Why the SEC/Ensign Peak Advisors Settlement Doesn’t Trouble Me (or, Why I Don’t Mind that Christ’s Church Has Money)

Background

In recent months, there has been much media attention turned to Ensign Peak Advisors, an investment arm of The Church of Jesus Christ of Latter-day Saints. From around 2000 to 2019, Ensign Peak Advisors had used subsidiary companies in its reports to the Securities and Exchange Commission (SEC), to avoid publicly disclosing the nature and extent of its investment portfolio. In 2019, a former employee of Ensign Peak Advisors filed a complaint with the SEC and told the press. The Church and Ensign Peak Advisors have since come into compliance and were recently assessed a total fine of $5 million by the SEC.

Here are some links with background info:

Church Newsroom summary

The Full SEC order

SEC press briefing

As could be expected, individuals and media outlets opposed to the Church of Jesus Christ (or to organized religion in general) have spun this story in a negative light, causing many members and friends of the Church to become troubled or upset. At the core of these feelings are three facts, which I don’t dispute:

The Church of Jesus Christ of Latter-day Saints has a lot of invested wealth (Ensign Peak’s holdings are valued around $37 billion).
Church leadership wanted to avoid publicly disclosing either the extent of this wealth or how it was invested, or both.
To avoid public disclosure, Church leadership instructed or authorized Ensign Peak Advisors to meet their filing requirements in a way that skirted around the law and was ultimately deemed illegal.

What I do dispute in this post are some of the claims and arguments that people derive from these facts:

The Church’s prophetic leadership willfully defied the law of the land and therefore are false prophets.
The Church of Jesus Christ doesn’t use its vast wealth to help the poor and needy.
The Church of Jesus Christ shouldn’t store (“horde”) so much money.
If Jesus had billions of dollars, he would have given it all away to help the poor, instead of storing/investing it.
The Church is trying to hide its wealth from its members.
The Church of Jesus Christ is financially corrupt.
It’s wrong and deceitful for the Church to ask poor converts to pay tithing.
Now that members know how much money the Church has, they won’t pay their tithing.

Here are my counter-arguments to each:

1. Accusation: The Church’s prophetic leadership willfully defied the law of the land and therefore are false prophets.

Let’s hear the Church’s side of the story (from the Church Newsroom article):

[Since 2000] the Church’s senior leadership received and relied upon legal counsel when it approved of the use of the external companies to make the filings. Ensign Peak handled the mechanics of the filing process. The Church’s senior leadership never prepared or filed the specific reports at issue.

. . . In June 2019, the SEC first expressed concern about Ensign Peak’s reporting approach. Ensign Peak adjusted its approach and began filing a single aggregated report. Since that time, 13 quarterly reports have been filed in full accordance with SEC requirements.

. . . We affirm our commitment to comply with the law, regret mistakes made, and now consider this matter closed.

Church leadership has admitted that mistakes were made and that they regret those mistakes.

From my reading of these and other sources, it sounds to me that back in the late 1990s, Church leadership and their investment managers were concerned about disclosing Church investments (see point 5 below). Legal counsel suggested a filing route that they considered legal. Church leadership trusted that counsel in authorizing the plan, with no intention of breaking the law. When it became apparent decades later that the SEC disagreed with their approach, they adjusted their filing to come into compliance. Mistakes? Yes. Willful disregard for the law? Doesn’t sound like that to me.

Let’s remember that our prophets are not infallible. They can and do make mistakes, and they are the first to admit such. If I were in charge of a worldwide church of millions of people and all the administrative oversight of that church, not to mention ecclesiastical and spiritual oversight, I’m sure I would make mistakes too: probably far bigger ones than our prophets make.

What about revelation? Wouldn’t they have prayed about this decision? Why didn’t God warn them not to pursue it? This question is valid. The answer goes back to the idea of infallibility: Do we believe that every administrative decision the prophets make is a perfect decision that perfectly reflects the will of God? Is that a reasonable expectation? Or does prophetic authority mean that the majority of decisions, and especially the ones with weighty spiritual consequences, are made under the influence of revelation, but allowing room for some prophetic decisions to be made by (error-susceptible) logic and common sense?

I think God allows us to make mistakes. I think He even allows His prophets to make mistakes. I don’t think He allows His prophets to lead the Church astray in serious spiritual or doctrinal matters, but this is not a spiritual or doctrinal matter. It’s a technical administrative detail.

The members of the First Presidency who would have authorized that decision in 2000 (Gordan B. Hinckley, Thomas S. Monson, and James E. Faust) have all passed away since. So we cannot ask them what they were thinking or intending, what guidance (if any) they received from the Spirit, and what they understood of the legal implications, when they authorized the Ensign Peak Advisors’ reporting plan.

Of course, we can jump to conclusions and judge the thoughts and intents of their hearts without any way of knowing for sure what those were. But let’s remember that with what measure we judge, we shall be judged.

2. Claim: The Church of Jesus Christ doesn’t use its vast wealth to help the poor and needy.

From the Church’s humanitarian report: “The Church of Jesus Christ of Latter-day Saints engaged in 3,909 humanitarian projects in 188 countries in 2021. This outreach, an increase from 2020, included $906 million in expenditures and 6.8 million hours of voluntary service.” This is only its humanitarian arm, not including the millions invested in quality, low-cost educations through CES schools and programs, the millions spent in Church administrative programs to build strong communities and foster faith and hope worldwide, and the millions of hours of service donated by members in private acts of service.

For further information, see the Church’s 2021 Humanitarian Report:

Caring For Those in Need: 2021 Annual Report of The Church of Jesus Christ of Latter-day Saints

3. Argument: The Church of Jesus Christ shouldn’t store (“horde”) so much money.

The Church of Jesus Christ is a global organization that operates somewhere around 20,000 meetinghouses, 170+ temples, and thousands more seminary and institute buildings (which all require maintenance without bringing in any revenue). Plus, it operates 4 private universities, dozens of welfare facilities and operations, and 31,000 congregations (all of which need operating budgets).

Large amounts of financial reserves allow the Church of Jesus Christ to continue operating all of these facilities in the advent of a global economic or political crisis. (If you were in charge of the finances of such an organization and were told to have an adequate rainy-day fund to keep everything running through a global crisis, how much money do you think you would want to set aside?)

It’s also not like the Church has put aside all this wealth in the last couple years. The Church has been investing and saving money for over a century and a half. Those investments have slowly grown over time as the Church has built up its reserve.

4. Argument: If Jesus had billions of dollars, he would have given it all away to help the poor, instead of storing/investing it.

Jesus did not have billions of dollars when he was on the Earth, so we don’t know what he would have done with it. But Acts and the letters of Paul indicate that after his death, early Christians leaders organized the collection, management, and storehousing of funds to support poor members of the Christian community and provide relief efforts. So early followers of Jesus, who had been trained by Jesus personally, engaged in careful management of funds to support the church’s larger mission.

5. Implied Accusation: The Church is trying to hide its wealth from its members

This is what the SEC press relief says: “The Church was concerned that disclosure of its portfolio . . . would lead to negative consequences.” It does not say what those “negative consequences” were, and it (rightfully) declines to speculate. The Church wasn’t trying to avoid paying taxes, because it’s already tax-exempt. Is the only other option that the Church was hiding its wealth from its own members for some nefarious reason? Is there really not any other reason why the leaders of a large nonprofit would want to keep the nonprofit’s assets private?

According to a Deseret News article on the settlement, “Some church officials said previously that they wanted to avoid church members following church investments as a roadmap for personal investing because they might not be appropriate to their circumstances.” Knowing the zealousness of some church members to over-interpret prophetic counsel, and the capacity of some individuals to twist that zealousness for personal profit at members’ expense, I consider this a valid reason for wanting to pursue privacy.

6. Implied Accusation: The Church of Jesus Christ is financially corrupt.

An investment firm under the Church’s umbrella deliberately avoided disclosing its portfolio properly to a federal government oversight commission. It was assessed a fine. Church leadership expressed regret and fixed the issue. That is what happened. Was the Church avoiding paying taxes? No, because it’s already tax-exempt. Were Church leaders embezzling funds or bloating their salaries so they could live in mansions and take private cruises? No. Was the Church harming people through financial predation or fraud? No.

I think it is actually a tribute to the Church’s upright financial behavior that this noncompliance is the only mud its opponents have found to fling at it. Especially when compared to the behavior of many large corporations and governments in today’s world.

7. Argument: It’s wrong and deceitful for the Church to ask poor converts to pay tithing.

In my mission to Puerto Rico, I saw dozens of families and individuals who had, over time, lifted themselves out of the cycle of poverty through applying the teachings of the Church of Jesus Christ on seeking an education, being wise financial stewards, avoiding debt, paying tithing, and becoming self reliant. Regardless of how much money the Church of Jesus Christ has or needs, I believe that inviting people to act in faith and live these principles, including the principle of tithing, will lead to their benefit, not their harm.

8. Assumption: Now that members know how much money the Church has, they won’t pay their tithing.

On the contrary. I would much rather willingly pay tithing to an organization that manages funds responsibly, invests for the future, and encourages financial self-reliance in its members, than be required to pay taxes to a government that has to spend $400 billion a year on interest for the massive debt it has accrued through financial mismanagement.

Each year, at general conference, a representative of the Church’s auditing department stands in front of the whole church membership and declares, “the Church follows the practices taught to its members of living within a budget, avoiding debt, and saving against a time of need.”

I am proud to belong to such a church.

2 thoughts on “Why the SEC/Ensign Peak Advisors Settlement Doesn’t Trouble Me (or, Why I Don’t Mind that Christ’s Church Has Money)”

Pete Madsen
April 9, 2023 at 10:36 pm

Jeremy, you articulated my thoughts perfectly! As soon as I first read the facts weeks ago about the SEC settlement, and looked at the big picture, it didn’t bother me. Thank you for your well researched and thoughtful article. I believe the LDS church is very responsible and wise managing contributions, expenses, and investments, including spending hundreds of millions of dollars each year to help the poor and needy.
I love how you said, in essence, that you have much more trust and confidence in how The Church spends your tithing, compared to how the government spends your taxes!

1. Jeremy P. Madsen
  April 22, 2023 at 12:12 pm
  
  Thank you, Pete! We live in a world where most governments, companies, and individuals are in a state of constant debt. It has become the norm. So when an institution takes the far more sensible route of storing up adequate financial reserves, it is viewed with suspicion and ridicule. People don’t understand that the more money an institution (or family) has, the far greater ability it has to serve and bless the world.