Over the last week or so, a number of people have pointed me to investigative journalism regarding the church’s finances in Canada and Australia and asked my opinion on them. Which is flattering but, unfortunately, right now I don’t have a ton of spare time. So rather than go through in detail, I’m going to try to contextualize a little bit of what I think is going on.
And what I think is going on is two things. First, the church thinks of itself and, to the extent it legally can, operates as a single economic entity. Over the last several decades or so, it has consolidated its finances in Salt Lake (which significantly diverges from most religious organizations I’m familiar with, including other hierarchical religions like the Catholic church).
Second, the church is obsessed with being financially opaque. It values its financial privacy to a degree that it can be harmful to the public’s perception. (I’m sure I’ve blogged about this, but I’ve also written about the history of the church’s varying levels of financial transparency/opacity for Dialogue.)
And these two things, I believe, underlie the stories coming out of Canada and Australia. And frankly, my quick blog post (written between getting kids up for school, getting them breakfast, and getting ready for work) may or may not be satisfying. It’s not meant to convict or exonerate the church. And pretty much everything I know about this comes from two articles. And I believe that the church should be more financially transparent, and that such transparency would be good for it in both the short and the long run.
Canada
The news out of Canada is that the Canadian church has sent about C$1 billion to the BYUs over the last fifteen years.
Which, I have to admit, I found kind of unsurprising. More on that in a minute.
The church has a separate corporate existence in Canada (and Australia, when we get there). Like in the US, my understanding is that Canadians who donate to the (Canadian) church get a charitable deduction. But Canadian law (at least according to the article–I’m not an expert in Canadian tax law) requires a Canadian charity to use the money for charitable purposes or to give it to another qualified charity. The US church is not a qualified charity for these purposes, which undercuts the church’s general financial organization. Like, in the US, when you hand your $100 of tithing to the bishop, he deposits it in a bank account that goes to Salt Lake, then Salt Lake distributes that money back according to its own criteria. (This is, on net, probably a good thing. Otherwise, poorer wards would have fewer resources, while richer wards could fund massive parties or ski trips or whatever.)
That’s not an option in Canada. But good news! Money is fungible. So if the Canadian church can’t remit tithing to the Salt Lake church, economically it does exactly the same thing by paying expenses that the Salt Lake church would have to pay. If the BYUs are qualified recipients and the church would have put at least C$1 billion into them over those 15 years, the church is indifferent to whether it pays directly or the payment comes through Canada or Australia or the UK or Brazil or whatever.
Secondarily, Canadian law requires some level of disclosure of how Canadian charities spend their money. By transferring all except some administrative expenses to the US and letting the US pay expenses directly, it circumvents the detailed reporting.
So what should we think of this? It’s ultimately up to you. The journalist points out that this is perfectly legal. Of course, perfectly legal is not the same as normatively good. And frankly, this issue would go away if the worldwide church were transparent about its finances, a thing entirely within its power.
That said, honestly, this feels like the church trying to shove the square peg of Canadian charity law into the round hole of its preferred corporate/economic regime. It really wants to act like a unified economic entity and, because Canadian law makes that hard, it has adjusted. But again, the fungibility of money means that, by structuring its expenditures to meet Canadian law, it can effectively include its Canadian revenue within its unified vision of church finances.
Australia
An Australian newspaper reports that the church has massively overstated its humanitarian giving. (Okay, it says “charitable,” but legally, charitable includes religious—it’s using “charitable” to mean “relief of poverty,” so I’m going to stick with “humanitarian.”) Several years of leaked financial statements suggest that Latter-day Saint Charities has made significantly less humanitarian donations than the church claims. (Apparently there’s also a 60 Minutes Australia TV segment? but I don’t watch US 60 Minutes—in fact, the only TV news-like show I watch is the Last Week Tonight segment that goes on YouTube—and I don’t plan on starting now.)
Is it plausible? Absolutely. Like I’ve said way too many times already, the church is far too opaque with its finances. But in evaluating the articles claims, I did have a couple questions.
First, the article says that the church:
“the church has claimed its global giving through its charity arm, Utah-based Latter-day Saint Charities increased by $US1.35 billion between 2008 and 2020. The church says it funds programs through organisations such as the Red Cross, Water For People and the World Food Program.
“But an analysis of the Latter-day Saint Charities own accounts — which have never been released or reported previously — show it only provided $US177 million in total charitable support over the same period, a discrepancy of $US1.18 billion ($1.82 billion). Latter-day Saint Charities uses global accounting firm PwC as its auditor.”
But here’s the thing: it doesn’t link to that claim. And in the church’s 2021 disclosure, it doesn’t mention anything about Latter-day Saint Charities in connection with its giving. And frankly, here the opacity gets in my way. I don’t know the purpose of LDS Charities. I don’t know whether the church does the bulk of its humanitarian giving through LDS Charities or if it just uses LDS Charities for particular endeavors. But without knowing whether LDS Charities is the exclusive font of church humanitarian aid or not, its financial statements don’t tell us much.
Again, it is clearly possible that the church is overstating its humanitarian aid. Its lack of transparency means that’s something we can’t objectively evaluate. But the Australian story doesn’t give us a ton of information about that question, either way.
And again, this is within the power of the church to resolve. It could be—and should be—more transparent.
And with that, it’s time to get kids to school and start the work day.
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By Common Consent, a Mormon Blog 
Sam, thanks for taking the time on this. I acknowledge that the Australian article is not a model of clarity. But their charge against the church is pretty straight forward: that it overstated its humanitarian giving by more than a billion dollars. The reporters apparently gave the church a chance to articulate the obvious potential defense you note above : i.e. that LDS Charities is not the organization’s sole vehicle for humanitarian giving, but the church decided not to respond–instead, referring the newspaper and its readers to the church’s opaque public statements.
In its 2021 report, for example, the church claims $906 million in “expenditures,” but doesn’t define expenditure. It is clear, however, that these “expenditures” include “donated clothing” from DI as well as “church operations,” which include family services counseling, employment centers, and DI. https://www.churchofjesuschrist.org/bc/content/shared/english/charities/pdf/2021/PD60013504-CaringForThoseInNeed-Annual-Report-2021-mobile-eng.pdf?lang=eng
In other words, some expenditures are non-monetary. How much of them are non-monetary, we’ll never know, but it seems very possible, that the church is assigning high dollar values to non-monetary “expenditures,” which could account for the discrepancies these reporters uncovered.
So yeah, “the Australian story doesn’t give us a ton of information about that question,” but it’s not for lack of trying and, as you emphasized, the church could easily fill the vacuum of information.
Finally, I think you included your own thoughts in the final block quote of your article.
Aargh. Thanks, Jesse. The WordPress blockquote was giving me so much trouble this morning, but it looks fixed now. I appreciate your pointing that out!
As to your substantive point: like I said, I agree: this is largely self-inflicted. The church has the information and ability to correct the record.
That said, I don’t put much weight on church PR issuing a non-answer, because historically, it’s been terrible at engaging with the press. And I don’t know why. Does it see the press as hostile and antagonistic? does it want to fully control the narrative in a way inconsistent with an outside journalist writing? does it think that its intended audience will ignore the news? (Also, we don’t know what precisely the paper asked or how much lead time they gave—it could be at least partly on the paper, too.)
That’s well beyond the scope of this particular post. And honestly, having known a couple people who worked for church PR who were perfectly competent, I have to assume this kind of approach is driven by the church, not its PR arm.
But ultimately, that would probably merit its own discussion. For these purposes, the church has all the power to clarify. And if it prospectively made financial disclosure, these questions wouldn’t come up in any event.
I wish the church would be more transparent with its finances. Allowing Church PR people to make claims and spin the story is setting us up for a PR disaster when clarification eventually comes. Opacity breeds mistrust. This mistrust works against the religious liberty arguments being put forward by church leadership.
Thanks to both Sam and Jesse in helping me wrap my head around these issues. I was hoping if anyone could add a bit more clarity to three areas I’ll try to summarize below:
1. (Logistical Tithing)
Just wondering Sam if you could help those of us who do not have the tax/legal background that you do, better understand just how do the Canada or Australia tithing situations look in a practical sort of way for a typical member in these two nations? That is, when a Canadian member writes a monthly tithing check, how does some of it literally land in Provo for the BYU budget? Surely, they still have to indicate the name of the church on the check rather than sending it to BYU? But how would that member be able to do a tax deduction literally?
So, I guess I’m also confused on the notion of the concept of missed-out Canadian tax revenue. Does this imply that if there were no such legal loophole of a university donation, how exactly would the tithing ended up being taxed before heading to Salt Lake City? It’s the logistics that throws me off in both articles you mentioned. Surely Australian members aren’t writing their tithing checks directly to Latter-day Saints Charities Australia (LSCA) correct? (And if writing checks is the antiquated method nowadays, how is it done digitally?)
2. (Transparency)
After clicking on each of the annual reports from latterdaysaintcharities.org and taking note of any financial disclosures, a pattern seems to have been broken in the 2021 report. For the first time ever, the church revealed in the 2021 report (that President Oaks surely must have quoted from in his general conference talk) an estimated annual expenditure whereas all the other reports only indicate a cumulative expenditure starting in 1985 (when President Kimball motivated all of us to fast and contribute on behalf of the Ethiopian famine). If one simply does a subtraction from year-to-year, the annual expenditures turn out to be $690M (2016), $180M (2017), $150M (2018), $100M (2019), $200M (2020), and $906M (2021).
So did we really spend practically five times more in 2021 than the previous year, or did our definition of what constitutes a humanitarian expenditure get modified as Jesse is pointing out in the first comment to your post? And I was also wondering why would the church be transparent enough to publish a cumulative amount but not an annual amount until suddenly last year? Is there some practical reason for the secrecy that I’m not seeing? It seems to only get a bit more cloudy when the in-kind donations that Jesse is calling our attention to are suddenly thrown into the mix.
3. ($100 Billion)
I’m still totally confused on why no one has yet to question the 2019 Washington Post article in the context of the Nielson brothers’ claim that at least 100 billion dollars are tied up in stock investments (both tithing and interest on tithing throughout the years). When you google the SEC and Ensign Peak Advisors, you do get access to quarterly reports of the portfolio, but it’s been typically less than $50 billion. So where is the other half invested? No one ever seems to question this number and it’s starting to get on my nerves.
Thanks readers for your patience with my questions that are meant to be asked in humility and a desire for better understanding on the issues. I really appreciate your essays Sam and the dialogue that you help guide in a professional way.
Warm regards.
Thank you.
Does anyone remember which country was assured that Tithes offered in their country would stay in their country? I’ve heard that before somewhere.
Old Man, I agree.
Richard, good questions. I’m going to answer them really quickly:
1. For members, the process is invisible. They write a check to the church. They get a deduction to the extent permitted by law. The issue, in Canada at least, is what the Canadian corporate church can do with it. Canadian law apparently limits a charity’s choices of how to spend its money. In a perfect world (from the church’s perspective), LDS-Canada would remit the money to LDS-Salt Lake. Salt Lake would then put that money together with the rest of its revenue and either transfer a portion back to Canada or pay Canada’s expenses directly. Canadian law doesn’t allow that remission. So instead, it transfers a significant portion of its revenue to the BYUs (call it $1 billion). If it had transferred that money to Salt Lake, Salt Lake would have spent say $10 billion on the BYUs. Now it only needs to spend $9 billion. Either way, it transfers to Canada the amount Canada needs to function. Economically, things end up being identical to how the world would be if Canada transferred money to Salt Lake.
2. I don’t know. It’s definitely possible that the church spent more. It’s possible that it recategorized some expenses. I suspect it’s likely a combination of the two. Without disclosure, though, we just don’t know.
3. The $100 billion number was always fictional; it was an estimate. That said, the SEC only requires disclosure of certain assets (stocks and bonds primarily, I think). So it’s possible that EPA holds $50 billion in stocks and bonds and another $25 billion in real estate and/or other non-disclosed assets. (Also, even if $100b were the right number in 2019, markets are currently down, and I doubt that the church’s portfolio is immune from the market downturn.)
I’ll begin with the caveat that everything I’m about to say is based on several behind-the-scenes looks at Church entities from educational and/or professional encounters with these entities (plus some experience as a mission financial clerk) and that my recollections are likely imprecise.
With that said, I believe Latter-day Saint Charities (LDSC) exists as a separate entity to facilitate compliance with grants and gifts given to the Church that have conditions attached, including financial disclosure requirements. Someone at some point determined that having either the Corp. of the Presiding Bishop or the Corp. of the President (now the Corp. of the Church) accept those conditional gifts was either impossible or overly complicated, so LDSC was born in the 90s to separate money for humanitarian and education projects. As a general rule, if it’s a large-ish project aimed at people who are not members of the Church, it falls under the LDSC umbrella.
The most recent report with the billion-dollar figure encompasses far more than the LDSC operations, most notably fast offerings, which likely makes up the largest portion of the billion-dollar figure. As I recall, in at least one country that had a similar corporate structure as the Church in the United States, that money went through the Corp. of the Presiding Bishop, which is consistent with both the ecclesiastical position of the lone member of that corporation and its other activities (again, all now moved to the Corp. of the Church). In addition to fast offerings, the 2021 report also notes Family Services and Deseret Industries, which, although much smaller than fast offerings, would not fall under the LDSC umbrella. There is also the possibility that the 2021 report also notes other projects that could fall under the LDSC umbrella, but for some reason were not run through that entity.
The Australia story, to me, betrays a sort of naïveté about how non-profit accounting works, as even smaller non-profits with much simpler corporate structures often have multiple legal entities whose revenues and expenditures are reported separately but that are included in the broader organization’s PR materials.
Speaking of PR, I suspect that the Church’s PR department has a philosophy that it is better to remain silent when someone is clearly out to write a hit piece. In this case, the Australian journalist has a reputation for missing important, basic, and easy-to-find facts in investigative pieces into religious groups.
Richard,
With respect to number 2, the Church did not previously include fast offerings in the report. That almost certainly accounts for the largest difference, but it’s also possible (likely even), that other humanitarian expenditures also grew in 2021.
There is a lot to sort out here. And I agree that it would easy for the Church to explain what is going on. Lacking that, here are my observations about the article:
1. I cannot find a source for the statement “In public statements, the church has claimed its global giving through its charity arm, Utah-based Latter-day Saint Charities increased by $US1.35 billion between 2008 and 2020.” Given that the most recent statement, covering 2021, claims only $0.9 billion and that was a big jump over previous years, there just isn’t room for a $1.35 billion increase over that time period.
2. They cite the LDS Charities financial statements as a source, but that can apply only to the lower number of $177 billion. They do not characterize the $177 billion as a difference. Instead, it represents “total charitable support over the same period.” They do not attach enough financial statements for me to verify that, but extrapolating from what they did attach, the number seems plausible. I suspect that the $1.35 billion also represents a cumulative amount, not a difference. If you sum the first five numbers reported by Richard above (excluding the 900 million in 2021), you get $1.32 billion, so that makes some sense.
3. The LDS Charities reports are actually very helpful in sorting out what they do and do not cover. Most importantly, the last page gives a country-by-country breakdown of expenses. In the two years I examined, the US received nothing in 2016 and a piddling amount ($134,000) in 2019. From that we can conclude that such things as the DI, LDS Social Services, bishops storehouses and any other service operating in the US on an ongoing basis is entirely excluded from the LDS Charities report. (I assume that the $134,000 was some sort of special project.) And there is still fast offerings, which I am quite certain are excluded from the $1.35 billion (but explicitly not from the $0.9 billion in 2021–hence the big jump in that year).
And a few observations beyond the scope of the article:
1. “Public support” for LDS charities amounted to just over $10.2 million in 2019. That is a shockingly low number–an indictment not of the institutional church but of the membership. I would have guessed that certain high-income members would have covered that amount all by themselves. The church transferred an additional $7.4 million from its other funds. So if you are worried that the fine print on your donation slip that says, in effect, “We’ll spend this money any way please” means that they are diverting money from the Humanitarian Fund to build shopping malls, you can relax. That is not happening. For what it’s worth, another $4.1 million came from investment returns.
2. The 2016 report broke out $220,000 of labor in the “Management and General” category. Sharon Eubank by herself could pull down close to that at any major charity. I assume she has staff at LDS Charities that eat up a good chunk of that. If so, I suspect that she is grossly underpaid. If not, I still wouldn’t begrudge her a dime of what she is getting. (Note that the 2019 report does not break out labor.)
Thanks Dsc and last lemming. One thing that I almost included in the post, but ended up leaving out, is that any journalist I’m familiar with would have spoken to an accountant for this story. But there is none cited or quoted, and for that reason I was relatively skeptical of its conclusions.
DSC: I was hoping you’d weigh in. Good stuff.
On this point: “Speaking of PR, I suspect that the Church’s PR department has a philosophy that it is better to remain silent when someone is clearly out to write a hit piece. In this case, the Australian journalist has a reputation for missing important, basic, and easy-to-find facts in investigative pieces into religious groups.” With all respect to you, that seems like a terrible strategy. By simply making some of your basic points, the church could have headed off the major allegation that their charitable contribution claims were grossly overstated. Plus, the church did respond to the AP article on the AZ abuse case, so it’s not against publicly standing up for itself against hit pieces.
Lastlemming: thanks to you too. To both you and DSC, what case could you make for the church’s policy of opacity when it comes to finances?
Sam: I have no opinion about whether the Church’s PR strategy is good or bad—I’m just giving my best guess as to what the thought process is. Some other possibilities are that the Church PR folks have pursued ways of correcting this story off the record so that the Church doesn’t have to make a statement directly. Someone else could point out the errors using public records instead. But again, that’s just a guess.
I also don’t have much to contribute to the discussion of the Church’s financial transparency. I would prefer more transparency than we have, but I don’t want the kind of full transparency some people are demanding. As you’ve pointed out before, Sam, disclosures are only as trustworthy as the entity publishing them, and there are ways to legally tell misleading stories with public disclosures. Personally, I’d like to know whether Church revenues exceed expenditures in any given year and get more reports like the 2021 LDSC report, but I don’t need to know how much a particular temple cost or what general authorities and church employees get paid.
Sorry, that last comment should have been addressed to Jesse.
@Sam’s comment at 12:41 pm: “(Also, even if $100b were the right number in 2019, markets are currently down, and I doubt that the church’s portfolio is immune from the market downturn.)” I believe Elder Bednar make this same statement earlier this year. But I’m not sure it’s correct.
The “market” in 2019 closed at just below 28,900. The market then went up as high as 36,000 in early January 2022, now landing at around 32,000 today. So technically the market is UP since 2019, and theoretically in a diversified portfolio, the church’s investment value would also be higher today than it was in 2019.
Thank you for allowing me to nitpick. Otherwise I agree with the premise: transparency by the church would alleviate the issue.
Fair, Chadwick. It’s down *this year.* But again, the $100 billion was always just an estimate, and the SEC doesn’t require advisors to disclose all assets under management, just certain specific assets.
Perhaps 20 years ago, tithing and fast offerings were not tax deductable in Australia. Only donations to a registered charity, administered in Australia are tax deductable.
Appearently the church set up LDS charitable trust to get round this, but the programme made a big thing about it having no office or staff in Aus, so doesn’t meet the requirements to be tax deductable. So just a shell company to avoid tax, and that the money is routed through other shell accounts in other countries on the way to Utah.
They also made the point that more money passes through this account (100 million) than through most recognized charities. So more money lost to taxation. I think Australian members will not be getting a refund for their tithing soon.
I live in a stake with 7 units and one 60 year old ward sized building. We are told the church can’t afford to build any chapels in our area.
For years US members have claimed all money flowed out from SLC now it appears not; some flows in from other first world countries.
I read a reply (sorry can’t find it now, so don’t take it as being 100% accurate) that here in Australia, the LDS Charitable Trust fund is governed by a board of 7 directors, who distribute almost all “tithing” collected to a number of different charities, both in Australia and internationally. $100 million incomings, just under $7 thousand outgoings. Member donations for tithing and fast offerings are therefore 100% tax deductible. Money for Church expenses then comes here from SLC. Perhaps someone can verify that?
https://www.acnc.gov.au/charity/charities/357ae4a8-38af-e811-a962-000d3ad24a0d/profile
Wow–only 7.8 thousand in expenses out of 100.2 million. That’s a lean machine. The church always tries to handle donations with great care.
Regarding the $100 Billion number, the investment details for some of the church’s holdings are public info. Search for the website “capedge dot com”, then search for “ensign peak advisors”. There you’ll find quarterly holding reports. The total of these investments is $42 Billion in the latest Form 13F.
I dug a little deeper into the link provided by Seniorhalf above. The $7,000 outgoing number (mostly audit fees) is prominent on the website, but does not reflect actual outlays. Don’t ask me to explain why. The amounts shown on the website for contributions to charities both inside and outside of Australia are shown as zero. But if you look at the actual financial statements, you can see that most of the money is directed to “L.D.S. Charities”, with the rest going to an Educational Buildings Fund and a Fast Offering Fund. They keep about $200 million in reserve.
The thing is, the amounts going to “L.D.S. Charities” show up nowhere on the financial statements of Latter-Day Saint Charities posted by the Sydney newspaper. Taking exchange rates into consideration, the amounts allegedly contributed by the Australian church significantly exceed the total receipts of Latter-Day Saint Charities (which I noted in my previous comment are shockingly low). So there remains a mystery about where that Australian money is actually going.
Lastlemming:
There is also an Australian charity on the acnc website called “lds charities Australia”.
I expect this is what is meant.
Thanks, Aussie Mormon. You are correct. The financial report of LDS Charities Australia is not terribly illuminating, but the summary indicates that the Australia group operates in pretty much the same countries as the LDS Charities whose report was published by the Sydney newspaper.
So now I’m beginning to understand why the budget of the primary LDS Charities is so small. If you add in the Australian money, the total is still kind of low, but not shockingly so. My guess is that my earlier assertion that the Church is not diverting money from the Humanitarian Fund might be wrong–it might be diverting an amount that is offset by Australian tithing. This is the kind of fungibility that Sam was talking about in the OP.
This could be happening with other countries too. It makes it even more complicated to figure out how much the Church is spending on projects that the Humanitarian Fund is supposed to support. Complete transparency would make it possible, but the gaming of different country’s tax laws would still make it very difficult.
Canada is deserving of the tax money that should be paid on the church income. The church uses clean water and public education and roads too – and not much for charitable help for actual Canadians (if it’s sending all money to BYU) Maybe legal but not ethical.
Well folks this is my take on the whole thing . It’s really none of our business as long as the church is complying with all applicable laws in each country & if laws change the church will re-adjust practices to comply with all domestic & foreign tax laws. So to this extent everything is legal & we can rest assured that LDS Charities is totally the greatest charity organization in the world!! Mankind in America & all other countries have much greater concerns such as corrupt governments that passes their own laws that destroys economies – promotes immorality & makes it legal to destroy the life of a human baby. Lets place our combined effort into preventing these human atrocities & a multitude of many others & remember the magnificent good the Church Of Jesus Christ Of Latter Day Saints does world wide for mankind !! GOD BLESS AMERICA !!