Church sued again over how it uses tithing contributions from members

[smac97]

On 11/10/2023 at 5:50 PM, Analytics said:

I've been thinking more about this, and I'll give you a couple of examples.

The first example is John Dehlin's organization "Mormon Stories Foundation." While I have a lot of sympathy for what they are trying to do, I don't think it is the type of thing that ought to be subsidized by the government. If I were in charge, contributions to Mormon Stories wouldn't be tax deductible.

Okay.  Would you characterize this as some sort of ideological litmus test?  One formulated and administered by the State?  If so, what would this test entail?  Which ideologies would be entitled to tax-free status, and why?

On 11/10/2023 at 5:50 PM, Analytics said:

I don't have a problem with it being organized as a non-profit, but if the organization started hoarding money, I'd wanted it to be taxed like a private foundation.

I'm not quite sure I follow.  You are okay with Mormon Stories starting as a non-profit, but it could thereafter be stripped of that status if it did something the State found problematic (such as "hoarding money")?  What other problematic behaviors do you have in mind (besides "hoarding money")?  And what counts as "hoarding"?

Thanks,

-Smac

[Teancum]

On 11/10/2023 at 1:39 PM, mfbukowski said:

 

Politics = religion iff religion is what you believe religiously.

All human institutions are made up out of nothing. Religion, politics, laws, nations and so on. All of it.  All are made up by humans.  The only think that makes them valid or "real" is that we accept them as such.

 

On 11/10/2023 at 1:39 PM, mfbukowski said:

I mean politics sure ain't science.

Who claims it is?

On 11/10/2023 at 1:39 PM, mfbukowski said:

So if we only believe science can be true, why argue over politics?

Non theocratic religions don't claim to be revealed by God. So while politics is made up most rational political arguments don't state because God said so.  And political philosophies are not claiming to be confirmed by revelation from God.

 

On 11/10/2023 at 1:39 PM, mfbukowski said:

It's all as irrelevant as religion then, right, all you secularists out there?

No I don't think so.  I have never said religion is irrelevant. It is certainly relevant because so many humans think that religion is relevant, especially THEIR OWN religion.

 

On 11/10/2023 at 1:39 PM, mfbukowski said:

PROOF to me that politics is a collection of "religious" views.

Pretty weak proof though for some political views become like a religion and I think for many proclaimed religionists politics actually syspercedes their religion.

 

On 11/10/2023 at 1:39 PM, mfbukowski said:

It MUST be seen as a religion.

No not really.

 

On 11/10/2023 at 1:39 PM, mfbukowski said:

What is "freedom" without unscientific / religious reasoning?

Gunas define freedom by accepting what freedom means. It may be different to different people.  But I think humans can come up with the best definition.

On 11/10/2023 at 1:39 PM, mfbukowski said:

What is a "right" if secular reasoning is NOT religion?

"All humans are created equal"

Where and when?

A man made statement that we in the United States accepted.  That is your when and where for Americans.

[Teancum]

5 hours ago, Kenngo1969 said:

Okay.  You're entitled to your [probably well-considered] opinion, but the question that, essentially, is at the center of this thread remains: One person's "hoard" is another person's "prudent stewardship."

Not really. It is not just a matter of opinion.  There are best practices out there one can use as a benchmark.

[CV75]

3 hours ago, Teancum said:

Not really. It is not just a matter of opinion.  There are best practices out there one can use as a benchmark.

Opinions rule the applicability of best practices and benchmarks according to a variety of factors and considerations.

[Analytics]

23 hours ago, smac97 said:

Okay.  Would you characterize this as some sort of ideological litmus test? 

No.

23 hours ago, smac97 said:

One formulated and administered by the State?  If so, what would this test entail?  Which ideologies would be entitled to tax-free status, and why?

No. N/A. N/A.

My actual position here is straightforward and shouldn’t be controversial. 

1- Tax breaks are in fact a subsidy.

2- Government subsidies should only be given to organizations that serve the public interest.

3- For purposes of such subsidies, what’s in the “public interest” should be narrow and tightly defined. 

23 hours ago, smac97 said:

I'm not quite sure I follow.  You are okay with Mormon Stories starting as a non-profit, but it could thereafter be stripped of that status if it did something the State found problematic (such as "hoarding money")? 

No, that isn’t my point. An organization being a non-profit doesn’t preclude it from being taxed (did you know private foundations are non-profits?). If an organization is going to be subsidized because it is ostensibly supporting the public interest, it needs to really support the public interest in a way commensurate with the subsidies. If it isn’t doing that, the subsidies should be eliminated.

23 hours ago, smac97 said:

What other problematic behaviors do you have in mind (besides "hoarding money")?

Nothing in particular.

23 hours ago, smac97 said:

  And what counts as "hoarding"?

https://thecommunity.nonprofitnewyork.org/s/article/Can-a-Nonprofit-Have-Too-Many-Assets

Edited November 13, 2023 by Analytics

[smac97]

31 minutes ago, Analytics said:

1- Tax breaks are in fact a subsidy.

2- Government subsidies should only be given to organizations that serve the public interest.

3- For purposes of such subsidies, what’s in the “public interest” should be narrow and tightly defined. 

Okay.  How would you define "public interest"?

Thanks,

-Smac

[LoudmouthMormon]

1 hour ago, Analytics said:

My actual position here is straightforward and shouldn’t be controversial. 

1- Tax breaks are in fact a subsidy.

2- Government subsidies should only be given to organizations that serve the public interest.

"In fact", eh?   The word 'subsidy' means different things to different people.

Monetary assistance granted by a government to a person or group in support of an enterprise regarded as being in the public interest. - The American Heritage Dictionary of the English Language
A grant or gift of money - Merriam Webster dictionary
Money given by a government or an organization to reduce the cost of producing  - Cambridge English Dictionary

You have to get economists involved to arrive at your definition, which broadens the meaning to include not just someone picking up dollars and handing it to someone else, but also "ok, I won't take as much money from you as I otherwise would - congratulations on your subsidy".  

It's not controversial that you and your people have a different definition than a basic literal reading would strongly imply.
It's not controversial that tax breaks mean the government won't take as much money from you, as they would if you didn't have the tax break.

What's totally controversial, is to use the word "given" when talking about tax breaks.  Economist lingo can be such a steaming pile of slimy, underhanded, false-narrative-spewing, incorrect-stewardship-pushing, context-hiding bullcrap.  I've got a hundred bucks.  The government is going to take ten dollars, leaving me with ninety.  But because of some unfortunate law that you detest, you're going to "give" me a subsidy, and not take any of my money.  In your mind, I've now been "given" ten bucks by the government. 

Ew.  

Gross.

This isn't anything personal against any person.  That disgusting expanded definition is widely used in business and government.  It's so endemic, large swaths of the population have been fooled into thinking you don't have money, it all belongs to the government, and they get to say how much you keep.  

The entitlement mentality!    "You don't get to have your stuff, unless this or that group approves."   Phooey.  If I was speaking this post out loud, I'd wish to spew them out of my mouth before I vomit.  I'm only typing, but still feel a need to wash my hands at handling such debasing notions.

Edited November 13, 2023 by LoudmouthMormon

[Teancum]

18 hours ago, CV75 said:

Opinions rule the applicability of best practices and benchmarks according to a variety of factors and considerations.

Indeed.  And when the experts share opinions and refine it down that is when you come up with best practices and benchmarks.  And guess what?  EPA's massive wealth fund is well beyond best practices and benchmarks for churches and NFPs with large endowment funds.

[Tacenda]

3 hours ago, Analytics said:

No.

No. N/A. N/A.

My actual position here is straightforward and shouldn’t be controversial. 

1- Tax breaks are in fact a subsidy.

2- Government subsidies should only be given to organizations that serve the public interest.

3- For purposes of such subsidies, what’s in the “public interest” should be narrow and tightly defined. 

No, that isn’t my point. An organization being a non-profit doesn’t preclude it from being taxed (did you know private foundations are non-profits?). If an organization is going to be subsidized because it is ostensibly supporting the public interest, it needs to really support the public interest in a way commensurate with the subsidies. If it isn’t doing that, the subsidies should be eliminated.

Nothing in particular.

https://thecommunity.nonprofitnewyork.org/s/article/Can-a-Nonprofit-Have-Too-Many-Assets

Interesting...

I hope the nonprofit side of the church will think long and hard of how much it spends comparable to how much it has in the Ensign Peak account. I honestly believe that the majority of the donations the church makes to charities comes from the members, as has been stated over the pulpit multiple times, which I give the church credit for. Sadly I don't think much comes from the for profit side if any. Maybe there is a stipulation put in that says they will only save that money and build on it. But to me, it doesn't sound like the church can spend even 10 percent from the Ensign account for charities like the members are asked to do in tithing. Wouldn't that be a novel thing to try? 

 

[CV75]

1 hour ago, Teancum said:

Indeed.  And when the experts share opinions and refine it down that is when you come up with best practices and benchmarks.  And guess what?  EPA's massive wealth fund is well beyond best practices and benchmarks for churches and NFPs with large endowment funds.

You are guessing as to whether and which experts have applicable insight for this particular arrangement. You are supporting your biased opinion, as am I.

[Analytics]

2 hours ago, LoudmouthMormon said:

"In fact", eh?   The word 'subsidy' means different things to different people.

Monetary assistance granted by a government to a person or group in support of an enterprise regarded as being in the public interest. - The American Heritage Dictionary of the English Language
A grant or gift of money - Merriam Webster dictionary
Money given by a government or an organization to reduce the cost of producing  - Cambridge English Dictionary

You have to get economists involved to arrive at your definition, which broadens the meaning to include not just someone picking up dollars and handing it to someone else, but also "ok, I won't take as much money from you as I otherwise would - congratulations on your subsidy".  

It's not controversial that you and your people have a different definition than a basic literal reading would strongly imply.
It's not controversial that tax breaks mean the government won't take as much money from you, as they would if you didn't have the tax break.

What's totally controversial, is to use the word "given" when talking about tax breaks.  Economist lingo can be such a steaming pile of slimy, underhanded, false-narrative-spewing, incorrect-stewardship-pushing, context-hiding bullcrap.  I've got a hundred bucks.  The government is going to take ten dollars, leaving me with ninety.  But because of some unfortunate law that you detest, you're going to "give" me a subsidy, and not take any of my money.  In your mind, I've now been "given" ten bucks by the government. 

Ew.  

Gross.

This isn't anything personal against any person.  That disgusting expanded definition is widely used in business and government.  It's so endemic, large swaths of the population have been fooled into thinking you don't have money, it all belongs to the government, and they get to say how much you keep.  

The entitlement mentality!    "You don't get to have your stuff, unless this or that group approves."   Phooey.  If I was speaking this post out loud, I'd wish to spew them out of my mouth before I vomit.  I'm only typing, but still feel a need to wash my hands at handling such debasing notions.

Entitlement mentality? In the 1930’s and 1940’s, the U.S. government did several massive things that exponentially increased the size and expensiveness of the federal government. In addition to Social Security:

1- In Bretton Wood in 1944, a global alliance was created to foster international trade. A key piece of this was the U.S. Navy ensuring the ability of cargo containers to be shipped around the world with virtually no risk of piracy. International trade caused the world to become economically vested in peace and prosperity. Without the extremely expensive navy funded by US tax payers, rather than global trade and peace, we would have economic stagnation and war.

2- Congress created the SEC and related laws. This ended up giving people enormous confidence in the stock market. This allowed people to invest confidently, which allowed industry to capitalize, which led to more profits and a growing economy, which led to more money to invest….ultimately resulting in continued exponential growth of the economy unlike anything the world has ever seen.

It isn’t a coincidence that the most impressive growth in peace and prosperity in human history followed the growth of the government in the 1930’s and 1940’s.

Which brings us back to accusations of entitlement mentality. By definition, the biggest benefactors of this system are the people and organizations that have made the most money in it. 

Do you think your Church is entitled to massive economic benefits that would be impossible without the system that is funded by the tax dollars paid by others?

[Teancum]

1 hour ago, CV75 said:

You are guessing as to whether and which experts have applicable insight for this particular arrangement. You are supporting your biased opinion, as am I.

Find me an expert that thinks an organization needs 20 times its annual operating expenses in reserve.  Because that is what the church has. @Analyticshas shared an abundance of information on such things.  Perhaps you have missed those?  I have not been combing what experts are out there to support my position. I just know what they are. So how about you?  Can you support the point you just made above?  Find is an expert that argues that it is good practice for an NFP or church to have 20x annual operating income stashed away.  Or that spends NONE of its stash of assets on its mission.  Not one red cent annually.  Count this as a CFR.

[CV75]

8 minutes ago, Teancum said:

Find me an expert that thinks an organization needs 20 times its annual operating expenses in reserve.  Because that is what the church has. @Analyticshas shared an abundance of information on such things.  Perhaps you have missed those?  I have not been combing what experts are out there to support my position. I just know what they are. So how about you?  Can you support the point you just made above?  Find is an expert that argues that it is good practice for an NFP or church to have 20x annual operating income stashed away.  Or that spends NONE of its stash of assets on its mission.  Not one red cent annually.  Count this as a CFR.

You're just having a "Teantrum" at this point. And yes, I can support the point I just made above: Bias - Wikipedia and Opinion - Wikipedia and Guessing - Wikipedia.

So yes, you are guessing as to whether and which experts have applicable insight for this particular arrangement. You are supporting your biased opinion, as am I.

[Teancum]

25 minutes ago, CV75 said:

You're just having a "Teantrum" at this point.

And you are acting like a child.

25 minutes ago, CV75 said:

 

 

And yes, I can support the point I just made above: Bias - Wikipedia and Opinion - Wikipedia and Guessing - Wikipedia.

So yes, you are guessing as to whether and which experts have applicable insight for this particular arrangement. You are supporting your biased opinion, as am I.

My CFR was for you to trot out some experts on a specific issue.  But then you knew that didn't you.  CFR still stands.

[let’s roll]

7 hours ago, Teancum said:

Indeed.  And when the experts share opinions and refine it down that is when you come up with best practices and benchmarks.  And guess what?  EPA's massive wealth fund is well beyond best practices and benchmarks for churches and NFPs with large endowment funds.

Why would benchmarks and best practices for NFPs apply to churches?  The officers and Directors who make decisions for NFPs do well to reference best practices and benchmarks for NFPs in making those decisions.  Churches believe they are doing the work of God under His direction.  Thus, in accord with that belief, it is both proper and logical that church leaders would look to God for direction in all matters, including managing temporal assets, and follow that direction even when the direction doesn’t map to benchmarks and best practices for secular institutions.

All have the right to disagree with the belief of church leaders that they can, and do, receive Divine direction but, in the context of that belief, those who suggest that leaders and churches should always follow secular guidelines should understand why such a suggestion might be understood as a suggestion that the leaders follow man rather than God.

[helix]

5 hours ago, Teancum said:

Find me an expert that thinks an organization needs 20 times its annual operating expenses in reserve

Perpetual funds have a knack for large numbers like this.

For example, Norway's fund is at $1.4 trillion or so for a population of 5.4 million people. It's designed for pensions. Last year, some quick math says Norway spent about $22 billion on pensions. That's a ratio of ~63x. 

While the church has been largely mum on its fund's details, every now and then you will hear them mention Africa's growth. For example, the church coordinated with the Wall Street Journal to talk directly about the fund: https://archive.is/sy1Ay#selection-2453.0-2453.376

Quote

In their first-ever interview about Ensign Peak’s operations, Mr. Clarke and church officials who oversee the firm said it was a rainy-day account to be used in difficult economic times. As the church continues to grow in poorer areas of the world like Africa, where members cannot donate as much, it will need Ensign Peak’s holdings to help fund basic operations, they said.

In other words, a fund large enough not to pay for lean years, but a fund which survives in perpetuity while also covering annual expenses.
 

Edited November 14, 2023 by helix

[CV75]

14 hours ago, Teancum said:

And you are acting like a child.

My CFR was for you to trot out some experts on a specific issue.  But then you knew that didn't you.  CFR still stands.

If that is your CFR, it has nothing to with what I wrote, which was about your guessing, opinion and bias, not your basis for them. Tantrums do have a way of getting in the way of facts.

[Calm]

53 minutes ago, CV75 said:

If that is your CFR, it has nothing to with what I wrote, which was about your guessing, opinion and bias, not your basis for them. Tantrums do have a way of getting in the way of facts.

The thread has turned personal, which is a waste of time for readers, so I hope those posting are enjoying it….

[LoudmouthMormon]

18 hours ago, Analytics said:

Which brings us back to accusations of entitlement mentality. By definition, the biggest benefactors of this system are the people and organizations that have made the most money in it. 

Do you think your Church is entitled to massive economic benefits that would be impossible without the system that is funded by the tax dollars paid by others?

Totally fair question, and the answer is yes, absolutely I do.  Since you wanted to go the "let's school this guy with a history lesson" route, here's my response:

Humans in the western world have been granting tax exempt status to religious organizations all the way back to Constantine granting the Christian church a complete exemption from all forms of taxation around 312ad.   Churches were tax-exempt in medieval England, under the justification that the church relieved the state of some governmental functions, and therefore deserved a benefit in return.  But the US justifications probably had it's beginning in The English Statute of Charitable Uses of 1601.   Before the American Revolution, 9 of the 13 colonies were giving some form of tax relief to churches.   They were unofficially exempt from the founding of the nation until 1894, when the tax exemption was officially codified in the federal tax code.  The 1894 Tariff Act was declared unconstitutional in 1896, got replaced by the Revenue Act of 1913, and interpreted by the SCOTUS in 1924 who said “Evidently the exemption is made in recognition of the benefit which the public derives” from churches’ “corporate activities.”  There wasn't even a ban on church intervention in political campaigns until 1954.  There have always been a minority of people who didn't like it.  Presidents Madison, Garfield, and Grant all opposed it, for example.  And yet it stands, even through, as you point out, the greatest economic expansion the world has ever seen. 

President Grant's opposition is sort of like yours.  Basically, pointing to the fact that churches have money, and getting outraged by the fact.  Grant told Congress:

Quote

in 1850, the church properties in the U.S. which paid no taxes, municipal or state, amounted to about $83 million. In 1860, the amount had doubled; in 1875, it is about $1 billion. By 1900, without check, it is safe to say this property will reach a sum exceeding $3 billion….so vast a sum, receiving all the protection and benefits of government without bearing its portion of the burdens and expenses of the same, will not be looked upon acquiescently by those who have to pay the taxes.

It sounds like he's making an argument, but I only hear greed.  Envy.  Jealousy.  Outrage fueled by nothing more than the childish noticing that someone has a cookie and they don't.   When you see someone has a cookie and you don't, and you react with "They shouldn't have that cookie, that's not fair", that's what I mean by entitlement mentality.   So in case there's any doubt to my position:

- Throughout all of recorded history, humans have seen enough value in religious institutions, that they're often willing to grant tax exempt status to them.
- The US has been doing so, with only a little in the way of opposition, since before it's founding.
- Churches are entitled, but they don't have an entitlement mentality.  You are not entitled, but you do have the mentality.

Again, this is not a good look on you:

           

 

 

 

p.s.  You and everyone else are still wrong when you say a tax break is a subsidy.

Edited November 14, 2023 by LoudmouthMormon

[smac97]

Just saw this article: Billionaire Philanthropists Have Discovered a New Way to Give Away Their Fortunes

Some excerpts:

Quote

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.

Huh.  I think the Church is dealing with a somewhat similar - though still materially differentiated - problem.

The Church has large amounts of wealth, as well as clear mandates to help the poor and the needy.

The Church is, I think, also encountering "the limitations of the traditional models of philanthropy."  I think there is, at present, more money to give then there are legitimate and trustworthy organizations to which that money can be donated.  This is a principal "limitation" addressed in the article.

The Church is distinguishable from "the world’s ultra-high-net-worth" in that its wealth is held strictly in trust.  None of the leaders of the Church, who ostensibly have access to the wealth of the Church, is taking advantage of that access.  None of them is leading a profligate, jet-set lifestyle.

The Church is also distinguishable from "the world’s ultra-high-net-worth" in that these folks will, sooner or later, shuffle off their respective mortal coils, whereas the Church, as an institution - a religious and charitable one at that - will continue on indefinitely.  So whereas the "ultra-high-net-worth" folks have, at most, years or a few decades to plan out the distribution of their accumulated wealth, the Church must plan for many, many decades ahead.  The calculus is quite different.

I commented on this issue back in 2021, when Jeff Green, a nominal member of the Church and billionaire, made a big news splash by announcing that he was A) resigning his membership in the Church, and B) planning to eventually donate "more than 90 percent" of his wealth before he dies.  I commented at the time:

Quote

I think his criticism of the Church's finances is . . . interesting.  He has amassed for himself a fortune worth billions, and also "worries about the faith’s transparency around its history and finances," but I don't see much in the way of financial "transparency" from him.  So I guess "transparent financials for thee, but not for me" is the way of things

Mr. Green "has pledged to donate 90% of his estimated $5 billion fortune, starting with a $600,000 donation to the LGBTQ-rights group Equality Utah."  Huh.  He is "starting" his philanthropy with a $600K donation, which works out to about .012% of his $5 billion fortune.  I suspect he has done more, but it sure is easy to sit back and second-guess and find fault with his charitable inclinations.  Kinda like how he and so many others have done with the Church.

 

Mr. Green decided "last month" to take the "Giving Pledge, vowing to donate more than 90% of his wealth before or at the time of his death."  Last month.

I admire the sentiment , but the "pledge" allows him to keep his billions for most or all of the rest of his life and then, having lived a life of opulence, give it away "before or at the time of his death."  He reserves to himself his billions, and all the benefits that derive therefrom, but then presumes to judge the Church's handling of its finances.  And unlike him, the Church's wealth is held in trust, and used to benefit the members and the rest of the world.  

There is a strong bit of irony here.  If Mr. Green had divested himself of his billions now, then he would be in a better position to criticize the Church's retention and long-term management of its funds.  Instead, his plan seems to be not a whole lot different from what the Church is doing: managing accumulated wealth with the long-term goal of it going toward worthy causes.  So why is it okay for him to do this with his money (all the while living the life of a literal billionaire), but awful and terrible when the Church does it?

Anyway, back to the article:

Quote

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.

I have been making this point for quite a while relative to the Church.  When an individual or institution holds such vast wealth, it also bears some moral responsibility to ensure that this money is managed well.  That obligation includes vetting the recipients of charitable donations, as opposed to taking the "Just Throw Money At It!" approach espousned by some critics of the Church.  These folks don't seem to have much of an answer to this issue.  But then, armchair quarterbacking isn't exactly a tough gig.

Quote

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.

"{T}here is a palpable frustration with the current vectors available for giving away large sums of money ... responsibly and effectively."

I think the Church also faces this issue.  And yet the only thing the critics seem to be saying, relative to charitable/humanitarian giving, is "Just Throw Money At It!"

Quote

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;

Many of the world's richest have "the stated objective" of philanthropy, but are "struggling to find impactful areas where they can make gifts in the scale of tens of millions."  I think the Church is encountering this same difficulty.

I think the Church is even more cautious in involving itself with this sort of "tens of millions"-style "mega-philanthropy."  I suspect the risks of such donations being wasted through corruption, graft, incompetence, etc. are very high.  So the Church tends to focus on more tractable and "vettable" charitable/humanitarian efforts, and encounters difficulties in finding sufficient "vectors" to effectively and efficiently utilize donations from the Church.  

This is not an idle concern.  MacKenzie Scott is, in the end, the sole arbiter of where her own money goes, and it's highly unlikely that anyone will rake her across the coals if and when a charitable concern to which she donates ends up being corrupt, ineffective, etc.  In contrast, the Church's wealth is sacred, the "Widow's Mite," and it is held in trust, such that those charged with administering it are considerably more "accountable" for the use of these funds as compared to Scott, Bezos, etc. 

Quote

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.

Huh.  I wonder if the Church's critics take exception to "mega-wealthy" folks donating to colleges and universities.  

Quote

“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.” 

{W}e want to make sure that we are getting {our wealth} into the hands of responsible organizations that will be good stewards of our giving."

Yep.  The Church of Jesus Christ of Latter-day Saints also wants this.  The Church funds CES and PEF programs, but these are not really comparable to "academic institutions" with massive managed endowments.

Quote

“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.” 

...{W}ithin the minds of many of the world’s richest dwell two distinct goals: charitable giving and making money—or more succinctly, philanthropy and investing. The latter is clearly about generating a return on capital while the former is about helping those in need or leaving a legacy to be remembered.

The Church also has these objectives, but I they are not really "distinct" from each other.  The Church's "making money" objective is not intended to facilitate profligate living by a fortunate few (as is the case with the mega-wealthy), but is instead intended to generate wealth to be held in trust for the eventual and long-term benefit of the Church's members and neighbors.

The next part of the article is pretty interesting:

Quote

{T}hese two disparate goals are beginning to meld with surprising effects in a new discipline called “philanthropic private equity.”

Suppose there is a large real estate developer that wants to build a 300-unit apartment rental complex in northern New Jersey, attracting young families of police officers, teachers, government workers and other working-class families. Because of the elevated cost of borrowing coupled with the high cost of land, the only way a major developer can bring the project to fruition is by charging market rates. And in an area like a New York City suburb, often that could mean charging rents of around $4,000 a month for a 3-bedroom, 1,200-square-foot family unit. But paying $48,000 a year in rent for a single-parent family of three making less than $100,000 a year before taxes is untenable. 

Now, suppose a large family foundation committed to addressing the country’s affordable housing crisis agrees to extend an interest-free, $100 million loan to the project in exchange for a commitment from the developer to lower the monthly rent for every unit in the development from $4,000 to $2,500 in perpetuity. In this simplified example, the developer can build a housing complex that will target working-class families while guaranteeing the economic return needed to satisfy its shareholders. Moreover, the developer will be able to bring the project online much faster than with any government-assisted program while the family foundation is able to deploy its capital to spur the creation of more affordable housing. It’s a classic win-win situation. 

I sure hope this can end up as a "win-win situation."  I think there may be a number of problems arising from this well-intentioned effort.  What happens when the developer is paid off and moves on?  Who is left to manage these apartments with guaranteed "in perpetuity" rents that are substantially below market value?  And who are the tenants that get these slick deals?  And what happens if a "working class" family ends up "moving on up" in its finances, but still wants to live in the cheap housing?  Wouldn't the natural incentive be for these folks to stay where they are, thus taking up facilities that are intended to help those of more modest means?  What about those on the waiting list?  And will there be sufficient monies to maintain these facilities?  How many of the problems endemic in, say, New York's "rent control" scheme will end up manifesting in this supposed "win-win situation"?

Quote

In this scenario, the philanthropy is the interest-free loan, and the original capital is eventually returned to the family foundation for further investing. Over a 25-year period, one family foundation might be able to recycle that same $100 million of philanthropy multiple times and, in doing so, facilitate the creation of thousands of new units of affordable housing. 

Of course, real-world deals are far more complex, but the salient idea here is that philanthropic private equity is in effect blending the otherwise disparate worlds of giving and investment into one structured financial product that delivers a good to communities that need it most.

This sounds like a great idea, but I wonder how it would turn out in real life.

I also wonder if this model would work for housing other than rental apartments in urban centers.

I also wonder if this model could work to address home ownership, rather than residential rentals.

Quote

From his sun-drenched office in Jupiter, Fla., Merton Capital founder Sean Davis has become a tireless evangelist for the benefits of philanthropic private equity. A former dealmaker at private equity giant Advent International, Davis knows the space like the back of his hand. However, after years of grinding, a desire to find more purpose in life eventually led him to the nonprofit world where he saw the daily toll that mission-driven charities went through just to keep the lights on.

“There aren’t many people I can think of—none maybe—that have traded a career in high finance for the world of nonprofits,” Davis told Observer. “But I quickly realized that many of the issues that not-for-profits were trying to solve through charitable giving were due to a lack of scale, or in other words, inadequate infrastructure.”

I hope he's right about this (as opposed to attributing current inadequacies to human frailties which seem to often spring up in the non-profit sector).

Quote

“To effectuate massive change, we need large amounts of capital. And philanthropic private equity is an approach that enables us to invest at scale through large private companies,” Davis said. 

He soon discovered that the idea of investing philanthropy into small private companies had been around since the 1960s through IRS-approved program-related investments, or PRIs. The Rockefeller Foundation, for example, has been investing in small private companies through PRIs for decades. But surprisingly, only 2 percent of foundations have ever used this mechanism and most were small scale in nature.

“I realized that this wasn’t a new idea at all. But no one was using this type of structure to scale their investments to the level that I was accustomed to when I was working in private equity,” Davis said. “And that was my lightbulb moment. The impact from larger philanthropy being deployed via large private companies could finally move the needle on a whole array of issues from poverty to climate change. We can use the tools of private equity to bring tremendous good to bear relatively quickly.”

Davis went on to form Merton Capital, a boutique philanthropic private equity firm that specializes in sourcing and executing projects across a range of industries using mega-philanthropy. Merton just completed its first workforce housing deal in Florida.

I hope this works out.  And I hope it can be scaled up.

Quote

“It’s still very early days for philanthropic private equity but there are many of us who believe it is an industry that could scale quite quickly,” said Justin Reizes, a former partner at KKR, the firm broadly credited for pioneering the modern private equity sector. He helped build and lead KKR’s Asia practice from the late 1990s to the mid-2010s. 

“I think it’s safe to say that within the next five years we will see a lot of deals across many sectors getting done this way,” Reizes told Observer. “Many of the planet’s most intractable problems can be solved with the philanthropic capital from some of the world’s largest family fortunes. There are billions, if not trillions of dollars of philanthropy sitting on the sidelines, ready to be deployed.”

While nearly everyone Observer spoke to for this article agreed philanthropic private equity is in its early stages, no one can put a precise number on how many deals have been done to date or the level of investment that is currently flowing through the space. The reality is that private equity is already known for being among the most secretive industries in the world and philanthropy can be at times equally if not more hush-hush. 

“It’s something that no one is tracking yet,” added Reizes. “We hear about things here and there, but it’s all very new. There is a lot of interest in the space to be sure and awareness is growing, but data is still hard to come by. But there is no doubt that philanthropic private equity gives philanthropists the ability to give at a level and speed that reflects their ambitions.”

With the world’s most vexing problems becoming increasingly harder to solve with each passing year, the timing for philanthropic private equity couldn’t be coming at a better time.

Interesting stuff.

Thanks,

-Smac

[MiserereNobis]

Quote

“For many ultra-high-net-worth individuals and families, giving wealth away is fraught with stress and anxiety,” observed Mark Reed

Poor ultra rich people, suffering such stress about how to give away money that they won't even miss.

It breaks the heart.

Edited November 14, 2023 by MiserereNobis

[LoudmouthMormon]

I'm reminded of Mother Theresa.  A while ago, I wanted to learn more about her, and one of the ways I learn more about people or things, is find who is mad or critical of them, and look at their arguments.   Sure enough, there were folks mad at Mother Theresa.  Their criticisms seemed to amount to "she didn't use her power and influence in the way that I think she should have".   

If I remember correctly, her material possessions at the time of her death amounted to  2 pairs of shoes, 2 simple sets of clothing, and a bucket.  And still people were mad at her.

Envy, jealousy, lust for power.  Nasty stuff, my friends.

Edited November 14, 2023 by LoudmouthMormon

[Calm]

2 hours ago, MiserereNobis said:

Poor ultra rich people, suffering such stress about how to give away money that they won't even miss.

I think if they are worried about making problems worse for people through careless giving, that is a valid concern.  Making a wise charitable gift can be as difficult as making a wise investment. Saying it that way is a bit over dramatic, imo. 

[smac97]

2 hours ago, MiserereNobis said:

Quote

“For many ultra-high-net-worth individuals and families, giving wealth away is fraught with stress and anxiety,” observed Mark Reed

Poor ultra rich people, suffering such stress about how to give away money that they won't even miss.

It breaks the heart.

I have had a few clients who are worth a lot of money.  I actually do feel sorry for them, as their days are spent obsessing over protecting what they have (from lawsuits, people wanting a handout, etc.) and growing it.

I don't know any "mega-wealthy" people, but I suspect that giving away large sums of money, particularly when a person wants to be conscientious about it, can be as stressful as any other major decision in life.

Thanks,

-Smac

[Amulek]

I'm good with stress and am willing to provide my routing number to anyone who finds dealing with extreme wealth to be bothersome...