SALT LAKE CITY >> The Church of Jesus Christ of Latter-day Saints defended today how it uses and invests member donations after a former church employee charged in a complaint to the Internal Revenue Service that the faith had improperly built a $100 billion investment portfolio using member donations that are supposed to go to charitable causes.
The vast majority of member donations are used to fund church operations, temples, missions, education and humanitarian needs while another portion is “methodically safeguarded through wise financial management and the building of a prudent reserve for the future,” church spokesman Eric Hawkins said in a statement.
He said the Utah-based faith of 16 million members worldwide complies with all applicable laws governing donations, investments, taxes and reserves and handles the money based on “sound doctrinal and financial principle taught by the savior.”
The IRS complaint from a former church investment manager alleges the Utah-based faith known widely as the Mormon church has misled members and possibly broken federal tax rules for religious organizations by using an affiliated investment arm to set aside about $1 billion a year from the $7 billion the faith receives annually in member donations, the Washington Post reported Monday.
The confidential IRS complaint was filed by David A. Nielsen on Nov. 21 and shared with the Washington Post by his twin brother, Lars P. Nielsen. Neither returned phone calls, emails and texts today from The Associated Press.
David Nielsen argued the church owes billions in taxes, and he wants a cut of that as part of a reward the IRS offers whistleblowers.
He stopped working for the company named Ensign Peak Advisors in September after saying in a resignation letter that he could no longer work there after his wife and children had left the faith and asked him to follow them.
Hawkins said the claims are “based on a narrow perspective and limited information.”
IRS spokesman Anthony Burke said the agency cannot discuss or confirm the complaint because of the rules of federal tax law.
The allegations bring new attention to the church’s finances that faith leaders have long declined to discuss publicly, fueling widespread intrigue and speculation. The church’s members worldwide are encouraged to give 10% of their income in a what is known as “tithing.”
Church historian D. Michael Quinn estimated in a book published last year that the religion brought in $33 billion in member contributions and an additional $15 billion from its for-profit businesses in 2010. Much of that money is likely spent to operate church buildings, temples and programs, Quinn said.
The church’s for-profit businesses include ranches and real estate, such as the $1.7 billion City Creek shopping center that opened in 2012 and spans two city blocks across the street from the church’s flagship temple.
The church said last year in an article about its charitable work that it has provided $2.2 billion worth of assistance to 197 countries since 1985. That includes cash, commodities and in-kind donations.
Lars Nielsen said in a statement to the Washington Post that his brother asked him to write an expose about his former employer, which turned into the complaint.
“Having seen tens of billions in contributions and scores more in investment returns come in, and having seen nothing except two unlawful distributions to for-profit concerns go out, he was dejected beyond words, and so was I,” Lars Nielsen said.
Ensign is registered as a supporting organization and integrated auxiliary of the church, allowing it to operate as a nonprofit and to mostly make money tax-free so long as it operates only for religious, education or charitable purposes. David Nielsen contends the church hasn’t followed those rules and hasn’t directly funded those three categories in more than two decades.