Winter concludes in her article “How the Mormons Make Money,” June 13, 2012, that: “In some cases money flows in the opposite direction, from the church’s treasury to the businesses.” Two CEOs for LDS business entities make interesting admissions regarding the interplay between Church and business funds. In an apparent response to Winter’s questions about that relationship, CEO of LDS subsidiary, Desert Management Corporation (DMC), Keith McMullin, admits: “From time to time, if there is a particular need, there would be some monies available [from the church treasury fund] but fortunately over the years that has not been the case very often,” says McMullin. “If you have a particular reversal in an enterprise, you need to have some additional cash flow until you work through a difficult time. I’ll give you an example, [sic] we’re going through one right now: It’s called a recession.” Winter notes that “McMillin declined to elaborate on whether the church has been bailing out subsidiaries.”
Later in the article, Sheri Dew, CEO of the DMC subsidiary, Deseret Book, admits that a decade ago the business was “in the red,” and that ultimately she had to ask for help from the Church. “Asking your prophet to fund a flailing business can be stressful,” she says.
The practice of using money from Church donations to fund business enterprises, even if a temporary or occasional transaction, and whether these transactions are loans or rise to the level of commingling, is reminiscent of the early days of Mormonism. Nineteenth century LDS prophet-presidents Joseph Smith and Brigham Young used LDS Church funds as their own, or liberally borrowed interest free, from those accounts. Clearly, in modern Mormonism, there is no bright line test for what can and cannot be done with donated funds. Recently the Church has made clear on its donation receipts that once the donations are received, “…all will be used at the Church’s discretion to further the Church’s overall mission.” Below are scanned copies, provided by a member of http://www.postmormon.org of the current receipt (right) and the prior (left).
Noticeably absent in the revised receipt are line item entries for specific donations to temple building, education and scripture funds. Does this mean the Church will no longer be spending money on these projects? If so, what exactly is its current ‘overall mission’? The new receipt advises: “Though reasonable efforts will be made globally to ensure that tithing is used as designated, all donations become the Church’s property and all will be used at the Church’s discretion to further the Church’s overall mission.” Previously, the limiting language at the end of the receipt referred only to tithing donations. It read: “All donations to the Church’s missionary fund become the property of the Church to be used at the Church’s sole discretion in the missionary program.”
The non-profit part of the LDS Church is organized and receives tax-exempt benefits under IRS code section 501(c)(3). Among the many limitations of a non-profit organization, such an entity cannot receive and distribute income that inures to the benefit of any one private individual, or participate directly in political matters. The Church has managed to avoid crossing these lines, but just barely. Their open encouragement of members’ participation in support of California Proposition 8, banning gay marriage, is one recent example.
The LDS Church seems to be walking a fine line between participation in ordinary activities, the type expected by a religious organization, and using donations for profit-making enterprises. Historically, most members of the LDS Church hierarchy can be traced to a select number of families, whether by blood or marriage. Instead of benefitting LDS average congregants, LDS business enterprises benefit only these privileged families in the Mormon machine; some refer to this old Mormon family monopoly on business (especially in the State of Utah) as the Mormon Mafia. Others have referred to entering Utah for business or even travel purposes as going behind the Zion Curtain.
One wonders how frequently, and to what extent, LDS Church money-making enterprises are in fact supported by faithful members’ tithes. Couldn’t most all of these successful business ventures be traced back to initial tithing seed money? Most certainly the primary, if not sole, source of income for the Church treasury account is from LDS member donations.
Compare this set-up to the duties professionals have to their clients: Attorneys, CPAs and real estate brokers all have a duty to separate client money from their business accounts. Money in client trust accounts can only be used for exactly what the client has specified. Never can the business income for the profession be mixed with the client’s money. Commingling is grounds for severe discipline under each professions’ code of ethics. As Park B. Romney, former CFO of a publicly held corporation and tax accountant has commented: “In the United States, organized religion becomes a license to steal, due to the unwillingness of oversight authorities (I.R.S., F.B.I., et. al.) and, in many cases, the judiciary, to hold Church leaders to the strict standards of fiduciary accountability which apply to business professionals.” When you use funds intended to promote spiritual growth for commercial gain, even if used only occasionally, like DMC CEO McMullin seems to have admitted, it is difficult to justify how the City Creek Mall or the profits from the other LDS businesses benefit the average Church member.
Most LDS members believe tithing money is used for the poor, for building chapels and temples, perhaps for religious education. I think many would be surprised to learn that it can be used for strictly financial enterprises like those run by DMC, the Church’s for profit umbrella. I suppose this is where building up the Kingdom of God on Earth is mentioned and the fine line between spiritual and temporal prosperity is blurred. But the question begs to be asked: does the Kingdom of God really need a billion dollar shopping mall, hunting preserves and a new hotel in Maui? As a couple of my Facebook friends have pointed out, wouldn’t the subjects in the Kingdom of God (on Earth) be better served if the Church built and supported medical clinics and homeless shelters? Sadly, the duty of Church leaders to make appropriate use of members’ contributions is blurred when those leaders convince the members that virtually anything they deem appropriate, in an environment of no real accountability, is, therefore appropriate, simply because the leader said so. Trust and faith in what will be done to build the Kingdom of God is mandatory; there is no oversight committee among the average LDS membership.
Certainly, using Church treasury money benefits those who work directly for the businesses; these people and their families are likely to be active members of the Church. This money is also used to pay salaries of upper echelon LDS leaders. (Note: some lay members of the LDS Church don’t realize that LDS general authorities are indeed paid a salary. This is most likely due to the leaders’ constant emphasis that “We have a lay clergy.” And while this is certainly true at the lower levels, from hard-working bishops to stake presidents, it is not true when referencing the first presidency, the twelve apostles and the two quorums of the Seventies—over 100 men. According to insiders who work at the Church office building—these men are all paid six figure salaries).
Non-profit organizations are required to return at least 5% of their gross receipts to charity. In the Church’s case, some of that 5% requirement is returned to the local wards, to provide financial relief for members of that particular ward. But according to several former LDS ward clerks who have posted their experiences on websites for former Mormons, most wards raise anywhere from $250,000 to $500,00 per year, yet it was quite common for these same wards to receive back as little as 1% of the amount they donated to Church headquarters in Salt Lake.
The LDS Church is not required, nor does it voluntarily disclose, how its income from member donations is spent. Unfortunately, unlike the relationship between a professional and his client, Mormon leaders, both business and ecclesiastical, act as if they have no legally recognized fiduciary duty toward their flock. In this writer’s opinion, that matter of law should be clarified and changed. If it were, organized religion would no longer be a license to steal and Mormons would have a greater voice in the determination of how their hard-earned donations are spent. If it were, the bright line test might replace the fine line equivocal excuse.
