Fair article on Church investments

The Wall Street Journal has written what is says is the first article with Church comments on the $100 billion investment fund. I found it generally fair and a good example of how journalism should be practiced in our days of shock headlines and one-sided stories.

Take a look here.

Here are some key excerpts:

In their first-ever interview about Ensign Peak’s operations, Mr. Clarke and church officials who oversee the firm said it was a rainy-day account to be used in difficult economic times. As the church continues to grow in poorer areas of the world like Africa, where members cannot donate as much, it will need Ensign Peak’s holdings to help fund basic operations, they said.

“We don’t know when the next 2008 is going to take place,” said Christopher Waddell, a member of the ecclesiastical arm that oversees Ensign Peak known as the presiding bishopric. Referring to the economic crash 12 years ago, he added, “If something like that were to happen again, we won’t have to stop missionary work.”

During the last financial crisis, they didn’t touch the reserves Ensign Peak had amassed, church officials said. Instead, the church cut the budget.

A former employee and the whistleblower in his report said they heard Mr. Clarke refer to the second coming of Jesus Christ as part of the reason for Ensign Peak’s existence. Mormons believe before Jesus returns, there will be a period of war and hardship.

Mr. Clarke said the employees must have misunderstood his meaning. “We believe at some point the savior will return. Nobody knows when,” he said.

When the second coming happens, “we don’t have any idea whether financial assets will have any value at all,” he added. “The issue is what happens before that, not at the second coming.”

Whereas university endowments generally subsidize operating costs with investment income, Ensign Peak does the opposite. Annual donations from the church’s members more than covers the church’s budget. The surplus goes to Ensign Peak. Members of the religion must give 10% of their income each year to remain in good standing.

Dean Davies, another member of the ecclesiastical arm that oversees Ensign Peak, said the church doesn’t publicly share its assets because “these funds are sacred” and “we don’t flaunt them for public review and critique.”

Mr. Clarke said he believed church leaders were concerned that public knowledge of the fund’s wealth might discourage tithing.

“Paying tithing is more of a sense of commitment than it is the church needing the money,” Mr. Clarke said. “So they never wanted to be in a position where people felt like, you know, they shouldn’t make a contribution.”

I also liked this:

The former employees offered more details of Ensign Peak’s operations. During the bull market of the last decade, some of them said, the fund grew from about $40 billion in 2012 to $60 billion in 2014 to around $100 billion by 2019. About 70% of the money is liquid, one of the former employees said. As its assets swelled, Ensign Peak grew more secretive, said some of the former employees.

The firm doesn’t borrow money–the church warns members against going into debt. It also doesn’t invest in industries that Mormons consider objectionable—including alcohol, caffeinated beverages, tobacco and gambling. Mr. Clarke said the fund has pulled some of its money from an investment firm called Fisher Investments after firm founder Ken Fisher made remarks last year that Mr. Fisher, in a newspaper column, called “inappropriate.” A spokesman for Fisher declined to comment.

And this:

Among rank-and-file members of the church, the whistleblower report unleashed an intense debate about tithing and how the church uses its vast resources.

On a recent snowy Sunday at a Salt Lake City meetinghouse, members said they trusted church leaders with their own money, and would continue to donate 10% of their income. “They use it well,” said Lasi Kioa, a 61-year-old immigrant from Tonga and a lifelong church member. “They help other people. They build the church.
I believe in that.”

But Sam Brunson, a church member and tax law professor at Loyola University, said he wished church officials would use the $100 billion to help those in need today.

“They could go a good way to eradicating malaria, or fix Puerto Rico’s electrical grid,” he said. Alternatively, he said, the church could change what it considers tithing, allowing members to give 10% of their income to charity, rather than to the church itself.

Notice how the article quotes somebody both in favor of the Church position and against it? I know that is rare these days, but this is how journalism used to happen all the time.

Anyway, it was nice to see a fair article on this issue. Read the whole thing.

This entry was posted in General by Geoff B.. Bookmark the permalink.

About Geoff B.

Geoff B graduated from Stanford University (class of 1985) and worked in journalism for several years until about 1992, when he took up his second career in telecommunications sales. He has held many callings in the Church, but his favorite calling is father and husband. Geoff is active in martial arts and loves hiking and skiing. Geoff has five children and lives in Colorado.

18 thoughts on “Fair article on Church investments

  1. I like the article, I don’t like the policy. This paragraph and comment sum it up for me.

    “Whereas university endowments generally subsidize operating costs with investment income, Ensign Peak does the opposite. Annual donations from the church’s members more than covers the church’s budget. The surplus goes to Ensign Peak. Members of the religion must give 10% of their income each year to remain in good standing.”

    Given the Church states it didn’t touch the fund during the last financial crisis – but rather cut the budget, i.e., what we were doing in the world – I think the Church leadership may be a bit too fixated on amassing a fund rather than using tithing to accomplish good works. If our donations “more than cover” the budget, I think we as a church should be doing more. There are a lot of good things that are being left undone.

  2. Anonymous,

    Even the mainstream media knows where to turn for anti-mormon mormon commentary.

  3. I agree this is a nice article. I think it’s notable that those managing the funds were willing to be interviewed and seemed to be quite forthcoming about the fund. It’s interesting to me that the other people quoted in the article (although mildly critical of the way the fund is managed) were believing, practicing Latter-day Saints. I’m a little surprised no one I consider to be truly critical of the church seemed to be a significant source.

  4. JSH, I am pretty sure you don’t have stewardship over how Church funds are being spent. That is confined to the Brethren working with financial advisers. So when I see comments like this…. “Given the Church states it didn’t touch the fund during the last financial crisis – but rather cut the budget, i.e., what we were doing in the world – I think the Church leadership may be a bit too fixated on amassing a fund rather than using tithing to accomplish good works. If our donations “more than cover” the budget, I think we as a church should be doing more. There are a lot of good things that are being left undone”….here is what I think:

    –Does the person not understand that the Church is run by revelation and that certain people are given stewardship over certain areas? In your case, you are given stewardship for your calling and for your family, but certainly not for finances for the entire Church. Your ability to judge how well the Church is spending its money is, well, zero. This is why most active members happily pay tithing and allow the Brethren to spend money as they see fit.

  5. “Given the Church states it didn’t touch the fund during the last financial crisis – but rather cut the budget, i.e., what we were doing in the world – ….”

    From the contacts i have, my understanding is the budget-cutting has been _internal_, not what the church is doing externally. Things such as Charitable projects, wells, wheelchairs, etc., and missionary expenses (for those who can’t afford it) were not cut.

    The internal cost-cutting went deep. Even to the point where cheaper/thinner boxes were used to ship out the Book of Mormon. I remember because full cases (40 hardcover copies) used to be shipped in heavy-duty triple-walled stapled boxes, and when they switched to double-walled boxes, at least one corner sometimes/usually got crushed by the carriers’ rough handling. 🙁 I miss those because they could be re-used for other things, for years.

    Chapel-cleaning is a huge expense being saved my member work, not building commercial kitchens any more in chapels is another savings. FM (Facilities Management) was cut to the bone, so much that it will likely have to be re-expanded, if it hasn’t already.

    If I understand correctly, mission offices are smaller now, in terms of staff and in terms of square feet. More missionaries live 4 or 6 to an apartment where feasible. Missionaries can now live outside their assigned ward boundaries if the savings in rent are worth it.

    So, I think it is incorrect to assume that “budget reduction” necessarily means less of an impact in the church’s reach to the world.

  6. And for those who are thinking that spending on wells and wheelchairs could have “increased more” if less money went to the rainy day fund, then I defer to Geoff B’s line of reasoning.

    If the Lord is telling the FP and Q12 exactly where and exactly when to build temples, and exactly where to send each missionary (these have been testified to in General conferences), He’s also perfectly capable, and likely, to be telling the FP and the Q12 exactly how much money to put on “line item X” and “line item Y” on a budget/spending plan.

    I predict the day will come when the Lord will open the spending spigots like never before. Massive media advertising campaigns will flood the earth. Prime time TV ads. Mass mailings to homes. Thousands more retired baby-boomer couples doing service and _proselyting_ missions.

    We ain’t seen nuthin’ yet.

  7. I am glad the Church practices what it preaches in terms of being stewards over sacred funds and increasing its gifts of “talents”, as it were.

    The recent (last 30 years) of prosperity enabled the Church to reduce the burden on members. No more member-constructed chapels and no more building fund assessments since the late 1980s! I gladly take my turn cleaning our meetinghouse in exchange, with the added benefit of making me more sensitive to the ongoing upkeep of the building during the weeks when I am not the one cleaning.

    I am a bit surprised that the article implied that a $150k annual salary for Ensign Peak investment managers was unusually low and that some employees felt they were being forced to view their jobs as a calling as a result. They must live in a different world than the rest of us. I don’t know of any “calling” that pays $150k! Most of the rest of us cannot even imagine making that much in our full time jobs!

  8. John: $150k is certainly not a calling. But for that type of a job it is unusually low. Investment fund mangers responsible for funds worth billions usually earn way, way, way more than $150k.

  9. Seb,
    Thank you for the fund manager salary information.

    I am certainly pro market when it comes to salary, but I doubt a fund manager making $150k (which is well within the upper 10% of income earners overall) will gain much sympathy for a claim of being underpaid, especially when their “bosses” allocate themselves even less than that.

    I did a search at salary.com which gives the range of salary for an investment manager in the US at $60k to $170k, and for SLC at $57k to $160k with a median of $123k. Of course this would not take into account specific circumstances, such as the experience of the manager, the size of the fund or how many other managers are involved:
    https://www.salary.com/research/salary/benchmark/investment-manager-salary/salt-lake-city-ut

    Cheers.

  10. John: We absolutely agree on the sympathy aspect of the issue. And of course the salary level of a fund manager might vary widely depending on his experience, the client and managed assets.

    However if we talk about assets under management of about $100 billion (just assuming here that this number is at least somewhere near the real number) the fund manager(s) responsible of managing such huge amount of assets would certainly earn seven figures a year. So $150k is nothing in comparison. You could probably “buy” more than half of all countries of this planet with this amount of assets at your disposal (given their GDP).

    So compared to the world $150k is really not very much.

    And I can only speak for myself, but if somebody handles billions and billions of dollars for the Church and is successful in what he does, well, in this case I would gladly see him being payed more.

  11. The reality is the main reason for the church’s large fund growth is the stock market has grown. It’s strange that people would rather the surplus savings be 70% of what it is now, if only the church had saved cash instead of investing it. Literally, like the slothful servant who buried it because he didn’t want to risk loss. Do you suppose that the church should spend 1:1 of it’s dollars? What should it do with those dollars if not save them in the best possible investments? And if you want to put on your financial planner hat, and say it should have sold off gains and spent them, well that’s likely the reason you don’t manage a million or more if your own investment. Nearly everyone of a certain age in the USA could, if they invested not too long ago and kept investing… But there’s a reason most don’t and it’s usually a combination of risk aversion and strong preference towards immediate consumption. That consumption preference being on display with the critics and the very thing that would have prevented the investments from compounding so powerfully.

    And if you do have that million or so… Get to work doing what you’d like others to do.

    Additionaly, those complaining about investment overlook the massive massive massive amount of good that 100 billion does for companies balance sheets.

    The 1929 stock market crash was equivalent to $400 billion. So to look at it from that perspective, the mere surplus from the tithes and offerings of faithful members of the Church of Jesus Christ have been invested and grown to the point where it’s 25% responsible for keeping the USA afloat. Which in turn provides growing prosperity for the world.

    The Lord and the church leaders understand more about the true power and impact of finances than all other people.

    Let’s take a different approach. Imagine a submarine captain decides that his 20,000 gallons of diesel fuel is worth a lot of money and he could improve all the lives of his crew, plus help those far away lands, if he just sold it off. So he sells the fuel and once it’s gone, he finds he has nothing left to go anywhere. The true value of that fuel is not the original price paid or even what he can be sold for, but what the fuel allows the submarine to do. Maintaining investment preserves and grows that value while allowing the people in that submarine to have the resources to continue moving forward. If you spend it, no matter how much you like otherwise, that money is gone. And ironically, you have to argue that the expenditure produces more value than the investment would have to justify it.

    But reality is that return on investment in comparison other expenditure choices is already built into the very returns that are growing with the fund.

    This doesn’t mean we don’t help people in need. We do and are doing it. We’re also prudently investing and holding investments in a way that maximizes a lot of good for more than just a balance sheet.

    On a side note, I wonder how many governments, scammers and sycophants in the finance and everyday world are now greedily looking at the church that they assume has deep pockets willing to pay… I certainly wouldn’t like to leave home with a sign on the door that says “$10 million cash inside” and plenty of the aforementioned actors focus in on what they assume is an easy target.

    Consider even the Swiss court case awhile back that banned non resident service missionaries essentially over the issue of tithing. That’s a benign case, but certainly at it’s heart is this idea that someone else knows better the way the church resources are too cute viewed. Broadcasting great wealth becomes a liability for many reasons, which is why the church preferred to keep it secret.

  12. I think it is wonderful to see the church has this money set aside for when the day comes. Remember, it wasn’t too long ago the church was in debt and had to take out loans to operate. Remember when President Hinckley announced in General Conference that the church was finally out of debt?

    These are good days for sure.

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