Donated Tithing Funds vs Earnings on Invested Tithing

The church repeatedly states that no tithing money is used for its business purposes, like funding the City Creek Center or bailout money for church-owned insurance company, Beneficial Life. The church is surprisingly secretive about finances and has not publicly disclosed any financial statements in the United States since 1959, that’s 65 years and counting.

The few statements when church leaders or representatives have given any detail to the use of sacred tithing funds (all of which are donations from members of the church) have been clear that no tithing money has been used for any for-profit endeavors.

“Not one penny of tithing goes to the Church’s for-profit endeavors. No tithing went toward City Creek Center.” - Keith B. McMullin, Head of Deseret Management Corporation, Previously the Second Counselor in the Presiding Bishopric | wasmormon.org — “Not one penny of tithing goes to the Church’s for-profit endeavors. No tithing went toward City Creek Center.” – Keith B. McMullin, Head of Deseret Management Corporation, Previously the Second Counselor in the Presiding Bishopric

They have clarified in some examples that when the church spends money they use the interest or proceeds from investments of surplus tithing. They are sure to make a clear distinction that this is not the same thing. This is how they have justified paying senior leadership a “living allowance” for the past 100+ years.

"There is not one of the general authorities in the Church that draws one dollar from the tithes of the people for his own use. Well, you may say, how do they live? I will give you the key: ... Tithing funds were invested in these institutions, for which the Trustee-in-Trust holds stock certificates, which are worth more today than what was given for them; and the dividends from these investments more than pay for the support of the general authorities of the Church. So we do not use one dollar of your tithing." - Joseph F. Smith, LDS Church President, 1907 General Conference | wasmormon.org — “There is not one of the general authorities in the Church that draws one dollar from the tithes of the people for his own use. Well, you may say, how do they live? I will give you the key: … Tithing funds were invested in these institutions, for which the Trustee-in-Trust holds stock certificates, which are worth more today than what was given for them; and the dividends from these investments more than pay for the support of the general authorities of the Church. So we do not use one dollar of your tithing.” – Joseph F. Smith, LDS Church President, 1907 General Conference

More recently, church president Gordon B. Hinckley stated during General Conference that the church was investing in the City Creek Center development but assured the membership that no tithing funds would be used, but funds from commercial entities owned by the church and the earnings of invested reserve funds. This sounded nice, and it was years before the immense size of these “reserve funds” leaked. While perhaps the statements could be argued as true, even the investment firm that manages these reserve funds treats the dividends and proceeds of invested tithing as tithing.

“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.” - President Gordon B. Hinckley | General Conference April 2003 | wasmormon.org — “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.” – President Gordon B. Hinckley | General Conference April 2003

Differences Between Invested Donated Funds and Profits of Investments

When a statement says “no donated money was used” to pay for something, but the earnings from invested donated money were used, it could be technically accurate but it’s also misleading. The original donated funds (the principal) were not directly used; instead, the profits or income generated from investing those funds was. But the profits weren’t possible without the principle. For donors and the public, the distinction between the donated funds and the profits derived from them is not clear or meaningful. The statement gives the impression that donations played no role in funding these expenditures, even though the earnings from those donations were the source of funding.

Even apologists agree that the earnings on the invested tithing funds are being used for commercial projects. They point to Hinckley’s statement to defend that these funds are not the same thing.

In the April 2003 general conference, President Gordon B. Hinckley explained “tithing funds have not and will not be used to acquire this property. Nor will they be used in developing it for commercial purposes.” Instead, “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.” Multiple statements were subsequently made reinforcing the fact that tithing funds would not and were not used for the development project.
Some claims are made that tithing really was used because some of the money came from earnings on invested reserve funds, which funds were set up using tithing donations. However, financial documents have shown that only earnings on invested funds, not the original funds themselves, were used to finance the development project.
FAIR, City Creek Center in Salt Lake City: Did the Church use tithing funds to finance the purchases and buildings?
https://www.fairlatterdaysaints.org/answers/City_Creek_Center_in_Salt_Lake_City

Donors are told their contributions are used for specific purposes or causes. Using the proceeds from investments of their donations feels like a circumvention of their intentions, particularly since they were not informed or aware of such financial practices. While the technical accuracy of such statements is debatable – at best a technical rationalization, and at worst a deliberately misleading statement, the spirit of transparency is compromised if donors are not fully aware of how their funds are managed and used. The distinction between invested donated funds and the profits generated from them is real, but when making statements about the use of money, clarity and transparency are key. Organizations need to be upfront about both the investment of donated funds and the use of any proceeds to maintain trust and integrity.

FAIR references the court case between James Huntsman and the LDS ~~Church~~ Corporation, where the court first determined that the earnings of invested tithing were used rather than tithing itself. But since then, the case has been appealed with additional information provided by whistleblower David Nielson that the church-owned investment company, Ensign Peak Advisors treated the tithing donations and the earnings on invested tithing all as the same thing.

Tithing Principal and Earnings The Same

During my employment at Ensign Peak Advisors, senior leadership and other employees referred to and revered all funds as “tithing” money, regardless of whether they were referring to principal or earnings on that principal. Tithing donations from the Church’s members were commingled with earnings. Every penny was referred to as the “widow’s mite.” - David Nielsen, former Senior Portfolio Manager, Ensign Peak Advisors, Whistleblower | wasmormon.org — During my employment at Ensign Peak Advisors, senior leadership and other employees referred to and revered all funds as “tithing” money, regardless of whether they were referring to principal or earnings on that principal. Tithing donations from the Church’s members were commingled with earnings. Every penny was referred to as the “widow’s mite.” – David Nielsen, former Senior Portfolio Manager, Ensign Peak Advisors, Whistleblower

These funds were mixed regularly and all considered to be “the widow’s mite,” in reference to the Bible story of a poor widow donating the equivalent of a penny. As the story goes, Jesus watched people donating from their surplus and compared them to the widow who gave all she had though it was relatively very little, “I say to you, this poor widow put in more than all the other contributors to the treasury. For they have all contributed from their surplus wealth, but she, from her poverty, has contributed all she had, her whole livelihood.”

The church investors using this widow’s mite reference it’s significant because they consider these funds to be sacred as the church requires every member to pay a teen percent tithing on their income. Failure to pay this results in being deemed unworthy to enter the temple. The church requires the poor to pay tithing before buying food for their family, and before paying their rent. Then the church uses this sacred donation to benefit their for-profit business deals. It certainly does not seem to align with what Jesus would value.

Full Declaration of David Nielsen

I, DAVID A. NIELSEN, declare as follows:
The facts stated herein are stated of my own personal knowledge and, if called and sworn as a witness, I could and would testify competently thereto.
From 2010 until 2019, I worked for a company called Ensign Peak Advisors,Inc. (“EPA”). EPA is an entity that was established to invest money on behalf of The Church of Jesus Christ of Latter-day Saints (the “Church.”)
My position at EPA was Senior Portfolio Manager. Among myresponsibilities was managing all aspects of the Emerging Market Debt fund (portfolio as large as ~$800mm net asset value at one point), among other things.
In my position at EPA, I had scores of meetings, both formal and informal, with Roger Clarke (EPA’s President and Managing Director), Robert Nydegger (EPA’s former Head of Fixed Income and later its Chief Investment Officer (“CIO”), Richard Willes (Head of Fixed Income), Michael Connors (Head of Fixed Income), and other persons at EPA. Through these meetings and other communications with EPA’s senior leadership, and my own responsibilities at EPA, I obtained an understanding of EPA’s operations.
According to what the senior leadership of EPA informed me, in 1997 EPA was formed and was seeded with tithing money from the Church.
During my employment at EPA, EPA’s senior leadership and other EPA employees referred to and revered 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. Every penny was referred to as the “widow’s mite.”
While I was at EPA, EPA’s funds were administered by a committee known as the Council on the Disposition of the Tithes (the “Council”). The Council was responsible for approving any distributions and/or withdrawals of the tithing funds maintained by EPA.
Based on statements made by EPA senior leadership including in the meeting described below, over a five-year period, the Council approved EPA’s withdrawal of approximately $1.4 billion in tithing funds to pay for the commercial development of the City Creek Mall. The Council like wise approved EPA’s withdrawal of $600 million in tithing funds to bail out a company called Beneficial Life Insurance Company.
In March 2013, I attended a meeting led by EPA senior leadership. EPA’s President Roger Clarke, along with Robert Nydegger, gave a presentation in which they described, among other things, the various ways that EPA had been distributing and/or withdrawing its tithing funds, including in connection with the City Creek Mall and Beneficial Life Insurance Company. Mr. Clarke used a presentation that included what is attached as Exhibit “A,” a true and correct copy of a slide from that presentation titled “Ensign Peak & Portfolio Purposes.” This slide presented by Mr. Clarke includes, among other things, “Examples of withdrawals” that include:
“City Creek: $1,400mm over 5 years”
“Beneficial Life: $600mm in 2009”
Before this March 2013 meeting led by EPA’s President Roger Clarke described above, I and other employees of EPA with whom I spoke were aware of public statements by the Church that no tithing funds would be used for City Creek Mall or other for-profit businesses. When Mr. Clarke made the presentation described above using Exhibit A, I and possibly other EPA employees present asked how the Church’s public statements about no tithing funds being used for City Creek Mall or Beneficial Life could be consistent with Mr. Clarke’s description of how EPA had made “withdrawals” for “City Creek: $1,400mm over 5 years” and “Beneficial Life: $600mm in 2009.” Mr. Clarke responded that two other Church-affiliated entities (Property Reserve, Inc. and Deseret Management Corporation) had received from EPA the $1.4 billion and $600 million, respectively, paid by EPA for City Creek Mall and Beneficial Life, and essentially that, as a result, people would not know EPA was the source of this funding to City Creek Mall and Beneficial Life. Mr. Clarke stated that it was important that people should not know EPA’s role as the source of the funds.
After that March 2013 meeting described above, Mr. Clarke’s presentation and the statements on Exhibit A prompted additional discussions among EPA personnel of whether EPA’s funding of City Creek Mall and Beneficial Life with approximately $2 billion in EPA tithing funds could somehow be reconciled with the Church’s public statements that no tithing funds were used for City Creek Mall or Beneficial Life. Again, all of EPA’s funds were tithing funds and were treated by EPA as tithing funds; every penny was “the widow’s mite.” Based on Mr. Clarke’s statements described above of which I have personal knowledge, it appeared the Church’s public statements were intended to conceal the truth about EPA’s use of tithing funds for City Creek Mall and Beneficial Life.
David Nielsen’s declaration in the James Huntsman lawsuit against the LDS Church, Filed Aug 16, 2021
https://www.scribd.com/document/520543715/David-Nielsen-s-declaration
520543715-David-Nielsen-s-declaration

Ensign Peak and Portfolio Purposes - Exhibit A - David Nielsen's declaration in the James Huntsman lawsuit against the LDS Church — David Nielsen’s declaration in the James Huntsman lawsuit against the LDS Church: Exhibit A | Ensign Peak and Portfolio Purposes

At the end of the day, the question isn’t whether the Mormon church is commercially involved as a corporation, but rather why there has been a lack of straightforwardness about this reality. A more open dialogue on this topic could help align the church’s financial practices with its values of honesty and integrity. Though those are qualities of a church and not a corporation, LDS Corp is showing us what it is made of by behaving like a corporation and not a church. What are your thoughts?

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