James huntsman (jon's brother) sues church for 'fraud'

[ttribe]

12 minutes ago, Analytics said:

Would it also depend upon the background of the accountants who set up the system? My understanding is that the people who really run things--the presiding bishopric, the controller, the treasurer, etc., typically come from for-profit corporations, not non-profits. And the people they report to--the first presidency, and to a lesser extent the Quorum of the Twelve*, generally come from for-profit backgrounds too. Would that culture affect how they set up the accounting?

____________________________

*I say they report their financials to the Quorum of the Twelve "to a lesser extent," because the apostles aren't authorized to see the Church's balance sheet. I'll refrain from speculating as to why this information is kept even from them.

Generally speaking, no. The decision on the application of accounting systems and standards is driven by reporting requirements. If there is no requirement for fund accounting, then setting it up that way would be unnecessary and likely somewhat more expensive to maintain. 

[Analytics]

3 hours ago, Robert F. Smith said:

Yes, the money is fungible, but that is not the true issue.  The only real question is How do we manage the money?  If, instead of simply putting all the money into a checking account from which all bills are paid, we put the money into an investment account and pay our bills from the interest or capital gains (thus keeping the principal), we are exercising wisdom in maximizing the value of the principal.  Jesus made the classic argument in his parable of the Talents (Matt 25:14-30).

In our personal lives, that means it is wise to put aside money for a rainy day, or to invest a small amount each payday for future retirement.  This is as true for private persons as it is for corporations.

When we pay a mortgage on a house, we are slowly gaining equity.  When we pay monthly rent, it is money down the drain.  The difference is stark.  Those who don't understand the difference will naturally find fault with the LDS Church.

I have a feeling James Huntsman knows something about managing money. 

As has already established, watchdog groups and advisors generally say rainy day funds for churches and charities should be between 6-12 months of the budget, with two or three years of the budget being the absolute maximum. And we know from the whistleblower that the church's rainy day fund is something on the order of 20 times its annual budget. Of course the Church can do what it wants, but this situation does raise some legitimate questions:

1. Should a church or charity that acts more like a hedge fund than a  religious or charitable institution be taxed like a hedge fund rather than like a religious or charitable institution?
2. Should churches or charities be required to disclose to their membership how they spend money? 
3. If a church misleads its donors about how the money they donate is spent, does that constitute fraud?

[bluebell]

32 minutes ago, Meadowchik said:

I can see how that's possible.

But I was commenting on how Robert was perceiving peoples' perspectives. I don't think it is simply a matter of understanding financial equity versus money "down the drain." One could argue that "building the kingdom" and building up lives now is an investment much more spiritually profitable than portfolio gains. In other words, that there are other kinds of equity though perhaps less tangible which can be cultivated with careful spending choices. 

I agree one could argue that.  But at the same time, I don't think one could be upset or call it immoral if someone else disagreed.

[Analytics]

16 minutes ago, smac97 said:

First and foremost, he repeatedly insists that the Church has always taught that 100% of tithing funds are used "solely" for "charitable" purposes.  This is not so.

Agreed.

16 minutes ago, smac97 said:

Second, the meaning of "charitable" as asserted by Huntsman is exceedingly vague, to the point that it undermines Huntsman's legal argument.

No, the lawsuit lists several examples of what he thinks "charitable" means, and convincingly states that bailing out for-profit businesses isn't a gray area.

16 minutes ago, smac97 said:

Third, there is no evidence that the Brethren are enriching themselves using tithed donations.  To the contrary, there is substantial evidence that they are doing nothing like this at all.

This is irrelevant to his lawsuit. His lawsuit is about whether he as a donor was misled about what the Church does with the money it solicited.

16 minutes ago, smac97 said:

Fourth, there is no evidence that the Church has been profligate or wasteful or foolish in managing the Church's resources.  To the contrary, all evidence points to them being excellent stewards.

This is irrelevant to his lawsuit. His lawsuit is about whether he as a donor was misled about what the Church does with the money it solicited.

16 minutes ago, smac97 said:

Fifth, there is substantial evidence (such as the Quinn quotes I have posted a few times now) that the Church's "commercial investments and for-profit businesses" are crucial to the Church supporting the Church and its members in areas where those members are not self-sufficient.

Quinn correctly observes that much of the international church is subsidized, but he has no basis of knowing whether this subsidization comes from commercial sources or tithing sources. And in either case, this is irrelevant to Huntsman's lawsuit. His lawsuit is about whether he as a donor was misled about what the Church does with the money it solicited.

16 minutes ago, smac97 said:

Sixth, Huntsman's lawsuit seems to expose a rather vast ignorance of the complexities of finance and accounting.  

I don't think so. 

16 minutes ago, smac97 said:

Seventh, the lawsuit seems to be, as Kathleen Flake put it, not about financial malfeasance, but rather “it’s about competing views of what should be done with Church money and who gets to say so.”

No, it is about whether the Church has been sufficiently honest with the people from whom it solicits funds. Huntsman doesn't argue that the Church should have done something else with the money. He argues they should have been open with him about what the money was being used for so he could make an informed decision about whether he wanted to contribute.

 

[smac97]

10 minutes ago, Analytics said:

I have a feeling James Huntsman knows something about managing money. 

As has already established, watchdog groups and advisors generally say rainy day funds for churches and charities should be between 6-12 months of the budget, with two or three years of the budget being the absolute maximum. And we know from the whistleblower that the church's rainy day fund is something on the order of 20 times its annual budget. Of course the Church can do what it wants, but this situation does raise some legitimate questions:

1. Should a church or charity that acts more like a hedge fund than a  religious or charitable institution be taxed like a hedge fund rather than like a religious or charitable institution?

I reject the premise.  The Church isn't acting "more like a hedge fund than a religious or charitable institution."  That is an absurd characterization.

10 minutes ago, Analytics said:

1. Should churches or charities be required to disclose to their membership how they spend money? 

The Church already does this.  The question is the level of specificity.  Critics will, I think, never be satisfied with what the Church does, and will always move the goalposts and demand more.

10 minutes ago, Analytics said:

1. If a church misleads its donors about how the money they donate is spent, does that constitute fraud?

If the elements of fraud are met, then yes.  Otherwise, no.

I see essentially zero chance of those elements being met here.  

Thanks,

-Smac

[Analytics]

14 minutes ago, smac97 said:

I reject the premise.  The Church isn't acting "more like a hedge fund than a religious or charitable institution."  That is an absurd characterization.

Actually, I was alluding to Ensign Peak Advisors. But when looking at the entire enterprise, to the extent the majority of the Church's revenue comes from its for-profit enterprises and to the extent the majority of its revenue is directed to further growing its for-profit enterprises, the question of whether it is a church that invests or is a hedge fund with a church in its diversified portfolio becomes relevant. And the Church isn't transparent enough to allow an informed member to make this evaluation for himself. This transparency issue is why James Huntsman was surprised and upset when some details of the Church's balance sheet were leaked.

14 minutes ago, smac97 said:

The Church already does this.  The question is the level of specificity.  Critics will, I think, never be satisfied with what the Church does, and will always move the goalposts and demand more.

It's a question of specificity and accuracy. Whether or not "critics" will ever be satisfied is irrelevant to whether or not what the Church is doing is actually right. It isn't a question of satisfying critics. It is a question of doing the right thing. And on this point, doing the right thing means disclosing your finances to the people from whom you solicit money to the extent that a contributing member like James Huntsman wouldn't be shocked when they learn the truth.

[smac97]

On 3/24/2021 at 9:25 AM, Analytics said:

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Second, the meaning of "charitable" as asserted by Huntsman is exceedingly vague, to the point that it undermines Huntsman's legal argument.

No, the lawsuit lists several examples of what he thinks "charitable" means, and convincingly states that bailing out for-profit businesses isn't a gray area.

Huntsman's ideosyncratic interpretation is not determinative.  

And he merely asserts that tithes were used to bail out a for-profit business (not sure how you arrived at the plural).

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Third, there is no evidence that the Brethren are enriching themselves using tithed donations.  To the contrary, there is substantial evidence that they are doing nothing like this at all.

This is irrelevant to his lawsuit.

It is quite relevant.  I just responded to your absurd characterization of the Church as acting "more like a hedge fund than a religious or charitable institution."  That is simply not so.  A hedge fund's objective is to enrich investors.  That is not happening here.  Nobody is getting rich from the Church's money.  The money is being used to further the Church's religious and charitable efforts.

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His lawsuit is about whether he as a donor was misled about what the Church does with the money it solicited.

Not really.  There is essentially zero chance of him prevailing on the fraud claim.  His lawsuit is about as Kathleen Flake put it (regarding the Nielsen matter), not about financial malfeasance, but rather “it’s about competing views of what should be done with Church money and who gets to say so.”

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Fourth, there is no evidence that the Church has been profligate or wasteful or foolish in managing the Church's resources.  To the contrary, all evidence points to them being excellent stewards.

This is irrelevant to his lawsuit.  His lawsuit is about whether he as a donor was misled about what the Church does with the money it solicited.

It is quite relevant.  The lawsuit is a pretext.  It will go nowhere.  I have to think that Huntsman and his lawyers know that.  So the lawsuit is about something else.  Kathleen Flake has a bead on what that "something else" is.  

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Fifth, there is substantial evidence (such as the Quinn quotes I have posted a few times now) that the Church's "commercial investments and for-profit businesses" are crucial to the Church supporting the Church and its members in areas where those members are not self-sufficient.

Quinn correctly observes that much of the international church is subsidized, but he has no basis of knowing whether this subsidization comes from commercial sources or tithing sources.

Really?  How do you know that?

It's curious that you seem to assume that Huntsman knows what he's talking about, but Quinn does not.

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And in either case, this is irrelevant to Huntsman's lawsuit. His lawsuit is about whether he as a donor was misled about what the Church does with the money it solicited.

It's hugely relevant.  It is absurd to claim, as Hunstman has, that the Church teaches that 100% of tithes go "solely" to "charitable" endeavors. 

It is further absurd to insist that the Church not save money or prudently invest it, and to instead zero out its balance sheet every year (since any saved/invested money would not -  by Huntsman's facile reasoning - be used "solely" for "charitable" efforts).  

If the Brethren were living large, then a claim of fraud would be more colorable.  But they aren't living large, so the claim is not very colorable.

If the Church had been profligate or wasteful or foolish in managing the Church's resources (as the foolish servant was in the Parable of the Talents), then a claim of fraud would be more colorable.  But it hasn't been profligate so the claim is not very colorable.

But perhaps most signicant is this: If the Church's for-profit endeavors are supporting the Church's charitable / philanthropic / humanitarian efforts, then the lawsuit is essentially gutted.  Every penny spent by these for-profit endeavors is a penny not spent from the tithes.  That penny from the tithes can then be spent on . . . charitable / philanthropic / humanitarian efforts.

As has been said, the financial and accounting considerations in this issue are quite complex.  This is why I am pointing to "when all is said and done"-type considerations.  I think it's fair to say that the Church complies with the law, so Huntsman's fraud claim has essentially no chance of success.  I also think it's fair to acknowledge the financial/accounting complexities that are necessarily implicated in Huntsman's lawsuit.  But those complexities should not obscure the overarching issue, which is whether the Church is acting legally / ethically / prudently in handling its resources.  So if, when all is said and done, Huntsman could point to the Brethren having profligate lifestyles, or wasteful/foolish spending, or some other misuse or malfeasance regarding the Church's money, then his claim for fraud would be more tenable, more colorable.  But he isn't doing that, likely because he can't do that, because the Brethren aren't living large, and because the Church's money is not being wasted, and is instead being managed prudently.

So the fraud claim is laid bare for what it is: a pretext.  As Kathleen Flake put it (applied here), the lawsuit is not about financial malfeasance or fraud, but rather “it’s about competing views of what should be done with Church money and who gets to say so.”

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Sixth, Huntsman's lawsuit seems to expose a rather vast ignorance of the complexities of finance and accounting.  

I don't think so.

So he's aware of those complexities, but still filed a frivolous lawsuit?

Bad faith, then?  

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Seventh, the lawsuit seems to be, as Kathleen Flake put it, not about financial malfeasance, but rather “it’s about competing views of what should be done with Church money and who gets to say so.”

No, it is about whether the Church has been sufficiently honest with the people from whom it solicits funds.

No.  A fraud claim is not about being "sufficiently honest."  A fraud claim is about . . . fraud.  An affirmative false statement of a material fact, which fact is known by the representor to be false, or which statement is made recklessly, and which fact is made to induce the hearer to act, and which hearer - being in ignorance of the falsity of the statement - is induced to act to his detriment or damage.

I have litigated fraud claims a lot.  I mean, a lot.  I'm probably into the hundreds by now.  They virtually always fail, most often at the very beginning of the lawsuit because the lawyer did such a poor job of vetting the claims and pleading them in the complaint (much like what we are witnessing here).  I eventually became so fed up with the sheer number of poorly-drafted fraud-based lawsuits that I wrote an article about it and had it published in the Utah Bar Journal:  A Primer on Pleading Fraud Claims in Utah.  

Preparing and filing a complaint based on a fraud theory is not rocket science.  It's not that hard.  It just takes a bit more investigation and research and time.  But it also takes a measure of professionalism to decline to file a fraud claim when the facts and the law cannot support such a claim.

Having read Huntsman's Complaint a few times, I think it's a pretty poor piece of work.  It might be able to survive a Motion to Dismiss, but I really doubt it will survive summary judgment.

Mr. Huntsman has his millions, so I suppose he can spend them how he chooses.  But I find it more than a little ironic that he claims to be concerned about the Church's money being spent on non-charitable activities, and he proposes to resolve that by . . . filing a frivolous lawsuit that will go nowhere, but will require the Church to spend money on fighting it rather than on, well, charitable activities.

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Huntsman doesn't argue that the Church should have done something else with the money.

Yes, he does.  Repeatedly.  

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He argues they should have been open with him about what the money was being used for so he could make an informed decision about whether he wanted to contribute.

His lawsuit says a number of foolish and ignorant things.  His lawsuit also says a number of things that are simply not so.

Thanks,

-Smac

Edited September 15, 2021 by smac97

[smac97]

24 minutes ago, Analytics said:

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I reject the premise.  The Church isn't acting "more like a hedge fund than a religious or charitable institution."  That is an absurd characterization.

Actually, I was alluding to Ensign Peak Advisors.

And who is getting rich off of EPA?  Where are the "hedge fund" millionaires and billionaires?

As we know, there aren't any.  Hence the absurdity of your characterization.

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But when looking at the entire enterprise, to the extent the majority of the Church's revenue comes from its for-profit enterprises and to the extent the majority of its revenue is directed to further growing its for-profit enterprises, the question of whether it is a church that invests or is a hedge fund with a church in its diversified portfolio becomes relevant.

To once again utilize Kathleen Flake's observation:  The lawsuit is not about financial malfeasance or fraud, but rather “it’s about competing views of what should be done with Church money and who gets to say so.”

And again, your characterization is absurd.  

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And the Church isn't transparent enough to allow an informed member to make this evaluation for himself.  This transparency issue is why James Huntsman was surprised and upset when some details of the Church's balance sheet were leaked.

Oh, here we go again with the endlessly malleable demand for "transparency."  Always demanded, but never defined.

We actually have quite a bit of information about how the Church spends its money.

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It's a question of specificity and accuracy.

Well, no.  The lawsuit is about fraud.

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Whether or not "critics" will ever be satisfied is irrelevant to whether or not what the Church is doing is actually right.

Meh.  I'm not inclined to let critics define what is "right."  I've been reading their criticisms for too long.  I don't think they give a fig about "whether or not what the Church is doing is actually right."  They dislike or hate the Church, and so work and speak against it regardless of what it does.

Also, I think it's strange that you dispute my point about the lawsuit being a pretext, but then you go on to acknowledge my point anyway.  I think the lawsuit is not about "fraud," and is instead about what Huntsman thinks regarding - as you put it - "whether or not what the Church is doing is actually right."  It's a pretext to let Huntsman vent his spleen about - as Kathleen Flake put it - "competing views of what should be done with Church money and who gets to say so."

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It isn't a question of satisfying critics. It is a question of doing the right thing.

I think that "satisfying critics" and "doing the right thing" are rarely going to coincide.  

And again, you are only proving my point: The lawsuit isn't about "fraud," it's about Huntsman declaring what he thinks "the right thing" is about what should be done with Church money and who gets to say so.

Thanks,

-Smac

Edited March 24, 2021 by smac97

[Meadowchik]

1 hour ago, bluebell said:

or call it immoral if someone else disagreed.

Not sure what you mean with this part. I wasn't addressing immortality/morality in my response to Robert ( atleast not directly) but was talking about reasonable expectations from a gospel perspective.

[Teancum]

21 hours ago, Amulek said:

I think that trying to legitimately prove a fraud claim like this against a religious organization is a fruitless endeavor.

And while I don't want to presume bad faith, I can't help but think that, as someone who "runs a film distribution firm in Southern California," how much of this lawsuit is genuinely about fraud as opposed to, say, wanting to put a little space between your family name and your Mormon heritage (for business reasons). 

Also, despite my best efforts to do otherwise, I just can't quite muster the energy to give a flying flip about a billionaire's trust-fund kid whining about having given away millions of dollars to a church - especially when said individual is still a multi-multi-millionaire. 

If I had enough money to give away millions of dollars and still have millions left over, I think I could find a way to be content with my lot in life. 

 

It seems to me it is not about the $$ but rather about how the $$ were spent which Huntsman has every right to be concerned about.

[bluebell]

8 minutes ago, Meadowchik said:

Not sure what you mean with this part. I wasn't addressing immortality/morality in my response to Robert ( atleast not directly) but was talking about reasonable expectations from a gospel perspective.

I've seen people who disagree with the church's perspective on what constitutes using tithing to fulfill "the missions of the church and the covenants of helping others" accuse the church of being immoral with it's money based solely on that disagreement of perspective.  That's what I meant by that part.

[Meadowchik]

1 hour ago, Peacefully said:

If I had the chance to raise my children again, I would still raise them in the LDS church, but I would allow for more freedom of thought and expression. I would spend time talking to them about what I believe, and where I have some differences with the way some things are taught, especially in Young Women classes. Instead, I let the members of the church teach my children their interpretations of the gospel and some of it was pretty messed up. Having said all of that, I think my children are better people for having grown up in this faith. I think it is the right thing for a parent to teach a child about God and Jesus(if the parents are believers) because it gives them a firm foundation, and a belief in a higher power - someone they can turn to in times of trouble. Teaching children to pay tithing helps them learn to share what they have and also manage money-both good things. I was raised in a different denomination, which I left when I was 18 because I didn’t agree with many of its teachings, but that is where I learned how to pray, and I learned that Jesus loves me. I cannot remember a time that I did not know those things and I am so thankful for that foundation. 

As an atheist I think I would do things differently.  But, sorta similar to you, I am glad that in my very early years I thought about spirituality and my values. In my case the catalyst was the church, but I am certain that religion is not unique is providing such catalysts.

[Danzo]

15 hours ago, ttribe said:

Actually, the more I think about it, the less likely it seems to me that they would be using fund accounting.  Fund accounting is typically only used when there are statutory or contractual (e.g. grants) restrictions. Otherwise, a non-profit that simply receives donations just issues a typical Balance Sheet and P&L with a slightly different "equity" roll-forward.  Yeah, I audited a few of those back in the day, too.

Although many organizations cheat and us a simple p&L and balance sheat (especially the small ones)  because they don't really know what they are doing, it really isn't appropriate for a non profit to use the P&L format for their financials.  The 990 is really not built around a P&L format.  You really have to manipulate the books to make it fit.

The reason why the I belive the church uses funds based accounting is that almost every thing that I have seen in the church revolves around "funds".  Tithing funds, Fast offering Funds, Humanitarian Funds, Building Funds, Mission Funds, Book of mormon Funds, Scout funds, Young womans funds Ect.   

When the church says no tithing funds were used for a particular endevor, the only way they could even pretend to say it is if the church used funds based accounting to segregate the funds from various sources of income. If they didn't use a funds based accounting, such statements would be meaningless.  When they say fast offering funds are used to help the needy, it would be a meaningless statement unless the church segregated the funds.  When it mentions a missionary fund, it would be meaningless unless a funds based accounting system were used. the same with humanitary funds.   BYU probably recieves Restricted Funds donations (for support of one program or other) on a very regular basis.

[Calm]

1 hour ago, Analytics said:

 because the apostles aren't authorized to see the Church's balance sheet

If you got this info from the whistleblower, I see no reason to assume it is completely accurate. Iirc it was at least thirdhand and could have been misunderstood, if not a fabricated memory.   My memory of the whistleblower document was that he was his own documentation, his footnotes were references to himself for the most part.  I kept trying to figure out where he got his claims and couldn’t much external support.

Edited March 24, 2021 by Calm

[teddyaware]

18 hours ago, MiserereNobis said:

What does "building Zion" look like, since it has such a high cost? Is it literally building something? Honest question here -- no criticism.

The prophecies of the LDS scriptures indicate that as the world ripens in iniquity (during the period of widespread war, increasing natural calamities and the worldwide persecution of the saints) the Church of Jesus Christ is going to build regions of safety and refuge from the raging storm that will ensue immediately prior to the Second Coming of Christ.

The foremost place of refuge in the United States will be the city of Zion (also known as the city of the New Jerusalem) that will be built in the heartland of America. The Church of Jesus Christ of Latter-Day Saints has been forewarned by the Lord that it will have to set up its own free, independent and fully functioning economic system in order for God’s people to escape his wrath when it is poured out without measure upon a world immersed in unimaginable wickedness. It’s going to take a lot of capital and resources to make the building of these places of refuge possible, and one day many of today’s naysayers and complainers are going to  realize how arrogant, foolish and short sighted they were to criticize the General Authorities for managing the Church’s finances in the wise and prudent way they are now doing. There’s great work to be done if the prophecies are going to be fulfilled, and the Church leaders are wisely preparing for it in obedience to the commandments of God.

You may be wondering how Zion and her stakes will be kept safe in a world of such overwhelming wickedness, violence, economic turmoil and natural cataclysms. Well the prophet Nephi saw, as part of his great vision of the latter-days, that the world will one day unite in a common cause to attempt to destroy the the restored Church of Jesus Christ and all that remains good and holy in the world. This will be a time of great testing for the Latter-Day Saints as many will fall away from the faith, as others who remain true and faithful to the Lord and his Church will have their lives either ruined or be destroyed. After this dark period of testing to see who will remain true and faithful to Christ, come what may, the Lord is going to miraculously intervene to save and preserve his faithful followers as the wicked divert their attention from the destruction of the Church of Christ and turn on each other in bloody wars of hatred and utter destruction. In other words, the wicked will destroy each other as one of the dreadful manifestations of God’s judgement upon a world fully ripened in iniquity. During this time when the wicked are preoccupied with trying to destroy each other in massive “king of the hill” military struggles, the people of God will be protected of God, and left free and unmolested as they prepare the righteous remnant who remain to receive their redeeming Savior with the joy of final rescue.

One of the great promises is that at the time of the Second Coming the Constitution of the United States will still be honored and adhered to in the New Jerusalem and the flag of the United States of America will still be floating on the breeze. I’m excited!

 

 

Edited March 24, 2021 by teddyaware

[ttribe]

2 minutes ago, Danzo said:

Although many organizations cheat and us a simple p&L and balance sheat (especially the small ones)  because they don't really know what they are doing, it really isn't appropriate for a non profit to use the P&L format for their financials.  The 990 is really not built around a P&L format.  You really have to manipulate the books to make it fit.

The reason why the I belive the church uses funds based accounting is that almost every thing that I have seen in the church revolves around "funds".  Tithing funds, Fast offering Funds, Humanitarian Funds, Building Funds, Mission Funds, Book of mormon Funds, Scout funds, Young womans funds Ect.   

When the church says no tithing funds were used for a particular endevor, the only way they could even pretend to say it is if the church used funds based accounting to segregate the funds from various sources of income. If they didn't use a funds based accounting, such statements would be meaningless.  When they say fast offering funds are used to help the needy, it would be a meaningless statement unless the church segregated the funds.  When it mentions a missionary fund, it would be meaningless unless a funds based accounting system were used. the same with humanitary funds.   BYU probably recieves Restricted Funds donations (for support of one program or other) on a very regular basis.

BYU has its own financial reporting and audits.  As far as I know it isn't rolled up into anything for the church.  As to your other comments, I'll just respectfully disagree with your characterizations of the ability to comment on the use(s) of certain funds and the necessity for a fund accounting system to support that.  The church had already stated on its tithing slips that just because you put money on a certain like, it doesn't mean it actually goes there.  

As to the 990, these are likely being filed for numerous church owned entities individually. Ensign Peak, for example, as an investment arm would be extremely unlikely to use fund accounting. 

[Danzo]

2 hours ago, Analytics said:

The issue is whether the Church was sufficiently honest with the membership about what it does with tithing money. Fund-based accounting really doesn't solve the issue.

If the Church uses fund-based accounting, then every year it gives each of its major programs a budget--$1.5 billion goes to BYU, $1.2 billion goes to buildings, $800 million goes to the missionary efforts, etc. 

If the Church puts, say, $1 billion of tithing money into a slush fund every year, is it 100% honest for it to say, "We didn't use any tithing money to bail out the mall and the insurance company. We used money from the slush fund!"

IF the Church uses a funds based accounting system to segregate funds by income source, then It can say whether or not tithing funds were used for a specific project.

Its used all of the time and is a normal form of accounting in non profits and government organization.  People get in trouble all the time in government for using money from the wrong source for the wrong project. 

We just had a scandal in one of the small towns in our area when the local government tried to use sewer funds (income from a sewer fee) for roads. 

These accountings systems are taken seriously.

[SeekingUnderstanding]

2 minutes ago, Calm said:

If you got this info from the whistleblower, I see no reason to assume it is completely accurate. Iirc it was at least thirdhand and could have been misunderstood, if not a fabricated memory.   My memory of the whistleblower document was that he was his own documentation, his footnotes were references to himself for the most part.

This is a fair point. But one that could be settled very easily if the church has any type of financial transparency

[Danzo]

1 minute ago, ttribe said:

BYU has its own financial reporting and audits.  As far as I know it isn't rolled up into anything for the church.  As to your other comments, I'll just respectfully disagree with your characterizations of the ability to comment on the use(s) of certain funds and the necessity for a fund accounting system to support that.  The church had already stated on its tithing slips that just because you put money on a certain like, it doesn't mean it actually goes there.  

As to the 990, these are likely being filed for numerous church owned entities individually. Ensign Peak, for example, as an investment arm would be extremely unlikely to use fund accounting. 

We will have to just agree to disagree.

If the church didn't use a funds based accounting system, the church couldn't even know  whether tithing funds were used for one project or another, much less lie about it. 

The statement as it currently reads "Though reasonable efforts will be made to use donations as designated, all donations become the Church's property and will be used at the Church's sole discretion to further the Church's overall mission."  Woudl not make any sense if they were not trying to segregate income by funds. No reasonable efforts could be made if there weren't an account system in place to measure that.

 

[Meadowchik]

4 minutes ago, SeekingUnderstanding said:

This is a fair point. But one that could be settled very easily if the church has any type of financial transparency

Also, what about the future? Is the church institution structured in such a way to prevent corrupt individuals from one day syphoning off or misappropriating funds, etc...? I would think that transparency helps to prevent such things. 

[Danzo]

2 hours ago, ttribe said:

Generally speaking, no. The decision on the application of accounting systems and standards is driven by reporting requirements. If there is no requirement for fund accounting, then setting it up that way would be unnecessary and likely somewhat more expensive to maintain. 

The reporting requirements should be set by the needs of the organization.  These financial statements are then manipulated for reporting to various outside parties (government). It should never be the reverse.

After as has been stated in many a tax court case GAAP is not an acceptable method of accounting for tax.    That doesn't mean GAAP should not be used, it just means the GAAP reports need to be manipulated for tax purposes.  Even GAAP is often a manipulation of accounting systems that are non GAAP but much more useful to the organization's internal needs.

 

Edited March 24, 2021 by Danzo

[smac97]

40 minutes ago, Teancum said:

It seems to me it is not about the $$ but rather about how the $$ were spent which Huntsman has every right to be concerned about.

But he doesn't have a right to file a frivolous lawsuit about it. 

The lawsuit most decidedly is "about the $$."  He's suing the Church.  He wants his money back.

Thanks,

-Smac

[2BizE]

16 hours ago, JustAnAustralian said:

"The exempt purposes set forth in section 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals. The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency." https://www.irs.gov/charities-non-profits/charitable-organizations/exempt-purposes-internal-revenue-code-section-501c3

Earning money so that the church can run its goal of advancing religion seems like an acceptable 501c3 action to me.

Building a mall and providing funds to an insurance company sounds like acceptable use for charitable/religious funds?  I don’t think they would go for that either in Australia.

[HappyJackWagon]

21 hours ago, smac97 said:

Yes.  But I think most reasonably-informed members understand that the Church has expenses that are not directly involved with these "religious ways."

I also think that most reasonably-informed members understand and appreciate that the Church is doing what it has been teaching us to do: live within its means, set aside reserve funds, plan for the future, etc.

I also think that most reasonably-informed members understand and appreciate that setting aside reserve funds and planning for the future does not mean simply stuffing money in a metaphorical mattress, but instead involves prudent use and investment of such funds.  The Parable of the Talents not only lauds such prudent use by the "good and faithful servant{s}," but also condemns the servant who buried the talent given to him and did nothing with it.

I also think that most reasonably-informed members understand and appreciate that the people who have access to and control over the Church's finances have put in place numerous safeguards, oversights, checks and balances, etc. so as to reduce the risk of misuse of such funds.  We have the Council on the Disposition of Tithes, the Budget Committee, the Appropriations Committee, the Church Budget Office, the Church Audit Committee, and more.  We get annual reports from the Audit Committee.  Moreover, we see the beautiful temples, the tens of thousands of missionaries, the thousands of church buildings, the Church's humanitarian and philanthropic efforts, the canneries and storehouses, Welfare Square, Humanitarian Square, and so on.

I also think that most reasonably-informed members understand and appreciate that the Brethren are not getting rich.  Their living allowances are static, uniform and fairly modest given the amount of work they do, the skills involved, and the alternatives available to so many of them.

Why would you think that?  I would expect the Church to use sacred funds wisely.  Are you suggesting that the Church's investments are not wise?

I would hope that members who have concerns about this would be circumspect, that they would give this matter some deliberation and study and effort to understand.  I would hope they would not listen to the dissidents and critics who presume to tell us how we should feel about how our Church manages our freely-given donations.

I would also hope they would think that the finances of an organization with members in the millions and resources in the billions are likely to be a bit more complex than, say, an individual's or family's finances.

How much of that invested money is spent advancing the missions of the Church?  

How much of that invested money is spent on profligacies seen on the Lifestyles of the Rich and Famous (General Authorities Edition)?

I think "most people" trust that the Church will handle sacred funds wisely.

And that trust seems to be well placed.

Two, actually (Pres. Nelson and Bishop Causse).

Thanks,

-Smac

I agree that most people trust the church to use funds wisely. The disconnect sometimes comes in what qualifies as "use". People expect expenses for missional purposes, facilities, etc. But "using" donations to create a $100 billion investment fund doesn't always translate to the average person as a wise "use". The primary use of funds seems to be to create more funds to save for uses on a rainy day.

I think it's impossible to know how much invested money is spent advancing the missions of the church. The church could make that info available, yet it doesn't. The lack of transparency makes it impossible to know so it requires blind faith in the leaders.

Obviously people disagree about this, but Huntsman seems to be in the camp that the church should be using the solicited (and required) donations from members primarily to accomplish goals beyond the accumulation of wealth.

[ttribe]

21 minutes ago, Danzo said:

The reporting requirements should be set by the needs of the organization.  These financial statements are then manipulated for reporting to various outside parties (government). It should never be the reverse.

After as has been stated in many a tax court case GAAP is not an acceptable method of accounting for tax.    That doesn't mean GAAP should not be used, it just means the GAAP reports need to be manipulated for tax purposes.  Even GAAP is often a manipulation of accounting systems that are non GAAP but much more useful to the organizations internal needs.

 

I'm not really interested in arguing the esoteric elements of accounting with you.  My comment was along these lines - if you are required to submit financial statements under grant and/or statutory guidelines, then you should be using applicable GASB and/or Yellowbook accounting principles as well as a fund accounting system.  If you are an SEC registrant, on the other hand, you should be using GAAP and an accounting system which at least facilitates such reporting.  Whether you THINK such decisions SHOULD be made based on the general needs of the organization, and what actually happens in the practical world, are often two very different things.  I was silent on the cost accounting needs because that's not really what this case is about.