The Church has $32 Billion in the Stock Market

[Thinking]

29 minutes ago, Analytics said:

And what are the ethical considerations above and beyond what the law actually says?

This.

[Analytics]

6 minutes ago, drums12 said:

I'll pass.  Please disabuse yourself of this fallacy.  https://mises.org/library/no-tax-breaks-are-not-subsidies

 

That argument only makes sense when one thinks taxes are theft rather than legitimate dues we owe to our democratic society in order to finance the common good.

When an organization receives the benefits of society (e.g. paved roads, police protection, fire protection, a functioning legal system, military protection, etc.) but doesn't pay the taxes that are required to pay for them, it sure as heck is being subsidized. That is because the rest of us have to pay more to make up for the fact that they are getting a free ride.

[Amulek]

1 hour ago, Analytics said:

The Church says it is doing nothing more than what it advises its members to do, but if we all saved money so we could then indefinitely live off of the interest, nobody would be working to produce the useful goods and services we need to survive. 

This is kind of a silly line of reasoning. I think it should be obvious to anyone that individuals and institutions face different realities when it comes to financial planning. 

Whenever I hear people speak about the church doing what it advises its members to do, that advice generally entails living within your means and saving for the future. That is imminently sound advice.

The difference between an individual and the church is that the institutional church is able to allow its savings / investments to compound over a far greater length of time. 

If you were able to live forever like the church (or the Highlander) then you could do the exact same thing. 

 

[smac97]

1 hour ago, Analytics said:

It should be remembered that according to the Church, "the vast majority of its financial resources comes from the tithes and offerings of Church members."

This article by Peggy Fletcher Stack is about Quinn's most recent book: Historian digs into the hidden world of Mormon finances, shows how church went from losing money to making money — lots of it, merits some attention, particularly these parts:

Quote

Quinn estimates — and estimating is about the best even a top-notch researcher can do — the church took in about $33 billion in tithing in 2010, based on a model of projected growth rates that followed a consistent pattern starting in the 1950s. It earns another $15 billion annually, he says, in returns on its profit-making investments. (The Bloomberg Businessweek piece from five years ago cited an investigation pegging the LDS Church’s worth at $40 billion.)

No matter the precise bottom line, these figures represent an astonishing accomplishment, Quinn says.

“It is an American success story without parallel,” the longtime historian says in an interview. “No institution, no church, no business, no nonprofit organization in America has had this kind of history.”

I suspect the Church has a conservative investment strategy.  Conservative means safer, but also a lower ROI.  From 1992 to 2016, the S&P’s average was 10.72%

Interestingly, Reuters estimated in 2012 that the Church's annual tithing income was "some $7 billion annually in tithes and other donations."  So the estimates appear all over the map ($7 billion versus $33 billion seems like a big spectrum).  The Church would need about a 22% annual return on its purported $32 billion in order to match its tithing income of $7 billion.  Assuming the S&P’s average of 10.72%, the Church would need to approximately double that average in order to equal the low-end estimate of tithing income.  That seems . . . unlikely. 

And even if we go with the Church's investment interest income generating something close to the S&P average (let's make it an even 10%), that would mean the Church getting something $3.2 billion on its investments.  I'm not sure what the tax obligation on that would be, but I think it would be significant.

I think there is way too much guesswork going on to speak intelligently on the Church's finances.  At the end, I think the Church's statement ("the vast majority of its financial resources comes from the tithes and offerings of Church members") is correct.

Quote

This might be a tangent, but it necessarily only possible for a privileged few to "invest cash to generate interest, then live off the interest." The rest of us simply must work.

Class warfare rhetoric doesn't really apply here.  

This article by Peggy Fletcher Stack is about Quinn's most recent book: Historian digs into the hidden world of Mormon finances, shows how church went from losing money to making money — lots of it, merits some attention, particularly these parts:

Quote

At the same time, Mormon authorities did not act like corporate giants, enriching themselves on profits.

Through the years, they paid themselves less than what others in their employ made, Quinn says. Today, that is sometimes barely half as much as some of the church’s skilled bureaucrats.

CEOs of other top nonprofits, including Harvard, Yale and the United Way, make almost 10 times as much, he says. “It was truly humbling to see these men who preside over an institution making tens of billions of dollars turning [the funds] back to the benefit of the rank and file.”

That fulfills what Mormon leader Brigham Young, known as the “Lion of the Lord,” said in 1875. At that time, Joseph Smith’s successor and his apostles signed a document, decrying America’s approach to unregulated capitalism, including the “growth of wealth in the hands of a comparatively few individuals.”

The country’s “priceless legacy,” they wrote, was “endangered by the monstrous power which this accumulation of wealth gives to a few individuals and a few powerful corporations.”

By pocketing such relatively small salaries and using church assets to serve the members, Quinn says, Mormon leaders have “maintained the spirit of that attitude.”

...

LDS author, researcher and blogger Jana Riess hasn’t read Quinn’s book, but was intrigued by his positive view of Mormon leaders and their handling of money for the global faith.

“If the church was in dire financial trouble as recently as the 1950s, that means there are still people in the hierarchy who remember that,” Riess reasons. “I tend to think the generation gap that exists in the church [apostles with an average age of 76] as always negative.

But having institutional memory — at least among a few — can be very helpful.”

The Cincinnati-based writer is also impressed with Quinn’s description of LDS leadership as a “form of service,” she says. “They are clearly not in it to get rich.”

The General Authorities, who are in positions to enrich themselves from the Church's considerable wealth, are not doing so.

So nobody in the LDS Church is among the "privileged few" you speak of because of the Church's wealth.

Quote

The Church says it is doing nothing more than what it advises its members to do, but if we all saved money so we could then indefinitely live off of the interest, nobody would be working to produce the useful goods and services we need to survive. God may have been on to something when he said we should eat our bread by the sweat of our brow.

The Church is living within its means.  The Church is not going into debt.  The Church is a wise steward of its finances (now, anyway).

The Church is indeed doing what it teaches its members to do.

Thanks,

-Smac

Edited May 30, 2018 by smac97

[Analytics]

1 hour ago, Scott Lloyd said:

Did you take any tax deductions last year? If so, I suppose that as a taxpayer subsidizing you, I have the right to see your financials. 

As a taxpayer, you are subsidizing the interest I pay on my home mortgage, the kids I deducted as exemptions, and some charities I donated to. Those are all, in fact, subsidizations.

You don't need to see my financials to decide whether or not those things should be subsidized. Personally, I think interest on mortgage should NOT be tax deductible--we should create incentives to own a home--not to maximize how much you borrow for one. 

However, all churches and charities should be financially transparent.

Here are links to the transparency scores of the charities I support:

Harvesters

United Way

ACLU

Salvation Army

 

Edited May 30, 2018 by Analytics

[SouthernMo]

I don’t have a strong opinion on this. I don’t think that increased transparency will assuage many critics of the LDS organization.

However, there are a few people here who seem to vehemently protect the LDS leadership’s decision not to disclose (as if they have agreed that it is the right decision).

I’d be interested in knowing what others think potential problems for the church membership would arise if LDS leadership decided to change course, and release organizational finances along with contextual descriptions. Would souls be lost in this course?

I ask because i can’t think of any problems, but then again, I’m not as wise as I’d like to be.

Thanks!

[drums12]

18 minutes ago, Analytics said:

That argument only makes sense when one thinks taxes are theft rather than legitimate dues we owe to our democratic society in order to finance the common good.

When an organization receives the benefits of society (e.g. paved roads, police protection, fire protection, a functioning legal system, military protection, etc.) but doesn't pay the taxes that are required to pay for them, it sure as heck is being subsidized. That is because the rest of us have to pay more to make up for the fact that they are getting a free ride.

Uhhhh no.  Your argument only makes sense if you accept the premise that there is some social contract a la Elizabeth Warren.  I don't subscribe to collectivism.

[Robert F. Smith]

3 hours ago, stemelbow said:

https://www.forbes.com/billionaires/#8b9ae6251c71

Browsing through the list of richest folks I see they typically give far more to charitable causes then the Church gives to the poor and needy.  

The per capita contributions to charity is higher for the LDS Church than any other church or religious organization.  The billionaires listed by Forbes are not organizations which have most of their assets tied up in real estate (chapels, temples, real estate investments, maintenance costs, etc.).  So, although Bill Gates & his wife give huge sums for charitable purposes worldwide, that is not the whole story:  Gates has a net worth of nearly $82 billion, of which just $14 billion is in Microsoft stock. The bulk of the remainder — $64 billion – is invested in a variety of assets through Cascade Investment LLC, his private investment firm.  One must make a more careful assessment of each person and entity in order to be fair.

[Danzo]

It would be a real scandal if it were to come out that the church left its money in savings.

That would be a stupid thing to do.

It comforts and reassures me that the church has people who understand how to invest.

[Danzo]

9 minutes ago, Analytics said:

As a taxpayer, you are subsidizing the interest I pay on my home mortgage, the kids I deducted as exemptions, and some charities I donated to. Those are all, in fact, subsidizations.

You don't need to see my financials to decide whether or not those things should be subsidized. Personally, I think interest on mortgage should NOT be tax deductible--we should create incentives to own a home--not to maximize how much you borrow for one. 

However, all churches and charities should be financially transparency.

Here are links to the transparency scores of the charities I support:

Harvesters

United Way

ACLU

Salvation Army

 

The fact the government lets you keep any of your money is evidence that we are all subsidizing you and your lifestyle. 😀

[Robert F. Smith]

3 minutes ago, drums12 said:

Uhhhh no.  Your argument only makes sense if you accept the premise that there is some social contract a la Elizabeth Warren.  I don't subscribe to collectivism.

Although it is true that Western democracy is built upon individual rights, it is also true that we have a U.S. Constitution -- which is a secular social contract, and which is the supreme law of the land (that is, the U.S. Supreme Court recognizes no higher law).  That document permits us as a people to elect representatives to a legislative body which writes the laws.  We govern ourselves.  No law is imposed upon us by some foreign entity, and we are ultimately responsible for all policies and laws of this nation.

On the other hand, Adam, LDS theology does support the notion of theocratic communalism -- such as practiced by the Hutterites, and in secular fashion by the Basque Mondragon.

[RevTestament]

4 minutes ago, Analytics said:

As a taxpayer, you are subsidizing the interest I pay on my home mortgage, the kids I deducted as exemptions, and some charities I donated to. Those are all, in fact, subsidizations.You don't need to see my financials to decide whether or not those things should be subsidized. Personally, I think interest on mortgage should NOT be tax deductible--we should create incentives to own a home-

Why? Appreciation and having a cheap place to live upon retirement are not enough? I don't see a need for additional incentive.

Quote

-not to maximize how much you borrow for one. 

Unfortunately, our government has gotten too much into the business of stimulating the economy, and can't resist the temptation to encourage borrowing in order to stimulate or increase the velocity of money, which tends to drive our consumer based economy. Keeping a house fully leveraged means more money being spent out in the economy for stuff. So our government began to encourage that. One problem is we have essentially reached the point of maximum borrowing. There is even massive debt to go to school. 

Quote

However, all churches and charities should be financially transparency.

In your opinion. However, there are reasons the Church may not want to be transparent. Society has become very litigious and transparency may be seen as an encouragement to being sued.

It may also be seen as having a dampening effect on principles of self-reliance, and encouraging free-loaders. 

By the same token I believe there are valid reasons for encouraging transparency.

[Robert F. Smith]

17 minutes ago, SouthernMo said:

I don’t have a strong opinion on this. I don’t think that increased transparency will assuage many critics of the LDS organization.

However, there are a few people here who seem to vehemently protect the LDS leadership’s decision not to disclose (as if they have agreed that it is the right decision).

I’d be interested in knowing what others think potential problems for the church membership would arise if LDS leadership decided to change course, and release organizational finances along with contextual descriptions. Would souls be lost in this course?

I ask because i can’t think of any problems, but then again, I’m not as wise as I’d like to be.......

We could think of this matter as the transparency of a govt or private pension governing board making their investment strategies and results available for annual third-party audit.  In that case, the employees and the govt or private entity each have their chosen representatives on the investment board.  This is so very important since the current employees and retirees all have a stake in wise and successful long-term investment strategies.  Otherwise, the pensioners can be left high and dry, which does often happen.

Transparency is just good policy.

[Analytics]

21 minutes ago, smac97 said:

This article by Peggy Fletcher Stack is about Quinn's most recent book: Historian digs into the hidden world of Mormon finances, shows how church went from losing money to making money — lots of it, merits some attention, particularly these parts:

I suspect the Church has a conservative investment strategy.  Conservative means safer, but also a lower ROI.  From 1992 to 2016, the S&P’s average was 10.72%

Interestingly, Reuters estimated in 2012 that the Church's annual tithing income was "some $7 billion annually in tithes and other donations."  So the estimates appear all over the map ($7 billion versus $33 billion seems like a big spectrum).  The Church would need about a 22% annual return on its purported $32 billion in order to match its tithing income of $7 billion.  Assuming the S&P’s average of 10.72%, the Church would need to approximately double that average in order to equal the low-end estimate of tithing income.  That seems . . . unlikely. 

And even if we go with the Church's investment interest income generating something close to the S&P average (let's make it an even 10%), that would mean the Church getting something $3.2 billion on its investments.  I'm not sure what the tax obligation on that would be, but I think it would be significant.

I think there is way too much guesswork going on to speak intelligently on the Church's finances.  At the end, I think the Church's statement ("the vast majority of its financial resources comes from the tithes and offerings of Church members") is correct.

I hope you see the irony that you are the one who, at least on this thread, introduced all of the guesswork. And this was all in response to me quoting the Church's statement which you think is in fact correct.

[hope_for_things]

2 hours ago, HappyJackWagon said:

Yes, but I suspect the $32 billion in stocks is just a small portion of total investments and assets. When throwing in real estate and commercial holdings then total invested $$ is likely staggering (as if $32 Billion isn't )

If we had any idea about the church's annual expenses we might have a better idea how much of this money is just padding the pot and how much is needed for operational considerations. IOW- If the church puts all donations into investments and receives $10 billion annually from investment income while its expenses are only $7 billion, then we know they are adding $3 billion annually to the next egg. (I'm totally using made up numbers here as an illustration so no calls for CFR please.)

It does make me wonder how much of a hit the church could take in another sharp economic downturn and stock market adjustment. The church is usually very conservative which is why I think this $32 is such a small fraction of their diversified portfolio. I don't think they'd risk the financial health of the church to the stock market...unless...financial revelations are coming more dramatically than we suppose.

Those are some good questions.  How much money does the church generate from investment income, and how does that compare to its operating expenses.  This reminds me a little of an initiative by some to have Harvard start giving free tuition because of their very large financial holdings. 

https://www.nytimes.com/2016/01/15/us/a-push-to-make-harvard-free-also-questions-the-role-of-race-in-admissions.html

This also makes the question about how the church asks every member to give 10% even those who are poor, who live in poor countries and who experience financial hardships.  The talks in conference about paying tithing first as an act of faith become very problematic, and I think actually aren't very Christian if you read the New Testament.  

 

[CA Steve]

One of the things that financial disclosure would provide is the ability to see where those investments are placed. For example are there any restrictions placed on the church portfolio(s) against investments that support companies who sell alcohol? 

[rodheadlee]

4 hours ago, FearlessFixxer said:

https://mormonleaks.io/newsroom/2018/05/30/mormonleaks-compiles-information-connecting-mormon-church-to-32-billion-of-investments/

Before everyone jumps my bones and tries to tell me I am trying to make the church look bad....

This is about transparency.

This can be seen from a faithful perspective, a negative perspective, and a neutral perspective.

Personally, It matters not to me how much the church has in the stock market, but I think their tithe payers have a right to know.

Very Cool, that makes me happy.

[Analytics]

4 minutes ago, RevTestament said:

Why? Appreciation and having a cheap place to live upon retirement are not enough? I don't see a need for additional incentive.

Fair question and decent point. Arguments for the mortgage interest deduction are construed as arguments in favor of home ownership. My main point is that owning a home and having a mortgage that pays lots of interest are not the same thing, and subsidizing one isn't subsidizing the other.

The arguments for subsidizing home ownership hover around the idea that that if you own your own home, you are a more permanent part of the community and a better citizen.

[phaedrus ut]

2 hours ago, provoman said:

 

How about a group vote to block your posting on this board? I normally would never suggest such a thing, but for you I am willing to suggest it. 

I suggest it because you do not engage in dialogue or discussion. Your posts are only to drive traffic to your website. If your contributions were more than drive posting to drive traffic to your website, my thoughts would be different.

This board has always allowed occasional posters and as long as it doesn't break the other rules I see no problem with it.  The purpose of this board is to discuss topics relevant to Mormonism.  It's going to get discussed one way or the other.  

Phaedrus 

[Analytics]

42 minutes ago, drums12 said:

Uhhhh no.  Your argument only makes sense if you accept the premise that there is some social contract a la Elizabeth Warren.  I don't subscribe to collectivism.

A la Elizabeth Warren and a la the Founding Fathers. And a la Dallin H. Oaks, who said:

I mention first what is probably the most important of the great fundamentals of the United States Constitution—the principle of popular sovereignty: The people are the source of government power; it is they who consented to a constitution that delegates certain powers to the government. I stress this fundamental by emphasizing what are not the sources of sovereign power. Sovereignty is not inherent in a state or nation just because it has the power that comes from force of arms. Sovereignty does not come from the divine right of a king, who grants his subjects such power as he pleases or is forced to concede, as in the Magna Carta. And sovereignty does not rest in an aristocracy of self-appointed wise men who think that their high birth or prestigious education gives them the right to prescribe what is best for everyone else. Sovereignty is in the people as a whole, and their sovereignty is supreme, subject only to a few crucial limitations that I will discuss in a moment.

Sovereignty in the people necessarily implies responsibility in the people. Instead of blaming their troubles on a king, on a cabal of military leaders, or on some distant group of wise men, citizens who are sovereign must share a measure of the burdens and responsibilities of governing. I will say more of this later.

The delegates to the Constitutional Convention did not originate the idea of popular sovereignty, since they lived in a century when persuasive philosophers had argued that political power originated in a social contract. But the United States Constitution provided the first national implementation of that principle.

(emphasis added)

https://www.mormonnewsroom.org/article/fundamentals-of-our-constitutions-elder-dallin-h-oaks

[Gray]

1 hour ago, Analytics said:

There are a few different issues here. What does the law currently state? What should the laws be? And what are the ethical considerations above and beyond what the law actually says?

In a democracy, we should use our right of free speech to discuss these issues and not defer them to "government channels." 

The law currently states that religious NFPs don't have to disclosure their financials.

Personally I don't have a problem with MormonLeaks in these two areas:

• Whistleblowing in cases of potential abuse/wrongdoing (as in the case with the Joseph Bishop molestation case)
• Research on publicly available information, or in interviewing church employees

Leaked documents that don't serve a legitimate whistle-blower purpose should not be published. The church has the right not to be transparent.  I think transparency is best, however. I would also support a tax policy requiring all churches to disclose finances.

[SouthernMo]

18 minutes ago, Robert F. Smith said:

We could think of this matter as the transparency of a govt or private pension governing board making their investment strategies and results available for annual third-party audit.  In that case, the employees and the govt or private entity each have their chosen representatives on the investment board.  This is so very important since the current employees and retirees all have a stake in wise and successful long-term investment strategies.  Otherwise, the pensioners can be left high and dry, which does often happen.

Transparency is just good policy.

Agreed.  At a minimum: How can transparency hurt?  Clearly, trust and context in any disclosure is imperative; why wouldn’t the church take a proactive stance on this? I don’t see any harm - which is why I ask the critics of transparency.  Maybe I’m missing something about greater disclosure that would harm people.

Is financial transparency an issue akin to church history?  Increasingly available information about finances will happen as a result of increased information sharing on the web. It’s only a matter of time.

The church published the Joseph Smith Papers as a reaction to questions correlation was not prepared for.  But, for some it was too little too late.  The early protection of faith at the sacrifice of truth only put the Church leadership on the defensive in that case.  We lost time, credibility, and membership.

I hope the church leadership sees the parallels and can be proactive in its messaging about finances.

Again - I ask the critics of financial disclosure: “What harm would come to members of the church if LDS leadership adopted a more transparent posture?

[pogi]

56 minutes ago, SouthernMo said:

I’d be interested in knowing what others think potential problems for the church membership would arise if LDS leadership decided to change course, and release organizational finances along with contextual descriptions. Would souls be lost in this course?

For one, there would be a much higher consumption of name brand Doritos and Fruit Loops on outings, as evidenced by this thread.

No, but seriously, I could see members gaining a greater sense of entitlement, becoming more willing to request and expect that the church pay for their mortgages, etc. (which is already a problem, but it would get worse) after recklessly managing their finances and living without of their means .  I could see members becoming much more upset when the church refuses to fund their reckless lifestyles.  You will see a dramatic increase in sideline critics. 

Whether or not that is a valid reason to withhold financial transparency is another subjective question. 

Edited May 30, 2018 by pogi

[Hestia]

@FearlessFixxer

No advertising.  Posts with a link to your site where you otherwise do not join in on the discussion are problematic.  

[Robert F. Smith]

8 hours ago, hope_for_things said:

.............................

This also makes the question about how the church asks every member to give 10% even those who are poor, who live in poor countries and who experience financial hardships.  The talks in conference about paying tithing first as an act of faith become very problematic, and I think actually aren't very Christian if you read the New Testament.  

The early Christians, like the Essenes, were communist in their economic cooperation with one another -- perhaps like the United Order -- which leaves us with no real comparison with current practice.

As to cajoling the abject poor to pay tithing, when that would leave them suffering malnutrition or worse, is that really what the Mormon Church sponsors in poverty-stricken regions?  Is your portrayal of the heartless LDS Church correct, or just plain absurd and untrue?

Edited May 31, 2018 by Robert F. Smith