Monday, December 30, 2019

$100 Billion and the LDS Church

About two weeks ago, Religion Unplugged and the Washington Post simultaneously broke a story: the Church of Jesus Christ of Latter-day Saints (which going forward I'll refer to as the Mormon or the LDS church). In brief, they reported a whistleblower complain to the IRS saying that Ensign Peak Advisers, a tax-exempt supporting organization/integrated auxiliary of the Mormon church, was sitting on investment assets worth $100 billion. Moreover, during its 32-year existence, the whistleblower alleged, it had never made any charitable distributions, to the Mormon church or any other charitable institution.

As both someone who spends a lot of time researching and writing about the intersection of tax and religion AND as a practicing Mormon, that revelation ended up taking a lot of my time. It raises interesting and ambiguous legal questions, many of which I wrote about here.

Over the course of my blogging this week, I'm planning on using the story to reflect on questions of church financial disclosure, of endowments held by tax-exempt organizations (and especially churches), and other policy questions. I'm not going to spend a lot of time on the technical treatment of this kind of church endowment, both because the answers are ambiguous and are probably not terribly important. After all, had Ensign Peak Advisers made modest distributions, or had the Mormon church held its investments in-house or with a for-profit investment fund, there would be no legal question: there is nothing preventing an actual public charity from holding a large endowment (section 4968 notwithstanding).

But even with that money held in-house, this size of an endowment would raise the transparency questions and questions of whether public charities should be able to amass so much money without paying taxes on it. So please join me this week as I try to think about some of these questions.

Samuel D. Brunson

Church and State, Current Affairs, In the News | Permalink


I appreciate that sometimes it is best to focus on only one, perhaps favorite, issue of the multi-part complaint--in your case, the size of the fund and its zero charitable distributions over 22 years. However, most of the complaint surrounds two illegal distributions. I would appreciate knowing your thoughts on that score. Do you have plans to at some point address those two illegal distributions, and what should be done to improve transparency such that those things happen with less frequency in our country? To review the first one: Beneficial Financial Group needed to $594 million to avoid failure (BFG was formerly managed by Mormon Prophet Thomas Monson, which would create an image problem). The Mormon Church decided to publicly state (through its owned newspaper, Deseret News) in 2009 that those funds would originate from Deseret Management Corporation and not involve tithing money at all. That was inaccurate. They originated from Ensign Peak Advisors as leaked documents show; DMC acted as a pass-through. The funds were literally never-invested tithing. It seems that Mark Willes, CEO of DMC, advised by his general counsel or under the nose of his general counsel, Robert W. Edwards, (first cousin to Henry B. Eyring, founding trustee of EPA and member of the First Presidency) may have sought this $594 million from Richard Willes, who was at EPA at the time. Allegedly, to facilitate and cover up this scheme, Rob Nydegger and Roger Clarke (the top two individuals at EPA) joined the Board of Directors of BFG in 2009 (and are in that position to this day to safeguard the cover up). To review the second: EPA bailed out the construction of the City Creek Mall with $1.4 billion (also from the never-invested tithing account within EPA). Mormon leaders lied about the origin of the funds again. One big problem with the current lack of transparency is that illegal distributions are very easy to hide. In my view, this is far worse an issue than amassing wealth without limit (immoral, though perhaps not illegal, given public representations made by the Mormon Church to its membership) or not making any charitable distributions in 22 years (the latter issue is still significant in my view). Would you be willing to give this matter the attention that it merits?

Posted by: Lars Nielsen | Jan 30, 2020 12:26:55 PM

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