On Money

This morning my husband came down and turned on the radio, disturbing my typical silence.

“NPR said there’s going to be a story about the Church and Tithing.“

The story came on, and the news report says a whistleblower with the Church’s investment arm has said some stuff to the IRS. But it’s not the whistleblower who has gone public. It’s the whistleblower’s brother.

At issue is that when funds that come into the Church that aren’t immediately needed for Church operations they are invested. And apparently there are times when the whistleblower feels that some of this investment fund is used in ways inconsistent with the charitable donation status of the source of the funds.

There are articles on this at the Salt Lake Tribune and The Washington Post. One comment I appreciated pointed out that most businesses keep a reserve of 30 years of operating costs to sustain an organization through periods of economic hardship (or one can think of unprofitable growth, spreading the gospel in places where tithing income doesn’t cover operations costs). According to this individual, the touted $100B actually amounts to only 17 years of operating costs, leading to the conclusion that the reserve should be $200B rather than the relatively paltry $100B reported.

As for me and my house, we pay tithes not because the Church has imminent expenses, but because it’s a commandment. And it doesn’t hurt that when I’ve failed to pay a timely tithe, God has gone ‘repo man’ on me. There was my decision circa 2000 to use my minor excess to fix a teetering car transmission instead of bring my tithing current. In the wee hours of Conference Sunday that car was stolen and used in a high speed chase, ramming a police vehicle, harming the officers in the car. The thief then ditched my totaled car in a ravine. So I was bereft of the thing I had paid to repair, my wallet further lightened by the fees associated with the car being impounded by the police, and I had the expense of purchasing a new-to-me car. That’s the kind of experience I have when I don’t pay a timely tithe.

Back to the whistleblower’s report, this is a matter for the IRS to investigate. If the reserve funds are in fact being used for inappropriate payments, then appropriate fines and sanctions will ensue. But the fact of a reserve and the size of the reserve and possible misuse of some small portion of that reserve do not rescind the commandment to tithe.

if people really feel the Church shouldn’t have such a big fund, the faithful response is to volunteer for a mission amongst those children of God who lack, de facto increasing the Church’s operating costs. A decision to simply break the commandment to tithe is not a response appropriate to one who believes in God and the restoration.

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About Meg Stout

Meg Stout has been an active member of the Church of Jesus Christ (of Latter-day Saints) for decades. She lives in the DC area with her husband, Bryan, and several daughters. She is an engineer by vocation and a writer by avocation. Meg is the author of Reluctant Polygamist, laying out the possibility that Joseph taught the acceptability of plural marriage but may have privately defied the commandment for love of his wife, Emma.

24 thoughts on “On Money

  1. I hope the whistleblower is lying or was mislead.

    I do not believe this: “. . . most businesses keep a reserve of 30 years of operating costs to sustain an organization through periods of economic hardship . . . .”

    I am not a business person, and I welcome correction. If you have 30 years in reserve, you would need just 3.3% return on the investment to completely fund expenses without dipping into revenue at all. Given the profit margin on a typical business, it does not appear to me that there is any rational reason to run the business at all at that point. Just live your life off the investment fund. You’ll make way more money. I am pretty sure that most businesses are much, much closer to the edge.

    That said, I don’t know how much the Church should have in reserve. It is not a business.

  2. The actual comment read:

    “ How about looking at this from another point of view…I work for a multi-billion dollar lending company, we keep a reserve equal to 30 years of operating expenses. The article indicates the Church is keeping a reserve of about 17 years ($100 billion / $6 billion = 16.67 years). IMHO, the Church should increase it’s reserve to 25 years or more. Strong entities exercise this prudent business practice. These types of reserves are needed to withstand economic downturns. With proper reserves, strong entities will last for many decades (or centuries). When all the facts are explained, the IRS will find that the Church is in full compliance with the tax laws.”

    It may be worth noting that the Church self-insures. So the reserve is there in the event of disaster that requires the kind of cash outlay typically associated with insurance (e.g., replacing a structure).

  3. I am the corporate controller for a Fortune 50 company. I would get laughed out of the building if I suggested that we needed 30 years of operating reserves on hand. Large companies with large cash stores have them not to insure the organization against lean times but because they lack good investment opportunities. The quote you included in your comment specifically mentions “lending company”. Prior to my current position I was the CFO for a small bank and again, we would never, ever, in a million years hold on to 30 years of operating costs. I think either the person quoted has no actual corporate finance experience or the writer for the article misquoted the individual (either specifically or by failing to understand the context).

    That being said, I have no problem paying tithing and I would continue to pay it even if I knew that leadership were simply taking all of my money and burning it in a large pyre. At the same time, I am fully justified by our Heavenly Father to challenge said leadership regarding its stewardship of those tithing funds and if those answers come back lacking in doctrinal support then I think I’m also fully justified in advocating that the responsible parties be relieved of their stewardship.

  4. So the whistleblower decided he had to resign because his wife and kids had left the Church and were demanding he follow them. As he is only 41, it doesn’t seem likely the kids are adults. As for motive, the articles say “He is seeking a reward from the IRS, which offers whistleblowers a cut of unpaid taxes that it recovers.”

    The brother of the whistleblower, who has been the one to take things public (without the whistleblower’s permission) is not a believer, but claims that the Church should be transparent because the Church teaches honesty.

    If something is wrong, I trust the IRS and the Church to figure it out. I was going to say I trust the IRS, but right now I’m trying to figure out why they haven’t sent me my refund and claim I never filed.

  5. There’s some fast and loose going on the with terminology. Not all reserves are cash reserves. Investments, such as stocks, bonds, real estate, can be called “reserves” in certain contexts. But they are not “cash reserves”.

    The majority of the chuch’s assets are what are called “income-consuming assets” such as chapels, temples, office buildings, bishops’ and regional storehouses, mission homes, temple president homes, temple worker/patron housing, etc. In order to protect those assets against downturns in tithing (there was a big downturn in tithing in 2008), you need income-producing assets … investments such as stocks, bonds, commercial real-estate, farm-land.

    There will also likely come a time when temples and the property on which they sit will no longer be tax exempt as religious property. The angle that the taxing authorities attempted in England (I forget what the outcome was) was that the London temple did not qualify as a relgious structure because it was not open to the public, as is a chapel. And, it’s still possible that the cudgel of same-sex-marriage could be used to deny tax-exempt status to the church as a whole in countries with legalized ssm.

    “Reserves” also have a very specialized meaning for insurance companies, and as the church is self-insured, and/or has only “catastrophic insurance” with a huge annual deductible, that is another type of reserves that is calculated separately from those reserves which protect against loss of tithing income.

    I remember when members had a “temple assessment” and were expected to contribute toward their temple-building fund. And were expected to contribute to the ward budget. Before my time, members were expected to financially contribute to chapel-building too. And at times even provide labor.

    I don’t know the exact history nor how church finances exactly work, but it’s easy to deduce that the church’s investment income has had a LARGE part to do with the fact that we NO LONGER make (or are expected to make) donations specifically for temple/chapel construction and ward budget.

    So, I say: YAY for church investments!

  6. Meg, thanks for this post. I for one am very grateful to see that the Church has large reserves. One story I saw (which I will link to at the bottom of this post) indicated the real amount is $32 billion, not $100 billion, but even it were $1 trillion, my reaction would be the same. Here is how it should work:

    1)I believe that Church leaders are inspired by God and that when they are in those positions they are acting as the Savior wants them to.
    2)Because I believe this, I try to follow the commandments and do what the prophets ask me to do.
    3)This includes paying tithing of 10 percent of my gross income and a generous fast offering, as well as occasional money for other causes.
    4)Once I write the check for tithing, I don’t care what it is used for because of number 1.
    5)It is not my place to question how much the Church has in reserves, but the news that the Church has a lot in reserves makes me pleased and assured that my tithing money is being handled well. If only all of our institutions (governments, pension funds, corporations) kept money in reserve, we would be a much happier people overall. Many of the coming battles in politics will be related to the fact that governments and pensions funds are going bankrupt right in front of our eyes, and the fallout will be very nasty.

    Another point: the whole question of the IRS getting involved appears to be a nonstarter. Take a look at this article:

    https://www.forbes.com/sites/peterjreilly/2019/12/17/100b-in-mormon-till-does-not-merit-irs-attention/?fbclid=IwAR2KpWEWou8BcnJARauLevBhGSJyslhrGHVlcWBYlgjSRVQO5qk1NfZmih4#898bdcf5d5bf

    Here is a good article indicating that the real amount in reserve might be $32 billion.

    https://www.deseret.com/opinion/2019/12/17/21026103/the-washington-post-mormon-church-whistleblower-says-billions-thank-goodness?fbclid=IwAR1g_7sJxmAgHDlHkA9T28PyIs9VR0mDD4HjFZo0guT9ckqBB2bwypxQCkU

  7. U.S. consumer debt is over $4 trillion.

    Total US corporate debt is $15.5 trillion.

    The U.S. national debt is over $23 trillion.

    The country is addicted to debt. I am glad the Church is not.

  8. James E. Faust: “This is the day of the cynics, the critics, and the pickle-suckers”. He then quotes President Hinckley: “Criticism is the forerunner of divorce, the cultivator of rebellion, sometimes a catalyst that leads to failure. In the Church, it sows the seed of inactivity and finally apostasy.” I echo Geoff’s comments and all other great comments.

  9. I am reminded of a story I learned from another historian at the 2017(?) JWHA conference in Nauvoo. In the years leading up to his death, President John Taylor was one of three putative owners of a productive mine. President Taylor and the two other owners were donating the proceeds from the mine to a fund established for the purpose of Redeeming Zion. In this case, I believe, the “Zion” in question was the temple lot in Independence, MO.

    When President Taylor passed away, his share of the mine was to go to someone who would continue the donations to the Redeeming Zion fund (George Q. Cannon, I believe). While Cannon was related to Sister Taylor, he was chosen because of his ecclesiastical position and shared vision, rather than blood relationship.

    Apostle John W. Taylor argued that it was not correct to pass the valuable mine share to Cannon. I think the argument was along the lines that his father was not of entirely sound mind or that his father was subjected to undue influence. For some extended period of time Apostle Taylor fought about the bequest. Eventually Cannon ceded the share to Apostle John W. Taylor, who proceeded to use the proceeds for his own purposes. The other mine owners followed suit.

    Almost immediately the mine petered out. Or silvered out or golded out, whatever it was that was being mined.

    In the decade after President Taylor’s death, the Reorganized Church made a run on the temple lot, attempting to prove that the RLDS Church was the legitimate successor to the organization founded by Joseph Smith. Much testimony ensued, with the judgement eventually coming down that ownership was to remain with the Temple Lot Church.

    It would be interesting to be able to know what would have happened had John W. Taylor not seized control of the mine share. Post hoc obviously doesn’t mean propter hoc, but it still seems things might have been different.

    The other historian was thrilled because he had found a document in John Taylor’s handwriting about the mine bequest. Not that this disproved Apostle Taylor’s position, but at least it informed students wondering if Cannon had effected an alteration to the will that wasn’t in accordance with President Taylor’s thoughts.

  10. “The U.S. national debt is over $23 trillion.”

    And that doesn’t include state and local debt. Nor does it include “the present value of future liabilities.” IE, unfunded future obligations, such as federal (incl military) pensions, medicare, medicaid, social security, etc.

    Does anyone have a link to what the “true debt” is? (ie, when the “present value of future obligations” is added to the official debt figure.)

    State and local government employee pensions are also largely unfunded. California and Illinois are both on a countdown to disaster.

  11. Leo and Books,
    Just so we’re clear that 210T is assuming the next 75 years we don’t spend any more than what we’re already committed to.

    As the debt grows it will grow too. But it also skips the fact that GDP in aggregate over that period will exceed 2 Quadrillion.

    In the short term, the debt will continue to grow by another 1-2 trillion a year it seems, maybe more, small likelihood of less.

    In one sense we can “pay it down” when you look at the strength of the economy over time. In another if it keeps growing and growing, I shudder at the fact that one day 75 years from now we’ll have 100+ trillion in debt a annual GDP of say 50 trillion. Just some rough mental estimates.

    Here’s an interesting question to ask. Who benefits if you only pay interest on your mortgage but never the principle. The bank does, as they’ll keep getting paid in perpetuity and can theoretically take the asset at anytime.

    Who also benefits? The people living in a big house, paying only interest. Now add in this component, the rate of interest the people are paying on the house is at least half the rate of inflation. So the return on the interest is actually not that much — the banks don’t really benefit as much from that perspective

    Now ask this question, would the bank ever try to repossess the house, if the occupant had nuclear weapons?

    Who is in charge at that point? The bank who can’t take possession, is paid an interest rate that barely covers inflation, and is indebted to the tune of trillions or the occupant with nuclear weapons?

    This is obviously not a sophisticated financial analysis. My hunch is there is a serious net drag on the economy. But I’m honestly not sure if the occupants in the house would be better off taking the money they spent on doctor visits, movies, restaurants, cars, and college, and just gave it to the banker and went without those aforementioned luxurious. Wouldn’t not buying those things and just giving all of that money to the banker have both a net drag on the economy and make life less enjoyable?

    Now what ultimately concerns me, and I think is happening, but few cares about and few will vote for, is over time the debt crowds out private growth. Independebce is lost because the economy requires more and more government spending too keep rolling. Private companies and individuals become dependant on tax credits, rebates, transfer payments. If you stop paying those and pay the bank, so to speak, those businesses and families, fall apart.

    So the growing the debt crowds out private independence. You must toe the line to get your tax credit, rebate, transfer payment etc. Airbnb requires owners to sign a diversity agreement. Some government grants do too. You can see how belief and action can then be compelled in order to make ends meet in a system where things are either so expensive without government funding (and as a direct consequence of many years of that funding).

    The $100 billion and growing reserve in that scenario is the one thing says, no thanks, we’ll stand independent (except you’re never fully independent, because the SEC can simply make rules that control that wealth and no one cares about protecting $100 billion “fat cats”, as they see them, in the age of unprincipled populism).

    So ya… Mixed bag, just like life, filled with an area to act, make decisions, have joy. But eventually we’re all doomed. One way or another. All we have is our faith in the Lord to truly count on and hope for.

    Sorry for the long comment but the thought chain is interesting to tease out.

  12. It would seem as if my username has been put in moderation. How disappointing on several levels.

  13. Not all of us are Church historians for lack of time, not for lack of interest (that’s why we enjoy this blog), but we have all seen the old Church movie “The Windows of Heaven”.

    I picture President Lorenzo Snow LAUGHING in Heaven when he read the headlines a couple of days ago. “I will… pour you out a blessing, that there shall not be room enough to receive it.”

  14. Libcon,

    I’m not sure how things work, since I didn’t set things to moderate. But the interface might moderate when the email isn’t valid. When I checked the email addresses you provided, they both bounced.

  15. I have been a frequent reader of the Bloggernacle for 15 years. I have been dismayed as I have read posts and commentary from those who profess to belong to the Church of God, yet rarely have anything good to say about it. More often than not I shake my head in disagreement.

    But with this recent development, I have felt my blood boil as I see the unhinged atracks against the Church. The critics will never be satisfied (2 Nephi 27:3). They presume, as they do with other issues, that they know better than those who were called by the Lord.

    What amount of surplus would the critics be comfortable with? Five billion? Twenty billion? Or would they prefer we be in the red $50 billion (Of course they would cry out against that as well)? With a nation that is over $23 TRILLION in debt, including the costs of a failed war on poverty, you would expect to see some positive response. The fact that the Church is being a wise steward with sacred funds must mean someone is getting shafted.

    I am grateful to belong to a Church that aims to stand independent of every creature beneath the Celestial world, that aims to have stores for future calamities, with thousands of Bishops ordained to seek out and help the poor and needy.

  16. Of course, the complaint filed with the IRS is not that the church has large stockpiles. It is that the complainant thinks that inappropriate things have happened.

    That said, your average person on the street that is being upset right now is upset because they either are or know of an individual who could use more money. And therefore they are offended that the church has any excess funds if the church is asking for donations.

  17. I am on the board of a homeowners association (HOA). We have a reserve fund that is not 100% funded by lights of the folks that audit such things, but is reasonably well funded (ca. 70%). The purpose of the fund is to have monies available to replace parts of the physical plant (townhomes) as they age. The dollar amount in the fund per homeowner is not far from the high-end estimate of the Church’s reserve divided by the number of members. HOA’s with inadequate reserve funds have to make special assessments to make necessary repairs (e.g. new roofs). Current expenses (water, electricity, routine maintenance) are paid out of a separate operating fund, not the reserve fund. A portion of the monthly dues goes into the reserve fund. Reserve funds are invested conservatively, as is typically required by HOA governing documents. We don’t have to pay taxes on the reserve fund or on the operating fund.

  18. “I will… pour you out a blessing, that there shall not be room enough to receive it.”

    I’ve come to believe, at least partly through experience, that that is how the Lord _likes_ to pour out blessings. He “delights” in blessing us, according to one scripture. We most often don’t think big enough.

    Someone in a conference talk once said something like how we usually hold out a thimble or juice glass, when we should be holding out a big bucket to receive the Lord’s blessings.

    And, as you might guess, there’s a meme for that….
    https://i.ytimg.com/vi/fe1PKnNBWxI/hqdefault.jpg

  19. I’m with Geoff B. Fun with math. 1 billion is a thousand millions. So, 100 billion equals 100,000 millions. How many millionaires are in the US? Quick google search says 18.6 million millionaires. My non-member friends didn’t blink an eye.

  20. I just saw my nephew perform in the musical “Joseph and the Amazing Technicolor Dreamcoat” and was reminded of Joseph’s interpretation of Pharoah’s dream of seven years of plenty followed by seven years of famine. How wise it was to put aside in times of prosperity to hedge against lean times. How thankful I am for Church leaders who understand this principle, teach it to the world, and then lead by example in ensuring the perennity of their own stewardship!

    As for the possibility of inappropriate use of tax exempt funds, I have another nephew, this one older, who also used to work for the Church in finance for one of its profit-making (and tax paying) arms. The Church is well aware of the US tax laws and follows them to the best of their knowledge. I doubt very strongly there is anything substantive to the accusations with respect to US tax law.

    Of course, the prospect of a six to seven figure IRS whistle blower award for the complainant would have nothing to do with it, could it?

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