Published by the Freedom From Religion Foundation, Inc. FFRF.org

Whistleblower: LDS Church misled members on $100B tax-exempt fund

Vol. 37 No. 01 Jan/Feb 2020
Cash in praying hands                                                                                                                                                                                                                                                                                                         

The Washington Post reported in December that the Church of Jesus Christ of Latter-day Saints has amassed about $100 billion that is supposed to be used for charitable purposes. A former investment manager for the church made the allegations in a whistleblower complaint to the Internal Revenue Service in November.

The confidential document accuses church leaders of misleading members and possibly breaching federal tax rules by hoarding donations instead of using them for charitable works. The Post reports that the complaint was filed by David Nielsen, a Mormon who worked until recently as a senior portfolio manager at the church’s investment division, Ensign Peak Advisors, which is based near the church’s headquarters in Salt Lake City.

Nonprofit organizations, including religious groups and FFRF, are exempted in the United States from paying taxes on their income. Ensign is registered as a supporting organization of the LDS Church, which permits it to operate as a nonprofit.

Nielsen urged the IRS to remove the church’s tax-exempt status and alleges that Ensign could owe billions in taxes. (Rewards to whistleblowers are offered from the IRS if it recoups any money.)

According to the Post story, the Mormon church collects about $7 billion annually in contributions from members. About $6 billion of that is used to cover operating costs and the remaining $1 billion is transferred to Ensign, which invests it to generate returns.

The complaint estimates the portfolio has grown from $12 billion in 1997 to about $100 billion.

Ensign has not directly funded any religious, educational or charitable activities in 22 years, the complaint also stated.

“If you have a charity that simply amasses a war chest year after year and does not spend any money for charity purposes, that does not meet the requirements of tax law,” said Philip Hackney, a former IRS official who teaches tax law at the University of Pittsburgh and was hired by the Post to analyze the whistleblower documents.