New Project Shows Church Finance Corruption

[IHAQ]

During a global pandemic Jesus Christ’s personal fortune grew by $6 billion…nett. That doesn’t sound like the guy I was taught about during Sunday School.

[Dr Moore]

During a global pandemic Jesus Christ’s personal fortune grew by $6 billion…nett. That doesn’t sound like the guy I was taught about during Sunday School.

More like $35 billion and counting.

[IHAQ]

During a global pandemic Jesus Christ’s personal fortune grew by $6 billion…nett. That doesn’t sound like the guy I was taught about during Sunday School.

More like $35 billion and counting.

Seriously?

[Analytics]

More like $35 billion and counting.

Seriously?

That doesn't sound right to me either. The letter to an IRS director claimed that as-of 11/30/2019, EPA had $124 Billion (including the real estate holdings in ARI and PRI). If that was all invested in an S&P 500 index fund, it would be worth about $184 Billion now: an increase of about $61 billion, plus the tithing money they've added to it.

Where did Dr. Moore get the $35 billion number? That seems low.

[Dr Moore]

I was mistaken. The number is $45 billion since the pandemic began. It’s in the OP-linked document.

[Gabriel]

That doesn't sound right to me either. The letter to an IRS director claimed that as-of 11/30/2019, EPA had $124 Billion (including the real estate holdings in ARI and PRI). If that was all invested in an S&P 500 index fund, it would be worth about $184 Billion now: an increase of about $61 billion, plus the tithing money they've added to it.

For me, that is truly the crux of the matter. Up until 2019, the church's wealth was a secret. Yet how was this secret revealed? Through the prophets (per Amos 3:7)? No. As usual, faithful members of the church had to learn about their own organization from outsiders. After the fact, the church can trot out all the gibbering eunuchs that they want to try to put a happy face on it.

[Dr Moore]

Has anyone else been monitoring the tax loophole investigation in Australia? This really is interesting. I am no international tax attorney, just a curious onlooker at most. I assume our friend Simon Southerton might be able to shed some light on the latest goings-on, as he's quoted in some of the articles linked below. Perhaps this is fodder for one of Prof. Consigleri's graduate law laboratories?

In short, it seems like the problem-solution in question goes as follows.

Problem: Donations to churches are not tax deductible in Australia, but donations to charities are.

Solution: The LDS church sends virtually all (as in, worldwide) donations to its humanitarian arm, LDS Charities or LDSC, through a shell entity in Australia, aptly named LDS Charities Australia, or LDSCA. Additionally, tithing paid in Australia is routed through related entities (multiple shells) and becomes intermingled with the same charitable trust network. Church expenses in country are covered by the top of this feeder fund structure. And LDS Charities funds are distributed to their final destinations from the same network of fund structures. By doing all of this, the sum total of LDS-linked dollar expenses in Australia goes up, but more important than that is that the composition of those dollars morphs from being 100% church-related (non tax deductible for members) to a significant majority being charity-related. And voila, tithing is now tax deductible for Aussie members.

Church Incentive: Member tithing in Australia, now being tax deductible, will presumably be higher. PR value of being one of the largest charities in Australia doesn't hurt.

Who Loses?: Australian gov collects lower tax receipts because LDS members can now deduct their tithing.

Evidently, an investigation has been initiated into the legitimacy of this structure. No doubt, church attorneys at Kirton McConkie carefully weighed the legal lines and gave some sort of all clear. And I guess it should be stated up front that churches and charities in Australia have to file mandatory financial reports every year -- and it appears that the relevant church entities comply fully (links below). If my scan of the 3 filings below is worth anything, it appears like the church actually does a two-step money shuffle with its worldwide LDS Charities donations. Step one is, those funds go into a sort of master fund, LDS Trust, which is based in Australia. And then, that entity gives to LDS Charities Australia. As such, I guess, LDSCA is able to say that all of its donations come from Australia, even though it seems insanely obvious that the money ultimately does not come from Australia and certainly not from Australian members.

This all reminds me so much of common corporate tax strategy structures, such as the famous Double Irish. Now, corporate tax strategy is routine for large businesses, and yes that includes large non-profits. What's really unique here is that the church itself in Australia doesn't have any tax in which to deploy a tax strategy -- all of this complexity helps members in Australia avoid paying their own taxes. What was that about rendering unto Caesar?

Anyway, there is evidently an investigation based on two fundamental questions:

1. Given that LDSCA is essentially nothing more than a shell company, for which virtually all donations originate offshore and which distributes all of its funds offshore, does it legitimately comprise an Australian charity?
2. Given that LDSCA has no employees and is not based in Utah, where LDS Charities is home based, led and managed (ahem, the "Contact Us" shows LDS Charities HQ is 50 E. North Temple, sound familiar?), is the organization legitimately truthful in claiming one, very essential, charity legitimacy characteristic -- namely, that decisions about what to do with its funds are made solely in Australia? From the main article below, a church spokesman claims that these decisions are in fact made in Australia. Seems that may be an assertion authorities might be likely to dig in deep to test.

Here are some informative links:

• April article in the Sydney Morning Herald (Southerton featured image)
• Church response via Newsroom
• More investigation coverage, Labor and Greens call
• Mormon Dialogue thread on the topic
• A recent Reddit summary (Southerton in the comments)
• LDS Charities Australia annual financial reports
• LDS Trust entity financial reports (looks like a master-feeder fund)
• LDS church in Australia, annual financial reports
• A summary of the worldwide LDS Charities reports (has 1 page that touches on Australia finances)

Oh, what a tangled web...

[Rivendale]

Has anyone else been monitoring the tax loophole investigation in Australia? This really is interesting. I am no international tax attorney, just a curious onlooker at most. I assume our friend Simon Southerton might be able to shed some light on the latest goings-on, as he's quoted in some of the articles linked below. Perhaps this is fodder for one of Prof. Consigleri's graduate law laboratories?

In short, it seems like the problem-solution in question goes as follows.

Problem: Donations to churches are not tax deductible in Australia, but donations to charities are.

Solution: The LDS church sends virtually all (as in, worldwide) donations to its humanitarian arm, LDS Charities or LDSC, through a shell entity in Australia, aptly named LDS Charities Australia, or LDSCA. Additionally, tithing paid in Australia is routed through related entities (multiple shells) and becomes intermingled with the same charitable trust network. Church expenses in country are covered by the top of this feeder fund structure. And LDS Charities funds are distributed to their final destinations from the same network of fund structures. By doing all of this, the sum total of LDS-linked dollar expenses in Australia goes up, but more important than that is that the composition of those dollars morphs from being 100% church-related (non tax deductible for members) to a significant majority being charity-related. And voila, tithing is now tax deductible for Aussie members.

Church Incentive: Member tithing in Australia, now being tax deductible, will presumably be higher. PR value of being one of the largest charities in Australia doesn't hurt.

Who Loses?: Australian gov collects lower tax receipts because LDS members can now deduct their tithing.

Evidently, an investigation has been initiated into the legitimacy of this structure. No doubt, church attorneys at Kirton McConkie carefully weighed the legal lines and gave some sort of all clear. And I guess it should be stated up front that churches and charities in Australia have to file mandatory financial reports every year -- and it appears that the relevant church entities comply fully (links below). If my scan of the 3 filings below is worth anything, it appears like the church actually does a two-step money shuffle with its worldwide LDS Charities donations. Step one is, those funds go into a sort of master fund, LDS Trust, which is based in Australia. And then, that entity gives to LDS Charities Australia. As such, I guess, LDSCA is able to say that all of its donations come from Australia, even though it seems insanely obvious that the money ultimately does not come from Australia and certainly not from Australian members.

This all reminds me so much of common corporate tax strategy structures, such as the famous Double Irish. Now, corporate tax strategy is routine for large businesses, and yes that includes large non-profits. What's really unique here is that the church itself in Australia doesn't have any tax in which to deploy a tax strategy -- all of this complexity helps members in Australia avoid paying their own taxes. What was that about rendering unto Caesar?

Anyway, there is evidently an investigation based on two fundamental questions:

1. Given that LDSCA is essentially nothing more than a shell company, for which virtually all donations originate offshore and which distributes all of its funds offshore, does it legitimately comprise an Australian charity?
2. Given that LDSCA has no employees and is not based in Utah, where LDS Charities is home based, led and managed (ahem, the "Contact Us" shows LDS Charities HQ is 50 E. North Temple, sound familiar?), is the organization legitimately truthful in claiming one, very essential, charity legitimacy characteristic -- namely, that decisions about what to do with its funds are made solely in Australia? From the main article below, a church spokesman claims that these decisions are in fact made in Australia. Seems that may be an assertion authorities might be likely to dig in deep to test.

Here are some informative links:

• April article in the Sydney Morning Herald (Southerton featured image)
• Church response via Newsroom
• More investigation coverage, Labor and Greens call
• Mormon Dialogue thread on the topic
• A recent Reddit summary (Southerton in the comments)
• LDS Charities Australia annual financial reports
• LDS Trust entity financial reports (looks like a master-feeder fund)
• LDS church in Australia, annual financial reports
• A summary of the worldwide LDS Charities reports (has 1 page that touches on Australia finances)

Oh, what a tangled web...

And nobody seems to be able to hold their feet to the fire. The Huntsman lawsuit tried. The whistleblower for Ensign Peak has tried. (although I hear IRS litigation takes up to 7 years+) . Tom Phillips tried. And on and on....

[Dr Moore]

Fair enough Rivendale. Though I would argue, it all depends on the definition of failure. Does retention matter? Activity rates? Tithing compliance? Conveniently, none of those are shared openly like child births and convert baptisms. From what I hear, all 3 are trending horribly since the news leaked about ensign peak’s true size.

[simon southerton]

Has anyone else been monitoring the tax loophole investigation in Australia? This really is interesting. I am no international tax attorney, just a curious onlooker at most. I assume our friend Simon Southerton might be able to shed some light on the latest goings-on, as he's quoted in some of the articles linked below.

That was a great summary of what is going on down here in Oz.

We know for a fact (from a Church submission to the tax office) that prior to 2014 the LDS Church in Australia was donating about $36,000 per year to humanitarian aid. Since 2014 the Australian LDS church has been donating about $60 million per year to humanitarian aid. Did Aussies suddenly get almost 2000 times more generous? or are we pretty much the same tight arses we were before?

There is no doubt the church is funneling charitable donations from SLC through Australian accounts to obtain charitable status. This then allows members to claim all of their tax back on their tithing. It is also double dipping. Tax will have already been reclaimed on the US charitable donations.

The new Australian government has indicated that they are very interested in investigating this. A month ago there was talk of meetings with an assistant finance minister responsible for charities. Things have gone quiet recently which isn't really surprising given the current economic circumstances. There are much bigger problems facing the new government right now. Parliament sat for the first time since the election yesterday. I wouldn't be surprised if it takes a few more months for things to settle down.

When they do eventually investigate, the church will almost certainly lose its tax exempt status. Why? Because the practise stinks. It may be legal but it is unethical and any church doing this should be ashamed. If the government does not investigate I will be writing to every church in Australia that has a multinational presence and advising them how they could dodge tax the Mormon way.