The LDS Church's Billion Dollar Investments

Feb 27, 2023

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The news hit early this week about a hefty fine levied by the US Securities and Exchange Commission against the LDS Church. The LDS Church has a huge investment portfolio and has violated some reporting requirements. This points to the vast wealth of LDS Church. Just how wealthy are they? How was this wealth obtained? How is it used? These massive investments have created some problems inside and outside of the church.

Best source on this: https://www.sltrib.com/religion/2023/02/21/lds-church-investment-firm-agree/

Tithing in Mormonism

Active Mormons are expected to pay one-tenth of their income to the LDS Church
Access to temples depends on paying a full tithe
Members meet with local church leaders annually to verify their tithe-paying status
This generates a large amount of income for the Church
Again → impossible to verify
One study (2012) based on countries that require more disclosure than the US
Estimated tithing income of $7 billion / year
Used to build and maintain meetinghouses
To build and maintain temples
To support the global missionary program
To help needy people around the world
2.3 billion since 1985
May seem like a lot → until we see later how much $$ the Church has
To educate Church members - seminary, institute, universities
To carry out the general administration of the Church
Many LDS will offer tithe-paying testimonies
When paying a full tithe was a sacrifice, God provided
Others offer testimonies of abuse
Counseled to take out a 2nd mortgage in order to tithe / or other drastic measures
Understanding the tithing culture & expectations is a key part of making sense of the news that came out this week about LDS investments

Creation of a “Rainy Day” Fund

LDS Church was not always wealthy
In 1960’s = started settling aside $$ from contributions for future contingencies
In late 1970’s → investments estimated at around $1 billion
Ensign Peak Investors established in 1997 as agent / arm of the LDS Church to manage investments
Employs around 70 people
BTW: you have to be an active member in good standing to work there
The rainy-day fund has grown beyond what anyone imagined
In 2012, LDS investments estimated at about $40 billion
Much more today

LDS Financial Wealth Exposed

For decades, financial analysts have speculated about just how wealthy the LDS Church is
But those are only outside estimates → without full data
Bc the Church is very secretive about its financial dealings
2019 - a whistleblower report filed with IRS
Former Ensign Peak employee = David Nielsen (a senior portfolio manager)
Filed along with brother Lars Nielsen
Lars went farther → gave the info to the Washington Post
Revealed in this filing = Church’s investment fund worth as much as $100 billion
$40 billion in US stock
Over $1 billion in Apple, $1B in Microsoft, $B in Alphabet
Also: Chevron, Visa, JPMorgan Chase, Home Depot, etc.
Timberland in Florida panhandle
Investments in prominent hedge funds
For all we know, the Church has other assets not managed by EP
Unknown how much foreign investment it might have
That may not be required to report by SEC rules

Problems with the U.S. Government

Earlier this week, SEC fined LDS Church and Ensign Peak $5M in penalties
Failure to properly disclose past stock holdings
Going to great lengths to deliberately obscure their investment portfolio
Quote from SEC:
“The church was concerned that disclosure of its portfolio, which by 2018 grew to approximately $32 billion, would lead to negative consequences. To obscure the amount of the church’s portfolio, and with the church’s knowledge and approval, Ensign Peak created 13 shell LLCs, ostensibly with locations throughout the U.S., and filed forms 13F in the names of those LLCs rather than in Ensign Peak’s name.”
Breaking down what Ensign Peak did
Required to file form annually to disclose the Church’s equity investments: Form 13F
Instead, EP created a number of shell corporations
Could not be traced back to the Church
Completely owned / controlled by EP
Created for sole purpose of preventing public disclosure of the amount and nature of the Church’s assets
Each one filed the required form
Nowhere could anyone see the actual total
This secrecy was out of fear of discouraging members from paying tithing (WSJ 2020)
Practiced this approach to reporting for about 20 years prior to 2019
After whistleblower → been filing correctly
The latest SEC filing = $44B → reports only those investments that must be disclosed by law
Does not reflect the portfolio’s total holdings
The Church’s finances are now also under scrutiny in Canada & Australia

What Members Think

Many don’t see the problem
The church didn’t really do anything wrong; it’s a minor issue like a traffic ticket
The church relied on lawyers; it’s their fault
Believe the church was secretive bc as a big player in markets, it didn’t want to cause market swings
Others: the church didn’t want individual investors to mimic the church’s investment strategy (thinking it inspired?), bc it would not apply to individual investors
Others have raised questions / critiques
Critique #1 = What the $$ could be used for
In spite of overall wealth → yet still heavy-handed tithing techniques
Still ask members to do more and more
Spend very little (proportionally) on caring for needy
Avg $60M / yr
Compared to annual tithing of 7B
Compared to annual investment growth of 7% of 100B
Critique #2 = What the money is actually used for
$1.4 billion for City Creek Mall in SLC
$600K to bail out Beneficial Life Insurance
Two church-owned commercial enterprises
Critique #3 = the LDS Church should pay taxes, or lose its tax-exempt status for using contributions for commercial purposes
A lot of $$ not being spent on its stated charitable purposes
Critique #4 = Hiding the actual amount
Church claims that use of $$ is guided by prayer
Temple recommend question: are you honest in all your dealings?
Undermines credibility of apostles & prophets
Deliberately trying to evade an applicable law → to shield reputation
Mistakes?
The Church’s statement on the matter expresses regret for mistakes made
But this wasn’t a mistake → a deliberate strategy to circumvent reporting requirements put in place for the public good
Sam Brunson, a Mormon who teaches tax law at Loyola U Chicago
“The apparent hypocrisy is potentially harmful in its relationship with its members.”