One complaint I often hear about Church leaders is that they are great at business but poor at pastoral care. I disagree: I think they’re actually bad at business. They either have bad lawyers and advisors, or they have good lawyers and advisors whom they refuse to listen to.
Many of you may have seen the news that the Securities & Exchange Commission (or “SEC”), the United States federal agency that is charged with enforcing federal securities laws, reached a settlement with the LDS Church for violations of securities laws.
By way of background, the SEC was formed in the aftermath of the 1929 stock market crash and is intended to enforce laws against market manipulation–to make the markets fair to all investors. These laws include everything from insider trading (the rules that landed Martha Stewart in jail when she sold stock in a pharmaceutical after getting a tip that its drug was about to receive an FDA denial) to misrepresenting information to the investing public in financial statements (the rules that landed Enron in major trouble when it fudged accounting rules to inflate revenue and hide debt in subsidiaries) to the rule at issue here: the requirement that institutional investment managers with more than $100 million in holdings disclose their equity holdings every quarter. This rule is intended to provide transparency into the holdings of the nation’s largest institutional investors (who have enough assets that they could influence market activity).
Institutional investors don’t really like this rule–it’s an administrative pain (as are many securities regulations), and many institutional investors don’t want people to copy their investing strategy because that strategy is their “secret sauce.” (In other words, the excuse that some are making for the Church–that it didn’t want members to copy its investment strategy–is not unique to it but rather is a concern shared by many institutional investors subject to 13f.) But, unlike other admittedly-complex securities rules and regulations, this one is pretty straightforward. In fact, Church leadership was specifically informed of the need for Ensign Peak Advisors (“EPA”) to file 13f disclosures. It failed to do so between 1997 (when it was formed) and 2019, and, further, took measures to obscure its investments by splintering them into multiple different entities (thirteen in total) that were essentially shells for EPA set up only for the purpose of obfuscating 13f filings. EPA retained control of all investment decisions for these entities.
I’m not going to address the details for why this was illegal or rebut contentions that it wasn’t illegal–Sam Brunson over at By Common Consent did an excellent job of that already. His post and the comments about what the SEC rules were, why they exist, what the Church did wrong here, and how it harmed people are worth a read, as is his commentary about honesty.
What I do want to comment on is that I think whoever made these decisions is bad at business.
As someone who regularly advises on legal and business decisions, and watches others make decisions, there are several questions we often consider:
- Is it legal? If so, is it squarely legal or does it skirt the edge? What level of legal risk is the organization willing to accept?
- Is it ethical? Does the decision align with the organization’s values?
- Even if the action is legal, could it cause PR / reputational harm to the organization? (This is often a more important consideration than 1. Fines can be paid. Public trust, when lost, is very difficult to win back.)
- If the organization is trying to obfuscate a practice, should we step back and consider whether that practice is problematic to begin with? Should that be a sign that perhaps we should reconsider the practice and behave in ways that we would be comfortable reading about in the newspaper?
How would these questions have been answered in this case?
- Legality: illegal. To the extent they thought splintering into separate 13f filings was “legal” (it wasn’t, because EPA retained control of the investments), it was on the very edge of legality and clearly intended to subvert the intent of the rule (transparency in financial markets). It was problematic enough that at least two employees resigned rather than make false statements–but rather than investigating or rethinking the strategy, those employees were simply replaced with yes-men. (For more discussion on the legality, head over to Sam’s post & comments).
- Ethical / values alignment: To the extent the Church values honesty and integrity, no, this action is not aligned with the organization’s values. I suppose to the extent the Church values secrecy and obfuscation–which increasingly seem to be the case–then this does align with its values.
- PR / public trust fallout: I don’t know how this is going to sit with the average member–if people thought it was a good idea to continue to tithe to the Church after the $100B news broke, I am not sure this would move the needle for them. Some people will defend the Church no matter what. Others may think that securities laws are stupid, and not worth following. But perhaps for some this is a new flavor of unappetizing. Certainly, it smacks of hypocrisy to ask members to be transparent with their bishop about how they are spending their money with respect to tithing when the organization makes a concerted effort not to be.
- Transparency: This seems like a question Church leaders should really be asking themselves. If they are not comfortable with the public knowing what they are doing, should they be doing it? As mentioned, the “we don’t want members to copy us” argument is not particularly persuasive (the information is too stale to really be worthwhile, and this is the same concern that other institutional investors have). The “we don’t want people to know how much money we have” seems to suggest that they know it’s a problem, and perhaps they should do something about it rather than hide it. To the extent they think that they are breaking the rules for a nobler cause–well, so did Elizabeth Holmes (while she may have had many reasons for lying, one was that she truly believed her tech would save the world–once she got it to work). It’s a bad excuse.
We could ask these same questions with respect to the Church’s response to sexual abuse allegations (instructing bishops that they were legally prohibited from reporting sexual abuse), which I described here:
- Legality: Maybe. As described in my post on the issue, I think there’s an argument that bishops were in fact mandatory reporters (particularly those who were also physicians). In addition, regardless of whether they were mandatory reporters, they were certainly allowed to report at their discretion–legal advice that they were prohibited from reporting was simply incorrect.
- Ethical / values alignment: The Church claims that it wants to protect children, so this behavior would seem to contradict that purported value. It seems the Church actually values protecting priesthood leaders and the institution. I actually don’t even think that their advice aligns with that value, though! They actually put those leaders, and the institution, at greater risk through not reporting.
- PR / Public trust: This seems a fairly obvious answer. I would guess that, for most people, covering up sexual abuse is worse than not covering it up.
- Transparency: The Church went to great lengths to hide its treatment of sexual abuse hotline reports–maintaining a data retention policy that required deletion of all call records at the end of every day, and treating the conversations as attorney-client privilege (a stretch of that coverage in my opinion). I understand a desire to protect privacy, but if the Church felt good about the way it was handling reports of sexual abuse, there are ways to protect privacy without keeping the innerworkings and responses secret. The secrecy should have given raise a little flag in their conscience telling them that, perhaps, something was not right in the way they were handling abuse. That flag was ignored.
In both cases, I think failing to consider all four of these issues when engaging in a potentially questionable practice or making a difficult decision is just plain bad business. Even setting aside the most honest thing to do, or the best thing for victims of sexual abuse to do, and assuming that Church leadership’s number one priority is to protect the institutional Church–which is what I do in fact assume–these actions actually went against the ultimate interest of the institutional Church. They damage the institutional Church in the longrun.
If Church advisors did not help decisionmakers through these considerations, they are bad advisors. They should be fired. Bad advice certainly doesn’t excuse the ultimate decisionmakers from their role in deceptive and shadowy schemes (despite their attempts at scapegoating advisors in the press), but it does suggest the Church should choose its advisors more carefully. Perhaps having yes-men in these situations is not the best setup even if you don’t like hearing no. Sometimes no is the right answer.
If advisors did advise to these problems (and it sounds like there were some that did in fact alert decisionmakers to some of these issues), and the decisionmakers ignored that advice, then–regardless of whether the actions were legal, moral, honest, etc.–they were unwise stewards of the institutional Church. They were short-sighted–whatever public fallout would have occurred in response to the 13f filings, I doubt it would have been worse than the fallout now after decades of dishonest behavior.
For a group of men who claim to see around corners, they seem to have walked head-on into this one. Perhaps they’ve been too long out of the business world.
What do you think?
- Would you change anything about the four considerations I outline for making business decisions? Are there examples of Church decisions that score well (or poorly) on this rubric?
- Do you think there is a subset of the membership for whom this will be a significant needle mover, or do you think anyone whose needle wasn’t moved in the last few years is probably immune?
- Do you think Church leaders have a tendency to “protect” the membership from information they don’t think the membership can handle? What do you think of this attitude? Is it good or bad for the institution in the long-term?
- Do you think Church leaders engage in short-term thinking at the expense of the long-term? Why or why not?
Wheat & Tares 
This is a fantastic summary of questions that should have been considered, and articulates what my husband and I have been exploring the past couple of days. The law so often is the lowest common denominator — the very least acceptable route that people and organizations can take. As someone who is in HR leadership, I know that relying on the law to make all business decisions is often not the best or the right approach. Coming from an organization that is constantly preaching our responsibility to live a higher law and be “higher and holier” I’m so incredibly disappointed that the senior leadership (clarified by the SEC to mean the first presidency and presiding bishopric) took the LOWEST possible choice here. It wasn’t legal and even if it had been legal or borderline, it’s not ethical, good, or right.
I’m willing to forgive leaders for their weaknesses and mistakes. God requires it of me. But my goodness, it would be a hell of a lot easier if they 1) sincerely and whole-heartedly admitted mistakes, took accountability for their actions, attempted to make restitution in the form of increased transparency and rebuilding trust and 2) stopped talking about themselves as infallible (Exhibit A – Elder Hamilton’s recent BYU devotional equating decisions by church leadership with the decisions made by the Savior himself).
I really like your criteria, Elisa, and I love that you’re weighing in with your expertise. I have a couple of kind-of related observations.
First, the Church really seems not to care about reputational risk. I think you make an excellent point that this seems like it should be a big concern, because once it’s lost, it can be really hard to get back. But I think Church leaders are maybe convinced enough that many or most members will listen only to them, and if they say the matter is closed, the members will consider it closed. (This is parallel, I think, to Trumpism, where Trump rightly said he could shoot someone without repercussions because he knew that his disciples would listen only to Fox News or similar outlets, who would carefully spin any such event as being the fault of the victim or a false flag operation by Antifa or who knows what else.)
Second, I think there’s a connection between your second and fourth questions. It seems clear that non-transparency itself is a value of the Church. Rather than having transparency be a value (except in unusual cases) or not having a position one way or another, GAs actively value not disclosing anything they can possibly get away with hiding. Elder Ballard’s infamous comment in the past few years about how they’re as transparent as they know how to be is utterly laughable. Kind of like how patriarchy-loving men worry about women running the world when we move as a society even a step away from total male control, he seemed to be describing how the Church was moving away from utter non-transparency to a little bit of transparency. The finances are hidden. The history has been hidden and spun for ever and ever, and only recently has the Church gone against its core value and actually released some stuff like the Joseph Smith papers. They were dragged kicking and screaming into acknowledging multiple versions of the First Vision and the fact of Joseph Smith’s polygamy. But on the whole, they’d far rather hide everything they can, and only let information go when it seems like they have no other choice.
In short, on this second point, I loved Bryce Cook’s comment here a week or so ago:
“Church leaders’ parent-child relationship with the membership is one of my biggest complaints with how they lead. They think we can’t handle ambiguity, moral complexity, questions without answers, transparency – so they give us black-and-white thinking, simplistic answers, certainty, and tell us that to be safe we must conform and obey.”
Here’s a link to Bryce’s comment: https://wheatandtares.org/2023/02/15/differentiation/#comment-288887
Would you change anything about the four considerations I outline for making business decisions? I wouldn’t change the questions, they’re good.
Are there examples of Church decisions that score well (or poorly) on this rubric? Apply these questions to Mountain Meadows Massacre or how the Church dealt with Prop 8 and they score poorly.
Do you think there is a subset of the membership for whom this will be a significant needle mover, or do you think anyone whose needle wasn’t moved in the last few years is probably immune? I think for every poor decision there are those that leave the church and others ignore it or rationalize it away and that over time it’s changed the character of the general church membership.
Do you think Church leaders have a tendency to “protect” the membership from information they don’t think the membership can handle? What do you think of this attitude? Is it good or bad for the institution in the long-term? Things happen everyday in this world that the church leaders could talk about that have spiritual implications but they don’t say anything except in the most general terms because they don’t want to offend a portion of the membership.
Do you think Church leaders engage in short-term thinking at the expense of the long-term? Why or why not? Just like many government or corporate individuals today, the church concentrates on short-term thinking. This might be masked by the effort to build temples and talk about second coming but when it comes to anything dealing with issues facing people today, the church’s responses are lukewarm at best to offend the least amount of people to keep the numbers up, even if they are miscounted.
@ziff, I wonder about your first point too. Scary thought.
As for transparency – I mean, maybe they *are* as transparent as they know how to be? In which case, they are unskilled at being transparent.
These people were businessmen during a very different time period. Many were pre-Enron and SOX. All are pre-increased ESG reporting requirements.
Transparency is something that has become more important from both a legal perspective and a cultural perspective (the younger people I know and work with expect transparency).
It seems they are operating from a bygone era where you just trusted the authority figure, shut up, and did your job. I don’t think that works anymore but they don’t seem to want to learn that.
Amen to LH! God, how much easier it would be to let this all slide if the First Presidency just released a statement—personally signed by Russel, Dallin, and Henry—stating their sincere regret and remorse that they failed to live up to their own standards in being exact, upright, and honest in all their dealings with their fellow being, that they repent, and promise to do better and set a better example in the future. Or some such. Whatever.
Seriously, if they actually released a statement like that, then virtually everyone—faithful members, marginal members, nonmembers, even the Church’s critics—would commend them and *actually* move on. The FP’s stubborn refusal to model basic repentance not only violates their own professed “first principles,” but is also just bad PR. So yes, in addition to the church being bad at business, it’s also just bad at Public Relations.
Based on these last two big scandals (EPA and KM child abuse), I suspect the way the church handles its affairs is to allow EPA, KM, PR, and who knows what other entities, to come up with whatever terrible ideas and practices they want and then basically trust their judgment with a rubber stamp. The first presidency average about 93 years old. They are not giving any of this the kind of rigorous oversight that it demands. EPA and KM, for their part, do not seem to apply any moral principles to their work, as they clearly don’t consider themselves as acting in ecclesiastical roles. The result is advice and strategy that has little consideration given for Christian values, skirts the law, and is actually not even particularly competent at least in these examples. I think a lot of this is a problem of outsourcing far too much to mediocre professionals.
Just to play devil’s advocate, is it good business to break the law when the fine is so much less than they EARN by breaking the law? It was like in Italy, when the professional bus driver slowed, looked both ways, and went on through the red light. Same bus driver was more than careful to respect red lights in Germany. But the tour guide explained that the fine for going through a red light was minimal, unless you caused an accident. The red light was really to determine whose fault the accident was, not make traffic obey the law. So, “good driving” was to avoid accidents, not stop and wait for a light. So, my devil’s advocacy question is how are we defining good business? By doing as the law dictates, or earning the most money for one’s company?
Now, my actual feelings on the subject is a church should not be in the business of business to begin with. The church leaders should not be good businessmen at all, but good examples to the members. And on that their disregard for the law is a total failure. Do they want members who lie, cheat, and bend the rules to pay as little tithing as possible? Well, then they should be that kind of citizen of the country they live in. And…oh, that’s right! They are exempt from tithing because they declared themselves exempt from tithing. So, do they really want to be setting the example of lie, cheat, bend the rules past the point of breaking it to all the members. I would say THAT is lousy business, because when members use the example they set, they will not be pulling in mega bucks from tithing.
For me, one of the under-pinings of all of these issues is the ages of the decision makers. As someone neck deep in elder care on multiple fronts, there are extremely compelling reasons why so few individuals continue their careers after 75. Mental capacity aging is real.
It isn’t as simple as, does this move the needle or not for members. We have other things going on in our lives besides the church.
1. Did you even hear about this information? Not everyone reads/listens to the news. Some members are drowning in their own life difficulties. They don’t have time or energy to go looking for information.
2. When they do get the information, do they believe it? Often members hear information but imagine it was made up, exaggerated or warped by antimormons. As a result they may simply brush it off as false information, believing they don’t have all the information leaders have which could make the story look entirely different.
3. Even if a member studies and believes comprehensive and eye opening sources of information about the church, they likely do not make a decision about that information right away. Many of us take a long time to process and consider what we think about something. Some of us are trudging through life and intrigue about the church is irrelevant to what is on our minds. Often we put any concerns on “the shelf” to deal with when and if we can.
4.I think the church’s way of dealing with information leads to members protecting themselves from information and avoiding thinking about things. We are led to feel afraid of having our own thoughts and doubts. So people just stay on the train track of their life for fear of a crash.
But do not fear things will stay the same. This information is out there. We are thinking about it. Ultimately the facts can no longer be hidden. The prophecy is fulfilled and the truth is shouted from the rooftops.
They day comes inevitably that members and leaders think differently about the church. Eventually this will change the entire dynamic. The days of leadership controlling the narrative are over. How soon they will adjust is another question. I fear the adjustments can only come through the dying off of a generation of leaders.
I think I’m with Anna on this one in that I’d like to quibble over whether the Church is bad at business or bad at leadership. If I can draw a distinction between the two, I think they are incredibly bad at leadership, and slightly less bad at business, if business is a cold calculation based on capitalist interests. After all, you have to give some credit for going from the near bankruptcy of the 1970s to the Vatican-shaming wealth today. They are good at business in the way mafiosas are good at criming (Capone having to be caught for tax fraud is classic), or the way Trump is good at enriching himself through politics. You can achieve some great business outcomes without integrity. You can have high integrity and go out of business on principle.
Part of the issue here is that the Church is not operating like an ethical business, and its leadership is putting profits ahead of integrity while claiming it is an organization that fosters and promotes integrity and requiring members to be honest in paying to them, while turning around and not being honest itself in how it manages those funds; the ethical aspects are the ones that to me illustrate a corporation’s leadership. Replacing two honest employees with two dishonest ones speaks volumes about leadership.
Maybe instead of the parable of the talents, which puts the Church in the role of the wise steward, increasing their investment tenfold, the more relevant parable here is the parable of the unforging debtor (Matthew 18) who begs his master to forgive his debts, is forgiven, then turns around and beats his fellow servant who owes him. Perhaps if the SEC barred the Church leaders from attending the temple for their dishonesty or their “cheating” the system (as they do to members who don’t pay a full tithe or who admit to dishonesty), instead of paying a pittance, we’d see some actual change. Nah, they just showed everyone that it’s totally OK to lie to avoid consequences. And THAT’s a failure of leadership.
But your questions are perfect, IMO, and whether we call it leadership or business, it ain’t good. Do you listen to Ken White and Josh Barrow’s podcast Serious Trouble? We hear a lot of these same types of discussions there (they used to do one called All The President’s Lawyers, and before that Pope Hat).
“The Church complies with all applicable law governing our donations, investments, taxes, and reserves.”
That was a key component of the first presidency’s statement in 2019 when David Nielsen turned whistleblower and revealed how much EPA was managing. When it was given, and in the present tense, that statement is arguably true, given that the church and EPA finally started complying with Rule 13f that same year. Was it coincidence that Nielsen blew the whistle and the church started complying with 13f in the same year? Had he just had enough? Did anyone learn of Nielsen’s plans before the decision was made to observe 13f and was the decision an effort to placate him? Some of that sounds a bit conspiratorial, but odder things have happened.
We can be sure that the taxes on the total value of the funds EPA manages would be significantly more than $5 million. Start with Joel Osteen, but make sure all the churches pay taxes. Them seem to all have taken L. Ron Hubbard’s observation to heart.
@instereo – those are great examples.
@your food allergy and @retx, yes, but then they should be self-aware enough not to put themselves in charge. That’s the issue.
@anna and @jaredsbrother, I don’t really know that these decisions were financially motivated. AFAIK, this is separate and irrelevant to the tax issues. I suppose there’s the argument that they did this because they wanted people to keep paying tithing, but I am skeptical of that. I think they just value secrecy almost for secrecy’s sake.
@hawkgrrrl22 that’s a fair distinction. I guess when I say “business” I am talking not solely about turning a profit but about building a sustainable organization with a good culture that also does well financially. Maybe I’ve just been fortunate, or I’m really naive, but the places I’ve worked have actually truly valued integrity and community and giving back and doing the right thing, even as corporations who are obviously trying to make money.
Excellent post. In the SEC case, the institutional church clearly and knowingly attempted to obfuscate and manipulate the intent of the rules. The OP references “breaking the rules for a nobler cause…”. Unfortunately, the continued existence of Mormonism is based largely on the ability of the Church to use the ‘nobler cause’ rationale as a means to mislead membership and maintain a semblance of loyalty from the unquestioning TBM segment.
Mormon history is replete with examples of a lack of transparency. Look no further than the Kirtland Safety Society, polygamy, MMM, Mark Hoffmann forgeries, racial and sexual discrimination, etc. Perhaps even more disturbing is the fact that members are supposed to unquestioningly believe the BoM is historical – despite many anachronisms ranging from the rock in the hat translation to the fact there is no physical evidence supporting such events as million+ man armies fighting epic battles.
The church has been able to stretch the truth for almost two centuries – why not keep it going for the SEC? It is not a matter of “protecting the membership” – it is lying in order to maintain loyalty to a deeply flawed organization. Unfortunately, there exists a faction within Mormonism that will display blind obedience despite an abundance of empirical data contradicting their faulty thinking.
I have seen far too many examples of how misplaced allegiances to the Church can permanently alter family relationships. It is particularly troubling to observe parents sever all contact with children who are not 100% observant members – as well as couples in mixed faith marriages who divorce. Protecting membership from the truth never works in the long run.
Mormon 5:8 . . . and that all things which are hid must be revealed upon the house-tops.
I also agree that the Church won on this from a purely fiscal perspective. The fine is small compared to the tithing collected during this time. They may lose in the court of public opinion; time will tell. But it seems based on comments at Deseret News that there will always be a loyal band of members that will defend anything from financial malfeasance to protecting child abusers. Our dear commenter Jack/bagofsand is leading that charge over at BCC.
“Do you think Church leaders have a tendency to “protect” the membership from information they don’t think the membership can handle? What do you think of this attitude? Is it good or bad for the institution in the long-term?”
I remember being taught, and teaching others as a missionary, that we came to earth to (1) gain a physical body and (2) to exercise agency. Yet every time I turn around churches, including the Mormon church, seems to take great pleasure in denying people of the very reason we supposedly chose to come to earth. Whether it’s telling a woman what she can’t do with her body, to telling young men they made a solemn covenant when they turned eight and were baptized to serve a mission, to ensuring members pay tithing by hiding the church’s wealth, it seems that either (1) exercising agency really isn’t all that important or (2) the Church is keeping its members from actually experiencing the purpose of mortality. Where is the informed consent?
The most interesting part for me is that members who are upset don’t actually care about the money. Most are not demanding a refund they know they will never get. They are upset because they thought they were donating money to make the world better. They wish they could donate that money elsewhere. I think that says about about what the members can actually tolerate vs what the church can tolerate.
My coworkers were first to share this story with me Tuesday as to which I was able to proudly respond “No longer my circus; no longer my monkeys.”
LWS329, I think you got to the crux of it all. I can’t believe how many members and even leaders like Bishops and Stake Presidents I’ve talked to about things happening in this world which is clearly available to know about on the news and they say, “I don’t watch the news anymore, it’s to negative.” In other words they just hide their head in the sand and when “news” stories filter through to them via Facebook, or their kids or some discussion in church, they can have plausible deniability to believe what they want, damn the facts.
“I’m willing to forgive leaders for their weaknesses and mistakes.”
Generous and exemplary of you, LH. But the question of how the leaders collaborated to arrive at the same “mistake” is seriously troubling. I wonder if it fits the requirements of racketeering.
If I consider that one of the leaders who made this “mistake” — over and over again for about a quarter of a century — had pretensions to the US Supreme Court I get sweaty with relief that he wasn’t nominated. He had full knowledge of the law — the lowest denominator of acceptable behavior, as you characterize it — and chose self-serving greed over the standards the church sets for members.
@elisa, great thoughts as always. I especially like the way you parse the critical differences between the questions what is legal and what is ethical/moral. Sam does an outstanding job over at BCC outlining the legalities of this issue. This matter falls within a legal framework, of course. But given this pertains to a church, our church, the moral questions are perhaps more important than the legal ones.
Frankly, I was surprised by the number of commenters on Sam’s post that view this as a “nothing burger,” like getting a speeding ticket. A part of me wants to level some damning criticism at the church for so completely failing to teach moral decision-making to its members. (I’ve ranted on that topic several times in the past.) It’s discouraging to see so many seemingly orthodox members comparing what the church did to a speeding ticket without deeper analysis. Like Ziff, I too had the the chilling thought after reading the BCC comments and thinking about how orthodox members might come down on more egregious church actions. I don’t want to over generalize, but it seems to me a third of church members(?) simply want to be on the winning team. They want to see the church win no matter what, and all we have to do is apply a bit of a victim mindset or spiritually superior mindset and we can justify any institutional church behavior.
A valid question in moral philosophy is “When is it okay to lie?” The best answers are, not surprisingly, more complicated than ‘never,’ or ‘whenever it serves our interests or what we think is a good interest’. Universal imperatives are often difficult to defend, and relativistic positions even more so. For example, it would be generally justifiable to lie if doing so were to save a life. Even if lying to save a life seems like a ‘no duh’, it may not be so obvious given the facts of the situation and therefore it requires informed analysis. We all must avoid viewing matters like church’s investment fund debacle as being binary. Meaning, we either want to see the church burn or we are willing to defend it all costs. The expressions of both extremes rob the church from receiving valid feedback from critics and defenders alike that should make the church feel very uncomfortable to the point of driving it to engage in positive, corrective change.
I’m extremely disappointed the church chose to work in the legal margins and make immoral decisions to hide and misrepresent its actions and plans out of what appears to be reasons of convenience. The church decided it didn’t want members to know about the investment fund and its growing wealth out of convenience. This is a poor justification given the magnitude of the church’s intentions to build an extraordinary amount of wealth.
But even more tragic in my mind is that the church missed an extraordinary opportunity to engage its members in reasoned persuasion at the outset of the investment strategy, or later as it took to flight. The church missed an opportunity to present members with an argument for the morality of generating such wealth. Fears of members not paying tithing could have been offset with reasoned arguments, as long as the premises were compelling and defendable. And if the church didn’t have sound moral justifications, then, rightly, the strategy should have been rethought. Nothing but good could have come from the church choosing to be more transparent, more moral and consistent with its own teachings, more engaged with its members, and more respecting of the laws of our country, not matter how byzantine invest law may be.
I too am fearful the church isn’t led by good businessmen, but I’m more fearful we are led by men who lack inspiration and who may be simply arrogant. Reasoned persuasion takes hard work, but it is the right thing to do. Hiding important activities from members out of convenience and governing by fiat is the work of lazy authoritarians.
It’s been said that trust is earned in inches and lost by feet. The church is going to have to work hard to reclaim trust. And I wonder if our church leaders even understand that, or care.
Thoughts are still bubbling up as I assume they will for me and for others for time to come.
How many times in GC has the church’s auditors attested — in lieu of any real transparency — that the church’s accounts were appropriate and accurate?
If the FP and the Q15 had a change of heart and began to provide a full and transparent record of their assets and activities, would you now believe them?
If the leadership who are theoretically themselves lead by HF were willing to be deliberately and repeatedly dishonest and have now admitted that, are they temporally or morally fit? Should there be resignations and replacements, particularly since one of the leaders directly involved is likely the next FP?
The questions are spot on. Great post.
The following statement to me seems impactful: “Public trust, when lost, is very difficult to win back.” I have heard many that have stop believing in the church as a divine institution say, “I am not having a faith crisis, I am having a truth crisis” and I take that to mean they feal the church leaders are not being truthful in certain areas and they lose trust in the leadership. And it is so true that it is hard to gain back that trust.
Our training as binary thinkers inhibits our ability to see nuance. Does belief in honoring, obeying, and sustaining the law apply to things that are malum in se, as well as those that are malum prohibitum? Or do we view traffic law violations and accompanying penalties — traffic tickets — as no big deal? Our moral teachings don’t give us, as individuals, a way to parse these issues — and clearly the Church’s leaders and lawyers don'[t think about them, either.
@phbrown, I think moral teachings do give us the tools to do that. But in any case, I’m not even talking about morality—I’m talking about sound judgment.
There’s plenty of discussion around the traffic ticket comparison over on Sam’s post so I don’t rehash that here.
I’m not as sangine as you about the teachings of the Church giving us the tools to develop either morality or sound judgment. Rather, it seems to me that we’re given lists of things to do and not to do, without any background about why to do or not do them. So, when something comes up that is on neither list, we so often misjudge.
C’mon you whiners, give these guys a break.
I know that if I had $32,000,000,000 and saw all of the suffering going on in the world that one of my thoughts would be, “Man, I could do so much with this money!…. Like invest it and make BILLIONS MORE!!!!!!”
And if I were in a position of leadership and I was telling poor people to donate 10% of their money to me when I was just sitting on billions of dollars, I would certainly want to hide what I was doing. Wouldn’t you? Don’t say that you wouldn’t want to, because I think that all of us would want to hide that. So, like I said, give these guys a break.
@phbrown ah, I misunderstood you.
On that we agree. The church does not prepare us to answer question two (does this align with my values?) because we don’t teach “values”, we teach behaviors and rules.
I still think in this case there are clear “rules” that were broken but overall I agree that Church culture is morally immature.
I was in my second year of law school when a professor mentioned casually that “morality” was more than sexual morality. I’d never heard that concept previously. To my mind, morality had only been taught by the Church in a sexual context, and — as a single person — only taught as “don’t.” My education in ethics and morality was woefully deficient and I suspect that I wasn’t alone.
Elisa: I too have been (mostly) fortunate to have worked at places where top leaders strove to make moral and ethical decisions, not just short-sighted arrogant ones because they had every reason to believe they could get away with it. I also was never in my life in a position where I was pressured to sign documents attesting knowledge that I was not given access to, nor implying I had control over something I did not. I’m not going to pretend that I didn’t have colleagues who signed off on things they didn’t understand because of course I did. I remember reviewing one particularly lengthy contract, then stopping by our internal counsel’s office to go over my notes. She looked at me in shock and said that never before had she had an executive actually read one of these things, let alone provide salient notes for improvement. She was impressed. I was (slightly) appalled but not suprised. But I wouldn’t work for a company that asked me to attest to something and then didn’t provide me the information needed to make an accurate attestation because that goes against my personal integrity, something I *thought* I learned being raised in the Church. I guess not.
So it’s unfortunate that we’ve learned that the Church IS a slimy organization that pressures people in these ways. I guess we could say that one soul is lost (the guys signing off on the 13Fs) to save the many (tithing dollars.)
I like the “are they good at business” approach and the questions you pose. We often get caught up in debates over sustaining vs criticizing Church leaders. Asking whether they’re doing a good job, or not, sidesteps that morass.
Once we start down the road of “good business?” or “good job?” I want to ask hard questions about the “$100 billion.” The actual amount is not important so much as the amount is far more than I can rationalize as any kind of rainy-day fund. With regard to the excess, any kind of business judgment or ethical concern or PR analysis or Christian moral choice that I know of would obligate people to employ those funds in a meaningful purpose-driven way. The fact that there are billions of dollars NOT being exercised is bad business practice. In a public company setting, there would be a shareholder revolt happening already, arguing that if the leaders don’t know what to do with the money, then either we need new leaders, or the company should return the funds to the shareholders who will make better decisions themselves.
I take it as given that illegal practices are not good business practices. What Chris Kimball just wrote is, in my opinion, the only defensible way to analyze the church’s use of its assets. Elisa’s explanation of how a public company would analyze the problem is also exemplary. I find it reassuring that someone like Elisa, who is present in a C-suite, can report that ethical concerns matter in the discussions she has there.
But it’s hard to connect Chris’s and Elisa’s comments with what the church actually does. When we try to define what “good business” means to the general authorities who govern the church’s investments, we run into two problematic questions that I can see. First, who defines the business objectives? Second, who enforces consequences for business decisions?
In a publicly owned company, managing executives define objectives. Stockholders, along with the governing board, enforce consequences. That’s somewhat oversimplified, but I think it gets at what’s relevant here. In the church’s situation, senior general authorities are, in effect, the managing executives. However, neither stockholders nor an independent board exist to check the decisions of the managing executives. Nor are there economic market conditions that might impose consequences on executive decisions.
In the recent past, the organizational checks on senior church leaders’ decision-making were two-fold: first, their decisions needed to foster the church’s membership growth; second, the church had to maintain financial viability. At the present time, both of those checks have evaporated. With over a hundred billion dollars’ worth of assets, church leaders have no practical financial limitation on what they can choose to do. And in an era when real growth in the church’s membership no longer seems achievable, growth targets can’t constrain management choices either.
Without a check on their decisions, the church’s leaders are free to define “business success” however they wish, even if “success” entails illegal practices, and even if “success” means hoarding money. I don’t know what their business objectives actually are. I don’t know whether they would consider the SEC order a small price to pay for a smashing business “success.”
For me the biggest question all this SEC drama brings up is about how Jesus organized his church. Can you imagine Jesus setting up 13 shell companies meant to hide wealth (or this the modern day Judas)? Why are donations to such an organization still tax exempt? None of it makes any sense to me. (Sorry if Sam covered that, I’m not really a big BCC fan). Also, what happens when people try to tell their bishops and stake presidents “I consider the matter closed.” I wonder how well that’s going to go over.
Great post! Two thumbs up for the picture used for this post. I had kids who were pretty crazy about Roblox for a few years, so that image brings back some good memories and made me laugh at the same time.
Another example of what I feel is a lousy business decision made by the Church is the wording added to tithing slips about 10 years ago, “Though reasonable efforts will be made globally to use donations as designated, all donations become the Church’s property and will be used at the Church’s sole discretion to further the Church’s overall mission.” I think the general understanding is that the Church can probably use tithing funds pretty much however they want to “further the Church’s overall mission”. However, the wording applies to all categories of donations: tithing, fast offerings humanitarian aid, etc. Why would I ever want to try to help people by donating to fast offerings or humanitarian aid as long as that wording is there? Here’s how I’d answer the 4 questions:
1. Legal? I’m not a lawyer, but I suspect that this is probably legal.
2. Ethical? No, for example, it’s not really ethical to take a donation to the humanitarian fund and build an upscale mall in downtown Salt Lake City. The wording makes it sound like the Church could do that if it wanted to.
3. PR? It would be really bad PR if it became known that fast offering or humanitarian donations were going to other causes like building malls or even building temples or chapels. I can already see the headlines in the New York Times if this were to happen.
4. Transparency? No, this is horribly opaque. It’s basically saying, “you can tell us how you’d like us to spend your donations, but in the end, we might just ignore your wishes, and we aren’t going to tell you what we did with the money anyway.”
Is it really that hard for the Church to keep humanitarian funds separate from tithing funds?
Some examples of good business decisions might be:
1. The Church no longer asks members in an area for separate “building fund” donations to build chapels and temples. (I think someone posted on here not too long ago that they had been asked to donate to a building fund not all that long ago, which I found shocking. I don’t think this is normal, though?)
2. All missionaries pay the same amount no matter where in the world they are sent. Tokyo missionaries pay the same amount as Uruguay missionaries.
3. It seems like the Church generally builds high quality chapels that last for a long time without a lot of maintenance costs. (I’m not sure asking members to clean the chapel is a great business decision, though.)
4. I personally don’t know if the Church should be in the higher education business, but I think it could be argued that the BYUs are a good business decision for the Church. They churn out a lot of faithful, educated members of the Church, some percentage of whom might have lost interest in the Church during college at a secular university.
5. The “I’m a Mormon” campaign was probably a reasonably good business decision. I guess there’s a case to be made for a lack of transparency because the diversity featured in the campaign was certainly not representative of the Mormonism I know. Calling it a “victory for Satan” just a few years later, though, was a bad business decision.
I think that the Q15 lays out long-term plans and executes on them. That is one “advantage” of having men serve for 40+ years. I think there are plans laid out for the next 10 and maybe even 20 years that no one except them knows about. Some of those plans are likely highly flawed and don’t represent Christ’s will–when they are revealed to the body of the Church, they will appear very short-sighted. Of course, things happen and the Q15 is also often forced to react in the short term as well. I’m not saying everything they do is part of a long-term master plan, but I think much of it is.
“Every lie we tell incurs a debt to the truth. Sooner or later, that debt is paid.” — Valery Legasov, “Chernobyl”
Before this story broke, I don’t know if we had a concrete example of the modern church deliberately lying like this. Critics of the church can point to a host of examples they might call lies, but defenders could wave away these examples as differences of belief or miscommunication.
I’m thinking of Elder Holland getting caught on camera lying about Mitt Romney and the temple penalties, but I think one could argue (I wouldn’t) that he could have honestly mixed up the timelines about penalties. I’m also thinking of all the artwork showing JS reading off gold plates, but again I think you could argue (and again I wouldn’t) that the artists and their patrons didn’t know any better. I know JS definitely lied—even under oath—but you could pretty much give the 21st century Q15 the benefit of the doubt about most things and chock up their dubious assertions to genuine belief and genuine ignorance.
But this story is on a whole different level. Now we definitively know the modern church isn’t above lying to serve their interests. So, naturally, this opens a particular door. What else are they knowingly, conspiratorially lying about? They got caught this time. What haven’t they been caught for yet?
christiankimball: “The actual amount is not important so much as the amount is far more than I can rationalize as any kind of rainy-day fund.”
If we divide 100 billion by the total number of members in the church it amounts to between 5 and 6 thousand dollars–per member, that is. With that in mind, if the church has as one of its priorities to store “seven years of grain” to sustain itself through some sort of catastrophic upheaval — financial or otherwise — it may not have enough (at this point) to help all of its members to survive. And on top of that if the church had as one of its priorities to keep its operations intact (along with providing aid to its members) then the 100 billion becomes a trifle compared to what would be needed to sustain the church through anything lasting more than a few months.
That said, I’m not suggesting that all of those funds have been earmarked for “rainy days.” Even so, when we consider how large an organization the church truly is–and what it’s priorities are for the future–that large sum of money begins to look rather small comparatively speaking.
et al,
I ask you, my friends, not to judge this particular situation too quickly. My sense is that more information will come light over time–which will lend clarity to the mechanics involved in managing the church’s funds.
One more bad business decision by the Church: making a distinction between tithing donations and earnings on tithing donations. My understanding is that, at least as of a few years ago, Ensign Peak funds have only ever been used for 2 things: to build City Creek Mall and to bail out the Church-owned insurance company. Beneficial Life. Church leaders (President Hinckley certainly said this: https://www.churchofjesuschrist.org/study/general-conference/2003/04/the-condition-of-the-church) have argued that tithing funds weren’t used for these purposes; rather, earnings on tithing donations was used instead. To answer the OP’s questions about making this distinction between tithing and earnings on tithing:
1. Legal? Probably. I’m not aware of any laws that don’t allow a church to distinguish between donations and earnings on donations.
2. Ethical? Nope. Members expect the Church to either spend their tithing donations or invest them responsibly. If invested, most Church members would make no distinction between the principal (the donations) and the earnings on the principal.
3. PR? It’s bad PR to spend earnings on tithing in ways that tithing shouldn’t be used because, again, pretty much no one except for apparently Church leaders makes this distinction.
4. Transparent? I guess if the Church were to provide financial reports to members stating it has X amount in tithing donations and Y amount in tithing earnings, that would be transparent, but they don’t do that.
One other thing to think about is that if the Church is going to hold these investments for a long time, the power of compound interest will make the earnings far exceed the original tithing donation amounts. For example, if the Church has $100 billion today, it would be very possible (8% annual compound interest) for it to have $1 trillion in 30 years just from compound interest alone (no principal added). In effect, the Church can start out with a relatively small amount of tithing donations and over the course of a few decades end up in a situation where the principal is not very significant when compared with the earnings. Therefore, the Church could pretty much do anything it wants with all of this money since most of it isn’t directly from tithing donations–it’s almost all earnings. Does the Church really think that it can do whatever it wants with all these earnings? Does the Church really expect members to not expect all of these earnings to be treated the same as their initial tithing donations? While legal, this deception almost feels like it might be worse than the SEC violation.
Jack, my thought on your math is that in a such a situation where the church would need to provide for its membership in this way, the value of the dollar (fiat currency) or stock market securities (unrealized book value of “projected future earnings”) is essentially ZERO. Kinda like the assertion that this fund is meant to rebuild AFTER the (cataclysmic) Second Coming (like really…at that time when EVERYONE will acknowledge that Jesus OWNS THE ENTIRE EARTH, Jesus will be like “well, wait a minute–let’s cash out these stocks and do some rebuilding”). I think these (counter)arguments from President Newsroom are laughable at best and disturbing at worst (because of how the lack of cogency reflects how President Newsroom views the intelligence of its audience).
Of course transparency is NOT something the Church values. From its inception, they have kept secrets—often big ones. Many faithful members don’t even know about the Second Anointing and when told about it think it’s a lie.
I think the bad business angle I find even more compelling (if I’m characterizing the 13F fiasco as bad leadership) is what Elisa says above about the fiscal irresponsibility of having basically NO PLANS for what to do with this money. Tithe-payers are excited to donate to a cause they consider worthy, including maintenance (which is covered), but what about some projects to use this money? What if these 13 LLCs had each been given a mandate? What wonderful things could the Church have accomplished? Fixing the environmental catastrophe that’s about to happen to the SLC basin? Poverty reduction programs? Sponsoring refugee families? Extending welfare to the world at large? Providing health care? Housing for the homeless? Using all the ancestry.com data for some real world benefit not yet imagined?
Instead we’ve got a stockpile of cash that might as well be invested in crypto for all the good it’s doing. Handing Jesus a check at the second coming is about the dumbest thing I’ve ever heard. Even building a gajillion temples that can’t be staffed or filled with patrons to continue to do work for the same names over and over is not really inspiring.
@angela and Christian, I totally agree.
The stewards of an institution – whether it’s a business or nonprofit or whatever – are charged with using the institution’s resources to further the institution’s purpose.
That may be to reinvest in and grow the business.
It may be to pay a dividend to shareholders.
It may be to support projects aligned with the institution’s objectives.
In no cases is it to amass such obscene amounts of cash and let it sit there. Yes, having a nest egg and letting it grow in the market is a good idea. But to what end? What is the strategy? When is the nest egg big enough? When it’s big enough what will you do with the excess?
There is no thought whatsoever to this. The objective seems simply to be – be as frugal and secretive as possible. But to what end?
And truly I think that is a failure of leadership, of vision. It’s negligent, unprofessional, and foolish.
Two thoughts on this new development that it’s not good business to grow the assets if they aren’t going to be used to further the organization’s cause:
Firstly, I can think of millions of ways to use these funds. Bigger youth budgets for wards. Funding youth summer camps and get rid of the bake sales already. Professional cleaning of our buildings. Implementing a world class humanitarian program. Paying BYU professors in line with their peers. Paying ALL seminary teachers and not just the ones that teach in Utah and Idaho. I could go on.
Secondly, I wonder if this wealth hoarding is a product of having leaders that are from the boomer generation. If these leaders grew up either during the depression or with parents that lived through the depression, the desire to hoard wealth is real. I saw it in my grandparents who were literally terrified in their old age of running out of money before they died when in reality they could never have spent all that money before they passed. Perhaps in twenty years we will have leaders that think about money differently, having not been impacted by the 1930s.
I understand 70% of members voted for Trump. I have wondered how they could find a moral vacume worthy of their support, and wondered if they were in effect groomed by the unquestioning loyalty required by the church. He put a lot of effore into hiding his tax returns. The church was similarly hiding its financial dealings.
There was an investigation into the how the church dealt with tithing in Australia. It went to shell companies in third world countries, to satisfy tax exempt status of charitable donations, but was then moved on. The assumption was that it ended up in Utah. After this fiasco, might there be another billion dollar fund where foreign tithing ends up in a tax haven somewhere? They wouldn’t want it in the US where they would have to hide it.
I can remember (years ago) when members not only paid tithing but each household was assessed at the end of the year, an amount for the ward budget as well.
I can also remember hearing (when wards had more control of funds) about a well -to-do ward—on the east bench of Salt Lake Valley—giving helicopter rides as an adult activity.
The bottom line is—it is often the hiding of behavior that gets one in trouble. They tried to keep certain info from getting out and in doing so violated rules—resulting in a $5 million fine.
@jaredsbrother, regarding your question about why the Church started filing the Form 13f in 2019 just before the whistleblower blew the whistle about the size of the Ensign Peak fund. The Salt Lake Tribune article on this topic said this:
QUOTE:
A public website, apparently the now-defunct Truth & Transparency Foundation, formerly known as MormonLeaks — reported in May 2018 on financial entities with apparent ties to the church that had reported investment holdings totaling about $32 billion — each with an online domain registered to a church subsidiary and a business manager whose name matched ones listed on church employment rosters.
After the website’s report on the LLCs, the SEC said, “two business managers resigned their roles, voicing concerns about what they had been asked to do.” Those managers were replaced and Ensign Peak continued to file under the clone LLCs until February 2020.
At that point, Ensign Peak changed course, as reported in The Salt Lake Tribune, and filed a single consolidated form that detailed all the securities listed under the clone LLCs under its own name, disclosing a public portfolio worth $37.8 billion held in stocks and mutual funds.
ENDQUOTE
So the change in the reporting was because of the MormonLeaks information, which came shortly before Nielsen’s full whistleblower report.
@your food allergy. I’m not willing to believe that the lawyers and investment managers run the show, with the Church leaders as nothing but an elderly rubber stamp. Church leaders have tight control of everything, and that comes through in Gen Conf and all their public appearances and speeches. There’s nothing about Pres Nelson’s manner that suggests he’s letting anyone else steer the ship. These are just matters of opinion, so you’re welcome to disagree with me.
The brethren know that they have so many negative things going on that some of them will leak out and they have a special “church reputation committee” that is overseen by members of the 12 that watches for and advises how best to respond to negative publicity.
I wonder how the 15 are handling this, since before the whistleblower the 12 did not know about these accounts.
This is the church’s (JESUS’s) SMALL account. Who knows what’s going on with the larger one.
Impressive post and follow-up discussion. I particularly enjoyed the clear and persuasive argument of the original post. When I was reading this thread, the church’s involvement in Prop 8 in 2008 came to mind as a prior example. To wit, was it
1. Legal? Laws were broken, although to an uncertain extent. We know that the church failed to respect campaign finance laws related to reporting and was subsequently fined, and there’s some evidence that the failure to report for which the church was fined was only the tip of the iceberg.
2. Ethical? Turning chapels into precinct houses and using religious authority to strong-arm political campaign donations from members (to the tune of about $25 million) are a shameful legacy of Prop 8. The untruths contained in the church’s messaging and media content of that era absolutely crossed ethical lines.
3. Good for PR? Prop 8 was an unmitigated disaster for the church from a PR perspective. This effect has persisted more than a decade. In fact, it can be argued that Prop 8 was the beginning point in the church’s dramatic downward slide in public perception.
4. Transparent? Absolutely not. The church strove actively to suppress information about its involvement (see https://www.huffpost.com/entry/mormongate-the-churchs_b_163016) and disclosed its behind-the-scenes activities only when forced.
It’s funny how the SEC settlement brought up the old wounds of Prop 8. The SEC debacle wasn’t the only breach of faith of this sort.
This stinks in so many ways.
My ancestors joined the church within weeks after it was officially formed. Ggg grandfather was one of the few who served a mission with Joseph Smith. He was also in zions camp along with his son in law, my gg grandfather. G grandfather was one of the very first saints to see the salt lake. At 9 years old. He made that trip and 2 more, working for others to earn money to bring his mother and sisters to Utah. He also knew Joseph, Brig, Porter, etc personally. Rescued the Martin company, led multiple trains from Missouri to Utah, fought Johnston’s army, was involved in a lot. Never met him but his words still guide me. He had interesting takes on a lot. The gospel is true. Salt Lake City isn’t any longer. SLC has figured out a way, like all other ‘religions’, to make money off the Savior. You can’t have billions of dollars controlled by accountants and their attorneys, and not have someone try to use it. SLC isn’t so afraid of the SEC and IRS and others as it is afraid of an audit showing what is actually going on and what rank and file saints will feel about it. I kinda think an audit will show that a bunch of fatcat ‘marman’ bros from Utah have been using it. We already know about city creek after they lied about it. What else is there we don’t know about.? Transparency is wonderful if you start out transparent. It shows some ugly stuff when it’s forced transparency. I read one quote by some lds accountant or attorney when this was first made light, he said nothing was done that was technically illegal. That says a lot. When you get into technicalities it’s basically a way to cover a lie. This very sad to see. My ancestors hard work deserves better. Im nobody, I deserve better. The Savior and his gospel definitely deserve better. Dark days ahead. Dark days. Very sad.