An Unemotional Analysis of the Recent "Whistleblower" on LDS Church Finances

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Cnsl1
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Re: An Unemotional Analysis of the Recent "Whistleblower" on LDS Church Finances

Post by Cnsl1 » 19 Dec 2019, 00:28

Based on my research on this issue, it seems pretty clear that tax laws were violated in two places. Under their articles of incorporation, Ensign Peak Advisors exists as a 509 a3 and investing arm of the church and a charitable organization. They pay no taxes but as I understand the tax law , they're supposed to allocate all out go to charitable, educational or humanitarian purposes. The records given to the IRS suggest they haven't given any money to those purposes. Rather they have taken approximately $1 billion/year in excess tithing (tithing money not needed cover expenses of the church) and over 20 some years got it up to over $100 billion. As I understand it, the money sits in a treasury fund for a while , building up, then is invested in a number of ways. As of now, none of that money has been used for charitable purposes and no taxes have been paid. That's problem one. How can EPA claim they are a charitable organization when for 20 + years they've done no charity?

Problem two is that two payments were made from that treasury fund.. not from any of the investing funds, where one might argue consisted of interest or revenue bearing accounts that were a step removed from tithing, but rather the fund holding the excess tithing money. One of these payments was to bail out Beneficial Life, an insurance company owned by the church. The other was to bail out or fund the final parts of the City Creek Mall project. Tithing funds may not have been used to build it, but it seems like they were used to finish building it.

Those two payments were illegal, based on my understanding.

Granted, my bank account will help testify that I'm far from a financial guru, but this story bothered me enough to investigate and this is what I learned. I'm sure there's more to come.

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mom3
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Re: An Unemotional Analysis of the Recent "Whistleblower" on LDS Church Finances

Post by mom3 » 19 Dec 2019, 16:05

This one is hard for me. I have read plenty of analysis. As it is a hot button issue, I will reserve making too many comments.

I am saddened, embarrassed, and heart broken. Even Joseph Smith's version of tithing would not have supported this. I believe in rainy day funds. I understand that we are a world wide church but in my wildest scriptural understanding this doesn't make sense.

I also work with the poor and needy - directly. I have been blessed by the church's generosity - or perceived generosity. Now seeing it in this light, it hurts.

I am trying to keep space for forgiveness for whomever made the choices. I understand that charitable organizations do a lot with their funds that sometimes seems in-congruent to the idea of "charitable organizations", but there is much here that just breaks my heart.
"I stayed because it was God and Jesus Christ that I wanted to follow and be like, not individual human beings." Chieko Okazaki Dialogue interview

"I am coming to envision a new persona for the Church as humble followers of Jesus Christ....Joseph and his early followers came forth with lots of triumphalist rhetoric, but I think we need a new voice, one of humility, friendship and service. We should teach people to believe in God because it will soften their hearts and make them more willing to serve." - Richard Bushman

Roy
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Re: An Unemotional Analysis of the Recent "Whistleblower" on LDS Church Finances

Post by Roy » 19 Dec 2019, 16:28

Roy wrote:
18 Dec 2019, 16:43
4) From the available information and several expert opinions, it would seem that the church might not have broken any tax rules (and absent any sure evidence of wrongdoing the IRS might not bother to investigate investigate). There just does not appear to be any smoking gun or even smoke at all.
To elaborate on my understanding, some opinions that I have read indicate that church subsidiaries can qualify as tax free and that churches have a fair degree of autonomy in this area.
https://www.forbes.com/sites/peterjreil ... d1ce5f5d5b
I don’t think David Nielsen will be able to retire on the reward from this case. That’s because there is not much of a case. The argument is that a private foundation is supposed to distribute 5% of its assets. 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.
Paul Streckfus of the EO Tax Journal agrees that this matter does not merit IRS attention.
“The IRS does not attempt to question the beliefs or purposes of churches unless extreme (law violations, for example). In the case of the Mormon Church, if they honestly believe they should be saving for the `second coming of Christ,’ why should the IRS question that? Just because there is $100 billion involved? If so, how much is too much? While church leaders have not been forthcoming about this pot of gold, church members can always withdraw their support if they object to this extreme saving or seek to remove the leadership.”
On the expenditures that the whistleblower objected to, Mr. Streckfus wrote me:
“As far as bailing out the insurance company and the shopping mall, who is to say this was not a justified use of funds to try to save failing investments? In order for section 4958 on excess benefit transactions to come into play, I think the IRS would have to show some individuals benefiting personally from the bail out. Poor business judgment would not be sufficient.”
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Re: An Unemotional Analysis of the Recent "Whistleblower" on LDS Church Finances

Post by nibbler » 19 Dec 2019, 18:11

For most people I imagine it's less about the legality of amassing a hoard and more about the morality of amassing a hoard.

Consider the lilies of the field, how they grow... their portfolio?

Maybe Jacob Marley and some ghosts will visit someone this Christmas Eve.
Cure sometimes, treat often, comfort always.
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Re: An Unemotional Analysis of the Recent "Whistleblower" on LDS Church Finances

Post by Curt Sunshine » 20 Dec 2019, 06:30

I agree that morality is the key issue in most people's minds who are troubled by this - and most people who accept it see it as moral.

Thus, it is not a simple issue.
I see through my glass, darkly - as I play my saxophone in harmony with the other instruments in God's orchestra. (h/t Elder Joseph Wirthlin)

Even if people view many things differently, the core Gospel principles (LOVE; belief in the unseen but hoped; self-reflective change; symbolic cleansing; striving to recognize the will of the divine; never giving up) are universal.

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DarkJedi
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Re: An Unemotional Analysis of the Recent "Whistleblower" on LDS Church Finances

Post by DarkJedi » 20 Dec 2019, 07:46

nibbler wrote:
19 Dec 2019, 18:11
For most people I imagine it's less about the legality of amassing a hoard and more about the morality of amassing a hoard.

Consider the lilies of the field, how they grow... their portfolio?

Maybe Jacob Marley and some ghosts will visit someone this Christmas Eve.
Maybe N. Eldon Tanner. The history of amassing a "rainy day fund" pretty much goes back to him following the most recent church financial crisis which was during the McKay administration (although not necessarily McKay's fault, I think McKay disagreed with some of what was happening and some of it was happening without his knowledge/approval). As a "good man of business" Tanner may have been specifically called because of his investment talent.

We do have a personal rainy day fund, and it makes good financial sense if you're able to do it (we have not always been in that position). We also do make charitable contributions, and not only to the church. On a personal/family level it's a little different because it's money we earned and how we spend it is up to us. But a rainy day fund is not all that unusual in any solvent organization, including government organizations (although laws do sometimes limit such savings). I don't have a problem with the church having savings/investments even though it is "other people's money" (depending on your point of view on the "Lord's funds"). I guess the question is how much is too much and could there be a purpose other than self preservation that at least some of it could be used for? Jesus didn't make the matter any less muddy with the story about the ointments. So, yeah, I think the news item is about legality but perhaps in the minds of at least some of the membership it's more about morality.
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Once there was a gentile...who came before Hillel. He said "Convert me on the condition that you teach me the whole Torah while I stand on one foot." Hillel converted him, saying: That which is despicable to you, do not do to your fellow, this is the whole Torah, and the rest is commentary, go and learn it."

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LookingHard
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Re: An Unemotional Analysis of the Recent "Whistleblower" on LDS Church Finances

Post by LookingHard » 20 Dec 2019, 08:09

After gritting my teeth a bit and trying to step back, here is my take.

On one level this is not specific to the LDS church. At least in the US this is a political question of the purpose and rules around religious non-profits. The main conclusion I come from here and feel the most important things would be for "large" religious non-profits to be required to submit publicly available financial reports.

As a member, I have a harder time. Given how much $ I have given and even more importantly, how hard the leadership requires tithing - especially comments like "if you don't have money for food, pay your tithing." That feels to me like forcing lower-income people to be dependent upon the church. If you pay tithing THEN we will give you food from the bishop's storehouse. For members with higher income, there is the "you have to pay the country club fees if you want to attend a wedding there (yes - they have relaxed this a bit, but still LOTS of social, logistical, and cost pressures to "just do the temple wedding"). So as a member I would like to see more disclosure and in the end, I have to decide if I want to continue to pay tithing or not. I am currently contemplating changing my status.

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nibbler
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Re: An Unemotional Analysis of the Recent "Whistleblower" on LDS Church Finances

Post by nibbler » 20 Dec 2019, 09:44

LookingHard wrote:
20 Dec 2019, 08:09
...especially comments like "if you don't have money for food, pay your tithing." That feels to me like forcing lower-income people to be dependent upon the church. If you pay tithing THEN we will give you food from the bishop's storehouse.
Piggybacking on this.

I don't think having a rainy day fund is at the heart of any question over morality, it's perhaps more related to how that rainy day fund is obtained.

To take the morality over having a massive rainy day fund out of the equation, let's say that having a rainy day fund is best practice and given the nature of anxiety people have over the uncertainty of future events, it's also okay to have a rainy day fund in any amount; no amount is too large. Individuals and organizations alike should have and attempt to build up a rainy day fund.

When leaders preach that members should pay tithing even when they have no money for food in a way they are putting their rainy day fund ahead of a member's ability to meet their current basic needs. The church truly doesn't need the money. What's more important, growing a $100 billion portfolio so the church can take care of themselves in the event of a decades long emergency, or a member dealing with an emergency they are currently facing?

Preaching that tithing should be paid before the basics also creates an environment where it will be very difficult for the member to build up their personal rainy day fund. It can set up a system where the church's already enormous rainy day fund takes priority over a member's rainy day fund.

It can feel like there are two standards:
The standard the church teaches the members - make tithing a priority, pay tithing before basic life essentials.
The standard the church follows - pay all the bills first, set aside the surplus, don't give from the surplus until a rainy day fund with a theoretical limit has been reached.

If the member were to follow a similar pattern for paying tithing it would look more like a surplus model that factors in a personal rainy day fund.
1) Pay all bills.
2) Set aside some money for a rainy day.
3) If there are any leftovers, 10% on that.
If you can't afford food you don't make it past step 1 and don't owe tithing.

I suppose the issue is that many members believe paying tithing is a basic life essential.

This is more down to leadership roulette, but the other issue is how members in financial straits are helped by the church. There's the expectation that the member has exhausted all other sources of help, family, friends, government programs. There's the expectation that a member be a full tithe payer... which again I would point out is against church policy as it presupposes that the surplus model is invalid. If a person operates under the surplus model and they can't pay their bills they have $0 titheable income, they haven't met their basic needs. There may be an expectation that the member do chores around the church. Even though there shouldn't be expectations attached to paying tithing, the member may have paid in tens or even hundreds of thousands of dollars in tithing and still be denied tens or hundreds of dollars in their hour of need. The money that helps members in need comes from fast offerings, something in addition to tithing, meaning the church doesn't use its surplus to foot the bill, it asks the members to shoulder the additional burden. All this factors into the emotional aspect.

What would the church do in the event of a global financial crisis? Right away, their investment nest egg would take a massive hit. When that happens it might cause the people in control of the purse strings to tighten their grip due to increased anxiety over the fate of the church... but if not, would the church adopt a new more charitable approach to helping members or would it follow well worn roads?

If a prolonged crisis does happen, I think sitting on $100 billion has the potential to set up a dangerous dynamic. A poor member needs assistance, the church is the only org in town in a position to help. To get help you have to clean the church three nights a week, do 100% ministering assignments, take 10 names to the temple per month, attend all your meetings, magnify a calling, join the church, etc. I think that kind of wealth has the potential to create an unhealthy power dynamic. It doesn't even have to be at the institutional level, local leadership roulette would be all that it takes.
Cure sometimes, treat often, comfort always.
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Minyan Man
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Re: An Unemotional Analysis of the Recent "Whistleblower" on LDS Church Finances

Post by Minyan Man » 20 Dec 2019, 10:00

I agree with what nibbler said. Especially:
nibbler wrote:
20 Dec 2019, 09:44
...If the member were to follow a similar pattern for paying tithing it would look more like a surplus model that factors in a personal rainy day fund.
1) Pay all bills.
2) Set aside some money for a rainy day.
3) If there are any leftovers, 10% on that.
If you can't afford food you don't make it past step 1 and don't owe tithing.
The only thing I might add is:
4) Put together a household budget
5) Live within your budget, as much as possible.
6) Rainy day money is for emergencies.
7) If you "borrow" from the rainy day fund, pay it back.

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Gerald
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Re: An Unemotional Analysis of the Recent "Whistleblower" on LDS Church Finances

Post by Gerald » 22 Dec 2019, 06:32

There are two pieces of advice that individuals and organizations ought to follow: don't mess with people's kids and don't mess with people's money. I think we see both of these problems rearing their heads in the Church. The recent concerns over interviews of youth (which I won't comment on) and now the consideration of the Church's wealth based upon the tithing of its rich AND poor members. It can be a bit hard to swallow when some members are living in poverty-like conditions and still paying tithing. But I do believe that for most who pay, it is an act of faith on their part rather than a means to access resources like the temple. I'm pretty sure that the general membership (those who are even aware of this story) would respond with a "so what" shrug. In fact, many (rich and poor) would probably take some pride that their Church is so wealthy.

That said, how much amassed wealth is too much? What percentage of spending on charitable concerns is adequate? There may be laws regarding this (which I'm not familiar with) but ultimately the answers to these questions are arbitrary. I appreciate the concerns expressed here and I consider them legitimate. I also am very convinced that the leadership of the Church is well-intentioned and are probably operating from a different set of assumptions (regarding money) than the rest of us. To clarify my own thinking I will lay out my money concerns about the Church:

1. Fast offerings that aren't used by a ward are forwarded to the Church Office Building. I don't know how often that occurs but I believe that to be the case. It would be nice if wards could retain some kind of surplus for future ward member needs.

2. I attended a meeting where our stake president made it very clear that donations to missionaries are to the missionary fund...not to the individual missionary. Thus, if a missionary comes home early, those members of ward or family who donated can't get "their money back." It's a charitable donation not a means to support an individual missionary (though it is used that way). I really don't have a huge problem with the policy but the fact that it had to be stated the way it was (and our stake president did it very kindly but firmly) makes the Church look...a bit acquisitive.

3. I sometimes resent being asked to do things as a member that someone could be paid to do. I don't mean clean our ward building. I don't mind doing that (though I question how clean bathrooms get with inexperienced members using inadequate cleaning supplies). But our local stakes are regularly asked to put together a team of people to clean our local temple. Uh, no. The cleaning has to take place late at night (one time volunteers were asked to come at 10 but now they ask them to come at 8...I think they didn't get many takers initially) and I refuse to clean a building I only use occasionally (maybe once a month) when there's more than enough funds to pay someone to do it.

4. The Church spends huge amounts of money (though its probably only a fraction of a fraction of their overall budget) making everything in the general Church look clean and shiny. It's not a bad thing and many members take great pride in the temple grounds, the visitor's centers, and the Church universities' facilities. Yet, as I walk around BYU or any other general Church facility, there's something about its absolutely pristine condition that feels a bit false. It's kind of like a home with a living room that no one ever goes into (except home teachers/ministers with shoes off). Beautiful but artificial. I prefer the lived-in quality of the public universities and the chapels. They may be a bit frayed around the edges but at least you can leave your shoes on.

Just my thoughts.
So through the dusk of dead, blank-legended And unremunerative years we search to get where life begins, and still we groan because we do not find the living spark where no spark ever was; and thus we die, still searching, like poor old astronomers who totter off to bed and go to sleep, to dream of untriangulated stars.
---Edwin Arlington Robinson---

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