The other day, the Salt Lake Tribune reported that the church’s wealth had increased substantially yet again. According to Ensign Peak Advisors’ Form 13F, as of Dec. 31, 2023, it held about $50.5 billion in reportable securities (basically, the set of certain publicly-traded securities listed here). That’s up about $6.1 billion from the prior year, and, according to the Trib, is just a hair (well, a couple billion dollars) below its four-year high.
According to a Widow’s Mite estimate, this $50.5 billion represents just under 20% of the church’s net worth.
And here’s the thing: that’s a lot of money. Even if the other $215 billion in assets were operating assets (like church buildings) and illiquid investments (that is, investments that can’t easily be sold, like land), the church has a lot of liquid assets.
Is that a problem? It is, for a couple closely-related reasons.
But before we get into those reasons, let’s talk quickly about nonprofits and operating reserves. See, best practices is for nonprofits (including churches!) to have operating reserves. Operating reserves are unrestricted liquid assets that allow the nonprofit to continue operating if, among other things, a significant stream of revenue dries up, the nonprofit faces an unexpected expense, or it has less revenue than it anticipated.
Nonprofits should have operating reserves. But knowing they need operating reserves is just the start of any inquiry. Critically, a nonprofit needs to decide how much to maintain in operating reserves and when it will dip into its reserves.
These two questions are interrelated and don’t have right or wrong answers. But there is some guidance: generally, the advice I’ve read is that a nonprofit should have sufficient reserves to allow it to function for at least three months; I’ve seen recommendations of up to six months. But this flat 3-6 month recommendation glosses over differences in nonprofit profiles. Organizations with riskier donation profiles should probably save more, while organizations that have a fairly stable, steady, and consistent stream of revenue can probably save less.
Just having operating reserves isn’t enough, though: a nonprofit should have explicit policies for when it will use those reserves. Reserves should generally be used to fund short-term shortfalls, and once a nonprofit gets past its emergency, it should work to replenish the funds it used.
Also, this plan doesn’t have to be—and probably shouldn’t be—static. In fact, it isn’t a terrible idea for the board to revisit its operating reserves policy annually. Maybe it keeps everything the same, but at least it keeps the idea front-and-center of the organization’s mind.
So we have a minimum size for a reserve fund. Is there a maximum size?
There’s no legal limit on how large a nonprofit’s reserve fund can be (or, at least, there’s no such ceiling in the U.S.). But there are pragmatic reasons why a nonprofit might want to limit the size of its reserve fund, relative to its costs. The biggest one is that nonprofits generally want to show that they’re being good stewards of donor money.
And having a reserve fund is a critical part of that stewardship—it shows donors that the nonprofit is being responsible and preparing for unanticipated contingencies. But allowing the reserve fund to grow too large undercuts its message that it is stewarding the money well. Too much in reserves means the organization is not spending on its charitable mission. It signals to donors that it doesn’t actually need their money.
I’m afraid the church is in the too-large-reserve-fund position right now, and also in the it-doesn’t-have-a-reserve-fund-policy position. Now, I could absolutely be wrong, but at the very least, based on public disclosure, mine is a fair assumption.
Now, it’s laudable (for real) the the church was able to save and grow its assets as much as it has. But the Widow’s Mite estimates that the church now gets more revenue from investment returns than from tithing. But the thing is, it should be funding its operations out of tithing. It really shouldn’t be using its reserve fund for anything other than emergencies. But if it makes more on its reserve fund than it brings in in operating revenue, it could continue to exist perpetually (barring some kind of massive shock) without collecting any more tithing.
That sends a bad message to members, especially if, like me, they believe there’s something sacred about the sacrifice of paying tithes. If the church doesn’t need our tithes, though, because it could 100% operate without them, it to some extent transforms the sacred into waste. After all, if my tithing is just going to sit in EPA and make the church more money, rather than funding buildings and temples and salaries and aid to the poor, my tithing isn’t doing the things that transform it from profane to sacred.
(The Widow’s Mite report suggests that inflation-adjusted tithing has fallen; is that because people are discouraged? I truly don’t know, but it’s at least possible.)
And the church has yet to signal when or how it would use its reserves. I’m not going to Google it, because this is just a blog post, but several years ago, and EPA executive suggested that it was a rainy day fund (and perhaps an apocalypse-insurance fund). Now, in large part I ignore that, because EPA execs aren’t the ones deciding how or when the church will use its money. But it’s worth noting that we just rode out a world-wide pandemic that lasted somewhere between two years and from 2020 until today, and the church didn’t access that money. And if a worldwide pandemic isn’t the time to access it, I don’t know what is.
Now again, I don’t have any inside information. Perhaps the church has a reserve fund policy. Perhaps it knows how and when it will spend its investment income.
But it hasn’t disclosed the fact of or the details of any such policy to its donors or its members. And frankly, in all my research, I can’t tell if best practices around reserve fund policies include transparency. But in this case, I’d suggest that transparency would only serve the church’s interests.
In the first instance, it would allow the church to explain how it was stewarding tithing dollars. It can demonstrate both that it has a reserve and that that reserve isn’t just sitting there growing and gathering dust, but is there specifically to meet contingencies that church leaders lay out. (And again, those contingencies can change: I suspect what the church needs to prepare for today is different from what it needed to prepare for in April 2020.)
On top of stewardship is public perception. See, every quarter EPA is going to file its 13F. And every year, there’s a pretty good chance the number will be higher than the previous year. (Not always, of course. The market can go down. And some quarters/years, the church is likely to sell more securities than it buys, and because the 13F just reflects securities, if the church shifts to cash or to real property, say, that’ll show up as a lower reported asset value.)
That means that literally every quarter, the press can write a story about LDS finances. And as long as the church doesn’t have an explanation for how it’s going to use its reserve funds, that story at least implies that the church is here hoarding wealth for the sake of hoarding wealth.
So having a reserve fund is good. And the church’s reserves could allow the church to do more good than it could do without that money. But until it decides how big that fund should be, and until it decides when and how it’s going to spend that money, the reserve fund literally does no good, for the church, its membership, or the broader community. And it may actually harm some or all of those constituencies.