The recent release from MormonLeaks showing LDS church stock holdings of over $32 billion has raised a bit of a stir in the bloggernacle and social media. Many are critical of the church’s amassing of such wealth, questioning why a church based on the teachings of Jesus would appear so focused on earthly treasure and not choose to spend its massive financial resources on helping the poor and needy. While I am not one to be afraid of making critical observations about church policies and positions that I see as harmful, this is one area that does not trouble me so much given what I know about basic economics and financial forecasting. I’ll explain.

The financial reserve the church has built up over the years might be compared to the U.S. Social Security Trust Fund [1], which reported a reserve of $2.85 trillion in 2017. Despite that very large number, the Social Security Trustees are currently forecasting that annual outflows (retirement benefit payments) will begin to exceed annual inflows (primarily FICA tax receipts) in 2022 such that the $2.85 trillion reserve will be depleted by 2034. What’s the cause of the future deficits and depletion? Changing demographics primarily. With the baby boomers in the workforce – aided by the strong economic expansion from 1980 through 2010 – the SSA collected more in FICA taxes than it paid out in benefits to retirees each year. However, as the boomers are now retiring and receiving social security benefits, there are fewer workers paying into the system and more retirees to support, which will result in annual deficits instead of the current surpluses, eventually leading to total depletion of the reserve unless FICA taxes are increased or benefits are cut.

So how is this like the church’s financial position you ask? The church’s income from tithing is also based on a set percentage of income earned by its members, and is similarly affected by demographic trends in the membership. Let’s say the church currently takes in $6 billion per year in income (primarily from tithing), and spends $4 billion per year on operations (stake and ward operating funds, new construction of buildings and temples, maintenance and renovation, university operations, missionary program, etc.). That leaves a $2 billion per year surplus, which it has to do something with. If the church believes tithing is a commandment for every member, it won’t tell the members to reduce their tithing or give out tithing refunds.

So then it has to decide what to do with the annual surplus it is building up. One big decision is, do you spend it all on programs and charitable efforts, or do you keep it in reserve based on expected growth and demographic trends? We know that member growth in North America, which pays the vast majority of the church’s tithing income, is slowing, whereas growth in poorer areas of the world, such as South America and Africa, is still strong; and those areas of the world are net users of tithing funds as opposed to suppliers. If you project these trends out into the future (which I’m sure church actuaries and financial wizards regularly do), at some point there will no longer be an annual surplus and, like the Social Security Trust Fund, the church will have to begin drawing on the reserve it has built up over the years to make up for the deficits. The larger the reserve, the longer the church will be able to give members (especially in North America) the type of experience they have grown accustomed to in terms of superior physical facilities, rich operating budgets and a strong university system, while continuing to support expansion in the poorer regions abroad.

However, like the Social Security Trust Fund, the church’s reserve won’t last forever and at some point operating outflows will have to be brought in line with income. Elder Bednar has apparently made some interesting comments about this phenomenon, stating that the members in North America will struggle the most with the coming changes. So the bigger question the critics should be addressing is not so much the size of the church’s financial reserve, but whether its current level of financial expenditures are necessary to support the mission of the church, which leaders would likely argue is to “build the Kingdom of God” and improve people’s spiritual welfare first and foremost. If the church began pouring a significant portion of our tithing funds into charitable programs, many people would likely complain that if they wanted to give their money to a charity, they would rather choose the charity. So maybe the church is better off putting the majority of its contributions into “building the Kingdom of God.” The question then becomes how nice do our temples and chapels need to be and how rich our local operating budgets to build the Kingdom of God? According to Elder Bednar’s remarks cited above, at some point this purpose will still be served without all the fancy buildings and trappings to which we have become accustomed.

Another question these issues raise is financial transparency. Is it right for the church to make these kinds of decisions without providing any insight or visibility to those who have contributed the funds? In my opinion, I would like to see the church go back to financial transparency and reporting on its income and expenditures, sharing with the membership – literally its stakeholders – its strategic plans and forecasts for the future. I imagine the leaders fear if the membership knew how large the income and reserves were, many would feel less inclined to pay a full tithe, which I’m sure is true (I’ve heard people say as much with the recent disclosure). But in my opinion, that is on the members – treat them like stakeholders and let them have their agency to decide, with full knowledge of how their contributions are used, how much to contribute.

[1] Although the Social Security Trust Fund is not really a fund in the literal sense of having restricted financial assets set aside; whereas the church’s financial reserve is composed of real assets, including stocks and bonds, real estate and businesses.