Has The Mormon Church Provided Proof Of How They Spend Their Money
The Church of Jesus Christ of Latter-twenty-four hour period Saints has allegedly amassed US$100 billion in purportedly charitable avails since 1997 without ever giving any money away – a possible breach of federal tax laws.
This judge of the size of its investment vehicle known as Ensign Peak Advisors became public noesis when David A. Nielsen, a former employee and a member of the church, blew the whistle.
Together with his twin brother Lars, a former church member, Nielsen gave the Internal Revenue Service evidence he claims proves the church mishandled funds.
Co-ordinate to the Nielsens, Ensign Summit Advisors has invested the church's annual surplus member contributions to build up a $100 billion portfolio. Only the Nielsens say they could find no testify that Ensign Peak Advisors spent a dime of this money for religious, charitable, educational or other "public" purposes every bit IRS rules crave under most circumstances. They also allege that it diverted tax-exempt funds to finance some for-profit projects, which could likewise violate IRS rules banning such transactions in some situations.
If the IRS determines that the investment fund failed to human action equally a charity fifty-fifty though information technology benefited from taxation breaks, it might find that Ensign Peak Advisors bankrupt taxation laws. If that happens, and the IRS collects back taxes, David Nielsen could receive a cut as a reward.
If the numbers are accurate, Ensign is the nation's largest charitable endowment, with as much money equally Harvard Academy and the Pecker and Melinda Gates Foundation have at their disposal, combined, if not more than.
Church building leaders deny that they have violated any laws that regulate taxation-exempt institutions. The church "complies with all applicable law governing our donations, investments, taxes and reserves," said the three-member council headed by church president Russell M. Nelson.
From my vantage signal every bit a historian of Mormonism, this news marks a new twist on an sometime story. For near two centuries, the church has conducted its finances in ways that defy the expectations Americans take for religious organizations.
A church-owned 'anti-banking concern'
Consider what happened in the summer of 1837, when the fledgling church building teetered on the brink of collapse.
At the time, Joseph Smith and many church building members lived in Kirtland, a small-scale town in northeastern Ohio. The Smith family had moved there in the early 1830s, seeking a safer gathering identify for church members in the face of persecution in New York state.
Smith and his followers began building a temple in Kirtland. The Saints defended their temple in 1836, just the project left Smith and others deep in debt. Like many communities in antebellum America, Mormon Kirtland was state-rich and cash-poor. A lack of hard currency hampered commerce.
Smith and his associates decided to start their ain bank to solve their financial woes. The apportionment of bank notes, they thought, would boost Kirtland's economic prospects and make it easier for church leaders to satisfy their creditors.
Lots of currency
The idea of Mormon leaders printing their ain money wasn't as crazy as it sounds in 2019. The United States still lacked a compatible currency. A host of institutions of varying integrity – chartered banks, unchartered banks, other businesses and even counterfeiting rings – issued notes whose acceptance depended on the confidence of citizens who might accept or turn down them.
Mormon leaders bought engraving plates for press bank notes and asked the Ohio land legislature to charter their bank. The Mormon proposal went nowhere in the legislature.
At this betoken, church building leaders took a more fateful and dubious step.
They had collected money from investors and had already begun printing notes of the "Kirtland Safety Society Bank." Instead of shutting down the performance when the charter failed to come through, they doubled down. Worried nigh the legal risk of running an unchartered depository financial institution, church leaders altered the notes to read "anti-Cyberbanking-Co."
A brief blast
For a while, all went well. "Kirtland bills are as safe every bit gold," one church member wrote in January 1837. The boondocks enjoyed a brusk-lived nail.
Before long, however, the anti-banking company proved anything but safe. Not-Mormons questioned the social club'due south ability to redeem its notes, and church leaders could not go along it afloat. The Kirtland Safety Society's struggles were non unusual. Scores of banks, including some of the nation's largest, failed in what became the Panic of 1837. Real estate speculators lost their fortunes, and workers lost their jobs.
What made Kirtland different was the bank's ownership. Many church members lost not only confidence in the society'southward banknotes, but faith in the prophet who had signed them.
The crisis divided the church building. At one point that summer, church members wielding pistols and bowie knives fought with each other in the temple. Smith and one of his meridian associates were convicted of issuing banknotes without a charter and fined $1,000 each. They soon fled the courts and their creditors, taking refuge with fellow church members in Missouri.
Afterward anti-Mormon mobs forced the Latter-24-hour interval Saints out of Missouri and and so Illinois, Smith'due south successor, Brigham Immature, led thousands of church members to what became the Utah Territory.
From a railroad to a shopping mall
The church building has never stopped blending commerce and religion.
In the late 1860s, Mormons built the Utah Primal Railroad, which connected Salt Lake City with Ogden – a terminate along the transcontinental railroad. Church leaders controlled the railway until 1878, when Wedlock Pacific bought it.
Beginning in 1868, the church also operated the Zion's Cooperative Mercantile Institution, a department store designed to put the clasp on not-Mormon businesses.
The church sold the shop in 1999, only in many ways its commercial interests accept become more grandiose since its frontier days of railroading and retailing.
In 2003, the church's for-profit real estate sectionalisation purchased the state on which the store had stood. Nine years later, the estimated $1.5 billion City Creek Heart development opened to the public, including a glitzy mall.
At the time, church officials asserted that they had not used any tithing money on the City Creek project. The church explains that tithing – the contribution of 10% of its 16 million members' almanac income – is for the construction and maintenance of church buildings, local congregational activities and the church'south educational programs. The church's for-profit divisions handle commercial projects, including real estate and publishing.
The Nielsen brothers allege that Ensign Peak Advisors diverted $1.4 billion in tithing funds to pay for the development, a possible violation of the IRS rules that govern taxation-exempt institutions.
Information technology is impossible to confirm the accusation without greater transparency on the part of the church, which has told Faith Unplugged, a nonprofit media outlet, that information technology "does not provide information about specific transactions or fiscal decisions."
According to Samuel Brunson, a tax law professor, the church was more open almost its ledger sheet and concern arrangements during the first half of the 20th century.
Then, in the mid- to late 1950s, it lost approximately $x million in municipal bail investments. The resulting embarrassment was one cistron in the church building's decision to go less forthcoming about its finances.
In this respect, the church is not unique. U.S. laws do not require churches to disclose their financial information in much detail. While some churches do and so voluntarily, others – including the Cosmic Church – continue their financial and commercial interests shrouded from public view.
Saving for a 'rainy decade'
It remains to be seen whether Ensign Pinnacle Advisors is going to become the subject of IRS investigations.
There are, of course, upstanding and moral questions in addition to legal ones. For example, should the church amass so much money? And might the church employ more than of its excess funds and investment gains for humanitarian purposes or to brand the tuition at church-owned Brigham Young University fifty-fifty more affordable?
What'south likewise at stake is confidence in the church building's leaders. Sen. Mitt Romney, the Republican Party'south 2012 presidential nominee and the nation's most politically influential Mormon, professed to be "happy that they've not only saved for a rainy twenty-four hours, but for a rainy decade."
Romney'south perspective makes some historical sense, given that the most obvious problem in Kirtland, Ohio, was that Joseph Smith's financial stewardship was decidedly unwise. At least today's church building leaders earn expert returns on their investments.
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Source: https://theconversation.com/mormons-and-money-an-unorthodox-and-messy-history-of-church-finances-129132
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