A whistleblower report made public this week alleges that leaders with The Church of Jesus Christ of Latter-day Saints improperly stockpiled over $100 billion of member tithes and donations meant for charity, allegations church leadership said Tuesday are based on “limited information.”
A former church employee submitted the complaint to the Internal Revenue Service suggesting that the religious organization has built an investment portfolio for years, and allegedly without following federal tax rules.
“They are saying to themselves: ‘Because we don’t have to disclose ins, outs or growth anymore, we can now do whatever we want, and it isn’t wrong since ‘there can be no accuser’” the whistleblower said in documents submitted to the IRS.
In response to the lengthy complaint, the First Presidency issued a statement Tuesday reassuring members the majority of funds are used “immediately” for education, humanitarian, missionary efforts and construction of meetinghouses and temples.
“We take seriously the responsibility to care for the tithes and donations received from members,” the statement read.
Church leaders explained a portion of income is “methodically safeguarded” for a future reserve per a doctrine taught in the Bible titled the “Parable of the Talents.”
“Claims being currently circulated are based on a narrow perspective and limited information,” the First Presidency stated. “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 religious organization reportedly receives $7 billion annually in member donations, according to the 74-page whistleblower report submitted to the IRS.
No additional information about the religious organization’s budget is available as church leaders have long refused to disclose specific details on spending or charitable work. According to a summary of financial information released by the church in 2018, “Although the Church doesn’t publish the details of its finances for the public, it provides all financial information required by law.”
Historian D. Michael Quinn claimed that the LDS Church received $33 billion in member contributions and $15 billion from for-profit business in 2010. He believed much of the money is spent operating church buildings, temples and programs, according to the Associated Press.
David A. Nielsen, 41, who created the whistleblower report, worked until September as a senior portfolio manager at the church investment division Ensign Peak Advisors, Inc.
He stated in a resignation letter to the company that he could no longer work at the nonprofit division after members of his family left the religion and encouraged him to leave as well.
His twin brother, Lars P. Nielsen, shared the complaint and other documents with the Washington Post who released the story on Monday.
“Having seen tens of billions in contributions and scores more in investment returns come in, and having seen nothing except two unlawful distributions to for-profit concerns go out, he was dejected beyond words, and so was I,” Lars Nielsen said in a statement to the Post.
The allegation states the church misled members and potentially broke federal tax law by using supporting organization Ensign Peak Advisors (EPA) to set aside about $1 billion a year.
“EPA’s job is to help the COP (Corporation of the President) look smaller and keep out prying eyes, so members won’t lose confidence should they find out that the senior apostles can’t figure out how to use $100+ billion to accomplish Christ’s mission,” the whistleblower stated in the complaint.
Ensign Peak Advisors operates as a tax-free nonprofit as long as the money is used for religious, education or charitable purposes.
In the report, David Nielsen argues the church has not followed rules outlined under 501(c)(3) rules by refusing to directly fund those three categories in more than two decades and thereby owes billions in taxes to the IRS.
He also stated he wants a cut of the money as part of a reward the IRS offers for whistleblowers should the information be investigated and action taken.
According to the National Whistleblower Center, IRS 211 claims — under which the accusations made against Ensign Peak Advisors fall — are signed under oath and penalty of perjury.
Among numerous call-to-action items by David Nielsen to the IRS are additional requests to Congress that ask it:
- “Require each 501(c)(3) classified as a religion (or an integrated auxiliary to one) above a threshold size to disclose and file to the IRS everything that any typical 501(c)(3) must disclose and file — including distributions or lack of distributions.”
- “Classify supporting organizations to (religious) public charities above a threshold size as private foundations for the purposes of regulating minimum distributions and reporting.”
- “Protect smaller, well-behaved religious organizations from cumbersome regulations or additional red tape that seem to be necessary for behemoth, unchecked religions.”
In 2018, the LDS Church released summary information about its financial dealings, “to help clarify how it handles its finances.” In that statement, the church said that pulling mainly from tithes and offerings from church members, the “church follows three main principles to govern its financial resources and ensure that work continues worldwide: it works within a budget, avoids debt and saves and invests for the future.”
That statement also outlined several of the areas that are financed by church funds, including the support and maintaining of 30,000 congregations, chapels and meetinghouses around the globe; the operation of temples, family history center, institutes and seminaries, storehouses, employment centers and universities and other higher education initiatives. They also oversee the proselytizing and service work of 70,000 missionaries worldwide, according to the 2018 statement.
The 2018 statement also said that “the church pays all taxes required by law” in each nation in which it has a presence and that to avoid misuse of funds, all expenditures are approved by the First Presidency, the Quorum of the Twelve Apostles and the Presiding Bishopric.
The church has also stated that it has spent billions of dollars to help with welfare and humanitarian needs around the world — $2.2 billion in 197 countries since 1985 — and that “as the church grows, increasing financial means are needed to continue to preach the message of Jesus Christ. The Church continues to maintain and build its reserves in anticipation of this growth.”
The LDS Church owns ranches, real estate and other for-profit businesses like the $1.7 billion City Creek shopping center in downtown Salt Lake City.
The Utah-based faith has more than 16 million members worldwide who are encouraged to give 10% of their income for what is known as “tithing.”