ST. GEORGE — The Church of Jesus Christ of Latter-day Saints is being accused of hoarding $100 billion in tithes and donations instead of using them for charitable means, thereby violating federal law, in a whistleblower complaint filed by a former investment manager for the church.
The complaint was filed with the Internal Revenue Service in November by David A. Nielsen, who worked for the church’s investment division, Ensign Peak Advisors, until September 2019, as reported by The Washington Post.
The Post story ran Monday, reporting that Nielson, with the help of his brother Lars. P. Nielson, wrote and submitted the complaint to the IRS. Neilson accuses the church of stockpiling billions of dollars it has not paid taxes on and asked the IRS to strip the church of its tax-exempt status.
Whistleblowers can receive a cut of the unpaid taxes as a reward from the IRS for reporting tax-related offenses. According to The Post, Neilson is seeking a reward from the IRS. Whistleblower complaints are signed under penalty of perjury.
Lars P. Neilson took the story to The Post, who told the newspaper his brother had asked him to write an expose on his former employer.
The complaint further alleges Ensign Peak Advisors hasn’t directly funded any charitable, religious or educational endeavors in 22 years, as reported by The Post.
It also alleges that Ensign used money collected from church tithes and donations to bail out two church-run for-profit businesses – an insurance company and a shopping mall – between 2009 and 2013.
In response to the allegations, top leaders of the church said, “Claims being currently circulated are based on a narrow perspective and limited information.”
In his complaint, Nielson estimated the church takes in $7 billion annually, with $6 billion going to operating costs and $1 billion going to Ensign which puts some of that into investments.
Ensign is registered as “a supporting organization and integrated auxiliary” of the church, according to The Post report. This allows it to function as a nonprofit and thus largely operate tax-free.
Like other faiths, LDS members are encouraged to pay 10% of their income to the church in the form of tithing. They are also encouraged to offer donations monthly through “fast offerings.” Other avenues of donation can go to humanitarian aid projects, the church’s missionary program, education, temple building and so on.
Church leaders have long said the tithes of the church are considered “sacred funds.”
In the wake of The Post’s story, the First Presidency, the governing body of the LDS church, released the following statement:
We take seriously the responsibility to care for the tithes and donations received from members. The vast majority of these funds are used immediately to meet the needs of the growing church including more meetinghouses, temples, education, humanitarian work and missionary efforts throughout the world. Over many years, a portion is methodically safeguarded through wise financial management and the building of a prudent reserve for the future. This is a sound doctrinal and financial principle taught by the savior in the parable of the talents and lived by the church and its members. All church funds exist for no other reason than to support the church’s divinely appointed mission.
Claims being currently circulated are based on a narrow perspective and limited information. The church complies with all applicable law governing our donations, investments, taxes and reserves. We continue to welcome the opportunity to work with officials to address questions they may have.
The church’s First Presidency’s consist of President Russell M. Nelson and his two counselors, Presidents Dallin H. Oaks and Henry B. Eyring.
The church’s online newsroom also features a Q&A section regarding its financial practices which can be found here.
On the website, it states that church members are taught to build up a reserve of money by saving a portion of their income, which is in keeping with the church’s long held practice of teaching members to be self-reliant and prepared in case of emergency or hardship, such as natural disaster or loss of employment. The church states it does the same on an institutional level.
From the section titled “Church Reserves”:
The church applies this same principle in its own savings and investments. In addition to food and emergency supplies, the church also sets aside funds each year for future needs. These funds are added to church reserves, which include stocks and bonds, taxable businesses, agricultural interests and commercial and residential property. Investments can be accessed in times of hardship or to meet the emerging needs of a growing, global faith in its mission to preach the gospel to all nations and prepare for the second coming of Jesus Christ (see Gérald Caussé, “In the Lord’s Way: The Spiritual Foundations of Church Financial Self-Reliance,” Church Newsroom, Mar. 2, 2018).
Some investments serve a dual purpose. For example, Church President Gordon B. Hinckley stated that “we have felt that good farms, over a long period, represent a safe investment where the assets of the church may be preserved and enhanced, while at the same time they are available as an agricultural resource to feed people should there come a time of need” (“The State of the Church,” Ensign, May 1991, 54). Another example is the church’s participation in the development of downtown Salt Lake City. With its investment in City Creek (a mixed-use development that includes retail space, residential units, office space and parking), the church enhanced the environs of Temple Square and underscored a commitment to Salt Lake City, Utah, where it is headquartered. The investment increased local economic activity during a financial downturn and attracted visitors and residents to Salt Lake City’s historic downtown.
The church’s reserves are overseen by church leaders and managed by professional advisers, consistent with wise and prudent stewardship and modern investment management principles. Ultimately, all funds earned by the church’s investments go back to supporting its mission to invite souls to come unto Christ.
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