Gaddy Lawsuit Judgement

[bluebell]

2 minutes ago, Calm said:

Mormonr quoted the Nielsen report (I don’t trust his calculations and other stuff because he doesn’t provide actual sources for some of his stuff, but makes claims and then footnotes them as if documented facts iirc, so grain of salt this):

https://mormonr.org/qnas/kQII1/the_100_billion_fund

So is this illustrating that the idea that tithing is part of the investment fund is speculation? I’m not sure if I’m reading it correctly.

[longview]

7 minutes ago, Calm said:

There are complaints in exMormon communities online about family members gifting or leaving money to the Church, those have probably been voiced since the Church started.

Then there was the announcement of private funding for the Nauvoo temple, donations for BYU, etc. 

So true. The interests, the dividends, and all the compounding are all NON-tithing value from original NON-tithing "bequests" gifted by "grateful" members. All that NON-tithing funds were/are sufficient to pay for many "City Creek" sized projects. I asked chatGPT about who were involved in City Creek.

Quote

🏗️ Main investors and participants

1. The LDS Church (primary developer & financier)

• Through its real estate arms:
  • City Creek Reserve, Inc. (CCRI)
  • Property Reserve, Inc. (PRI)
• These are commercial entities owned by The Church of Jesus Christ of Latter-day Saints.
• The Church funded most of the project (often cited ≈ $1.5+ billion).
• PRI specifically financed housing and parking components.

👉 Widely regarded as the majority investor, though exact percentage is not publicly disclosed.

---

2. Taubman Centers, Inc.

• Co-developer and operator of the retail mall.
• Invested at least ~$76 million directly.
• Owns/operates the shopping center portion (retail).

👉 Minority partner, but key commercial operator.

---

3. Harmons Grocery Stores

• Participated as a development partner (not just a tenant).

---

4. Cowboy Partners

• Involved in residential development components.

---

5. Hamilton Partners

• Also listed among development partners.

 

[Calm]

1 hour ago, bluebell said:

So is this illustrating that the idea that tithing is part of the investment fund is speculation? I’m not sure if I’m reading it correctly.

There may be documentation elsewhere as I am remembering its existence, but it may be an assumption on my part based on speculation.  I couldn’t find the specific information in scanning the Mormonr page. I may or may not keep looking. 
 

Added:  see below from DeseretNews confirming it, though not the amount 

Edited April 25 by Calm

[Calm]

7 minutes ago, longview said:

So true. The interests, the dividends, and all the compounding are all NON-tithing value from original NON-tithing "bequests" gifted by "grateful" members. All that NON-tithing funds were/are sufficient to pay for many "City Creek" sized projects. I asked chatGPT about who were involved in City Creek.

 

You need to remember that the Church went practically bankrupt a few times, so I think it is likely complicated trying to trace from where and how much earlier donations contributed to current church wealth (it’s not like in the low times they lost their businesses or property, for example).  I suspect you are right, in part because one of the alleged leaked documents show total portfolio balance and even if the fund was 1/4 tithing that would leave much, much more that what was removed (1.5 billion over 5 years).

https://openargs.com/wp-content/uploads/IRS-Letter-Final.pdf

[Calm]

Bluebell, I did find another copy of the report and it does look like speculation as where Neilsen claims the documents are talking about tithing, all I am seeing is “donations” and “contributions”.  He uses both “tithing” and tithing and invested tithing funds iirc to describe the full fund, so he is not consistent even there and not accurate.

Here’s a link if you want to check yourself.  I did a quick search on “tithing” and couldn’t find the actual source of his numbers for 7$ billion received in tithing, but I believe it’s someone else’s estimate.  The $1 billion in excess tithing received comes from his assumption as far as I can tell that all or the vast majority of EPA’s “granted” income comes from excess tithing.  See exhibit D if this is hard to read:

This below is the closest I think he gets to documentation and it states it is an approximation. He claims zero withdrawal activity for the past 5 years, but bases that I believe on a list that is headed “examples of withdrawals” (it’s on exhibit D) which he apparently assumes is the total expenditures rather than just some of them (why use “examples” rather than “list” if it was all of them?)  It does say the “draw” has been small, but does that mean there weren’t any others?  Not to me, but maybe?  Maybe they just used an old slide?  The only date on it is 2009 and it’s supposedly from a slide? from 2013.

https://openargs.com/wp-content/uploads/IRS-Letter-Final.pdf

Edited April 25 by Calm

[Calm]

For the claim he is inconsistent see page 6 and 7 as I can’t get the screenshot to work.  First he described the fund on page 6 as made up of “recent tithing surplus” or from the “capital gains in having invested tithing” and then on page 7 says EPA “paid $600 million using exclusively tithing dollars”, when exhibit D (page 45 of 74) shows the withdrawal was from the fund, not the contributions before they hit the fund (assuming he is right and all the contributions are from tithing surplus and not other donations, income, etc).

Careless, didn’t know what he was doing or lying to make the Church look bad because he knew people would only quote some of what he wrote and not all or look at his alleged sources or a combo of the above, take your pick.

 

Edited April 25 by Calm

[Calm]

https://www.deseret.com/faith/2020/2/14/21133740/mormon-church-finances-billions-presiding-bishopric-ensign-peak-tithing-donations-byu-real-estate/

Quote

 

The church transfers surplus tithing each year to Ensign Peaks to invest for a rainy day.

“The church practices what it preaches in terms of setting aside and having budgets,” Bishop Davies said. “We never expend more than what we estimate will be coming in terms of tithes and offerings. And also by definition we set aside a certain amount every year in reserve for those times when there will be a need, and there will be a need in the future.”

 

Okay, think I am done diving on this, lol

Edited April 25 by Calm

[bluebell]

13 minutes ago, Calm said:

https://www.deseret.com/faith/2020/2/14/21133740/mormon-church-finances-billions-presiding-bishopric-ensign-peak-tithing-donations-byu-real-estate/

Okay, think I am done diving on this, lol

Good job tracking all that down!

[Calm]

39 minutes ago, bluebell said:

Good job tracking all that down!

It helps when you know already (are pretty sure anyway, lol) it exists.

OTOH, I could have saved myself some wrk if I hadn’t tried to find the specific item and just started with google.

Still, I was glad to refresh my memory on the estimate of the principal amount as well as the size of the portfolio to confirm if the leak is accurate, the expenditures were at most about 1/20 of the fund and therefore the principal was untouched.

Edited April 26 by Calm

[Analytics]

16 hours ago, Anonymous Mormon said:

1) Regardless of if you agree with Pres Hinckley's terminology, do you agree that he was making this distinction and being honest in how he portrayed it?

From a technical perspective, I think his comments were too vague to be "true" or "false". Hinckley was an excellent communicator who could have clearly explained what was happening had he wanted to. The fact that so many members, including CPA's who worked for the Church, misunderstood wasn't unintentional. 

I reject your theory that everybody perfectly understood Hinckley's comments when he made them, but then somehow it was only the critics who remembered and properly understood what he said a few years later. 

16 hours ago, Anonymous Mormon said:

2)  The term salary (money paid to you by your company) is like the term tithing (money paid to the church by congregants). If you invest your salary in the stock market and the stocks increase in value and you sell the increase but keep the principle amount, when the IRS comes to tax you do you consider this as salary and pay the same taxes like you would on your salary? Would you consider salary and tithing to be any different?

What "I" consider to be "salary" and how it should be taxed is irrelevant. These things are well defined by the IRS in the tax law.

The whole paradigm that some of the assets the Church has are "tithing" is vague and imprecise. From an accounting perspective, "tithing" is one of the Church's sources of income, just as "dividend income", "interest income", "livestock sales", "rental income", "realized gains on commercial real estate", etc. are all sources of income. When the money comes in, it goes into various funds. But all of the money in these funds is fungible. 

Then when it spends money, it spends money from funds, not from sources of income.

If Ensign Peak Advisors this year makes $15 billion in investment income,  and receives $700 million of tithing income, and then has a $1.4 billion mall expense, then it is fair to say that the $15 billion of investment income is enough to cover the $1.4 billion mall expense. But it is just a heuristic to say that the specific money that was spent was investment income and not tithing. 

16 hours ago, Anonymous Mormon said:

3) What about a company's sales revenue - if the company invests its sales revenue and then sells some of the investment's increase, is it using its sales revenue to fund the transaction?

(note: I am not an accountant but you are, so please go easy on me if I used any of the accounting terms incorrectly - hopefully you understand what I mean)

Actually, I'm an actuary. As a specific example, Northwestern Mutual has an asset portfolio that might be about the same size as the Church's. NM has $399 billion in assets, and last year received $24.7 billion in premium, and $15.5 billion in investment income.

My counterparts at NM receive a salary, and it would be weird, confusing, and nonsensical for the CEO to say, "I want to assure you that Analytics's salary comes from investment income and not premium." 

[Analytics]

21 hours ago, bluebell said:

I responded to this but must have forgotten to post it.

I'm not seeing where Hinckley said that the "reserve consists of tithing money that is saved for a rainy day".  That sounds like an interpretation of two quotes, based on some assumptions that are not specifically stated.

Beyond that, there is no such thing as indirect tithing.  Tithing is 10% of someone's income.  To suggest that 'indirect tithing' exists is to argue for a completely different definition of tithing than what the church uses, isn't it?  Because neither interest from tithing money nor things bought with that interest can be defined as 'one tenth of a church member's income'.

Who is arguing that "indirect tithing" exists? How do they define it?

In the context of this discussion, "tithing" is simply a source of revenue for the Church--it consists of donations that were designated "tithing" by the donor.

My point is simple. This funding can be used for things. The Church can use it to build a temple. They can use it to hire somebody to mow the lawn in front of the Church. And they can use it to purchase Nvidia stock. If they use tithing to purchase Nvidia stock and then use the investment earnings to buy a mall, isn't it accurate to say they indirectly used tithing money to build a mall?

 

 

[smac97]

23 hours ago, Analytics said:

From a technical perspective, I think his comments were too vague to be "true" or "false". Hinckley was an excellent communicator

I think the tithing lawsuits were contrived.  I don't think any of the plaintiffs were confused about what Pres. Hinckley said, but they feigned confusion because they used City Creek as a pretext to get the Church in court.

23 hours ago, Analytics said:

who could have clearly explained what was happening had he wanted to.

I think he did.  From the Ninth Circuit: 

Quote

Although the Church stated that no tithing funds would be used to fund City Creek, it also clarified that earnings on invested reserve funds would be used. The Church had long explained that the sources of the reserve funds include tithing funds. Huntsman has not presented evidence that the Church did anything other than what it said it would do.

The Ninth Circuit, all eleven of them, apparently found the Church's statements sufficiently clear as to be explaining "that earnings on invested reserve funds would be used," that "the sources of the reserve funds include tithing funds," and that "the Church {explained} ... what it said it would do."

23 hours ago, Analytics said:

The fact that so many members, including CPA's who worked for the Church, misunderstood wasn't unintentional. 

I can appreciate your perspective.  I think Pres. Hinckley was quite clear in his remarks.  He presupposed that Latter-day Saints understood what "tithing" means, and he differentiated tithes from other sources of revenue.  

23 hours ago, Analytics said:

I reject your theory that everybody perfectly understood Hinckley's comments when he made them, but then somehow it was only the critics who remembered and properly understood what he said a few years later. 

I also think "only the critics" had an incentive to misconstrue Pres. Hinckley's remarks, such as by trying to make them seem "fraudulent."  

23 hours ago, Analytics said:

What "I" consider to be "salary" and how it should be taxed is irrelevant. These things are well defined by the IRS in the tax law.

I agree that "salary" is well-defined, both by the IRS and in a more generalized sense.

I don't think there is much of a dispute about "tithing" either.  I think Huntsman's lawsuit was a contrived effort to generate a dispute where none existed.

23 hours ago, Analytics said:

The whole paradigm that some of the assets the Church has are "tithing" is vague and imprecise.  From an accounting perspective, "tithing" is one of the Church's sources of income, just as "dividend income", "interest income", "livestock sales", "rental income", "realized gains on commercial real estate", etc. are all sources of income.

Yes.  And those sources of income can be tracked, such that the Church know which of its investments are using which sources of income.

For example, from the Ninth Circuit decision in Huntsman:

Quote

To explain the funding of the City Creek project, the Church submitted two declarations. The first declaration, by a director in the Church’s Finance and Records Department named Paul Rytting, stated that all the funds allocated to the City Creek project came from earnings on the Church’s reserve funds invested by Ensign Peak, meaning that no principal reserve funds (i.e., funds taken directly from Church members’ tithing contributions) were used. 
...
In opposition to the Church’s motion for summary judgment, Huntsman submitted a declaration by whistleblower David Nielsen. Nielsen stated:

Quote

During my employment at EPA [Ensign Peak Advisors], EPA’s senior leadership and other EPA employees referred to . . . all funds of EPA as “tithing” money, regardless of whether they were referring to principal or earnings on that principal. In addition, during my time at EPA, tithing donations from the Church’s members were commingled with earnings that EPA had made.

...
Huntsman argues that the Church committed fraud by misrepresenting the source of funds for the City Creek project and Beneficial Life.
...
No reasonable juror could conclude that the Church misrepresented the source of funds for the City Creek project. Although the Church stated that no tithing funds would be used to fund City Creek, it also clarified that earnings on invested reserve funds would be used. The Church had long explained that the sources of the reserve funds include tithing funds. Huntsman has not presented evidence that the Church did anything other than what it said it would do.

President Hinckley qualified the assertion that tithing funds would not be used by noting that earnings on invested reserve funds would be used. In his 2003 announcement of the City Creek project, Hinckley stated:

Quote

[T]ithing funds have not and will not be used to acquire this property. Nor will they be used in developing it for commercial purposes. 

Funds for this have come and will come from those commercial entities owned by the Church. These resources, together with the earnings of invested reserve funds, will accommodate this program.

(Emphasis added). That statement thus drew a distinction between principal tithing funds, coming directly from Church members, and earnings on the funds that the Church sets aside from its annual income (which includes tithing funds). The four subsequent statements that Huntsman points to, which state without qualification that tithing funds were not used for City Creek, can only be understood within the context of Hinckley’s earlier statement distinguishing between tithing funds and earnings on reserves, and they therefore do not support Huntsman’s fraud claim.

The Church had also long publicly indicated that “reserve funds” come at least in part from tithing funds. In a 1991 statement, Hinckley suggested that tithing comprises the bulk of the Church’s annual income and budget. In that same statement, Hinckley said that “a fixed percentage of the [Church’s] income will be set aside to build reserves against what might be called a possible ‘rainy day.’” In 1995, he repeated that message, stating that “each year we put into the reserves of the Church a portion of our annual budget.”  Because Hinckley stated that tithing funds are critical to the Church’s annual income and budget, those statements necessarily implied that the reserves contained tithing funds.
...
Nielsen’s declaration does not contradict the conclusion that Ensign Peak held sufficient earnings on invested reserve funds to fund the project without using principal tithing funds. Nielsen testified that Ensign Peak’s senior leadership and other employees “referred to . . . all [Ensign Peak funds] as ‘tithing’ money, regardless of whether they were referring to principal or earnings on that principal,” and that the approximately $1.4 billion that Ensign Peak appropriated for City Creek came from tithing funds. The presentation slide that Nielsen submitted with his declaration indicated that “1,400mm over 5 years” was withdrawn from Ensign Peak’s “investment reserves” for City Creek. Even accepting the facts asserted in Nielsen’s declaration as true, they do not show that principal tithing funds were used for the City Creek project. Neither Nielsen’s statement nor the Ensign Peak presentation slide distinguished between principal and earnings, so neither contradicts President Hinckley’s public statement that only earnings would be used. They also do not conflict with Ensign Peak’s financial records, which show that Ensign Peak held sufficient earnings on reserve funds to finance City Creek.

Moreover, even accepting Nielsen’s account that Ensign Peak employees used “tithing” to refer interchangeably to both principal and earnings, that does not support Huntsman’s claim because President Hinckley drew a distinction between those types of funds in his public statements.

Huntsman would have us conflate what Pres. Hinckley differentiated.  Huntsman filed suit in California because, per his lawyers, they figured California judges would be more amenable to his way of viewing things relative to the Church.  And he ended with 11 appellate judges rejecting his argument, and none accepting them.

23 hours ago, Analytics said:

When the money comes in, it goes into various funds. But all of the money in these funds is fungible. 

Could you clarify what you mean here?  You described tithing as "one of the Church’s sources of income," right alongside dividends, interest, real-estate gains, etc. But you also said that once the money is in the funds, it’s all "fungible" and spending comes from the funds rather than from any specific source.

Could you help me understand how those two ideas fit together in your mind?  Is tithing still a meaningfully distinct category once it’s received, or does the fungibility make the original source, for you, irrelevant for tracking purposes?

I am trying to see the bridge between the technical accounting reality you’re describing and the legal claims in the tithing lawsuits. From your viewpoint, is the core issue that the Church should have kept tithing dollars in a completely separate, traceable bucket, or that the fungible nature of the money makes the whole conversation about ‘tithing’ misleading by nature?

23 hours ago, Analytics said:

Then when it spends money, it spends money from funds, not from sources of income.

If Ensign Peak Advisors this year makes $15 billion in investment income,  and receives $700 million of tithing income, and then has a $1.4 billion mall expense, then it is fair to say that the $15 billion of investment income is enough to cover the $1.4 billion mall expense. But it is just a heuristic to say that the specific money that was spent was investment income and not tithing. 

Actually, I'm an actuary. As a specific example, Northwestern Mutual has an asset portfolio that might be about the same size as the Church's. NM has $399 billion in assets, and last year received $24.7 billion in premium, and $15.5 billion in investment income.

My counterparts at NM receive a salary, and it would be weird, confusing, and nonsensical for the CEO to say, "I want to assure you that Analytics's salary comes from investment income and not premium." 

 

Thanks for walking through that example and the Northwestern Mutual analogy—that helps me see how you’re thinking about this. I appreciate you taking the time to explain the accounting flow so clearly.

Just so I’m tracking you correctly: You are saying that once money is received, it all sits in funds and becomes fungible. When the organization spends money (whether it’s a mall project or salaries), it’s spending from the funds, not from any specific source of income like tithing or investment returns. So labeling a particular expense as ‘paid for by investment income, not tithing’ is really just a helpful heuristic rather than a precise accounting fact. Is that a fair summary?

If so, I have a couple of questions I’d genuinely like your thoughts on, because I’m trying to reconcile this with how the whole tithing conversation has played out:

1. In your view, is that same ‘heuristic’ standard something the Church should have used when its leaders spoke publicly about tithing funds (for example, when President Hinckley or others described how certain projects were funded)? Or does the sacred nature of tithing create a different expectation for how those funds are described to members?
2. I’m curious how you see the Northwestern Mutual analogy mapping onto a religious organization. With an insurance company, premiums are basically customer payments under a contract. Tithing, from the members’ perspective, is a sacred offering given directly to God with the understanding that it will be used for the Lord’s purposes. Does that difference in the source and intent of the money change anything about how strictly the ‘fungibility’ principle should apply, or is it - in your view - still exactly the same?
3. If all money is truly fungible once it’s in the funds, what would it even look like for the Church (or any nonprofit) to be fully transparent about tithing versus investment income? Is there a way to communicate that distinction that wouldn’t feel misleading under the accounting rules you’re describing?

I’m not trying to score points here—I’m honestly trying to understand how you’re connecting the technical accounting reality with the way the lawsuits and the public statements are being framed. Your perspective on this is helpful.

Thank you,

-Smac

Edited April 27 by smac97

[bluebell]

22 hours ago, Analytics said:

Who is arguing that "indirect tithing" exists? How do they define it?

In the context of this discussion, "tithing" is simply a source of revenue for the Church--it consists of donations that were designated "tithing" by the donor.

My point is simple. This funding can be used for things. The Church can use it to build a temple. They can use it to hire somebody to mow the lawn in front of the Church. And they can use it to purchase Nvidia stock. If they use tithing to purchase Nvidia stock and then use the investment earnings to buy a mall, isn't it accurate to say they indirectly used tithing money to build a mall?

 

 

Sorry for the confusion I just realized that you were quoting JAHS concerning the indirect tithing stuff.

It's could be technically accurate to say that the church indirectly used tithing to build a mall, but from my perspective not very useful to this specific discussion.  From my perspective, it would be more accurate to say that tithing could have helped make buying the mall possible, even though none was used to purchase it. 

"Indirectly used" doesn't make a lot of sense to me on this topic because it's like saying that farmers indirectly use poop to get milk.  It could be technically accurate (milk comes from cows and cows eat grass and a farmer fertilizes his field with manure to grow the grass), but it's also pretty irrelevant in a discussion on whether or not poop created the milk. 

Unless you want people to doubt the safety of the milk and the morality of the farmer.  If that is the goal then framing the discussion in terms of the "indirect use of poop in milk" does become more relevant.

I think the same is true for trying to tie the mall purchase to the 'indirect use' of tithing.  It doesn't answer the question of whether or not tithing was used to purchase the mall (which is the topic of discussion), but it can help muddy the waters and create some bias.

(I don't honestly know if you are trying to tie the purchase of the mall to the indirect use of tithing or not.  You might just be making a statement about how that could theoretically be argued, and in that case, I agree with you.  If you are trying to make a statement about how that should be argued, or about how it is relevant to the discussion, then that is where we disagree, for the reasons I explained above).

[Analytics]

2 hours ago, smac97 said:

The Ninth Circuit, all eleven of them, apparently found the Church's statements sufficiently clear as to be explaining "that earnings on invested reserve funds would be used," that "the sources of the reserve funds include tithing funds," and that "the Church {explained} ... what it said it would do."

How much do you think the Church spent defending itself on this lawsuit? As a starting point, 1,000 hours at an average rate of $1,000 per hour is a million dollars. Do you think they spent more than that or less than that on legal fees in the Huntsman case?

The reason I bring this up is to highlight that these judges, all of whom I presume were non-Mormon, were fed a carefully curated basket of evidence to support a story that guided them to the conclusion they reached. I'm not saying this is the wrong conclusion: we now know with 20-20 hindsight and with the understanding that in all contexts, "the reserves" refers to unspent tithing money saved and invested for a hypothetical rainy day.  But that isn't the way most Latter-day Saints interpreted his remarks before the IRS letter brought this all to light.

If someone were to ask today, what Stone Holm asked in 2015, how would you answer? He asked:

Quote

Another thread got locked before I could ask a question, so will ask it now. One frequently hears the statement that tithing funds were not used for such and such an investment. And while I like to think that is true, I have to pause and think...if not tithing then what funds were used? Surely not Fast Offerings, too many those are even more sacred as to their dedicated use, and surely not missionary funds. So, what are these mysterious "not tithing" funds?

Now, we would all say, "The money came from the Church's reserves that are held by Ensign Peak Advisors. The Church operates on a fraction (e.g. 90%) of its tithing revenue, and the remainder is put into a "rainy day fund" it calls its "reserves." The money in that fund grows with investment income and new tithing revenue. The money for the mall came from interest earned on this reserve fund (or if you are a pedantic actuary, you'd say, "the $1.4 billion for the mall was a lot less than its annual investment income, so rather than reinvesting $1.4 billion of its investment income in Nvidia etc., it was invested in the mall. In that sense, the money came from investment earnings and not directly from tithing)."

That's what we would say now. But how many Latter-day Saints said that then? 

There has been a huge shift in how you guys typically think about this. How you guys used to think about it was different than how the Ninth Circuit thinks about it now for two reasons:

1. You guys believe (or at least used to believe), that if it would be inappropriate for "tithing" to be used for X, it would be equally inappropriate to use interest generated from unspent tithing on X. They were both equally sacred, so if we received an assurance that tithing wouldn't be used for X, that was meant to be interpreted broadly and include both tithing and interest generated on unspent tithing.
    
2. The term "reserves" is better defined now than it was then. When Hinckley said "reserves," people thought "financial resources the church has" and not "unspent tithing". 

I'll answer the rest of your questions, but I hope you'll answer these two from me:

1- Did you ask Grok, "With 20/20 hindsight, and looking at the issue the way these participants looked at in 2015, who was more right, the “faithful participants”, or the “critics”? In other words, was the mall in part indirectly financed with tithing because it was in fact financed in part with investment income derived from tithing?"

2- Why would the members need assurances that tithing wouldn't be used for the mall? Why is it okay for "interest on tithing" to be used for the Mall and not "tithing" itself? In other words, is it okay to use tithing to buy shares of Nvidia? If it is okay to use tithing to buy shares of Nvidia, why wouldn't it be okay to use tithing to build a mall? 

2 hours ago, smac97 said:

I also think "only the critics" had an incentive to misconstrue Pres. Hinckley's remarks, such as by trying to make them seem "fraudulent."  

To be clear here, I'm not saying Hinckley's remarks were "fraudulent." And nobody with integrity has a motive to misconstrue what Hinckley said. But I am saying that the majority of Latter-day Saints on this forum systematically misunderstood Hinckley in basically the same way that Huntsman did. From what you've posted, Grok agrees with me on this.

2 hours ago, smac97 said:

Could you clarify what you mean here?  You described tithing as "one of the Church’s sources of income," right alongside dividends, interest, real-estate gains, etc. But you also said that once the money is in the funds, it’s all "fungible" and spending comes from the funds rather than from any specific source.

Yes. I'm talking about basic accounting here. There are two main financial statements: the income statement and the balance sheet. The balance sheet shows the value of assets and liabilities at a moment in time (a "stock"). The income statement shows income, expenses, and changes in asset values over a period of time (a "flow"). Accounting uses "double-entry" mathematics. Whenever there is a financial transaction, there is always a credit and an offsetting debit, and usually, one affects the income statement and the other affects the balance sheet. 

Your checking account works the same way. If you have multiple sources of income, you can't go to the bank and ask them to tell you whether expense X came from your salary or from your bonus or from your investment income. They'd say expense X came from your checking account.

2 hours ago, smac97 said:

Could you help me understand how those two ideas fit together in your mind?  Is tithing still a meaningfully distinct category once it’s received, or does the fungibility make the original source, for you, irrelevant for tracking purposes?

The Church could say that it doesn't want to spend more on X this year than it receives in investment income this year. But this is generally a type of mental accounting. 

2 hours ago, smac97 said:

I am trying to see the bridge between the technical accounting reality you’re describing and the legal claims in the tithing lawsuits. From your viewpoint, is the core issue that the Church should have kept tithing dollars in a completely separate, traceable bucket, or that the fungible nature of the money makes the whole conversation about ‘tithing’ misleading by nature?

I think the Church should be more transparent with its members about its finances. 

It is an indisputable fact that it indirectly financed the mall through tithing, as defined by JAHS in that thread. The correct answer to his question would be, "yes, 'City Creek mall was made possible by sacred tithing money,' but it was made possible by sacred tithing money donated over the prior 50 years, not the prior 150. And there is nothing wrong with that." That is the correct answer, but how many Latter-day Saints said that at the time? 

2 hours ago, smac97 said:

Just so I’m tracking you correctly: You are saying that once money is received, it all sits in funds and becomes fungible. When the organization spends money (whether it’s a mall project or salaries), it’s spending from the funds, not from any specific source of income like tithing or investment returns. So labeling a particular expense as ‘paid for by investment income, not tithing’ is really just a helpful heuristic rather than a precise accounting fact. Is that a fair summary?

 

If so, I have a couple of questions I’d genuinely like your thoughts on, because I’m trying to reconcile this with how the whole tithing conversation has played out:

1. In your view, is that same ‘heuristic’ standard something the Church should have used when its leaders spoke publicly about tithing funds (for example, when President Hinckley or others described how certain projects were funded)? Or does the sacred nature of tithing create a different expectation for how those funds are described to members?
2. I’m curious how you see the Northwestern Mutual analogy mapping onto a religious organization. With an insurance company, premiums are basically customer payments under a contract. Tithing, from the members’ perspective, is a sacred offering given directly to God with the understanding that it will be used for the Lord’s purposes. Does that difference in the source and intent of the money change anything about how strictly the ‘fungibility’ principle should apply, or is it - in your view - still exactly the same?
3. If all money is truly fungible once it’s in the funds, what would it even look like for the Church (or any nonprofit) to be fully transparent about tithing versus investment income? Is there a way to communicate that distinction that wouldn’t feel misleading under the accounting rules you’re describing?

I’m not trying to score points here—I’m honestly trying to understand how you’re connecting the technical accounting reality with the way the lawsuits and the public statements are being framed. Your perspective on this is helpful.

Thank you,

-Smac

 

If the Church would have had the same level of transparency as Northwestern Mutual (NM) (i.e. it would provide high-level income statements and balance sheets that show its assets, liabilities, income, and expenditures), Hinckley would have said something like:

"As you see from our financial statements, the Church earns well over $1.4 billion every year in investment income. This year, we are going to invest $1.4 billion in the mall rather than investing it in stocks and bonds. We can afford to do so without reducing what we spend on our core mission and without reducing the reserve funds to a dangerous level." 

This point in the conversatrion is about where @Danzo would show up and remind us that with "fund based accounting", the Church could set up a "fund" that strictly receives tithing dollars, and another "fund" that would receive investment income dollars. That way, these two different funds would be two different assets, and expenditures for X, Y, or Z could be debited against whatever fund you wanted. More abstractly, setting up funds this way is just a budgeting mechanism, and saying "expense X will come out of the accrued investment income fund" is equivalent to saying "we want to make sure that the accumulated amount of accrued interest is greater than the cost of X." 

And if it is really important from some sort of moral perspective that "tithing" only be used for building temples, supporting the missionary system, and purchasing stock of Nvidia while "investment income" can be deployed more broadly on things like malls, then the Church should be more explicit about this.

Edited April 27 by Analytics

[Analytics]

2 hours ago, bluebell said:

Sorry for the confusion I just realized that you were quoting JAHS concerning the indirect tithing stuff.

It's could be technically accurate to say that the church indirectly used tithing to build a mall, but from my perspective not very useful to this specific discussion.  From my perspective, it would be more accurate to say that tithing could have helped make buying the mall possible, even though none was used to purchase it. 

"Indirectly used" doesn't make a lot of sense to me on this topic because it's like saying that farmers indirectly use poop to get milk.  It could be technically accurate (milk comes from cows and cows eat grass and a farmer fertilizes his field with manure to grow the grass), but it's also pretty irrelevant in a discussion on whether or not poop created the milk. 

Unless you want people to doubt the safety of the milk and the morality of the farmer.  If that is the goal then framing the discussion in terms of the "indirect use of poop in milk" does become more relevant.

I think the same is true for trying to tie the mall purchase to the 'indirect use' of tithing.  It doesn't answer the question of whether or not tithing was used to purchase the mall (which is the topic of discussion), but it can help muddy the waters and create some bias.

(I don't honestly know if you are trying to tie the purchase of the mall to the indirect use of tithing or not.  You might just be making a statement about how that could theoretically be argued, and in that case, I agree with you.  If you are trying to make a statement about how that should be argued, or about how it is relevant to the discussion, then that is where we disagree, for the reasons I explained above).

All I can say is that before the IRS Whistleblower report came out, the majority of members saw it differently--back then, they didn't say what you are saying now. Rather, they seemed to believe that since it was somehow wrong to use tithing to build a mall, it was equally wrong to use tithing to buy shares of Nvidia, and then using the investment income on that to buy a mall. They thought indirectly using tithing (as defined by JAHS) was still using tithing. 

[smac97]

1 hour ago, Analytics said:

How much do you think the Church spent defending itself on this lawsuit? As a starting point, 1,000 hours at an average rate of $1,000 per hour is a million dollars. Do you think they spent more than that or less than that on legal fees in the Huntsman case?

I'm sure a lot of money was spent.

1 hour ago, Analytics said:

The reason I bring this up is to highlight that these judges, all of whom I presume were non-Mormon, were fed a carefully curated basket of evidence to support a story that guided them to the conclusion they reached.

Well, the nice thing about the American legal system is that it has a strong adversarial component.  So when it comes to compiling "basket{s} of evidence," both sides can do so if the case is litigated on the merits.  That appears to have been the case here.  The Church had substantial evidence in support of its position, and Huntsman did not.  

The Federal Rules of Evidence are indeed intended to "curate" (that is, "to select, organize, and present content, items, or information, typically with expertise, to provide a polished or meaningful collection") evidence.  Is your "carefully curated" comment intended to suggest that the Church hid or obfuscated about relevant evidence?  If so, could you elaborate?  Or am I off base here?

1 hour ago, Analytics said:

I'm not saying this is the wrong conclusion: we now know with 20-20 hindsight and with the understanding that in all contexts, "the reserves" refers to unspent tithing money saved and invested for a hypothetical rainy day.  But that isn't the way most Latter-day Saints interpreted his remarks before the IRS letter brought this all to light.

I'm not sure we are well situated to speculate on how "most Latter-day Saints interpreted {Pres. Hinckley's} remarks."

Moreover, the Ninth Circuit held that "no reasonable juror" could find that the Church made any misrepresentation about the funding of City Creek.  

1 hour ago, Analytics said:

If someone were to ask today, what Stone Holm asked in 2015, how would you answer? He asked:

Quote

Another thread got locked before I could ask a question, so will ask it now. One frequently hears the statement that tithing funds were not used for such and such an investment. And while I like to think that is true, I have to pause and think...if not tithing then what funds were used? Surely not Fast Offerings, too many those are even more sacred as to their dedicated use, and surely not missionary funds. So, what are these mysterious "not tithing" funds?

Now, we would all say, "The money came from the Church's reserves that are held by Ensign Peak Advisors. The Church operates on a fraction (e.g. 90%) of its tithing revenue, and the remainder is put into a "rainy day fund" it calls its "reserves." The money in that fund grows with investment income and new tithing revenue. The money for the mall came from interest earned on this reserve fund (or if you are a pedantic actuary, you'd say, "the $1.4 billion for the mall was a lot less than its annual investment income, so rather than reinvesting $1.4 billion of its investment income in Nvidia etc., it was invested in the mall. In that sense, the money came from investment earnings and not directly from tithing)."

That's what we would say now. But how many Latter-day Saints said that then? 

I think the Latter-day Saints would have referred to Pres. Hinckley's remarks, such as this one:

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We feel we have a compelling responsibility to protect the environment of the Salt Lake Temple. . . . But I wish to give the entire Church the assurance that tithing funds have not and will not be used to acquire this property. Nor will they be used in developing it for commercial purposes.

Funds for this have come and will come from those commercial entities owned by the Church. These resources, together with the earnings of invested reserve funds, will accommodate this program.

And this 2003 statement by Presiding Bishop Burton:

Quote

“None of this money comes from the tithing of our faithful members. That is not how we use tithing funds.”

And this 2006 statement in the Ensign:

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The Church first announced three years ago it was planning to redevelop the downtown area to energize the economy of the city that houses its headquarters and to bolster the area near Temple Square. No tithing funds will be used in the redevelopment.

And this 2007 Deseret News quote:

Quote

Money for the project is not coming from LDS Church members’ tithing donations.  City Creek Center is being developed by Property Reserve, Inc., the Church’s realestate development arm, and its money comes from other real-estate ventures.

And this 2012 statement attributed to Keith McMullin:

Quote

“McMullin said not one penny of tithing goes to the Church’s for-profit endeavors. Specifically, the Church has said no tithing went towards City Creek Center.”

The Ninth Circuit reviewed these and concluded:

Quote

The Church contended that the City Creek project had been funded with earnings on invested reserves, not direct tithing contributions, and that this was consistent with its public statements.
...
{Paul Rytting, director of the Church's Finance and Records Department stated that} all the funds allocated to the City Creek project came from earnings on the Church’s reserve funds invested by Ensign Peak, meaning that no principal reserve funds (i.e., funds taken directly from Church members’ tithing contributions) were used. Rytting testified that Ensign Peak’s assets included both reserve funds and earnings on invested reserve funds. 
...
{Roger Clarke, President and Managing Director of Ensign Peak from 1997 to 2020} affirmed the veracity of Rytting’s declaration and authenticated the Ensign Peak financial documents that Rytting had submitted.
...
No reasonable juror could conclude that the Church misrepresented the source of funds for the City Creek project. Although the Church stated that no tithing funds would be used to fund City Creek, it also clarified that earnings on invested reserve funds would be used. The Church had long explained that the sources of the reserve funds include tithing funds. Huntsman has not presented evidence that the Church did anything other than what it said it would do.
...
{Pres. Hinckley's 2003 statement} drew a distinction between principal tithing funds, coming directly from Church members, and earnings on the funds that the Church sets aside from its annual income (which includes tithing funds). The four subsequent statements that Huntsman points to, which state without qualification that tithing funds were not used for City Creek, can only be understood within the context of Hinckley’s earlier statement distinguishing between tithing funds and earnings on reserves, and they therefore do not support Huntsman’s fraud claim.

The Church had also long publicly indicated that “reserve funds” come at least in part from tithing funds. In a 1991 statement, Hinckley suggested that tithing comprises the bulk of the Church’s annual income and budget. In that same statement, Hinckley said that “a fixed percentage of the [Church’s] income will be set aside to build reserves against what might be called a possible ‘rainy day.’” In 1995, he repeated that message, stating that “each year we put into the reserves of the Church a portion of our annual budget.”  Because Hinckley stated that tithing funds are critical to the Church’s annual income and budget, those statements necessarily implied that the reserves contained tithing funds.

This seems fairly straightforward.  

Huntsman's view is summarized as follows (from the Bress Concurrence) :

Quote

In Huntsman’s view, “tithing funds” includes both the principal and earnings on tithes, and he believed neither would be used to finance City Creek.  There is no dispute that only earnings on invested tithed funds were used to finance the project; the principal on the tithed funds was not used.

What are your thoughts about this last bit: "only earnings on invested tithed funds were used to finance the project; the principal on the tithed funds was not used"?

1 hour ago, Analytics said:

There has been a huge shift in how you guys typically think about this.

I'm not sure about that.  Pres. Hinckley said tithes were not used.  I believed him.  His comments, and the other ones cited above, have been ratified as factually true by the Ninth Circuit.  My thinking has not changed at all.  

1 hour ago, Analytics said:

How you guys used to think about it was different than how the Ninth Circuit thinks about it now for two reasons:

1. You guys believe (or at least used to believe), that if it would be inappropriate for "tithing" to be used for X, it would be equally inappropriate to use interest generated from unspent tithing on X.

I don't think I ever believed that.  I have never thought it problematic for the Church to invest tithes.  To the contrary, I think the Brethren would be poor stewards if they had not invested tithes.

I think a reasonable argument could be made for Latter-day Saints to be concerned about a substantial investment of tithes in a commercial venture in downtown Salt Lake City, where such a venture would (indirectly) benefit mostly the Utah Latter-day Saints.  

I also think it would be appropriate for Latter-day Saints to be concerned if Pres. Hinckley had been dishonest in his statements.  But he wasn't, so most of us weren't.

1 hour ago, Analytics said:

They were both equally sacred, so if we received an assurance that tithing wouldn't be used for X, that was meant to be interpreted broadly and include both tithing and interest generated on unspent tithing.

Not sure about that.  The Parable of the Talents comes to mind.  Robert F. Smith in 2018:

Quote

Quote

Here is what FairMormon says in response to the question "Was the Church-funded redevelopment project in downtown Salt Lake City known as City Creek Center funded using tithing?"

Further supporting quotes are given, including this one:

Now, we have the recent statement from the Church, based on Presiding Bishop Causse's article, which says:

Are the first two sentences in the first paragraph referring to tithing money being "set aside" as a reserve?  If so, can we confidently (and boldly) say that "no tithing money is being used for construction of City Creek Center"?

Since the monies and property held by the LDS Church likely all go back ultimately to tithing contributions, all that means is that current tithing contributions are not being used for such real estate investment.  However, if the Lord gives some talents to a guy (as in the parable of the talents), and he invests them and expands their value (which the Lord praises), then the original talents have now been exceeded.  Even though such monies are fungible, it is also true that no actual tithing monies were used to invest in the City Creek project.

The statement that tithing money was set aside as a reserve is simply a way of saying that it was invested and thus expanded in value.  The LDS Church no doubt has billions in such reserves, although I haven't read Mike Quinn's recent book on LDS Church finances.  Since the Lord himself praises such investment strategies, the Brethren are very wise to create such reserves so that they can then expand them still further.

And again here:

Quote

Quote

 

I agree.  Tithing was used and that is perfectly fine.  That's the purpose tithing.  City Creek furthers the work of the Church.  That is what tithing is supposed to do.

What I have a problem with is the Church playing word games and lying that these funds spent were not tithing funds.  

 

It is not a lie to say that tithing funds were not used, because they weren't.  The LDS Church has long invested monies into real estate and other businesses which produce greater value.  That's what investments are for (as in the parable of the talents), to grow the principal.  Having done that, one need only use that extra money for further investments.  Makes good practical sense, and City Creek is merely one more investment in a long line of good investments.  Banks and investment companies do exactly the same thing. 

Me in 2018:

Quote

Quote

EVERYTHING the Church has built or will ever build will be paid for with tithing.

By that reckoning it is a "flat out lie" that I have ever earned any income.  My parents paid for all my needs during childhood.  I then went into the Army, and then on a mission, then to college, then to college again, and now here I am.  But I never would have been able to get to college without my parents' financial support.  So my income from my job really isn't mine.  It's my parents.

Of course, my parents started out with their parents supporting them, so they never made any income, either.  And neither did my grandparents, who relied on my great-grandparents, and so on, ad infinitum.

By your reasoning, my salary isn't attributable to anything I have done.  "EVERYTHING" that I have done or ever will do was paid for by my parents, and grandparents, and so on. 

That's your reasoning.  And it doesn't seem to hold up well.

I am reminded here of the Parable of the Talents:
...
 

So let's postulate about this servant.  He starts with ten talents.  He keeps the original five talents given to him by his lord in one Bag 1, and the additional five talents he earned in Bag 2.

The servant then goes out and uses the five talents from Bag 2 to buy and ox and some seeds and a field, and uses the former to plow and sow the latter.  He then tends the field, reaps a harvest, and ends up earning 15 talents.

The servant now has twenty talents, five of which remain in Bag 1, and fifteen in Bag 2.

So the question is this: Did the servant use any of the money from Bag 1 to earn the fifteen talents in Bag 2?  Well, no, he did not.  He used the original five talents in Bag 2 to earn an additional ten talents, also put into Bag 2.  The servant reports as much to the tax collector, who collects taxes on the fifteen talents in Bag 2 (the money in Bag 1 is not taxable under the laws of the land, so the collector leaves it alone).

However, let's say that the servant has a neighbor who harbors some genuine spite and antipathy for the servant.  The neighbor is looking for any reason, any argument to find fault with the servant.  So the neighbor publicly accuses the neighbor of "flat out lying" to the tax collector.  The tax collector speaks with the servant, determines that only money from Bag 2 was used to buy the ox and seeds and field, and then determines that since only money from Bag 2 was used for the crop venture, the servant was speaking truthfully and accurately, and the neighbor had borne false witness (perhaps ignorantly).

The neighbor, thwarted in his efforts to harm by the servant, is furious.  "He lied!" he shrieks.  "Full stop!"  The tax collector is confused as to why the neighbor is being such a meddlesome busybody and intruding into the affairs of the servant and his lord (particularly since the servant has fully complied with the laws of the land).  The collector just shrugs at the neighbor's ranting and false accusations and moves on to the next town.

The servant, meanwhile, is preparing the next venture to turn the 15 talents into 25.  In the days and weeks ahead, he keeps the five talents in Bag 1, and does not use them for commercial ventures.  He does, however, occasionally transfer talents from Bag 2 to Bag 1, as needed.

Food for thought.

Me in 2019:

Quote

Quote

The feeding of the multitude was an act of compassion and a teaching moment.  Is City Creek Center an act of compassion by the church?  A teaching moment?

City Creek can be seen as an application of the Parable of the Talents in Matthew 25.  I wonder if DCP had this in mind when he said this: "Semitic peasants catching fish for a living are spiritual in a way that middle class gringos selling shoes or iPhones can never hope to be."

He was being ironic, but do you see his point?  That there is nothing wrong with seeking God's help in our mortal endeavors?  If the ancients could pray over their economic efforts (flocks and fields), why can't we do the same with our economic efforts (in this case, "selling shoes or iPhones")?

Me in 2020:

Quote

Quote

Is the growth of a business that used the EPA fund as collateral, considered tithes?

I'd say no.

The parable of the talents comes to mind.  The master gave three servants five talents, two talents, and one talent repsectively.  Two of the servants thereafter multiplied the talents, such that they presented the master with, respectively, ten talents and four talents, respectively. 

The master ended up with fifteen talents, having given his servants eight to begin with.  

How do we characterize the seven additional talents?  Are they the Lord's?  Or, in the alternative, are they . . . well, there is no alternative, is there?  The seven additional talents are the Lord's regardless of how they are characterized.
...

Quote

So the church can take tithing funds received, invest them in anything, and all profits are not considered tithes as long as they don't touch the principal?

I would think so.  Tithes are donations from the members.  Profits derived from soundly investing those donations are not donations from the members.

Again, consider the Parable of the Talents.  Did the master give his servants eight talents, or fifteen?

Me in 2021:

Quote

Quote

“Interest on tithing money is still tithing money,” says Provo resident Marco Davis. “They shouldn’t be used for speculative business projects. And it’s a serious half-truth, if not an outright lie, to claim the City Creek mall wasn’t funded by tithing.”

I disagree.  Interest on tithing money is not "still tithing money."  And the Church should have used some portion of tithes for "speculative business projects."  See, e.g., the Parable of the Talents, the amazing success of Ensign Peak, etc.

And it's neither a half-truth nor an outright lie to say that tithes weren't spent on City Creek.

Quote

Michael Austin, a Latter-day Saint educator in Indiana, is not as bothered as others about the mall, he says. “I don’t see any moral difference between a shopping mall and a mutual fund.”

If the church has been “spending tithing dollars on city malls, that is a big problem. If they have been investing savings — wherever the origin — in a city mall, then, it seems to me, that is no different than investing in oil companies, or tech stocks, or bitcoin,” Austin writes in a recent By Common Consent blog post. “The management of resources, I think, follows a different set of moral rules than their expenditure.”

Jesus’ Parable of the Talents is not about spending money but about managing it, Austin says. “Whether the money is ultimately spent morally or immorally is — while not an unimportant question — one that cannot be answered from the text. Morality and immorality are not at issue in our interpretation; wisdom and foolishness are very much at issue. … God expects us to be wise as well as good.”

Yep.
...
 

First, I think the Church should be "involved in commercial ventures."  The Church needs to prudently manage the funds donated to it.  The only way to do that is to invest "in commercial ventures."  It would be inappropriate for the Church to not invest in commercial ventures.

Second, the prudent investment of funds is manifestly congruous with the mission of the Church.  The Parable of the Talents and other scriptural provisions about wise stewardship make that pretty clear.

Third, I don't think Bro. McCluskey speaks intelligently for "what the general membership expect."

Fourth, there is nothing hypocritical about investing money.  Bro. McCluskey is essentially declaring that the Church should do what the third servant did in the Parable of the Talents: bury money in the ground and do nothing with it.  That . . . did not turn out too well for the third servant, while the first and second - the ones who took the money and invested it and made more - were called "good and faithful."

Fifth, the Church can and ought to walk and chew gum at the same time.  It can fulfill its four-fold mission and act as a proper steward of sacred funds.

Amulek in 2022:

Quote

Quote

Buying for-profit companies is not what we pay tithing for. 

Obedience to God's commandment is what I pay tithing for.

And, personally, I'm grateful that the Church doesn't take their leftover funds and just bury them in the ground like the slothful servant in the parable of the talents.

Me in 2023 (responding to you) :

Quote

Quote

To be more precise, the record reflects that Ensign Peak had earnings of over $3.9 billion in 2003.  Then, on January 1, 2004, Ensign Peak earmarked $1.2 billion of its funds to an internal account for the City Creek project.  Withdrawing $1.2 billion from an account that just earned $3.9 billion cannot mean that Ensign Peak cut into the principal instead of the earnings.

I think it is unwise, even foolish, to suggest - as you seem to be doing - that "sacred" funds of any sort are somehow desanctified if they are invested.  That makes no sense at all.  The Brethren would be poor stewards if they did not invest "sacred" funds.  The Parable of the Talents is worth consideration here.

Me in 2023 (again responding to you) :

Quote

I 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.

Having been a Latter-day Saint all my life, I feel fairly comfortable in speculating about the many hundreds of faithful Latter-day Saints of my acquaintance.  If called upon to assess the funding of City Creek and the Church's public statements about it, I think virtually all of them would reach conclusions substantively akin to those of Robert's and Amulek's and mine above.

Moreover, the Ninth Circuit found that "no reasonable juror" could have found that the Church made any misrepresentation.

1 hour ago, Analytics said:

1- Did you ask Grok, "With 20/20 hindsight, and looking at the issue the way these participants looked at in 2015, who was more right, the “faithful participants”, or the “critics”? In other words, was the mall in part indirectly financed with tithing because it was in fact financed in part with investment income derived from tithing?"

I did not.  I find "indirectly" to be an infinitely regressive kind of thing. 

1 hour ago, Analytics said:

2- Why would the members need assurances that tithing wouldn't be used for the mall?

Why is it okay for "interest on tithing" to be used for the Mall and not "tithing" itself? In other words, is it okay to use tithing to buy shares of Nvidia? If it is okay to use tithing to buy shares of Nvidia, why wouldn't it be okay to use tithing to build a mall? 

Because there had been questions raised about it?  

Because a reasonable argument could be made for Latter-day Saints to be concerned about a substantial investment of tithes in a commercial venture in downtown Salt Lake City, where such a venture would (indirectly) benefit mostly the Utah Latter-day Saints?

Because the Church felt the venture had some risk, and so wanted to provide assurances that "principal" would not be used?

Those are the ones that come to mind, and that's from someone on the outside looking in.

The distinction the Church draws—direct tithing vs. earnings on invested reserves—has held up legally, but critics argue it’s a distinction without a meaningful difference to the average member. That tension may have been why Pres. Hinckley felt it necessary to speak so plainly.

1 hour ago, Analytics said:

To be clear here, I'm not saying Hinckley's remarks were "fraudulent." And nobody with integrity has a motive to misconstrue what Hinckley said. But I am saying that the majority of Latter-day Saints on this forum systematically misunderstood Hinckley in basically the same way that Huntsman did. From what you've posted, Grok agrees with me on this.

Not sure about that: "The overwhelming consensus among the faithful participants (JAHS, Pahoran, Scott Lloyd, Mola Ram, LeSellers, Jeff K., etc.) was that tithing money was not used — either directly or indirectly — for City Creek. They repeatedly rejected the critics’ 'indirect tithing' chain as an unsupported assumption and insisted the funds came from separate commercial/investment sources (ZCMI, real estate, etc.)."

1 hour ago, Analytics said:

Quote

 

Could you help me understand how those two ideas fit together in your mind?  Is tithing still a meaningfully distinct category once it’s received, or does the fungibility make the original source, for you, irrelevant for tracking purposes?

 

The Church could say that it doesn't want to spend more on X this year than it receives in investment income this year. But this is generally a type of mental accounting. 

I think the Church should be more transparent with its members about its finances. 

It is an indisputable fact that it indirectly financed the mall through tithing, as defined by JAHS in that thread.

"Indirectly financed" is infinitely regressive.  And it does not appear to be a concept accepted by the Ninth Circuit.

1 hour ago, Analytics said:

The correct answer to his question would be, "yes, 'City Creek mall was made possible by sacred tithing money,' but it was made possible by sacred tithing money donated over the prior 50 years, not the prior 150. And there is nothing wrong with that." That is the correct answer, but how many Latter-day Saints said that at the time? 

I think most Latter-day Saints didn't really care about the funding of City Creek, and did not need to parse out the particulars of Pres. Hinckley's 2003 statement or the subsequent statements from other Church sources.  

I think the tithing lawsuits were pretextual and contrived, and not really about "tithing" at all.

Anyway, I appreciate your comments.

Thanks,

-Smac

[bluebell]

2 hours ago, Analytics said:

All I can say is that before the IRS Whistleblower report came out, the majority of members saw it differently--back then, they didn't say what you are saying now. Rather, they seemed to believe that since it was somehow wrong to use tithing to build a mall, it was equally wrong to use tithing to buy shares of Nvidia, and then using the investment income on that to buy a mall. They thought indirectly using tithing (as defined by JAHS) was still using tithing. 

In your opinion what changed so that the majority of members were not bothered by the whistleblower report about the tithing when it came out?

If the majority of them would have been bothered before I mean. 

[Analytics]

4 hours ago, smac97 said:

I'm sure a lot of money was spent.

Well, the nice thing about the American legal system is that it has a strong adversarial component.  So when it comes to compiling "basket{s} of evidence," both sides can do so if the case is litigated on the merits.  That appears to have been the case here.  The Church had substantial evidence in support of its position, and Huntsman did not.  

The judges found the Church's arguments more persuasive. And the Church's superstar legal team deserves some of credit for the victory--their ability to persuade is why the Church paid them the big bucks.

My point is that the presentation of the data the lawyers gave the judges is different than the presentation the church gave the members.

4 hours ago, smac97 said:

I'm not sure we are well situated to speculate on how "most Latter-day Saints interpreted {Pres. Hinckley's} remarks."

We can't see what "most members" believed, but we can look at what members of this forum said, because we did talk about it.

4 hours ago, smac97 said:

What are your thoughts about this last bit: "only earnings on invested tithed funds were used to finance the project; the principal on the tithed funds was not used"?

As an actuary, I find that statement meaningless. Actuarial mathematics is based on the concept that money grows with interest. Remember when I took issue with Sam Brunson claiming "every financial endeavor that includes both principal and income on the principal distinguishes the two." Two illustrate why, I told you about how two of my friends happened to both testify on Capital Hill together, so I watched the hearing, and happened to remember this interesting question:

Could you give me, the insurance industry in general, how 
much of, say, auto insurance, health insurance, and long-term 
insurance, how much goes for claims?

In long-term care insurance, the company relies on interest income to pay claims, and it would be misleading to distinguish between principal and interest in this question. Professor Cohen interpreted "premium" as meaning "premium plus accumulated interest," and that is exactly the right way to do it. Citing the American Academy of Actuaries:

Quote

Under the statutory requirements of the 1980s and early 1990s, pricing actuaries were expected to certify that the premium rates were designed to produce a certain minimum lifetime loss ratio. The lifetime loss ratio is defined as the present value of projected claims over the present value of projected premiums. Most states required actuaries to certify that the minimum lifetime loss ratio be at least 60 percent, although some states required different minimums. The intent of this minimum lifetime loss ratio was to protect the consumer from high premium rates by requiring that most of the premiums were paid out in benefits.

Mathematically, dividing the present value of claims by the present value of premiums (both discounted to policy issue) is identical to accumulating both premiums and claims with interest until the end of the policy and dividing them.

The point with all of this is that to honestly evaluate whether "most of the premiums were paid out in benefits", you can't look just at premiums--you also have to look at premiums and the interest income the premiums generate before it is spent on claims. You have to look at it that way to come up with a number that is understandable, meaningful, fair, and comparable.

The value of money is intrinsically linked to time. Interest is the mechanism that links the two. So it isn't the least bit contradictory for somebody to say, "I gave the Church $200,000 over the last 20 years. The accumulated value of those donations is $330,000."

That is how I look at it. But to me, it was always quite obvious what the Church was really doing.

4 hours ago, smac97 said:

 Because a reasonable argument could be made for Latter-day Saints to be concerned about a substantial investment of tithes in a commercial venture in downtown Salt Lake City, where such a venture would (indirectly) benefit mostly the Utah Latter-day Saints?

That doesn't answer the question. I can understand why somebody would be concerned with the church using its resources on a commercial venture in downtown Salt Lake City, but if the Church makes the decision this is a good use of resources, why say principal can't be used but interest can be?

4 hours ago, smac97 said:

Not sure about that: "The overwhelming consensus among the faithful participants (JAHS, Pahoran, Scott Lloyd, Mola Ram, LeSellers, Jeff K., etc.) was that tithing money was not used — either directly or indirectly — for City Creek. They repeatedly rejected the critics’ 'indirect tithing' chain as an unsupported assumption and insisted the funds came from separate commercial/investment sources (ZCMI, real estate, etc.)."

Here is the thing. The Church did "use tithing money indirectly." That is an undisputed fact. That concept of "using tithing money indirectly" is perfectly defined in that thread, and the point of that thread was talking about that concept. From JAHS in the opening thread:

Quote

 

But then of course critics ask the next question; "Where do you think the church got the money to buy the businesses in the first place?"

And they conclude that It must have started with tithing money donated by early church members. So in an indirect way the City Creek mall was made possible by sacred tithing money donated by members 150 years ago; money that is supposed to be dedicated to building God's church and helping the poor; not for building shopping malls. How does one respond to this?

 

It is now an undisputedly true that "in an indirect way the City Creek mall was made possible by sacred tithing money donated by members [in the past]." We now know that is true. That is what happened. But at the time, the "The overwhelming consensus among the faithful participants" was that this was not true. The overwhelming majority of faithful participants were wrong. 

When JAHS, Pahoran, Scott Lloyd, Mola Ram, LeSellers, Jeff K., and the others said they were confident "tithing money was not used — either directly or indirectly", they were talking about a well-defined concept of indirect use. They believed that by definition, using investment income derived from unspent tithing was indirectly using tithing [this was defined in the OP], and that indirectly using tithing is using tithing. Since the Church leaders assured us that tithing wasn't used, they thought that meant it wasn't used neither directly nor indirectly. Their position makes sense--investment income on unspent tithing is just as sacred as the tithing itself, so if it is somehow problematic to use tithing for a mall, it would be equally problematic to use investment income on unspent tithing on a mall.

Of course, a few people understood the truth. For example, Craig Paxton said, "I hate that believers get so defensive at the very suggestion that tithing funds were used...or even that the investment income from tithing funds were used...good greif....chill out."

But others didn't understand it. Thesometimesaint explained why they were so defensive at the very suggestion that "the investment income from tithing funds were used." Because "The Church officers have publically stated that no tithing funds were used in the purchase of the mall. You are calling those Church officers liars."

JAHS, Pahoran, Scott Lloyd, Mola Ram, LeSellers, Jeff K., thesometimesaint, and James Huntsman all interpreted these remarks in the same basic way. Claiming that the first seven on that list always agreed with what you are saying now is gaslighting. 

Edited April 28 by Analytics

[Analytics]

3 hours ago, bluebell said:

In your opinion what changed so that the majority of members were not bothered by the whistleblower report about the tithing when it came out?

If the majority of them would have been bothered before I mean. 

Motivated reasoning is a powerful thing.

 

[smac97]

55 minutes ago, Analytics said:

The judges found the Church's arguments more persuasive.

All eleven judges, yes.  And not just the arguments, but the evidence presented by the Church, and the corollary lack of evidence presented by Huntsman: 

Quote

No reasonable juror could conclude that the Church misrepresented the source of funds for the City Creek project. Although the Church stated that no tithing funds would be used to fund City Creek, it also clarified that earnings on invested reserve funds would be used. The Church had long explained that the sources of the reserve funds include tithing funds. Huntsman has not presented evidence that the Church did anything other than what it said it would do.

It's not like this case was a close call.  A unanimous decision from the circuit Huntsman chose because he felt it would be most advantageous to him.  And the case was adjudicated on the factual merits.  Phrases like "No reasonable juror" and "Huntsman has not presented evidence that the Church did anything other than what it said it would do" demonstrate both the strength of the Church's factual and legal position and the weakness of Huntsman's. 

55 minutes ago, Analytics said:

And the Church's superstar legal team deserves some of credit for the victory--their ability to persuade is why the Church paid them the big bucks.

The Church also won a unanimous decision in the Tenth Circuit.  And before Judge Shelby.

I think the credit belongs to the attorneys, sure.  But also to the Church, whose conduct was within the law.  And also, conversely, the very poor lawyering of Huntsman's and Gaddy's lawyers, and whomever was representing the consolidated plaintiffs before Judge Shelby.

I spent nearly ten years representing mortgage lenders and servicers.  My success rate was, I think, probably north of 97%.  I'd like to think it was because I was a great attorney.  And I did do a pretty good job.  But then, all that litigation centered on loan documents that had been heavily vetted and well-drafted, and loan servicers overwhelmingly did a good job at servicing loans.  But most of all, I won so often because the legal theories I was arguing against were factually and legally quite poor.  I think the same should be said about the tithing cases.  

55 minutes ago, Analytics said:

My point is that the presentation of the data the lawyers gave the judges is different than the presentation the church gave the members.

I don't follow.  The Ninth Circuit quoted the five public statements centering around Pres. Hinckley's statement.  The two declarations were not presented to the Church, but I don't see how they were "different than the presentation the church gave the members."

55 minutes ago, Analytics said:

Quote

I'm not sure we are well situated to speculate on how "most Latter-day Saints interpreted {Pres. Hinckley's} remarks."

We can't see what "most members" believed, but we can look at what members of this forum said, because we did talk about it.

We seem to have different perspectives about what the denizens of this board had to say about Pres. Hinckley's remarks, years after the fact.  And I'm not sure what sort of probative weight the opinions of the denizens of this board have about the merits of Huntsman's lawsuit.

55 minutes ago, Analytics said:

Quote

What are your thoughts about this last bit: "only earnings on invested tithed funds were used to finance the project; the principal on the tithed funds was not used"?

As an actuary, I find that statement meaningless. Actuarial mathematics is based on the concept that money grows with interest. Remember when I took issue with Sam Brunson claiming "every financial endeavor that includes both principal and income on the principal distinguishes the two." Two illustrate why, I told you about how two of my friends happened to both testify on Capital Hill together, so I watched the hearing, and happened to remember this interesting question:

Could you give me, the insurance industry in general, how 
much of, say, auto insurance, health insurance, and long-term 
insurance, how much goes for claims?

In long-term care insurance, the company relies on interest income to pay claims, and it would be misleading to distinguish between principal and interest in this question. Professor Cohen interpreted "premium" as meaning "premium plus accumulated interest," and that is exactly the right way to do it. Citing the American Academy of Actuaries:

Mathematically, dividing the present value of claims by the present value of premiums (both discounted to policy issue) is identical to accumulating both premiums and claims with interest until the end of the policy and dividing them.

The point with all of this is that to honestly evaluate whether "most of the premiums were paid out in benefits", you can't look just at premiums--you also have to look at premiums and the interest income the premiums generate before it is spent on claims. You have to look at it that way to come up with a number that is understandable, meaningful, fair, and comparable.

The value of money is intrinsically linked to time. Interest is the mechanism that links the two. So it isn't the least bit contradictory for somebody to say, "I gave the Church $200,000 over the last 20 years. The accumulated value of those donations is $330,000."

That is how I look at it. But to me, it was always quite obvious what the Church was really doing.

What the Church "was really doing" and what the Church told the public had no substantial distinction between them, quoth the Ninth Circuit.

55 minutes ago, Analytics said:

Quote

Because a reasonable argument could be made for Latter-day Saints to be concerned about a substantial investment of tithes in a commercial venture in downtown Salt Lake City, where such a venture would (indirectly) benefit mostly the Utah Latter-day Saints?

That doesn't answer the question. I can understand why somebody would be concerned with the church using its resources on a commercial venture in downtown Salt Lake City, but if the Church makes the decision this is a good use of resources, why say principal can't be used but interest can be?

I don't think the Church said "principal can't be used but interest can be."  Rather, Pres. Hinckley said:

Quote

We feel we have a compelling responsibility to protect the environment of the Salt Lake Temple. . . . But I wish to give the entire Church the assurance that tithing funds have not and will not be used to acquire this property. Nor will they be used in developing it for commercial purposes.

Funds for this have come and will come from those commercial entities owned by the Church. These resources, together with the earnings of invested reserve funds, will accommodate this program.

Can you help me understand how you get "principal can't be used but interest can be" from this statement?  Are you possibly focusing on Bishop Burton's statement (“None of this money comes from the tithing of our faithful members. That is not how we use tithing funds.”)?

55 minutes ago, Analytics said:

Quote

Not sure about that: "The overwhelming consensus among the faithful participants (JAHS, Pahoran, Scott Lloyd, Mola Ram, LeSellers, Jeff K., etc.) was that tithing money was not used — either directly or indirectly — for City Creek. They repeatedly rejected the critics’ 'indirect tithing' chain as an unsupported assumption and insisted the funds came from separate commercial/investment sources (ZCMI, real estate, etc.)."

Here is the thing. The Church did "use tithing money indirectly." That is an undisputed fact.

I think the "indirect tithing" concept is disputed.

55 minutes ago, Analytics said:

It is now an undisputedly true that "in an indirect way the City Creek mall was made possible by sacred tithing money donated by members [in the past]." We now know that is true. That is what happened. But at the time, the "The overwhelming consensus among the faithful participants" was that this was not true. The overwhelming majority of faithful participants were wrong. 

I am not sure this is an accurate summary.  But I'm not particularly interested in establishing or refuting what a handful of Latter-day Saints on this board thought in 2012.

Thanks,

-Smac

[Analytics]

2 hours ago, smac97 said:

Can you help me understand how you get "principal can't be used but interest can be" from this statement? 

He said, "I wish to give the entire Church the assurance that tithing funds have not and will not be used to acquire this property." That implies that there was some concern that using "tithing funds" for that purpose would somehow be wrong, inappropriate, or at least troubling. It implies he wanted people to know that wouldn't happen.

The very assurance itself implies that it is somehow wrong, inappropriate, or at least troubling about using "tithing funds." And the "overwhelming consensus" on this board was that this was meant to be taken in a broad way. For the same reasons it would be wrong, inappropriate, or at least troubling to use tithing funds directly for this purpose, it would also be wrong, inappropriate, or at least troubling to use them indirectly for this purpose.

This is simply the way that JAHS, Pahoran, Scott Lloyd, Mola Ram, LeSellers, Jeff K., etc., viewed the issue.

I don't get "principal can't be used but interest can be" from what Hinckley said, but your reasoning indicates that we needed assurance that it wouldn't be used directly from tithing and needed assurance that it would be indirectly used from tithing. That doesn't make sense, which is why I don't buy your post hoc rationalization of this.

2 hours ago, smac97 said:

I think the "indirect tithing" concept is disputed.

The only place I ever heard of "indirect tithing" was when bluebell used that phrase earlier in this thread. 

The following three things cannot be disputed:

1- JAHS was crystal clear about what he meant when he said critics were saying "in an indirect way the City Creek mall was made possible by sacred tithing money donated by members."

2- "The overwhelming consensus among the faithful participants (JAHS, Pahoran, Scott Lloyd, Mola Ram, LeSellers, Jeff K., [James Huntsman,] etc.) was that tithing money was not used — either directly or indirectly — for City Creek"

3- We now know that in the context of that conversation, the people who shared this consensus position were wrong and the critics were right--the Church did use tithing--at least in an indirect way--for City Creek.*

2 hours ago, smac97 said:

But I'm not particularly interested in establishing or refuting what a handful of Latter-day Saints on this board thought in 2012.

Here is the thing. If we want to understand what informed members really thought about these issues in 2012, what the members of this board said in 2012 is a better evidence than what a group of California judges decided about it in 2024.

I don't have a ton of sympathy for James Huntsman in all of this. If he would have asked me about it then, I would have told him the same thing I told AHS, Pahoran, Scott Lloyd, Mola Ram, LeSellers, Jeff K., etc. 

_________________________________________

*Whether it was really in an "indirect way" rather than a more "direct way" is also in dispute. According to David Nielsen, about once a month, surplus tithing donations goes from the Church into EPA's Treasury Account. Then according to EPA's investment policy, the money is transferred to other accounts and used to purchase financial securities. Nielsen says that the money that left EPA for the mall didn't actually come from investment returns, but rather came from the Treasury Account itself.  That means those specific dollars weren't investment returns on assets, but rather were surplus tithing dollars that hadn't been invested yet.

Of course from my perspective this is a distinction without a difference--it would have been a waste of time and transaction costs to liquidate shares of Nvidia and use those investment returns for the mall, and then used the new tithing to buy back the shares of Nvidia; it's more efficient to just keep reinvesting the investment returns and use the fresh tithing money for the mall. But then again, I don't see a real difference between directly using it and indirectly using it.

Edited April 28 by Analytics

[smac97]

49 minutes ago, Analytics said:

He said, "I wish to give the entire Church the assurance that tithing funds have not and will not be used to acquire this property." That implies that there was some concern that using "tithing funds" for that purpose would somehow be wrong, inappropriate, or at least troubling. It implies he wanted people to know that wouldn't happen.

The very assurance itself implies that it is somehow wrong, inappropriate, or at least troubling about using "tithing funds."

I guess I don't see the implication of "wrong" or "inappropriate" you do.  The Church's explanation, cited by the Ninth Circuit, is shot through with references to the Church investing its reserve funds (which funds include tithing funds) :

• "During the time the Church was developing City Creek, the Church primarily invested its reserve funds through a separate entity called Ensign Peak Advisors, Inc. Ensign Peak held both reserve funds and earnings on invested reserves. The Church used Ensign Peak funds to finance the City Creek project."
• "The Church contended that the City Creek project had been funded with earnings on invested reserves, not direct tithing contributions, and that this was consistent with its public statements."
• "{Paul Rytting} stated that all the funds allocated to the City Creek project came from earnings on the Church’s reserve funds invested by Ensign Peak, meaning that no principal reserve funds (i.e., funds taken directly from Church members’ tithing contributions) were used."
• "Although the Church stated that no tithing funds would be used to fund City Creek, it also clarified that earnings on invested reserve funds would be used.  The Church had long explained that the sources of the reserve funds include tithing funds."
• "President Hinckley qualified the assertion that tithing funds would not be used by noting that earnings on invested reserve funds would be used."
• "{Pres. Hinckley's statement} drew a distinction between principal tithing funds, coming directly from Church members, and earnings on the funds that the Church sets aside from its annual income (which includes tithing funds)."
• "Because each
  relevant Ensign Peak account held enough earnings on invested funds to cover the funds appropriated for City Creek, any commingling of principal tithing funds and earnings on invested tithing funds cannot support Huntsman’s fraud claim."
• "Finally, the term 'earnings of invested reserve funds' was not so ambiguous that the Church could have expected or intended its relevant audience—here, Huntsman—to misunderstand what it meant. ... {T}he Church would have expected Huntsman to be aware of its explanation that reserve funds included tithing funds."
• {From the Bress Concurrence}: "There is no dispute that only earnings on invested tithed funds were used to finance the project; the principal on the tithed funds was not used."

The Church has been investing tithes for many years.  That the Church chose not to use tithes to fund City Creek does not mean that investing tithes is per se "wrong" or "inappropriate."  "Troubling" is, I think, a possibility, but that would be regarding this specific project, not investing tithes as a general principle.

49 minutes ago, Analytics said:

And the "overwhelming consensus" on this board was that this was meant to be taken in a broad way. For the same reasons it would be wrong, inappropriate, or at least troubling to use tithing funds directly for this purpose, it would also be wrong, inappropriate, or at least troubling to use them indirectly for this purpose.

This is simply the way that JAHS, Pahoran, Scott Lloyd, Mola Ram, LeSellers, Jeff K., etc., viewed the issue.

I don't get "principal can't be used but interest can be" from what Hinckley said, but your reasoning indicates that we needed assurance that it wouldn't be used directly from tithing and needed assurance that it would be indirectly used from tithing. That doesn't make sense, which is why I don't buy your post hoc rationalization of this.

Habit Ten of the Hollis book suggests that we "Embrace the Discomfort of Non-Closure."

I am okay with you and I disagreeing on this issue.

Thanks,

-Smac

Edited April 28 by smac97

[Analytics]

8 hours ago, smac97 said:

I guess I don't see the implication of "wrong" or "inappropriate" you do.  The Church's explanation, cited by the Ninth Circuit, is shot through with references to the Church investing its reserve funds (which funds include tithing funds...

You are preaching to the choir on this. This is what people like Craig Paxton and me have been saying all along.

8 hours ago, smac97 said:

The Church has been investing tithes for many years.  That the Church chose not to use tithes to fund City Creek does not mean that investing tithes is per se "wrong" or "inappropriate." 

That is exactly what Craig Paxton and I have been saying all along. I’m glad you agree what us.

8 hours ago, smac97 said:

"Troubling" is, I think, a possibility, but that would be regarding this specific project, not investing tithes as a general principle.

I don’t think that captures their perspective. JAHS explained why it was troubling by saying it is "money that is supposed to be dedicated to building God's church and helping the poor; not for building shopping malls."

The idea that it is troubling to invest the money in a Salt Lake City shopping mall but not troubling to invest it in shares of Meta and Nvidia is weird. And this goes back to why the Church set up a big set of clone LLC’s--the objective was to hide the nature and scale of its investments from its own membership.

Regarding “investing tithes” as a general principle, I think that is even more troubling, and certainly not in line with mainstream views on how churches and charities should operate. 

Using reasonable guesses, the Church probably takes in about $8 billion a year in tithing, and uses perhaps $7 billion of that a year to “build God’s church and help the poor” and then saves the $1 billion for a rainy day. That $1 billion it saves is added to an investment fund that has over $200 billion in assets and generates perhaps $14 billion a year in investment income. That investment income is all tax-free and 100% of it is used to grow the size of the $200 billion fund. So when you define the Church’s total income as tithing plus investment income, its total income might be $21 billion a year. Of that $21 billion, it deploys 67% ($14 billion) to increase the size of its for-profit investment portfolio, and $7 billion (33%) to “build God’s church and help the poor."

8 hours ago, smac97 said:

Habit Ten of the Hollis book suggests that we "Embrace the Discomfort of Non-Closure."

I am okay with you and I disagreeing on this issue.

Okay. But the psychology behind this is eyeopening. 14 years ago, Craig Paxton correctly explained how the mall was financed, and the “overwhelming consensus” here was he was saying offensive anti-Mormon lies. That he was calling the brethren liars. Now you are reading those same conversations and telling me with a straight face that Craig Paxton was right all along, and that reasonably informed members always believed the way Craig Paxton did. 

I knew motivated reasoning was powerful, but I didn’t know it was that powerful.

Edited April 28 by Analytics

[smac97]

5 hours ago, Analytics said:

Regarding “investing tithes” as a general principle, I think that is even more troubling, and certainly not in line with mainstream views on how churches and charities should operate. 

I can see how smaller "pay as you go" churches and charities may lack the means and/or desire to maintain an endowment fund, but some larger churches and charities routinely set aside surpluses (donations exceeding immediate operating needs) and invest them prudently.  Plenty of sensible and appropriate reasons for this, such as planning for long-term sustainability (to weather economic downturns, fund future projects (e.g., building temples, schools, church programs, humanitarian/charitable work, etc.), or to provide ongoing support when donations fluctuate), wise stewardship (the Parable of the Ten Talents), and so on.

For the average small local church or charity, investing donations is uncommon. For larger denominations, well-resourced nonprofits, universities, hospitals, and some major religious organizations, it is common and prudent.

5 hours ago, Analytics said:

Using reasonable guesses, the Church probably takes in about $8 billion a year in tithing, and uses perhaps $7 billion of that a year to “build God’s church and help the poor” and then saves the $1 billion for a rainy day. That $1 billion it saves is added to an investment fund that has over $200 billion in assets and generates perhaps $14 billion a year in investment income. That investment income is all tax-free and 100% of it is used to grow the size of the $200 billion fund. So when you define the Church’s total income as tithing plus investment income, its total income might be $21 billion a year. Of that $21 billion, it deploys 67% ($14 billion) to increase the size of its for-profit investment portfolio, and $7 billion (33%) to “build God’s church and help the poor."

The bulk of tithes and offerings are used directly to sustain the operations of the Church.  The speculation about the Church's other income is interesting, but still speculative.

What the Church should do with its accumulated wealth is indeed a challenge.  You and others (such as Teancum) have come up with proposals that are facially appealing (such as a rote "spend{ing} 5% of their principal on their philanthropic mission" rule) , but perhaps not practical or prudent if put into practice.  I have previously characterized this idea in provocative terms, but I have lately been working on turning over a new leaf, so I won't re-visit that characterization (and will, instead, retract it and apologize for it).

In recent months we have seen substantial evidence of widespread corruption and malfeasance in NGOs and charitable organizations.  A sampling:

• The Erosion of Trust: How Scandals and Systemic Failures Have Transformed Public Perception of NGOs
• Beyond the Bribe: Corruption and Fraud in Local-Level NGOs
• Biggest Nonprofit Scandals in Recent History
• The dark side of giving: Exposing charity fraud
• A Timely Warning About a Projected Rise in Charity Fraud
• ‘Everybody’s hiding their skeletons’: A gloves-off conversation on aid diversion and double standards (Humanitarians should talk about the reality of fraud and mismanagement, aid leaders say.)
• Fraud Risks in Nonprofits: Trends and Strategies for 2025
• When government outsources compassion, fraud moves in
• Nonprofits: The Scam of the NGO is Bigger Than You Think
• 76 Fake Charities Shared a Mailbox. The I.R.S. Approved Them All.

The Church has, I think, been quite smart to carefully vet its partners in philanthropic/humanitarian efforts.

From 2020: What the Presiding Bishopric has to say about the finances of the Church and the faith of its members

Quote

In addition to responding to disasters across the globe, Church humanitarian funds have been used to provide food programs, vision care, maternal and newborn care, clean water and sanitation, immunizations, wheelchairs, and help for refugees.

However, reaching out and helping those in need is “a very complex endeavor,” he said.

The Church can’t just send out cash and checks to people, he said. “It has to be done in an organized way, and with follow up, with training, a lot of expertise and good partners. Otherwise, you just don’t get any results.”

Bishop Davies said the Church is careful to select humanitarian projects and partners that will make the best use of the Church’s funds. “We are very careful with the widow’s mite,” referring to the biblical parable by the Savior.

“We recognize that this comes from the faith of Church members and we want to make certain that they have the trust and confidence that their donations are being managed in a careful and thoughtful and very safe way for them and for the Church,” said Bishop Davies.

Leaders often ask themselves “what else can we do, where else can we go, who else can we work with,” said Bishop Waddell.  

Every time the Church reaches out, the objective is to bless both the giver and the receiver, added Bishop Caussé. So in addition to selecting good humanitarian projects, Church leaders are always mindful of providing service opportunities for Church members. “It’s not just a matter of money,” he said. It’s also done as members “devote time and resources and efforts to help others.”
...
As to the question, is the Church doing enough, Bishop Caussé said, “We hope we can do more and more in the future, and as the Church grows, there will be more opportunities for doing good.”

(Emphasis added.)

The Church is not alone in facing challenges to large-scale financial support of philanthropic/humanitarian efforts:

Billionaire Philanthropists Have Discovered a New Way to Give Away Their Fortunes

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For most of us outside the upper 0.001 percent of global wealth holders, among the things we likely do not end up worrying about on a regular basis is how difficult it is to give away our money. But for many of the world’s ultra-high-net-worth—many of whom give annual gifts to charities in the tens of millions—the limitations of the traditional models of philanthropy are becoming increasingly evident. With a record number of billionaires worldwide, many are finding that simply writing big checks to nonprofits isn’t really moving the needle in the way that they hope. 

Take Amazon founder Jeff Bezos’s ex-wife, MacKenzie Scott, who has been among the planet’s most generous philanthropists in recent years. As of the end of 2022, Scott had given away over $14 billion across roughly 1,600 causes and organizations since her divorce with Bezos in 2019. Yet, despite her stated desire to give away at least half of her wealth, she is falling further and further behind her goals. According to Forbes, the billions she has given away notwithstanding, Scott’s net worth has still managed to grow from $36 billion in 2019 to $43.6 billion this year, chiefly due to appreciation of her Amazon holdings. Said another way, Scott’s growth in fortune is far outstripping her ability to part ways with it. And she is not alone.

Forbes’s 2023 list of the world’s billionaires included 2,640 individuals with ten-figure fortunes that hold onto a combined wealth topping $12 trillion, an amount representing around 2 percent of global wealth. Although that number marks a slight dip from 2022, it’s still an astounding statistic that has been on an upward trajectory for decades. For many of these ultra-wealthy individuals and families, there is a palpable frustration with the current vectors available for giving away large sums of money, known as mega-philanthropy—defined as charitable giving of more than $10 million a year—responsibly and effectively.

Mega-philanthropy is the stated objective of many of the world’s richest, but many are struggling to find impactful areas where they can make gifts in the scale of tens of millions; save for academic institutions who generally park the lion’s share of their donations in endowments, there are very few nonprofits set up to take in gifts of that size that generate significant impact.

“For many ultra-high-net-worth individuals and families, giving wealth away is fraught with stress and anxiety,” observed Mark Reed, an heir to the Reed family fortune which owns nearly 1.4 million acres of prime forestland in the Pacific Northwest, making it the fifth largest landowner in the U.S. “On one hand, we want to make sure that we are getting [our wealth] into the hands of responsible organizations that will be good stewards of our giving. But on the other hand, I think there is a growing sense among many wealthy families that the marginal utility of, say, another $50 or $100 million gift to a favorite Ivy League alma mater is somewhat limited.” 

“Many are asking, ‘Where can we deploy our fortunes in a way that delivers a greater benefit to society and our communities?’” Reed added. “And that’s where I think philanthropic private equity can play a big role.” 

An interesting challenge, to be sure.

5 hours ago, Analytics said:

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Habit Ten of the Hollis book suggests that we "Embrace the Discomfort of Non-Closure."

I am okay with you and I disagreeing on this issue.

Okay. But the psychology behind this is eyeopening. 14 years ago, Craig Paxton correctly explained how the mall was financed, and the “overwhelming consensus” here was he was saying offensive anti-Mormon lies.

I just don't think you are accurately stating/characterizing what the denizens of this board said/thought in 2012.

For example, Craig said this: "It is disingenuous for the church to claim that no tithing funds were used to fund the City Creek Mall."

Also Craig: "Classic Money Laundering...So can the Church really claim that they didn’t use tithing funds to fund the City Creek mall? Ummm I suppose so…but is it really an honest statement to claim such or is the church just being disingenuous?"

You are characterizing this as Craig having "correctly explained how the mall was financed."  I think most Latter-day Saints took exception to his denigrating characterizations ("disingenuous," "money laundering," etc.), and also with the "indirect" use of tithes argument.

Mola Ram: "Acutally yes, the church can claim it because they did not."

Pahoran: "No, it's just truthful {for the church to claim that no tithing funds were used to fund the City Creek Mall}."

Cobalt: 

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Many years ago, Gordon B. Hinckley said the following:

"In the financial operations of the Church, we have observed two basic and fixed principles: One, the Church will live within its means. It will not spend more than it receives. Two, a fixed percentage of the income will be set aside to build reserves against what might be called a possible “rainy day.”" https://www.lds.org/...ch.p23?lang=eng

Apparently, the church has a rule to invest some "fixed percentage" of the funds it takes in. It would be a lot less directly lucrative to put these "reserves" in the bank and let bankers invest it for them, than for the church to directly manage its own investments, through its commercial real estate and business arms. But nobody outside the church knows the full answer, given that these companies are not publicly traded, and therefore do not have to disclose their finances except to the IRS.

It's possible that the church buys shares in the stock of companies like Property Reserve, Inc. That way, tithing funds are not directly used to finance investments like City Creek. Or perhaps Property Reserve, Inc. has accumulated cash on hand for such projects from its other investments.

Jeff K.: "The question of tithing money tied to a mall is a red herring that still has not been proven."

Minos (responding to Craig) : "Those are unpleasant accusations. You do need to follow board guidelines and support them."

JAHS apparently had some qualms about the concept of investing excess contributions.  Cobalt commented:

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Quote

 

"a fixed percentage of the income will be set aside to build reserves against what might be called a possible “rainy day.”

It's also possible that this "rainy day" money will not be used for investments or to build shopping malls; it would probably be used for the upkeep of the church through hard times.

 

That's how it would be used in a "rainy day," but until the rainy day, the money has to be put somewhere, and the church probably doesn't want to just deposit it with bankers. They'd rather make more lucrative investments in real estate, etc.

And so on.

Some Latter-day Saints may have had qualms about the Church funding City Creek.  I think Craig's inflammatory and accusatory and inaccurate ("money laundering") framing of the issue is what provoked most of the Latter-day Saint commentary.

5 hours ago, Analytics said:

That he was calling the brethren liars.

Craig said this: "It is disingenuous for the church to claim that no tithing funds were used to fund the City Creek Mall."

Also Craig: "Classic Money Laundering...So can the Church really claim that they didn’t use tithing funds to fund the City Creek mall? Ummm I suppose so…but is it really an honest statement to claim such or is the church just being disingenuous?"

"Disingenuous":

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Disingenuous (pronounced /ˌdɪsɪnˈdʒɛnjuəs/) describes behavior that is insincere, dishonest, or gives a false appearance of frankness. It suggests a calculated attempt to mislead, pretending to be more honest or unaware than one actually is. The term originates from the mid-17th century, combining dis- ("not") with ingenuous ("noble, candid"). 

"Money Laundering":

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Money laundering is the illegal process of making large amounts of money generated by criminal activity—such as drug trafficking, terrorism, or fraud—appear to have come from a legitimate source. It involves concealing the origin of "dirty" money to use it legally without attracting detection. It typically involves three steps: placement (introducing cash into the financial system), layering (hiding the trail), and integration (using the funds).

Can you see how some might disagree with your bland characterization of "Craig Paxton correctly explained how the mall was financed"?  It seems he was doing quite a bit more than that.

5 hours ago, Analytics said:

Now you are reading those same conversations and telling me with a straight face that Craig Paxton was right all along, and that reasonably informed members always believed the way Craig Paxton did. 

I think Cobalt, and I, and most other Latter-day Saints did not dispute the general concept of "Member Pays Tithing --> Tithing in Excess of Current Needs is Invested à Investments Earn Return --> $$$ From This Return on Investments is Reinvested in the City Creek Mall."  Craig and Cobalt were both correct on this point.  They were both correct because of the information they had from public statements made by Pres. Hinckley, such as his 1991 remarks cited by Cobalt:

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In the financial operations of the Church, we have observed two basic and fixed principles: One, the Church will live within its means. It will not spend more than it receives. Two, a fixed percentage of the income will be set aside to build reserves against what might be called a possible “rainy day.”

For years, the Church has taught its membership the principle of setting aside a reserve of food, as well as money, to take care of emergency needs that might arise. We are only trying to follow the same principle for the Church as a whole.

Based on this, I surmise that disagreement with Craig arose less from his aligned-with-Pres.-Hinckley's-remarks summary of the Church setting aside a percentage of its income to build reserves, and more from his inflammatory framing of that point.  That is, I think most objected to and disagreed with Craig accusing the Brethren of being "disingenuous" and engaging in "money laundering."

5 hours ago, Analytics said:

I knew motivated reasoning was powerful, but I didn’t know it was that powerful.

I think the disagreement comes down to presuppositions you have (such as "indirectly using tithing money is still using tithing money") that Latter-day Saints do not share.

Thanks,

-Smac

Edited April 28 by smac97

[bluebell]

16 hours ago, Analytics said:

Motivated reasoning is a powerful thing.

 

Agreed.  It's definitely something both of our perspectives and beliefs are susceptible to.  Bias is a very real thing.