In a CBS '60 Minutes' segment on church finances, he missed a comprehensive history of faith (2023)

On Sunday evening, the CBS news program "60 Minutes" aired a segment on the financial assets of the Church of Jesus Christ of Latter-day Saints. The story repeated the widely reported facts about the church's investments and expenses and the criticism of one man, a self-proclaimed "whistleblower" who once worked in church investments.

What the "60 Minutes" segment on church finances and other reports often miss is the extensive and sometimes impoverished history that explains church finances and decision-making today, including the modern history of self-sufficiency that sustains the global church.

Sixty years ago, the church was engulfed in a financial crisis that threatened to become the worst in the history of the religion, a historianHe wrote. It means something for a church with historypast financial problems.

For example, the apostle once secured new loans in New York, hours before the church defaulted on a large payment to a bank in San Francisco. He awoke that morning in despair, aware that the defeat of two banks belonging to the church threatened to wipe out its last deposits. If it had failed, the church's creditworthiness would have been destroyed, and debtors would have sued to seize church property, according to the late historian Ronald Walker.

In 1962, the church had a deficit of $32 million. With red ink once again soaking the church's books in early 1963, and its finance officials worried that they would not be able to pay church employees, President David O. McKay acted decisively. He reinstated one of the counselors in his First Presidency who oversaw church finances, historians say.

A few months later, President McKay turned the role over to an entirely new counselor who set the church on a strict course of fiscal responsibility. It began with years of seat belt tightening. The biggest symbol of that saving was the current moratorium on construction. For five years, construction on the largest building in Utah and Latter-day Saint history at the time, the Church's 28-story office building, had stalled.

The new strategy worked spectacularly. One historian has said that the principles of church finance established in the 1960s directly led to today's accumulation of assets.

"As far as I know, this program has been continuously and consistently implemented for half a century. And if you do that for half a century - you take a portion of the tithing income every year and you just put it aside and invest it - between the savings and the exponential growth you get from the growth of interest on investments, the church gets this huge stockpile," said Nathan Oman, a historian and professor of law at William & Mary College of Law in Williamsburg, Virginia.

Today, the church has a portfolio of value stockstens of billionsdollars. "60 Minutes" said some estimate the church's assets to be $150 billion, although it did not provide a source for that figure. The church does not disclose how much money it has so it can focus on its religious mission, Bishop W. Christopher Waddell, first counselor in the presiding diocese, told "60 Minutes."

The program suggested, again without sources, that the church receives $7 billion in tithes each year and spends $6 billion on various religious and charitable causes and invests what is left in times of need. These funds are managed by an investment arm known as Ensign Peak Advisors, which is not considered a separate entity but acts as "built-in auxiliary equipment"Churches.

If the church has $150 billion, a figure the church did not confirm during an interview with "60 Minutes," then the $6 billion it spends annually on its mission would represent 4% of annual charitable spending, more than the retired IRS official told "60 Minutes" that would require a 501c3 non-church to maintain its nonprofit status. Unlike other 501c3 charities, the IRS does not require churches to make minimum payments.

The church gives more than a billion dollars in charitable contributionsa comprehensive education system with multiple campuses around the world(including its flagship university, BYU) and an additional $1 billion annuallyin humanitarian offers. Meanwhile, it funds 30,000 churches, a worldwide mission effort, as well as thousands of meeting places, hundreds of temples, and comprehensive free genealogy services—all part of the church's religious mission to call people to follow Jesus Christ.

The Church of Jesus Christ of Latter-day Saints

Bishop Waddell said the church's goal is to "make sure we're satisfied with the years (of operating budget) we have in the event of a financial crisis to make sure we can continue church operations. We just want to make sure, that it is enough'.

It is impossible to understand the church's financial holdings and practices by looking only at inventory records or incomplete estimates gathered from unofficial sources, historians say. The actions of Latter-day Saint leaders are deeply rooted in both a specific theology and a history of economic hardship.

In the past, large church funds were destroyed.

These factors, combined with a history of social and governmental tension, created an enormous incentive to build independent, self-sustaining societies and economies. This is the story of how the Church of Jesus Christ rose from a small group of believers with little or no money to a world faith that achieved the all-encompassing economic prosperity that its early leaders sought from the beginning.

And unprecedented reserve funds for the first time in church history could shape its increasingly global growth trajectory. Oman suggested that gathering church assets may become increasingly important at a time when the majority of membership expansion is focused on Africa and Latin America.

"The Latter-day Saint wealth per capita today is probably greater than the Latter-day Saint wealth per capita in the future," he said. "What austerity does is move money from the high per capita wealth of Latter-day Saints now to the lower per capita wealth of future Latter-day Saints."

Tom Smart, Deseret News

Theology and money

Funding preceded the birth of The Church of Jesus Christ of Latter-day Saints.

The publisher hired to print the Book of Mormon demanded full payment in advance. There was no church yet, and printing would have cost nearly $100,000 in today's money. Wealthy New Yorker Martin Harris, for whom Joseph Smith worked as a day laborer, covered the expenses by mortgaging his 320-acre farm in 1829.

The Church was organized in 1830. Five months later Joseph Smith receiveddiscoveryasserts that to God all things are spiritual. This statement became the theological background for the church's dynamic economic growth beyond American borders and throughout 21st century globalization. Church leaderscontinue to interpretthe scriptures mean that both the spiritual and the earthly are eternal and inseparable. Therefore, for Latter-day Saint leaders, economic prosperity is an integral part of religion, according to the late economic historian Leonard J. Arrington.

According to the late historian D. Michael Quinn, Joseph Smith held a leadership role in more than 20 business enterprises. Brigham Young oversaw economic expansion from the Rockies to the Pacific. They believed that money was necessary to build the kingdom of God, provide maximum security for the church, help church members, and care for the poor and needy,Quinn said.

So the church bought property and built—then abandoned under pressure—frontier towns from Ohio to Missouri to Illinois. He received pennies on the dollar for properties he could sell when he left each place.

"Leaders had to devise ways to help poor members move west," Arrington wrote. The movements also involved church leaders in buying land and formulating plans for community and economic development.

Finally, driven from the United States by murder and mobs, the persecuted religious pioneers did not simply stop outside their borders in the Salt Lake Valley. From there they spread, creating more than 300 settlements ranging from Mexico to Idaho and California to Colorado.

Success in each depended on developing the economy from the ground up. They established shops, sawmills, printing houses, urns, farms and much, much more. Some have succeeded. Others do not. In early Utah, church leaders continued in their quest to be self-sufficient from the United States.

Brigham Young once said that if the church were to be left alone for 10 years in the Great Basin, the Latter-day Saints would establish themselves as an independent nation. In the 1850s he encouraged missions devoted to the economy—the Iron Mission, the Sugar Mission, the Leadmission, and others for cotton, linen, silk, wine, and wool.

"Since the beginning of the church, there's been a need for money, and I think it's something that affects the way the church functions today because it's such a big part of our history," says Matthew Godfrey, senior director of historian for Outreach. and involvement in the Department of Church History.

Build and assign

Church leaders also started a salt business and resort, bought interests in railroads and telegraph lines, and pioneered the hydroelectric industry in the West. All these interests were eventually sold to Eastern companies. This has also been the pattern of the Latter-day Saints.

The Church of Jesus Christ met the needs of the community and then donated or sold the property over time when it no longer made sense for the church or the needs could be met by others, historians say. In some cases, it would benefit the church to keep the business. E.g:

• In the 1930s, when public education ended elementary schools, Latter-day Saints gave Utah and Arizona what is now Weber State University, Utah Technical University, Snow College, and Eastern Arizona College.
• Three sides of the churchconnected1957, but in 1960 it also got out of the banking sector and sold its controlling stake in Zions Bankfor 9.8 million dollars. In 2021, Zion's reported Frnet profit of DKK 1.1 billion.
• In 1975 he donated his 15dynamic and economically viablehospitals to a non-profit organization because they were not "focused on the mission of the church." Intermountain Healthcare, now Intermountain Health, expanded to 33 hospitals in seven states with$13.9 billion in total revenuelast year.

What remains central to the church's mission is social and humanitarian aid, education, missionary work, genealogical work, meeting houses and temples for weekly services and religious ceremonies.

Jeffrey D. Allred, Deseret News

Building independence

Historical efforts by church leaders to build financial independence and ensure the welfare of their members have sometimes failed.

Deficit spending was common for the church in the 19th century. According to historians, the church experienced repeated setbacks in the 1830s, 40s, 70s, and 90s, and in the 1900s, 20s, 30s, and 60s.

The worst early financial failure was the Kirtland Safety Society, the church's first foray into banking, although this institution was technicallya joint stock company. It opened in January 1837, suffered heavy losses in May and closed in November.

"The Church founded the Kirtland Safety Society because, like other frontier societies,Kirtlandit was a society poor in money. The idea was to use the land that people owned to ensure the economic development of the area,” said Godfrey.

A complex set of factors condemned the bank. One was the National Panic of 1837, a depression that caused the failure of 600 banks. All the banks in Michigan were closed, including the one the church bought to support the Kirtland Security Company. Church leader Joseph Smith lost the most money, Godfrey said.

"In general, businesses owned or controlled by the church have drained its resources, often helping to bring the LDS Church to the brink of bankruptcy," Quinn wrote. "This first happened in 1837 during the national depression."

Joseph Smith led a church next to Missouri, but within 10 months the governor issued an order to exterminate the Latter-day Saints. An apostle and at least 17 others were killed in the days before and after the order. (The future governor officially revoked the orderi 1976.)

The Church again suffered losses in the next move, to Nauvoo, Illinois.

There, church members turned the swamp into a city that for a time surpassed Chicago as the largest in Illinois. The influx of Latter-day Saints—a church organized to help 5,000 European converts immigrate to Nauvoo—threatened the state's political order, and their religious beliefs, including polygamy, offended other residents. (Manifesto from 1890"led to the end of polygamous unions in the church".)

The economic struggles continued. Joseph Smith, whose finances became intertwined with those of the church, was forced to declare bankruptcy in 1842. He talked about moving the church further west. His brutal assassination by a mob and further threats of violence in 1844 led to just that.

When the Saints left Nauvoo, they again left the temple and lost the money in their belongings.

The movement set in motion what Arrington considered the largest immigration in American history. It was again a religious imperative inseparable from earthly expenses and maintenance. And what began with 25,000 pioneers organized to leave Nauvoo for Salt Lake City in 1847 was only the beginning.

Through the church's Permanent Migration Fund and other efforts, 80,000 people moved west over four decades at a cost of $10 million, ArringtonHe wrote. What one economist called the best-regulated immigration system in American history would have continued, but Congress shut it down in 1887 with the Edmunds-Tucker Anti-Polygamy Act.

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The apostle and the loan that prevented bankruptcy

Congress has tried for years to abolish early Latter-day Saint polygamy. The Edmunds-Tucker Act had real teeth. He attacked church affairs and confiscated church property. A combination of government intervention, business failures and bad investments left the church helpless in the face of the coming second-worst recession in American history, Arrington wrote.

A perfect storm was brewing that threatened to become another Kirtland, which one church leader called "a perfect horror."

By December 1892, the church owed half a million dollars in short-term loans that were due quickly and had no prospect of payment, according to historian Ronald Walker. The Church suffered heavy losses in mining, sugar, real estate, banking and investments.

Church President Wilford Woodruff sent future Church President Elder Heber J. Approval of the Quorum of the Twelve Apostles in New York to seek new loans so the church could make its payments. Elder Grant first experienced success in May 1893, according to Walker.

But in June, the country was hit by an economic panic. The Panic of 1893 would be known among Americans as the Great Depression until the following 1929. Utahns began a march on the shores of Salt Lake City, including two who belonged to the church.

On July 1, Latter-day Saint banks began the day with $40,000 in deposits, already below what federal regulations require. They have $10,000 left at the end of the day, WalkerHe wrote.

At the same time, the church did not make salaries for its employees. "We have no money," wrote the First Presidency.

In August, the church told Wells Fargo Bank in San Francisco that it was unlikely to default on the Sept. 2 loan. As of Sept. 1, church banks held less than 3 percent of deposits, Walker said.

In New York, Elder Grant secured the necessary $100,000 loan, but the banker delayed payment until September 6. Elder Grant had a bad night and wept in prayer early the next morning.

Fortunately, bank deposits in New York began to stabilize, and Elder Grant was able to secure a $250,000 loan from a man who had previously worked with the church, John Claflin. Within hours, $50,000 was available at one of the church's banks, and Wells Fargo received the payment on time.

The loan saved the church from bankruptcy, Walker wrote, but combined with the Depression, it was still devastating. President Woodruff called the terms of the loan "horrendous": The Church had to pay back $250,000 over two years at 6 percent interest. Claflin also got to keep $50,000 of the tips for himself.

That meant the church actually only had $200,000 to spend.

The church was unable to pay Claflin in 1895. Instead, it transferred railroad and resort interests to him. He received the last payment in 1899.

Nearly three decades later, Heber Wells wrote a letter to Elder Grant, who had become president of the church. Wells helped stop the church from running in 1893 and became Utah's first governor. It reminded President Grant of his time in the financial distress of the Panic of 1893.

"Those were the days," Wells said, "when we fought and bled and almost died together."

The crisis of 1963 modernization of the church's finances

That loan was a turning point for the church, according to Walker. Economic forces were working to nationalize the American economy, he wrote. The Church's efforts to build a self-sustaining economy outside the Rockies have ended.

In 1899, new church president Lorenzo Snow told other church leaders, "The Lord was not pleased with us because we borrowed or charged nearly ($2 million) for a business venture."

Religious Education Image Archive (BYU)

In the Latter-day Saint tradition, there is a well-known story of President Snow calling church members to commit to tithing, the biblical command to give 10% of their increase in exchange for an outpouring of spiritual blessings from God. In 1901, increased tithing funds eliminated half of the debt, but it took until 1907 for the church to find its nose above water again.

“Today the Church of Jesus Christ of Latter-day Saints does not owe a dollar that it cannot pay at once,” said President Joseph F. Smith at the general conference in 1907. “We are at last able to pay while I go . We no longer need to borrow, and we don't need to if the Latter-day Saints continue to live their religion and keep this law of tithing. It is an ecclesiastical revenue law."

The Great Depression that followed again shook the church's finances. In 1938, the church spent nearly $900,000 more than it took in, according to records kept by the late President J. Reuben Clark, first counselor in the First Presidency. During the 1940s, he limited church spending to 28% of tithe income. By 1959 the church had spent about $100 million less than it had received in tithes from 1943-47. and 1950-59, according to historian Quinn.

By 1963, that money was gone.

In the late 1950s, the church began an aggressive international building program. The church grew rapidly. Worldwide membership grew by 50% to nearly 1.7 million members from 1950 to 1960. President Henry D. Moyle, first counselor to President David O. McKay in the First Presidency, believed that it could grow faster by building a meeting place to attract and support new converts.

President Clark was cautious. President McKay continued forward, according to Quinn. The church built more than 1,000 new meeting places. He also built temples in Switzerland and England when Europe did not have a single share of Latter-day Saints, the ecclesiastical term for a group of powerful churches, said Oman, a professor of business law at William & Mary.

"In a way, they were both right," Oman said. “President Clark is correct that the expenditures initiated and continued by President McKay with President Moyle are not sustainable given the church's income.

"President McKay is right to see the possibility of world Mormonism, this great wave of proselytizing growth that he envisioned as a possibility and that the church would work on."

Tithing income increased as the church's membership grew, according to Quinn, but President Moyle continued to use the deficit to fund construction. The church spent $32 million more than it took in in 1962. President McKay assumed financial oversight as losses mounted again in 1963. In October, he turned the role over to President N. Eldon Tanner, making the Canadian business director his first counselor since death of President Moyle.

"President Clark ended up being right about the economy, and President McKay ended up being right about convert baptism," Oman said.

"The composite of these two positions is N. Eldon Tanner."

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Mapping the road to today's prosperity

President Tanner vigorously implemented austerity measures. He had a clear answer when his five children asked why they couldn't have things they couldn't afford.

"I can give you three reasons," he said. "The first is that we can't afford it. The other two are irrelevant."

President Tanner called for a review of all financial practices and mandated revolutionary changes. He established modern principles of scientific financial management. He also systematized the church's investments, according to historians.

First he imposed a moratorium on construction. It was embarrasing. Construction of a comprehensive church office building has begun on the lot north of the church leaders' office. Work on the underground parking garage began in 1962. When it was completed in 1964, President Tanner stopped the project.

In 1966, he informed the commission that "no funds have been approved in the budget for the current year to begin construction of the headquarters building." For a total of five years, church leaders could use a self-contained parking garage and look out their windows at the top of the wasteland.

Work finally resumed in 1969 — when the church's deficit turned into a $29.5 million surplus, according to Quinn. The 28-story building was opened in 1972.

"The key to the story of how the church got through financial difficulties in today's world of huge profits is N. Eldon Tanner," Oman said.

Financial discipline

"N. Eldon Tanner controls the expenses and leaders enforce the requirement that the operating expenses of the church must always be covered by the annual tithing income - so there will be no debt, no liquidation of assets to pay for operating expenses, and a portion of the tithing income will be earmarked for future expenses”, said Oman.

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President Tanner's biographer said that until he arrived, the church's budget was "'half a thing,'" with many activities not even included. Now a tight, integrated budget was created that required individual departments and organizations as a whole to live off their income."

Seven future church presidents were part of the Council of Tithing when President Tanner began establishing these principles in late 1963. Elders Gordon B. Hinckley and Thomas S. Monson, who would lead the church into the 21st century, were the new apostles.

President Tanner remained First Counselor in the First Presidency for the next 20 years, overseeing the Church's finances for President McKay and his three successors, instilling in the Church financial principles that led to its current era of unprecedented financial strength.

"First, the total expenses will not exceed the expected revenues,"He saidthe current presiding bishop of the church, Gérald Caussé, who directs the temporal affairs of the church under the leadership of the First Presidency. "Second, the budget for operating expenses will not grow from year to year at a faster rate than the expected increase in tithing."

An apostle who once served with President Tanner, Elder Marvin J. Ashton, said, "President N. Eldon Tanner will go down in history as one of the greatest counselors who ever served in the First Presidency of the Church."

The challenge of financial strength

For most of its history, the church regularly faced financial impoverishment. Today he has other challenges. He has gone from a past when money was scarce and leaders had to find ways to help poor Latter-day Saints, some of whom were refugees, to today deciding how funds should be properly used to serve his growing number of global missions. Society and the economy are also changing.

"The financial model that the church has now was created to solve a lot of problems in the 1960s," Oman said. "It is a very new chapter. I think there is no reason to assume that an economic model established in the 1960s will work effectively in the 2020s, 60 years later."

The expenses for the church's humanitarian aid aremore than doubled in the past five years, to $1.02 billion last year. He also changed the Sunday service schedule from three to two hours so that Latter-day Saint chapels could serve more congregations.

But over the past five years, President Russell M. Nelson has announced plans to133 new temples, an increase of 73%. While some critics want the church to use its mortgaged property, it serves a strict purpose, according to the presiding diocese.

"There will come a time when all these resources, these reserves, will be needed," Bishop Waddell said. "We don't know when, we don't know exactly in what form, but you mean the (biblical story of)seven fat years and seven thin years, there are so many examples in the scriptures that we try to follow, whatever it may beparabola or talentand don't bury the talent. We have seen what the Lord did to this person. We want to be ready for all possible situations."

During the COVID-19 pandemic, the church was able to dramatically increase its humanitarian projects due to the church's relative financial strength.

Church leaders also know that stock portfolios are volatile. In 1930, a First Counselor in the First Presidency said the church had lost "at least $6 million" in stock and bond trading during the previous decade.

The church founded Ensign Peak Advisors in 1997 to manage $7 billion in reserves invested in securities or stocks. Using a long-term investment strategy, church securities owned by Ensign Peak grew to $52.3 billion in the fourth quarter of 2021, according to public filings.

"Most of the growth, I would say, is because we are currently in the greatest period of prosperity in the United States on record, and that is creating this wave of financial markets," Bishop Caussé said shortly before the covid-19 pandemic. "We are only the recipients of it."

The church portfolio fell 23% to $40.3 billion in the third quarter of 2022. It rose to $44.4 billion by the end of the year.

"I don't think people realize how much volatility there can be in the value of a really large portfolio, especially if you're an institution that can afford to be illiquid," Oman said. "If economic conditions worsen, there will be big changes in the value of their portfolio."

This means that what now looks like it will cover several years of work if a recession wreaks havoc on the economy would actually be much shorter because of the effects the slowdown would have on the markets.

"If that happened..." said Bishop Waddell, "we wouldn't have to stop mission work, we wouldn't have to stop maintaining buildings and building churches, we wouldn't have to stop humanitarian and social work, we wouldn't have to stop educational work'.

Spenser Heaps, Deseret News