A popular legal Twitter personality has an evergreen tweet: “It’s not RICO.” See, RICO (the Racketeer Influenced and Corrupt Organizations Act) has become a super-popular rhetorical crime. Trump violated RICO; antifa violated RICO; I’m probably violating RICO just by posting this!
The thing is, RICO is a very narrowly-tailored law. There are specific criteria a crime has to meet to violate RICO and basically, if you hear someone say that somebody else violated RICO, you can be about 99% sure not only that they’re wrong, but that they have absolutely no idea what they’re talking about.
I thought about that the other day when a friend pointed me to a clip from a popular Mormon-themed podcast.[fn1] In the clip, the podcaster makes a blockbuster announcement: the podcaster has just discovered why the church builds so many temples. Specifically, the podcaster was told by an “inside source”:
It turns out that for the church to maintain its tax-exempt status, for the Mormon church to maintain its tax-exempt status as a charity or as a church, it has to do something with its money. And so building temples is one of the major ways the church can spend a boatload of money with all this cash that it keeps collecting and stay in business and be perceived as a charitable institution.
Now, unlike the podcaster, I don’t have an inside source to tell me why the church is building a lot of temples. But I can tell you, without a doubt, that it has nothing to do with the church’s tax-exempt status.
Now, in spite of Ken White’s evergreen tweet, on the rarest occasions it is, in fact, RICO. RICO wasn’t passed to sit on the books unused. But it also wasn’t passed to criminalize everything we think is bad.
And there have been times when the church does things because of taxes. A chapter in my first book discusses the effect that Supreme Court litigation about the deductibility of missionary support had on mission financing. I wrote about how Brigham Young almost did away with tithing as a result of the Civil War income tax. And I’m writing about a couple more situations where the tax law affected church decisions in the book I’m currently writing. And the fact that the church’s for-profit businesses are separately incorporated is definitely tax-related.
But I’ve also written about the more common situation: where tax pressure doesn’t affect the church’s decisions. I know it’s popular to say that the church reversed its race-based temple and priesthood under tax pressure but (a) that’s not where the law was in 1978 (or frankly today) and (b) there’s no contemporaneous evidence that its tax-exempt status played into that decision. (As far as I can tell, it became a popular assertion at the ten-year anniversary, which makes sense because, at that point, the Supreme Court had decided Bob Jones.) Similarly, rhetoric about loss of tax exemption didn’t affect the church’s position on the ERA or same-sex marriage.
But 99 times out of 100, when someone tells you a church (ours or, frankly, any other church) made a decision to preserve its tax exemption, they’re wrong. Period.
And this particular claim (which another friend tells me is not unique either to this podcaster or to discussion of our church) is laughably wrong. Because public charities (a classification which includes, among other things, churches, universities, museums, and even the NCAA and the US Olympic Committee) don’t face any type of spending requirement. At all.
That’s in distinction to private foundations, which are required to spend at least 5% of their assets annually or pay a fine. (The main distinction between private foundations and public charities is that private foundations are funded principally by a single person or a small group of people, while public charities enjoy broad public support. A private foundation is basically a rich-person’s fund to make charitable contributions.)
And the thing is, this isn’t ambiguous. It’s not hidden. It’s not a close question.
And it’s not a sin to be wrong about taxes. But it’s also not hard to be right, at least on this question. This podcaster—and others who make similar claims—could have spoken to literally anybody who is familiar with taxes or nonprofits and had their mistaken understanding corrected. Heck, they could have tagged me on Twitter and I could have given them an answer.
So sure, on occasion, the church will change its actions in reaction to the tax law. But if you assume that the tax law was not a cause—directly or indirectly—you’re probably right.
[fn1] No, I’m not going to link to it. And no, I’m not going to say which Mormon-themed podcast and podcaster it is. If you really want to find out, I saw it on TikTok. I’m sure you can find it too.