On Sunday night, the CBS news program “60 Minutes” aired a segment about the financial assets of The Church of Jesus Christ of Latter-day Saints. The story rehashed widely reported items about the church’s investments and spending and one man’s criticisms, a self-described “whistleblower” who once worked with church investments.
What the “60 Minutes” segment about the church’s finances and other reports often miss is the sweeping and at times poverty-ridden history that helps explain the church’s finances and decision-making today, including its modern-day record of self-sufficiency that sustains a global church.
Sixty years ago, a financial crisis engulfed the church and threatened to become the worst in the faith’s history, one historian wrote. That’s saying something for a church with a storied past of economic distress.
For example, an apostle once secured new loans in New York City hours before the church would have defaulted on a large payment with a San Francisco bank. He awoke despondent that morning, aware that a run on the two banks owned by the church threatened to wipe out the last of its deposits. If he had failed, the church’s credit rating would have been ruined and debtors would have sued to seize church assets, according to the late historian Ronald Walker.
In 1962, the church ran a $32 million deficit. With red ink soaking the church’s books again in early 1963 and its financial officers worried they wouldn’t be able to meet payroll for church employees, President David O. McKay moved decisively. He changed the assignment of one the counselors in his First Presidency who had overseen church finances, historians say.
A few months later, President McKay handed that role to a brand-new counselor who set the church on a rigorous course of fiscal responsibility. It began with years of belt tightening. The biggest symbol of that frugality was an immediate building moratorium. For five years, construction was halted on the largest building in Utah and Latter-day Saint history to that time, the 28-story Church Office Building.
The new strategy worked spectacularly. One historian said the principles for church finances established in the 1960s led directly to its accumulation of assets today.
“As far as I know, that program has been relentlessly and consistently followed for half a century. And if you do that for half a century — you take a portion of the tithing revenue every single year and you just set it aside and invest it — between savings and then the exponential growth that you get from compounding interest on investments, the church gets this enormous pool of reserves,” said Nathan Oman, a historian and professor of law at William & Mary Law School in Williamsburg, Virginia.
Today, the church has a stock portfolio worth tens of billions of dollars. “60 Minutes” said some have estimated the church’s assets total as much as $150 billion, though it didn’t provide a source for that figure. The church does not publicize how much money it has so it can keep the focus on its religious mission, Bishop W. Christopher Waddell, first counselor in the Presiding Bishopric, told “60 Minutes.”
The program suggested again without a source, that the church takes in $7 billion in tithing each year and spends $6 billion on its various religious and charitable causes, investing what remains for a time of need. These funds are managed by an investment arm known as Ensign Peak Advisors, which is not considered a separate entity but rather functions as an “integrated auxiliary” of the church.
If the church did have $150 billion, a figure the church did not confirm during the “60 Minutes” interview, then the $6 billion it is said to spend annually on its mission would represent 4% in annual charitable spending, above what a retired IRS executive told “60 Minutes” would be necessary for a non-church 501c3 to maintain its non-profit status. Unlike other charitable 501c3 entities, churches are not required by the IRS to make minimum disbursements.
The church provides more than $1 billion in charitable contributions to an extensive multi-campus worldwide educational system (including its flagship university, BYU) and another $1 billion a year in humanitarian offerings. Meanwhile, it funds 30,000 congregations, a global missionary effort, as well as thousands of meetinghouses, hundreds of temples and extensive free genealogical services — all part of the church’s religious mission to invite people to follow Jesus Christ.
Bishop Waddell said the church’s goal is “to make sure that we’re comfortable with how many years’ worth (of operational budget) we have in case of a financial crisis to make sure that we can continue church operations. We just want to make sure that that is sufficient.”
It is impossible to understand the church’s financial holdings and practices by looking at stock filings alone or at incomplete estimates compiled by unofficial sources, historians say. Latter-day Saint leaders’ actions are deeply rooted in both specific theology as well as a history of economic distress.
Large church reserves have been wiped out before.
Those factors, combined with a history of societal and governmental tensions, created an immense drive to build independent, self-sustaining communities and economies. This is the story of how the Church of Jesus Christ rose from a small band of believers with little to no money to become a global faith that has achieved a sweeping economic-sufficiency that its earliest leaders sought from the start.
And the unprecedented reserve funds that are a first in the church’s history could shape its increasingly global growth trajectory. Oman proposed that the church’s compilation of assets may be increasingly important during a time when most of its membership expansion is centered in Africa and Latin America.
“The per capita wealth of Latter-day Saints today is likely higher than the per capita wealth of Latter-day Saints in the future,” he said. “What savings does is move money from the high per-capita wealth of Latter-day Saints now and transfers it to the lower per-capita wealth of future Latter-day Saints.”
Theology and money
Financing preceded the birth of The Church of Jesus Christ of Latter-day Saints.
The publisher hired to print the Book of Mormon required the full payment upfront. There was no church yet, and the printing would cost the equivalent of nearly $100,000 in today’s money. Prosperous New Yorker Martin Harris, for whom Joseph Smith had worked as a day laborer, covered the cost by mortgaging his 320-acre farm in 1829.
The church was organized in 1830. Five months later, Joseph Smith received a revelation stating that to God, all things are spiritual. That statement became the theological underpinning for the church’s vigorous economic development across the American frontier and through 21st century globalization. Church leaders continue to interpret the scripture to mean that both the spiritual and earthly are eternal and inseparable. For Latter-day Saint leaders, then, economic welfare is an indispensable part of religion, according to the late economic historian Leonard J. Arrington.
Joseph Smith had a management role in more than 20 business enterprises, according to the late historian D. Michael Quinn. Brigham Young oversaw economic expansion from the Rockies to the Pacific Ocean. They believed money was necessary to build the kingdom of God, provide maximum security for the church, help church members, and care for the poor and needy, Quinn said.
So the church bought property and built up — then abandoned under duress — frontier cities from Ohio to Missouri to Illinois. It received pennies on the dollar for the properties it could sell as it left each place.
“Leaders had to devise ways of helping poor members move westward,” Arrington wrote. The moves also involved church leaders in buying land and formulating plans for community and economic development.
Finally driven from the United States by murders and mobs, the bedraggled religious pioneers didn’t just stop beyond its borders in the Salt Lake Valley. They expanded from there to create more than 300 settlements ranging from Mexico to Idaho and California to Colorado.
Success in each depended on developing an economy from scratch. They founded stores, sawmills, printing shops, asheries, farms and much, much more. Some succeeded. Others did not. In early Utah, church leaders persisted in their quest to be self-sufficient from the United States.
Brigham Young once said that if the church was left alone for 10 years in the Great Basin, Latter-day Saints would establish themselves as an independent people. In the 1850s, he instigated missions dedicated to economies — the Iron Mission, the Sugar Mission, the Lead Mission and others for cotton, flax, silk, wine and wool.
“From the very beginning of the church, there was a need for money, and I think that’s something that influences how the church operates today, because it’s been such a large part of our history,” said Matthew Godfrey, senior managing historian for outreach and engagement in the Church History Department.
Build and divest
Church leaders also started a salt business and a resort, bought interests in railroads and telegraph lines, and pioneered the hydroelectric power industry in the west. All of those interests eventually were sold to eastern businesses. That, too, has been a Latter-day Saint pattern.
The Church of Jesus Christ filled community needs, then over time donated or sold off assets when it no longer made sense for the church or the need could be met by others, historians say. In some cases, keeping businesses would have benefited the church’s bottom line. For example:
- In the 1930s, as public education disrupted church schools, the Latter-day Saints gave to Utah and Arizona what today are Weber State University, Utah Tech University, Snow College and Eastern Arizona College.
- The church’s three banks merged in 1957, but in 1960, it got out of the banking business, too, selling its controlling interest in Zions Bank for $9.8 million. In 2021, Zions reported a net income of $1.1 billion.
- In 1975, it donated its 15 “vigorous and financially viable” hospitals to a nonprofit organization because they were not “central to the mission of the church.” Intermountain Healthcare since has expanded to 33 hospitals in seven states with $13.9 billion in total revenue last year.
What remains central to the mission of the church is welfare and humanitarian aid, education, missionary work, genealogical work, meetinghouses, and temples for weekly worship and religious ordinances.
Historical efforts by church leaders to build economic independence and look after the welfare of its members sometimes failed to pan out.
Deficit spending was common for the church in the 19th century. The church experienced deficits repeatedly, in the 1830s, 40s, 70s and 90s, and in the 1900s, 20s, 30s and 60s, according to historians.
The worst early financial setback was the failure of the Kirtland Safety Society, the church’s first foray into banking, though the institution technically was a joint stock company. It opened in January 1837, suffered major losses by May and closed in November.
“The church established the Kirtland Safety Society because, like other frontier communities, Kirtland was a cash-poor society. The idea was to leverage the land that people owned to provide for economic development in the area,” Godfrey said.
A complex set of factors doomed the bank. One was the nationwide Panic of 1837, a recession that caused 600 banks to fail. Every bank in Michigan closed, including one the church had acquired to shore up the Kirtland Safety Society. The church’s leader, Joseph Smith, lost the most money, Godfrey said.
“Generally, church-owned or -controlled businesses have been a drain on its resources, often helping drive the LDS church to the edge of bankruptcy,” Quinn wrote. “This happened first in 1837 during a national depression.”
Joseph Smith led the church next to Missouri, but within 10 months, the governor issued an extermination order against the Latter-day Saints. An apostle and at least 17 others were killed in the days before and after the order. (A future governor formally rescinded the order in 1976.)
The church again suffered losses in the next move, to Nauvoo, Illinois.
There, church members turned swampland into a city that for a period surpassed Chicago as the largest in Illinois. The influx of Latter-day Saints — the church organized to assist 5,000 European converts to migrate to Nauvoo — threatened the state’s political order and their religious beliefs, including polygamy, offended other residents. (The 1890 Manifesto “led to the end of plural marriage in the church.)
Financial struggles persisted. Joseph Smith, whose finances had become enmeshed with the church’s, was forced to file for bankruptcy in 1842. He spoke of moving the church farther west. His violent murder at the hands of a mob and additional threats of violence in 1844 led to just that.
When the Saints departed Nauvoo they again left behind a temple and lost money on property.
The move touched off what Arrington deemed the largest migration in American history. It was a religious imperative once again inseparable from earthly expense and survival. And what began with 25,000 pioneers organizing to leave Nauvoo for Salt Lake City in 1847 was just a beginning.
Through the church’s Perpetual Emigration Fund and other efforts, 80,000 people moved west over four decades at a cost of $10 million, Arrington wrote. What one economist called the best system of regulated immigration in U.S. history would have continued, but Congress shut it down in 1887 with the anti-polygamy Edmunds-Tucker Act.
The apostle and the loan that averted bankruptcy
Congress had sought to quash early Latter-day Saints polygamy for years. The Edmunds-Tucker Act had real teeth. It attacked church businesses and seized church assets. A combination of government interference, business setbacks and poor investments left the church defenseless against the coming of the second-worst depression in U.S. history, Arrington wrote.
A perfect storm was rising that threatened to become another Kirtland, which one church leader had dubbed the “perfect horror.”
By December 1892, the church owed half a million dollars in short-term, rapidly maturing loans it had no prospect of paying, according to historian Ronald Walker. The church had suffered major losses in mining, sugar, real estate, banking and investments.
Church President Wilford Woodruff dispatched a future church president, Elder Heber J. Grant of the Quorum of the Twelve Apostles, to New York City to seek new loans so the church could make its payments. Elder Grant initially saw some success in May 1893, according to Walker.
But in June, an economic panic struck the country. The Panic of 1893 would be known among Americans as the Great Depression until the next one in 1929. Utahns began a run on Salt Lake City banks, including two owned by the church.
On July 1, the Latter-day Saint banks began the day with $40,000 in deposits on hand, already below what federal regulations required. By the end of the day, they had $10,000 left, Walker wrote.
At the same time, the church failed to make payroll for its employees. “We have no money,” the First Presidency wrote.
In August, the church informed Wells Fargo Bank in San Francisco that it likely would default on a Sept. 2 loan payment. On Sept. 1, the church’s banks held less than 3% of deposits, Walker said.
In New York, Elder Grant secured what should have been the necessary $100,000 loan, but the banker delayed payment until Sept. 6. Elder Grant had a fitful night, crying in prayer early the next morning.
Fortunately, New York bank deposits had begun to stabilize, and Elder Grant managed to secure a $250,000 loan from a man who had done business with the church before, John Claflin. Within hours, $50,000 was available to one of the church banks, and Wells Fargo received its payment on time.
The loan saved the church from bankruptcy, Walker wrote, but combined with the depression, it still was ruinous. President Woodruff called the loan’s terms “fearful”: The church was to pay back the $250,000 in two years at 6% interest. Claflin also got to keep $50,000 off the top for himself.
That meant the church actually had only $200,000 to use.
The church couldn’t pay Claflin in 1895. Instead it transferred railroad and resort shares to him. He received his final payment in 1899.
Almost three decades later, Heber Wells wrote a letter to Elder Grant, who had become the church’s president. Wells had helped hold back the runs on the church banks in 1893, then became Utah’s first governor. He reminded President Grant of their time in the financial foxholes of the Panic of 1893.
“Those were the days,” Wells said, “when we fought and bled and nearly died together.”
The 1963 crisis that modernized church finances
That loan was a turning point for the church, according to Walker. Economic forces were working to nationalize the American economy, he wrote. The church’s efforts to build a self-sustaining economy beyond the Rocky Mountains were over.
In 1899, new church President Lorenzo Snow told other church leaders “the Lord was displeased with us for borrowing or going into debt to the extent of nearly ($2 million) for business enterprise.”
Within the Latter-day Saint tradition, the story is well known about President Snow calling for church members to recommit to paying tithing, the biblical injunction to give 10% of one’s increase in return for an outpouring of spiritual blessings from God. By 1901, increased tithing funds had wiped out half the debt, but it would take until 1907 for the church to get its nose above water again.
“Today The Church of Jesus Christ of Latter-day Saints owes not a dollar that it cannot pay at once,” President Joseph F. Smith said at general conference in 1907. “At last we are in a position that we can pay as we go. We do not have to borrow any more, and we won’t have to if the Latter-day Saints continue to live their religion and observe this law of tithing, It is the law of revenue to the church.”
The next Great Depression capsized church finances once more. In 1938, the church spent nearly $900,000 more than revenues, according to records kept by the late President J. Reuben Clark, first counselor in the First Presidency. Throughout the 1940s, he capped church spending at 28% of tithing revenues. By 1959, the church had spent about $100 million less than it received in tithing from 1943-47 and 1950-59, according to historian Quinn.
By 1963, that money was gone.
During the late 1950s, the church embarked on an aggressive international building program. The church was growing fast. Worldwide membership increased by 50% to nearly 1.7 million members from 1950-60. President Henry D. Moyle, first counselor to President David O. McKay in the First Presidency, believed it could grow faster by building meetinghouses to draw and support new converts.
President Clark was reticent. President McKay pressed forward, according to Quinn. The church built more than 1,000 new meetinghouses. It also built temples in Switzerland and England when Europe didn’t have a single Latter-day Saint stake, the church term for a grouping of strong congregations, said Oman, the William & Mary business law professor.
“In a sense, they were both right,” Oman said. “President Clark is right that the spending that President McKay begins and that’s carried forward with President Moyle is not sustainable given the church’s income.
“President McKay is right in that he saw the possibility of global Mormonism, this massive wave of convert growth that he envisioned as a possibility and that the church was going to work toward.”
Tithing revenue surged as church membership grew, according to Quinn, but President Moyle resumed deficit spending to fund construction. The church spent $32 million more than it received in 1962. President McKay took back financial oversight as losses mounted again in 1963. In October, he handed the role to President N. Eldon Tanner, making the Canadian business executive his first counselor after President Moyle’s death.
“President Clark ends up being right about the finances and President McKay ends up being right about the convert baptisms,” Oman said.
“The synthesis of those two positions is N. Eldon Tanner.”
Setting the course to today’s prosperity
President Tanner vigorously enforced austerity. He had a ready answer when his five sons asked why they couldn’t have items they couldn’t afford.
“Boys, I can give you three reasons,” he’d say. “The first is, we can’t afford it. The other two don’t matter.”
President Tanner called for a review of all financial practices and imposed revolutionary modifications. He installed modern principles of scientific financial management. He also systematized the church’s investments, according to historians.
First, he instituted a building moratorium. It was awkward. On the land just north of church leaders’ offices, they had started construction of a sky-scraping Church Office Building. Work began with a subterranean parking garage in 1962. When that was complete in 1964, President Tanner halted the project.
In 1966, he informed a committee that “funds had not been allowed in this year’s budget to begin construction on the General Office Building.” For a total of five years, church leaders could use the stand-alone parking garage and look out their windows at the top of the idle ground.
Finally, work began again in 1969 — when the church’s deficits had turned into a $29.5 million surplus, according to Quinn. The 28-story building opened in 1972.
“The basic answer to the story of how the church went from financial difficulty to this world today where it has enormous surpluses is N. Eldon Tanner,” Oman said.
“N. Eldon Tanner controls costs, and leaders put in place the requirement that the operating expenses of the church will always be met out of annual tithing revenue — so there will be no debt, there will be no liquidation of assets to pay for operating costs, and some portion of tithing revenues are going to be set aside against future expenses,” Oman said.
President Tanner’s biographer said that until he arrived, the church budget had been “‘a halfway thing,’ with many activities not even included. Now a strict, comprehensive budget was established requiring individual departments and the organizations as a whole to live within its income.”
Seven future church presidents were part of the Council on the Disposition of Tithes when President Tanner began to install those principles at the end of 1963. Elders Gordon B. Hinckley and Thomas S. Monson, who would guide the church into the 21st century, were new apostles.
President Tanner remained the first counselor in the First Presidency for the next 20 years, overseeing church finances for President McKay and three of his successors, steeping the church in the financial principles that have led to today’s era of unprecedented financial strength.
“First, total expenditures will not exceed forecasted revenue,” said the church’s current Presiding Bishop, Gérald Caussé, who guides the church’s temporal affairs under the First Presidency’s leadership. “Second, the budget for operating expenses will not increase year to year at a more rapid rate than the anticipated growth in tithing contributions.”
An apostle who once served with President Tanner, Elder Marvin J. Ashton said, “President N. Eldon Tanner will go down in history as one of the greatest counselors ever to serve in the First Presidency of the church.”
The challenge of financial strength
For most of its history, the church regularly faced financial destitution. Today it has different challenges. It has gone from a past where there was not enough money and the leaders needed to find ways to help impoverished Latter-day Saints, some of whom were refugees, to determining today how to properly utilize its funds in service of its increasingly global mission. Society and finance also are changing.
“The financial model the church has now was created to solve a bunch of problems in the 1960s,” Oman said. “It’s a very new chapter. I don’t think there’s any reason to suppose the financial model put into place in the 1960s is going to work effectively in the 2020s, 60 years later.”
The church’s humanitarian aid spending has more than doubled in the past five years, to $1.02 billion last year. It also has changed its Sunday worship schedule from three hours to two hours, allowing Latter-day Saint chapels to serve multiple congregations.
But over the past five years, President Russell M. Nelson has announced plans for 133 new temples, an increase of 73%. While some critics want the church to spend down its reserved assets, they serve a strict purpose, according to the Presiding Bishopric.
“There will come a time when all of these resources, reserves, will be necessary,” Bishop Waddell has said. “We don’t know when, we don’t know exactly in what form, but you think of the (Bible story of the) seven fat years and the seven lean years, there’s so many examples in the scriptures that we strive to follow, whether it’s the parable of the talents and not to bury the talent. We saw what the Lord did to that individual. We want to be ready for any contingency.”
During the COVID-19 pandemic, the church was able to dramatically increase its humanitarian projects due to the church’s position of relative economic strength.
Church leaders are also aware that stock portfolios are volatile. In 1930, the first counselor in the First Presidency said the church had lost “at least $6 million” in stock and bond transactions during the previous decade.
The church launched Ensign Peak Advisors in 1997 to manage $7 billion in reserves invested in securities, or stocks. Using long-term investment strategy, the church’s securities held by Ensign Peak rose to $52.3 billion in the fourth quarter of 2021, according to public filings.
“Most of the growth, I have to say, is because we are right now in the longest period of prosperity in the United States that has ever been recorded, and this is creating that surge of financial markets,” Bishop Caussé said just before the COVID-19 pandemic. “We are just beneficiaries of it.”
The church’s portfolio sank 23% to $40.3 billion in the third quarter of 2022. It rebounded to $44.4 million by year’s end.
“I think people don’t realize how much volatility there could be in the value of a really big portfolio, especially if you’re an institution that can afford to be illiquid,” Oman said. “If economic conditions go badly, there will be big swings in the value of their portfolio.”
That means that what now looks like it would cover more years of operations should a downturn ravage the economy would actually be much smaller because of the effect a downturn would have on markets.
“If that were to happen…,” Bishop Waddell said, “we won’t have to stop missionary work, we won’t have to stop maintaining buildings and building temples, we won’t have to stop humanitarian and welfare work, we won’t have to stop education work.”