays out lots of money every year from its tithing.  If we view total expense in comparison to endowment if there were some payout requirement it would be met.”  In summary, the Church as a whole pays vast amounts of money out each year for charitable and religious purposes and there is no requirement that those payments have to come specifically from Ensign Peak or any other fund or account.

Church Leaders Not Enriching Themselves: Reilly, of Forbes, adds, “Most financial scandals involving churches involve the people running them looting them, not the church saving up too much money.  There is nothing in these allegations that indicates LDS leadership is enriching itself.”  Church leaders receive a relatively modest salary and there is no accusation – or evidence – that tithing funds are misused to enrich those leading the church.      

Excess Accumulation? The “scandal” seems to be simply that the church has accumulated too much wealth.  In the complaint to the IRS the amount in Ensign Peak is said to be $100 billion.  The Church has not commented on the amount of money it has in reserve.  Are there legitimate reasons the Church would want to build up significant reserves?  Here are some facts to consider:

Centralized Finances – The manner in which the Church of Jesus Christ of Latter-day Saints finances its operations differs from other churches. This is explained well in an article on the University of Virginia’s Mormon studies website by its chair, Kathleen Flake, who writes, “…unlike other Christian churches, this one has centralized payment of all expenses associated with membership, regardless of the amount of member contributions.  All such contributions are wired to headquarters and distributed globally to local congregations to pay for worship, welfare, and proselytizing.”

From these contributions the church builds and maintains chapels for over 30,000 congregations, 159 temples, and 4,400 family history centers in 136 countries.  In addition, the church operates 4 universities and colleges with 90,000 on campus and online students, provides religion classes to hundreds of thousands high school and college age students, and runs the largest private welfare program in the world.  Given the size of the Church and scope of its programs, and its growth in poorer parts of the world, it makes sense to have significant savings to meet anticipated needs.

Commitment to Remain Debt Free – In 2018 Presiding Bishop Gerald Causse wrote, “We rejoice in the fact that the Church has achieved complete financial independence and is able to accomplish its mission without any type of debt.” In 1998 President Gordon B. Hinckley stated, “If we cannot get along, we will curtail our programs….We will not borrow.”  The only way to have a chance of staying out of debt during difficult times is by building up significant reserves when times are good, which is what the Church is doing.

The Lesson from Ancient Egypt – The 41^st chapter of Genesis contains the account of how Joseph interpreted Pharaoh’s dreams, telling him the dreams were a prediction of seven years of plenty followed by seven years of famine. Joseph was appointed to gather excess grain during the years of plenty and store it for use during the years of famine. 

This is a wise principle that everyone should follow, but few do.  The tendency is to live it up during times of plenty, thinking good times will last forever.  In fact, one of the paradoxes of personal finance is that savings rates usually go up during hard times and down during times of plenty.  Individuals, families, and organizations of all types would be wise to learn the lesson from ancient Egypt.  Good times never last forever and the time to prepare for the inevitable periods of hardship is when times are good. 

The United States has now gone over ten years without a recession, the longest such period in history.  During this time investments have also done extremely well.  Those willing to learn the lesson from Genesis chapter 41 have been able build up significant reserves.  Church leaders know the good times can’t and won’t last forever.  Speaking of the need to save when times are good President Gordon B. Hinckley, in the October 1995 General Conference, Stated:

“Not only are we determined to live within the means of the Church, but each year we put into the reserves of the Church a portion of our annual budget.  We are only doing what we have suggested every family do.  Should there come a time of economic distress, we would hope to have the means to weather the storm.”

The Church has been saving during a period of unprecedented prosperity for future storms and “famines” that are certain to come.  This is prudent and should be praised rather than disparaged.           

The Church Practices What It Preaches – The purpose of this blog is to pass on the simple, timeless principles of wise financial management taught by Church leaders.  These principles include living on less than you earn, avoiding debt, and regularly saving a portion of your income for use when times are difficult.

Presiding Bishop Gerald Causse recently wrote:

“Church leaders have frequently counseled members to practice provident living by establishing home storage, including extra water, basic food items, medications, clothing, and other supplies that could be needed in case of emergency.  Members have also been counseled to ‘gradually build a financial reserve by regularly saving a portion of their income.’

This same principle of temporal preparation has also been applied at the general Church level.  For example, grain silos and warehouses filled with basic emergency necessities have been established throughout North America.  The Church also methodically follows the practice of setting aside a portion of its resources each year to prepare for any possible future needs.”

In the Church’s official response to the complaint to the IRS the Church’s commitment to save is again emphasized:

“We take seriously the responsibility to care for the tithes and donations received from members.  The vast majority of these funds are used immediately to meet the needs of the growing church including more meetinghouses, temples, education, humanitarian work and missionary efforts throughout the world.  Over many years, a portion is methodically safeguarded through wise financial management and the building of a prudent reserve for the future.”

I find it comforting that in temporal matters the Church successfully practices what it preaches and in so doing will be prepared for difficult times to come. 

The Widow’s Mite  

Mark 12:41-44 reads:

And Jesus sat over against the treasury, and beheld how the people cast money into the treasury: and many that were rich cast in much.

And there came a certain poor widow, and she threw in two mites, which make a farthing.

And he called unto him his disciples, and saith unto them, Verily I say unto you, That this poor widow hath cast more in, than all they which have cast into the treasury:

For all they did cast in of their abundance; but she of her want did cast in all that she had, even all her living.

President Hinckley always kept on his desk a genuine widow’s mite “as a reminder of the sacrifice it represents, that we are dealing with the consecration of the widow as well as the offering of the wealthy.”

The leaders of the Church treat tithing money as sacred.  Tithing money is not used to enrich Church leaders but is carefully budgeted to further the mission of the Church and reduce suffering in the world.  The Church’s charitable and humanitarian efforts have increased significantly in recent years and I would expect them to continue to grow. 

A portion of tithing money is also carefully saved each year.  This wise management has allowed the Church to build up significant reserve funds for difficult times in the future – and that’s a wonderful thing. 

 

Additional Reading:

Is the Church of Jesus Christ Rich, or Enriching? by Boyd Matheson 

The Washington Post Says The Church of Jesus Christ Has Billions. Thank Goodness by Hal Boyd & Lynn Chapman 

Mormonism and Its Money by Kathleen Flake