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.
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[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.
Wheat & Tares 
Given the SEC disclosures I wonder if the funds also include funds managed but not owned by the Church (such as charitable remainder trusts and the like).
I think the question about Church governance is foundational to the arguments about finances and transparency. One perspective is that the leadership has been called of God and can do whatever they see fit; regular members need to accept their actions as ordained of God and the leaders are accountable solely to God. The other perspective is more egalitarian, where leaders are themselves regular members functioning in a stewardship role and are accountable to church membership for their stewardship; the general Church membership is accountable to God for the whole thing. The D&C seems to favor the latter perspective (particularly the latter portion of Section 124), but current leadership and membership seem to favor the former.
Why are you assuming that this reserve could not last forever? Conservatively managed endowments last indefinitely while providing an average return of about 7% annually. In this case that would be more than 2 billion annually.
The tangential argument that the church wouldn’t reduce or refund tithing ignores the issue of how tithing has been calculated historically. Whether tithing is calculated on interest, increase, or income (net or gross) would make a huge difference to the average member. As the calculation method has shifted over time, the amounts required have constantly grown. So much so that an average member paying on net income could be paying about 10x as much as if they were to pay based on interest as described in D&C. In the face of large surpluses, why shouldn’t the church reevaluate the calculation scheme on which they insist, and bring it more in line with the actual commandment as found in the canon.
Stephen – good point, but based on my review of the accounting standards (FAS 136), the beneficiary of the trust who manages the assets (which could include both the church and the donor) report their net interest in the fair value of the assets managed. So in other words, if some portion of the assets being managed by the trust are pledged to the church at a future date, the church carries it as an ownership interest.
Cody – It seems as though the church is slowly becoming more transparent on doctrinal/historical issues, trusting that members are mature enough to handle such information. Hopefully, this will begin to occur with church governance and financial issues as well.
Daniel – The reason the reserve can’t last forever is due to changing demographics. Unlike a university with a managed endowment that simply has to support a fixed level of expenditures year after year, the church’s level of expenditures is based on continued high growth in areas of the world where contributions do not equal spending on operations. As the church continues growing in those areas, while growth slows in North America (and perhaps the upcoming generations of members contribute less?), expenditures for “building the kingdom” will exceed total income (both contributions and income from investments). As for your question about the shifting income base on which tithing is paid, that’s fodder for another post – but I believe more members are becoming aware of those historical bases and making adjustments accordingly, which is one factor that could begin to reduce tithing revenues over time.
Yup. When 2/3rds or more of members are in poor regions subsidized by the Church then that surplus won’t last long. Of course what gets neglected is that many of these regions may increase in economic output becoming richer. While that’s happened to a degree in parts of the Americas I believe even there we still have net subsidies in most areas. Although I certainly do hope for their sake that places like Africa modernize the way many Asian countries have.
Daniel–I agree that definitions of tithing calculation have changed over the years, but I appreciate the fact that there is a lot of room for interpretation nowadays. The way I see it, if the Church refuses to be financially transparent with me, then I refuse to be financially transparent with the Church, and I’m free to interpret the law of tithing so broadly that it is only limited by my imagination. I disagree with many of the ways the Church is spending its money right now (BYU, legal defense of sexual predators, defending “the Family” and “religious freedom” and other things that don’t represent me or my interests), so I pay my “tithe” to the Church Humanitarian Aid Fund, which I believe is a worthwhile cause, and supports one of the missions of the Church. I can still declare myself a full tithe payer with a clean conscience, and I know my bishop will never try to audit my personal finances or pry into my financial history beyond a simple yes-or-no question. I know of several members who engage in similar creative interpretations like this (giving tithes to charities of their choosing, paying tithing only on income surplus after basic living expenses are met, etc.). By contrast, my grandparents dutifully paid on the gross without complaint (there was some folk doctrine years ago about “gross blessings” versus “net blessings”) as I’m sure many of their generation did. While this shift in culture is likely impacting the Church’s revenues, it also indicates the increased self-determination of Church members, which I believe is good for the long-term health of the organization. While I’m critical of many ways the Church uses its funds, I don’t resent the fact that it runs certain for-profit businesses or has a diverse but responsible investment portfolio.
I found the news interesting, but not surprising or outrageous. Believe me, I’m a dyed-in-the-wool skeptic when it comes to the question of any organization, including the church, having its members best interests at heart. There are several things that I think are truths that don’t push me as close to outrage as some other issues in the church:
1. It’s really expensive to run/grow/support an organization of this size. New buildings and temples, supporting missions and local units and paying leadership stipends, travel, etc. all require a large amount of resources. In some sense, of course, I find this too bad. I’d love to have the church be as simple, grounded and humble as the gospel of Jesus Christ calls for individuals to be, but that’s just not the world we’re living in.
2. The amassed wealth (of what percentage of the entire church’s wealth, we have no idea) that’s shown in these 13 holding companies is the result of fairly conservative investing strategies. Over the long haul, most financial advisors will tell you that low to moderate risk when it comes to investing will lead to more success generally unless you really take part in something extraordinary, like buying 10,000 shares of Microsoft on the first day the company went public or something. So it makes sense to me that there would be this much in cash given the church’s investment strategies.
As some others have mentioned however, I REALLY don’t like the church’s lack of transparency on this and other matters. I think it’s disingenuous and glib to dismiss that concern with something along the lines of “well, once you donate it to the church, it’s the Lord’s money, so don’t worry about it.” That may be, but the church’s secrecy around such matters to me means its instinct is to conceal rather than be open and honest and I think that’s contrary to the spirit of Christ and how he would have all of us, leaders included, conduct ourselves.
Also, I wonder if there’s any part of the investing strategy that assumes the church will have fewer and fewer tithe payers as time goes on as a result of many members leaving for any number of reasons. I don’t know about the financial numbers, but as far as I can tell after talking with stake/ward clerks and looking at what data are available, I’d guess that only about 30 percent of members of record pay tithing, if that. That might tend to make leadership feel a bit uncertain (and hence more conservative in their spending habits) than is the norm, especially if the number of folks leaving, esp. our young adults, keeps increasing.
And some of this, too, might change drastically if we ever start taxing churches in this country (IMHO, we should. Especially churches like the Mormon Church, which dabbles in politics even while claiming it doesn’t). If that becomes the case, suddenly there’s a lot more outflow.
Great post Bryce. I rarely get upset with anything Wikileaks puts out, and while the numbers were higher than I expected, it frankly doesn’t surprise me that the church invests in the stock market.
Historically converts to the church have come from economically disadvantaged groups, wether it be the current global south or the 19th century European pioneers. The fact that the reserve could be amassed at all seems to me ample evidence that in the long term the church need not assume that areas of current growth will remain economically disadvantaged.
Jesus Christ did not condemn money or wealth. He condemned the content of our hearts. He also did not put the burden of caring for the poor on the church or on the government. He placed that burden of care on us as individuals. For those who are angry because you wish to accuse the church of not doing enough for the poor, examine what you are doing personally
I worked in the audit Department for Zions Bank which had a department that did nothing but reconcile the church checking account. The amount of money going out all over the world to feed people to build buildings to provide medical support was astounding.
So far as I know the Church doesn’t demand you be financially transparent. They ask if you pay a full tithe and that’s it. They don’t ask if you do it on net or gross or if you subtract taxes or whatever. It’s between you and God and it’ll be God who decides your blessings or whatnot. Which in some ways is a more scary thought than transparency.
So let me get this straight. The Church has 32 billion in stock, probably more, but let’s just stick with that number for now. And people are freaking out thinking that is a lot of money. To me it is a depressingly small sum, chump change really. Here are some back of envelop numbers and you can be depressed too. I figure there are only 5 million active, tithing giving, come to church members. That figures about 30% activity rate which, I think is actually high, but gives us a good starting place. And the Church has a Stock portfolio of 32 billion dollars. That comes out to a paltry $6400 per active member. Not exactly swimming in money is it. How long could you feed, clothe and house your family on your share of the money? And how long did it take the Church to amass this “fortune”? 100 years? 50 years? 25 years? To put into prospective both Bill Gates and Warren Buffett have each three times the wealth that we see in the Church’s stock portfolio here.
I just hope the Church has a lot more money squirreled away. Because this is pretty small change.
Some interesting points. As a person with a compliance background in financial services, I would go for transparency , particularly with regards to expenditure. In my experience, lack of transparency usually means something to hide.
I would also place caring for others way above building the kingdom. I suspect the 40 million dollars cited really means from the humanitarian fund and not tithing or nvestment income.
I would also point out that that ward budget allocation is minuscule and not the “generous” payment suggested.
Just my thoughts
My only problem is how do they justify paying $15 million for a piece of land to put a church house on in the UK? I guess when it is not your money–it is no object. Just does not make sense to me–for a building that gets a couple of days use a week.
IMO, letting the members decide with regard to use of the church’s funds is a very bad idea. If a committee of “active” and mature members were set up as an advisory body (that did NOT have the traditional pressure of being “led by God” and also always being unanimous) that might be a useful step to assuage the wider membership regarding the “transparency” of church leadership regarding finances.
The vast majority of members have neither the education nor experience to adequately grasp the issues and complexities that are at play in such decisions. It is analogous to politics. Sometime ago (30-40 years) I read a quote that I, now, cannot find. Something like, “the people are an idiot.” Masses of people, like sports fans, or celebrity fans, or voters, or the rank and file members cannot be trusted to weigh the facts and issues. Rather, too many have no critical thinking skills, too little information, and they are swung to and fro in the winds of rhetoric, propaganda, groupthink and ignorant tradition.
Clearly, I am not one such and would prefer full transparency. As for most others, they “can’t handle the truth” and I don’t trust them…just as our church leaders haven’t trusted we members for all our history to be able to handle the unvarnished truth of our church history.
The $32 billion figure is not necessarily assets of the Church. One of the reasons I hate MormonLeaks is that they put out information that is technically accurate, but seems calculated to lead people to erroneous conclusions. The figure represents assets managed by entities apparently related to the Church. Although some almost certainly represents reserves, other portions likely represent pension, ERISA, 401k, or other funds attached to a liability.
If all $32 billion were direct assets of the Church or affiliates, I wouldn’t mind, but it’s easy to imagine non-reserve funds (and assets not belonging to the church) accounting for much of that figure.
Let’s all privately try to imagine what Jesus would do with $32 billion.
You can rationalize anything but it seems to me the question is what does Heavenly Father think is the best use of the church’s assets whatever they are. …and I think we all know that they’re a whole lot more than what’s in securities and LLCs with names other than the Church of Jesus Christ of Latter-day Saints.
DSC: a comment at BCC says that there are publicly available documents to trace the church’s retirement obligations. Those documents relate to different investments with with large but substantially lower sums than the $32 billion being discussed here. The available evidence, though scant, suggests these funds are not related to retirement obligations.
I plan on bearing testimony that I knew the entire time the Church had 32 billion in the stock market and it actually strengthens my testimony. Isn’t this exactly what Jesus taught?
For me, the difficult part of this isn’t that the church has a lot of money. We’ve known that for a long time. It isn’t that the church has corporate, agricultural, and commercial holdings. We’ve know that for a long time also. The difficult part is that the church has lied about tithing funds not being used for its investments. My whole life, the church has not been transparent about this. The church has always claimed that tithes are used exclusively for the spiritual mission of the church (building and maintaining temples and chapels, printing books and magazines, etc.) That was a lie. Add to that the fact of how tithing is used as a hammer to keep members “faithful” and I’m at a point where I’m done paying my tithing to the organization of the church. I’ll use that money according to the manner that the Spirit directs me. Tithing as a sign of one’s faithfulness and as a requirement for the eternal family and exaltation is not consistent with the gospel that Paul preaches. Tithing becomes something that is paid more out of fear; fear of losing your salvation, fear of losing your family, fear of losing the support and blessings that the church offers; than it is out of love. And that is NOT the gospel of Christ.
The entire BBC thread is worth reading.
https://bycommonconsent.com/2018/06/01/32-billion/
“So much so that an average member paying on net income could be paying about 10x as much as if they were to pay based on interest as described in D&C.”
Yeah, and widows in London or the Bay Area would be paying 100x more on the old “interest” system
“The difficult part is that the church has lied about tithing funds not being used for its investments.”
A number of things you could make this claim about… Not this one would love to see your source. Hinckley in the 90s often talked about the church living in it’s means as setting aside plenty for a rainy day… You just upset he didn’t specify brokerage accounts instead of a savings account?
Here is the interesting thing about the modern church.In 1907 conference, Joseph f.Smith told the members he was looking forward to the day when no tithing would be needed from members because the church would be out of debt. I think we have safely passed that date. Everyone stop paying tithing until the leaders actually take the time to go back and see what previous prophets have said. I get so tired of this ignorance on the part of the brethren.
Anon this time — I’ve finally talked my husband into “tithing” to the Humanitarian Fund. You said your bishop doesn’t pry into your finances, but if he did, wouldn’t there be a paper trail of non-payment? My understanding is that even online tithing payments are reported to your ward, so if you show $0 tithing and your bishop cared to check…. I have no interest in a temple recommend, but my husband does.
Daniel Smith – I’ve had enough experience with ERISA and some other related issues to know that I don’t even want to touch the details of employee benefits plans with a ten-foot pole. However, I wonder if anyone with expertise can say whether DMBA’s mutual funds include non-publicly offered mutual funds and whether the LLCs at issue here might manage those funds. I confess total ignorance of what the SEC permits in these cases.
Laurel–online tithing does not always get reported back to the local ward. Mine never has, at least not consistently, especially since I’ve been in 5 wards in as many years (either from moving or having boundaries changed) and the system doesn’t always catch up. In any event, I tell him that I pay directly to SLC and keep my own records (which is technically still true even now that I “tithe” to the Humanitarian Fund), and he is in turn grateful that he does not have to be responsible for the burden of handling any more money than necessary. I know of some members who pay tithing with stocks or in-kind donations, and those kinds of things don’t get reported back to the ward level either.
I believe the true intent of tithing (sharing our resources with our communities for the betterment of society) is largely lost on the modern-day Church, so I choose to exercise my own agency and self-determination to do what little I can to help put things right. Money, economies of finite resources, and scarcity are all man-made phenomena and conditions of mortality, therefore I only consider tithing to be a temporal principle, not an eternal one.
Yes, the Bishop gets a breakdown of the funds you contribute to each year and the amount to each. Sadly, if it goes to any fund other than tithing, you are deemed a non-tithe payer. The figures also go to yiurvStake President. It would affect Templevworthiness.
I don’t agree with this approach, but it is factually what happens
Tithing is bass ackwards. After tithing 10%, most members of the church aren’t left with enough income to give much to humanitarian and charitable causes. It has always bothered me that temple worthiness requires contribution to things like your chapel’s broadband capacity, printing curricular materials, paying the church’s bills, enlarging the church’s investments, etc. rather than things like clothing the naked and feeding the hungry. Not that there is anything wrong with a contribution to building maintenance (it is the members that benefit from the existence of these buildings, after all), but it seems to me to be a complete re-imagining of scriptural priority and mandate to believe that beefing up the institution, rather, than reaching out in love to struggling neighbors is what the Lord would prefer that we do with our modest increase.
I wholeheartedly agree, Troy
There are some very good points there
I was taught to pay my tithing to “build up the kingdom of god.” I just didn’t know that the kingdom of god was a bunch of stock market and real estate investments.
My parents paid on their gross their whole lives. Now my mother, a widow, only pays on the interest earnings from their investments of their net earnings (after tithing). Recently, her bishop pulled her aside and said that she wasn’t paying enough. (Her lifestyle was apparently too lavish to believe that she was paying a full tithe.)
I can believe every word of that. I paid gross on my salary all my life AND on my interest and investment income. . Duh!