Not Tithing Funds

[Analytics]

All businesses and governments pool their money into one general fund, because all money is fungible.  However, payments for specific expenses can only be paid out of that fund based on a controlling and preapproved budget.  If the money has not been preapproved, it cannot be spent.  Governments and churches generally operate on specific budgets (as does the LDS Church), allocating resources based on the purpose for which they were contributed....

 

When someone at Church HQ says that no tithing funds were used, it is very likely true.

 

It isn't that clear cut.

 

For example, say that one year the Church takes in a cool $1 Billion in tithing.  It might budget to spend $900 Million on its various "paid by tithing" operating expenses, and save the remaining $100 Million.

 

The Church really would save tithing money for a rainy day, wouldn't it?

 

So what is it going to do with the $100 Million?  Surely the Church would not bury the money in a hole--they are going to be wise and faithful servants and make a return on it, right?

 

How would they invest it?  A savings account?  Government bonds?  Publicly traded stock?  Those all represent loans to outside entities.  If it is okay to loan the money to a bank (i.e. put it in a savings account), is it okay to loan the money to Deseret Management Corporation (DMC)?  If it does loan it to DMC, is it okay for DMC to, say, buy a cattle farm in Florida with the money and try to make a return on it?  Or a Mall in Salt Lake City?

 

So when the Church says, "no tithing money was used," the meaning of that isn't clear; if the Church has any tithing money saved in a stock or bond issued by one of the Church's for-profit businesses, and if that for-profit business used any of its resources to fund the project in question, there is a direct connection between the tithing dollar and the fungible resources of the for-profit entity.

Edited June 18, 2015 by Analytics

[bluebell]

It isn't that clear cut.

 

For example, say that one year the Church takes in a cool $1 Billion in tithing.  It might budget to spend $900 Million on its various "paid by tithing" operating expenses, and save the remaining $100 Million.

 

The Church really would save tithing money for a rainy day, wouldn't it?

 

So what is it going to do with the $100 Million?  Surely the Church would not bury the money in a hole--they are going to be wise and faithful servants and make a return on it, right?

 

How would they invest it?  A savings account?  Government bonds?  Publicly traded stock?  Those all represent loans to outside entities.  If it is okay to loan the money to a bank (i.e. put it in a savings account), is it okay to loan the money to Deseret Management Corporation (DMC)?  If it does loan it to DMC, is it okay for DMC to, say, buy a cattle farm in Florida with the money and try to make a return on it?  Or a Mall in Salt Lake City?

 

So when the Church says, "no tithing money was used," the meaning of that isn't clear; if the Church has any tithing money saved in a stock or bond issued by one of the Church's for-profit businesses, and if that for-profit business used any of its resources to fund the project in question, there is a direct connection between the tithing dollar and the fungible resources of the for-profit entity.

 

I'm not sure if you read the post in this thread by the person who actually worked as an accountant for the Church.  They explain how the church really doesn't have the chance to put much tithing away in a rainy day fund.  Probably not more than would keep the church running for a few months.  I'm also guessing that they would keep such a fund pretty liquid.

[Analytics]

I am a CPA who has actually worked with the Church on money issues.  I haven't seen this discussed so I will try to add something to the conversation.

 

The Church of Jesus Christ of Latter Day Saint has two basic legal entities that it controls.

 

One is the non for profit entity we all identify as the Church.  All donations made to the Church through the donation process of each ward and branch go to this non profit entity.  This includes tithing, fast offering, missionary, perpetual education fund and humanitarian fund.  Members can and do make specific donations to the Church through gifts, wills and estates.  All of these funds by law must be kept in the non for profit legal entity.  Donations from these funds can be made to other non for profit entities such as the American Red Cross.  This non for profit entity does keep some reserve funds that are invested in very conservative investments but would only sustain the operations of the non for profit entity for a very short period of time.  The non for profit entity of the Church really does operate on the donations of members.  Primary uses are buildings, missionary, education including Church schools and seminaries and fast offerings....

 

Both the for profit and non profit entities have been audited both by public accounting firms and government agencies.  Believe me, the Church has very sophisticated accounting systems and employees to make sure it complies with all laws.  If the statement was made that no tithing funds were used, I am confident that is the case.  Why would the Brethren make such a statement if it were false and could be proved false very easily by either the Federal or State government and would put the Church at a high risk of government penalties.

 

Just my two cents based on my understanding and what limited pieces of the Church finances I have seen.

 

What is your basis for believing that the assets of the non-profit entity would only be sufficient for a few months?  There isn't a law that says non-profits can't have massive savings.  As an example, Harvard University is a nonprofit tax-exempt institution, and over the last 10 years its endowment has grown from about $25 Billion to $36 Billion.  The fact that Harvard continues to hoard obscene amounts of money has no bearing on its nonprofit, tax-exempt status.

 

There is no law that says churches can't do the same thing, is there?  Just as Harvard invests its endowment in for-profit enterprises, the LDS Church is totally free to invest its savings in for-profit enterprises.  Included in the for-profit enterprises in which it can invest are DMC and the other for-profit businesses it owns.  There is nothing illegal about this.

 

I have no doubt that the Church conducts its financial affairs according to the law.  That doesn't mean that its accumulated savings over the years isn't invested in its for-profit businesses, much less that those accumulated savings aren't significant.

Edited June 18, 2015 by Analytics

[mfbukowski]

Over the months since you have been posting here, I have in turns been highly annoyed, ticked off, and completely exasperated by you and your posts. I have almost put you on Ignore a few times, just to save my limited grasp on sanity. But with the bolded and blued parenthetical comment in the quote above, you have completely redeemed yourself in my eyes. Dang! You can actually laugh at yourself! You have a sense of humor! You made me laugh my heiny off! I repent of wanting to Ignore you. From now on, I will not cringe when I see that you have posted something that I have to read.

Of course, I still reserve the right to disagree with you, but that's OK, I disagree with everyone here at one time or another. Except maybe Calmoriah and Garden Girl.

I agree.

 

 I am almost starting to think about the possibility of liking this guy after all. 

[Analytics]

I'm not sure if you read the post in this thread by the person who actually worked as an accountant for the Church.  They explain how the church really doesn't have the chance to put much tithing away in a rainy day fund.  Probably not more than would keep the church running for a few months.  I'm also guessing that they would keep such a fund pretty liquid.

 

Thank you for bringing that post to my attention; no, I hadn't read it.

 

After reading it, I replied (post #103 above).  On the one hand, she made some good points about the church having lots of very sophisticated finance and legal professionals and wouldn't do anything illegal.  On the other hand, the issues of how much the church saves and how it invests its savings seem to be above her pay grade.  

[Duncan]

Analytics-Kim Pearson is a man. People mix me up with Brad Pitt all the time so I get it

Edited June 19, 2015 by Duncan

[Tacenda]

I agree.

I am almost starting to think about the possibility of liking this guy after all.

Ahhh...now he has to be nice to you guys.

[mbh26]

Whoever came up with the idea of "non-tithing funds" should get a statue erected to their honor in Temple square, and the BYU Accounting school named after them. 

 

It is the most preposterous idea to say that The Church of Jesus Christ of Latter-day Saints has some portion of funds, however acquired, that are somehow exempt from the spiritual mandates of "tithing" that I suspect the only reason most members thinks it makes sense is because the Church says "non-tithing funds" in such a way that we think such a thing is supposed to make sense, and so we just go along with it.

 

"Oh, they said 'Non-tithing' funds, so such a thing much exist, and it must be okay for them to use those funds in the way they did because they just said it was."

 

The odd thing is that if it is possible for the Lord's church to have a pool of money that is exempt from the conditions of "tithing", then it must also be possible for us to also have "non-tithing funds" which are exempt from the law of tithing.  Yes, I pay a full tithe, but I have several investments that were made with non-tithing funds, so they are exempt from the law of tithing and I use them to make other investments.  These investments have been especially valuable in allowing me to make improvements to my house, and these improvements have driven up the property value not just for me but for my surrounding neighbors, so who can argue that it's not a holy purpose?

 

 

It wouldn't surprise me if more than a few financially successful members use that exact reasoning.