Grunt

Financial Whistleblower

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Guest MormonGator
10 minutes ago, Vort said:

include "us" (or at least me).

generic usage of the word, which I use often. So often in fact, I don't explain it anymore. I used to explain it all the time. I wasn't referring to anyone in particular. 

I think I was exactly right. Whistleblowers are either heroes or villains depending strictly on how we feel about who/what they blew the whistle on. 

Edited by MormonGator

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A few thoughts.

I find it funny the people who want to take your money and spend it "the right way" or the way they want are also the ones who have racked up trillions in debt.  Heaven forbid an organization have a surplus.

I also found it interesting that in the article on WaPo, it mentioned that there is a "finders fee" for those who report tax fraud.  Seems like this guy has a chip in his shoulder, and is also trying to cash in.

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5 hours ago, MarginOfError said:
  • The Church takes in $7 billion dollars in donations annually, and spends $40 million dollars annually on humanitarian aid. That comes to 0.5% of its donations revenue is spent on humanitarian aid. That doesn't account for its other sources of revenue.  Conversely, about $6 billion of that is spent each year on operating expenses, which increases the percentage to 4% of the remaining billion is spent on humanitarian aid. One of the complaints raised is that 4% seems kind of low.

I want to point out one distinction here that the article and most people don't understand.  The church has two distinct streams of donations. Tithes and offerings.  Tithes are used for operating expenses.  Offerings are spent on welfare and humanitarian aid, which is why you never see a high number in the Tithes column.  And likely that 4% you mention is probably due to infrastructure costs, and not straight donations.  No, that's where your fast offerings, missionary funds, Deseret Industry, etc all comes from. Most of those funds are handled locally, and never even reach the central church, but are redistributed through the bishop at his discretion.  This is not part of the billions in the article.  And virtually every penny goes to charity, since we know bishops are unpaid, and many of the labor in making and distributing food is done by volunteers.  So, don't make the mistake of thinking the church is stingy on humanitarian efforts. They are simply not reporting that... and I believe are doing so deceptively.

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19 minutes ago, MormonGator said:

generic usage of the word, which I use often.

Who are the "generic 'we'"? Those on this forum? Latter-day Saints in general? Americans? Human beings? Vertebrates?

I think a generic usage doesn't work well when the generic reference is not well-defined. For example, if you mean "those on this forum", then you are simply wrong. Many here have demonstrated that they are far more fair-minded than that. If instead you mean "Latter-day Saints in general", I disagree with you, but the point is perhaps worth discussion. And if you intentionally left the meaning of "we" vague, then you really can't complain when someone like me objects to the overly broad, ill-defined characterization.

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45 minutes ago, Traveler said:

What we are talking about are tax deductible donations.  I do not intend to negotiate English words for meaning.   Lets take an example - like the Winter Olympics.  It can be quite interesting what is "charity" and what is an investment.  So @Mores - is money spent on Olympic venues overhead or investments?  (Since you are the expert and absolutely sure that there is not and never can be an intersection between the two sets of overhead and investment)

But lets talk about the church.  Are meeting houses "charity" or real estate investments or overhead for church operations? - How about temples, tabernacles and other church buildings?  And let us not forget investments or overhead in obtaining farmland, historical sites and other properties - It is not unusual for the church to procure property without designating its purpose.  Often temples are built on property already owned by the church.  Now for the favorite for many anti-LDS - Downtown SLC redevelopment.  Can helping develop business and safe environments for families be "Charity"?  Is using church funds to invest in businesses close to the SLC temple grounds for use by the community - never to be considered charity?  What a novel idea - letting inner city places rot and become over run with crime to be excluded from charity.   

Here is another novel idea - is money spent on equipment for communications, or creating movies - is it overhead or investment?  Is the owning of manufacturing facilities to manufacture temple cloths to be sold to members holding temple recommends - are such things tax deductible charities?  What if one year because of an accounting type mistake or change in the tax code and the church made a profit on any investment - what then?

Sometimes I am amazed at what lengths some are willing to go to; to contrive a complaint. 

 

The Traveler

I believe the church spends every penny with the goal of bringing people closer to Christ.  That includes all of the above.  As for the eyes of the law, the church, when it invests in profit making endeavors, like cattle ranches or shopping  malls, they do pay taxes on those investments, just as any for-profit company.  The difference is, the church, can immediately convert farms to charity endeavors with no effort, and of course they use the profits to funnel back into the process. They learned a lot from programs like the Perpetual Emigrating Fund, and how to use current funds for future endeavors. 

The notion that someone in the church is getting rich is the most frustrating accusation.  No one is getting rich, even though I hear from message boards that apparently Prez Nelson skims 2% off for his palaces.

 

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1 minute ago, bytebear said:

No one is getting rich, even though I hear from message boards that apparently Prez Nelson skims 2% off for his palaces.

Doctor Nelson didn't make enough money from his time as a world-renowned heart surgeon, you see. So now he has a sweet gig where, at 95 years old, he spends 80 hours per week traveling around from meetinghouse to meetinghouse helping people, and for this life of luxury he receives the exorbitant sum of around $120,000 per year. If only he could have made that kind of coin during his surgery days! Maybe he could have afforded to retire instead of working hard into his tenth decade.

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I do find this "scandal" a bit over stated.  The church takes in 7B, and spends 6B, and has 100B in savings.  Now, let's put that into household expenses.  Say I make 70K a year and my expenses are 60K, and I have 1 million in a 401K.  Sounds about right for a 100+ year old institution.  In fact, I would call it slim.

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16 hours ago, Mores said:

The article mentioned that.

This is difficult to fault him for.  If he worked for a financial company, then he's probably well aware of the laws providing for such compensation.  He would be a fool to simply say,"No, thank you.  I don't need it."

Basically he'd be getting anywhere from $500 Million to $9 Billion (a lot of estimating even to come up with those limits).  Yup, some people see that kind of money and they just can't help themselves.

Yup.  It was just as I figured.  They've dotted every "i" and crossed every "t".  So, it looks like these twins have sold their birthright for a mess of pottage.  Really sad.  I sure hope they can find it within themselves to repent.

Fair points, I'm just always skeptical of Anti Mormons when they try to paint themselves as 100% involved in a righteous cause. You are correct, if this was any other institution this fact wouldn't bother me.

Edited by Midwest LDS

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Guest MormonGator
44 minutes ago, Vort said:

Humans

Correct. 

 

45 minutes ago, Vort said:

I think a generic usage doesn't work well when the generic reference is not well-defined.

Noted. 

 

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5 hours ago, Traveler said:

I doubt this matters beyond a lottery someone expects if anything is collected.   It is not unusual for charitable organizations (like the Clinton's) that use as much as 90% of collected funds for overhead (investments).  The question is not if some money is invested - the question is - how much the controlling principles personally benefit - which is less than the lawyers that will adjudicate the case - I would be most interested to see a response from @Just_A_Guy

 

The Traveler

Tax law isn’t really my thing (@JohnsonJones, aren’t you a lawyer too?). There’s an LDS lawyer named Sam Brunson who blogs at By Common Consent (about the only redeeming feature of that cesspool), and his take is that we are sort of in a murky area of law.  In theory a not-for-profit subsidiary asset holding fund of a nonprofit is supposed to occasionally make donations to its parent nonprofit that are “commensurate” in size of the subsidiary.  But there’s a question about whether that “commensurate” standard applies at all; and my own take is that even if it does, the question is “commensurate to what”?  If the Church says (for example) “the fund needs to be commensurate to the work the economic/social reconstruction the Church anticipates being called to do once the White Horse prophecy has been fulfilled”—does the IRS have the constitutional right to say “the White Horse Prophecy is will never come to pass and you have no theological right to plan for it”?

Furthermore, I would submit that propping up a life insurance company in the middle of the 2009 financial crisis so that it could pay its employees and policy holders, is very “humanitarian”; as is urban redevelopment at City Creek.  It maybe too white-collar for the tastes of some progressives; but it very much provided a social and charitable benefit to the local community—believers and unbelievers alike.  

Edited by Just_A_Guy

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Guest MormonGator
25 minutes ago, Midwest LDS said:

You are correct, if this was any other institution this fact wouldn't bother me.

I really admire you for saying that. A lot of people lack the self reflection or worse, the integrity,  to admit they'd feel the same way. 

 

46 minutes ago, bytebear said:

I do find this "scandal" a bit over stated.  The church takes in 7B, and spends 6B, and has 100B in savings.  Now, let's put that into household expenses.  Say I make 70K a year and my expenses are 60K, and I have 1 million in a 401K.  Sounds about right for a 100+ year old institution.  In fact, I would call it slim.

My thoughts completely. It's totally overblown and anti-LDS people will use it as a stick to beat the church. 

The church is doing everything right. They announced they are cooperating with officials, and said they obey and follow the laws. So I'm optimistic it'll die down shortly. My grave concern is that they'll do what the Catholics did during their recent scandals. Plug cotton in their ears, pretend nothing is wrong, and turn the music up. Thankfully the leadership of our church doesn't seem to be doing that. 

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Heaven forbid an organization has a rainy day fund, combined with investments in the future.  I personally believe there will be a time when certain countries become open to the gospel, and we will have a massive influx of new members, and the infrastructure to maintain such an influx would be colossal.  Not really sure who said the money was being saved for the second coming, but they are right, if not totally distorting the reasoning (but what else is new?).

 

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3 hours ago, bytebear said:

I want to point out one distinction here that the article and most people don't understand.  The church has two distinct streams of donations. Tithes and offerings.  Tithes are used for operating expenses.  Offerings are spent on welfare and humanitarian aid, which is why you never see a high number in the Tithes column.  And likely that 4% you mention is probably due to infrastructure costs, and not straight donations.  No, that's where your fast offerings, missionary funds, Deseret Industry, etc all comes from. Most of those funds are handled locally, and never even reach the central church, but are redistributed through the bishop at his discretion.  This is not part of the billions in the article.  And virtually every penny goes to charity, since we know bishops are unpaid, and many of the labor in making and distributing food is done by volunteers.  So, don't make the mistake of thinking the church is stingy on humanitarian efforts. They are simply not reporting that... and I believe are doing so deceptively.

This isn't quite true. The only categories that remain in the local units bank account are the Budget, Ward Missionary, and Other. Each batch of tithing, fast offerings, general missionary, or anything else is immediately transferred to Salt Lake. When an fast offering expense is recorded by the unit, the funds for that expense are immediately transferred from Salt Lake to the local account. I believe it's been this way since at least 2000

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Guest Scott

This isn't a criticism, but a question. 

Why doesn't the Church disclose financial statements anymore?   They used to do it.  Most other churches that I am aware of do it.  So I'm just curious as to why they don't anymore.  

Anyway, 100 billion dollars would be enough for just over $10,000 per active member so it isn't as large of a sum as it seems.

By way of comparison, the national debt per person is around $67,000.😲

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51 minutes ago, Scott said:

This isn't a criticism, but a question. 

Why doesn't the Church disclose financial statements anymore?   They used to do it.  Most other churches that I am aware of do it.  So I'm just curious as to why they don't anymore.  

Anyway, 100 billion dollars would be enough for just over $10,000 per active member so it isn't as large of a sum as it seems.

By way of comparison, the national debt per person is around $67,000.😲

So if my math is right, you’re saying the Church should be carrying a debt of at least $670 billion in order to be as well-run as the federal government is. ;) 

Edited by Just_A_Guy

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6 hours ago, Just_A_Guy said:

Tax law isn’t really my thing (@JohnsonJones, aren’t you a lawyer too?). There’s an LDS lawyer named Sam Brunson who blogs at By Common Consent (about the only redeeming feature of that cesspool), and his take is that we are sort of in a murky area of law.  In theory a not-for-profit subsidiary asset holding fund of a nonprofit is supposed to occasionally make donations to its parent nonprofit that are “commensurate” in size of the subsidiary.  But there’s a question about whether that “commensurate” standard applies at all; and my own take is that even if it does, the question is “commensurate to what”?  If the Church says (for example) “the fund needs to be commensurate to the work the economic/social reconstruction the Church anticipates being called to do once the White Horse prophecy has been fulfilled”—does the IRS have the constitutional right to say “the White Horse Prophecy is will never come to pass and you have no theological right to plan for it”?

Furthermore, I would submit that propping up a life insurance company in the middle of the 2009 financial crisis so that it could pay its employees and policy holders, is very “humanitarian”; as is urban redevelopment at City Creek.  It maybe too white-collar for the tastes of some progressives; but it very much provided a social and charitable benefit to the local community—believers and unbelievers alike.  

My brother has been involved (as a missionary in Europe) with church funds.  The Church also is registered as a separate corporation in every country where funds are collected.  I believe the corporation in the USA is the corporation of the first presidency - but there may be several in the USA.  These corporations are registered with the church and pending on the local laws are joint with the church or separate.   Some countries will not let funds for charity leave the country - I believe Russia is that way.  I do not know how the Church runs the non profit side of things.  I know what I do.  All my businesses are held through LLC's.  I meet with my tax accountant each year (actually it is my wife that handles all our accounting) and we plan the deductions for the upcoming year in advance - Especially if we have any out of country income which we try to balance with expenses.  I would not call it "murky" as much as I would call it complicated.  Anyway business expenses work better than charitable donations because we can get personal benefits or I should say personal expenses covered.  I do not know but I suspect that missionary funds are most likely listed as business expenses rather than charity.

Every once in a while there is talk about the church losing its tax exempt status - I am not so worried because I believe the church could do alright by declaring or running the Church funds through corporations.   Bottom line - I have no doubts that the church runs things strictly by law (and I believe that in some countries the church does not have a tax exempt status).  I very much doubt that the article that started this thread will generate much traction.  If we listen at conference - the Church uses independent accountants for audits to insure all is lawful and well documented.  I am aware of individuals that have used church monies incorrectly but during my lifetime I do not know of any accounting failures.  I think the last time the church had a big failure with money and the church was the Kirtland Safety Society

 

The Traveler

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I gotta say, and this may reveal personal issues in my own adulting, but I actually haven't read the articles. I tried to be responsible enough to read summaries and such but in truth...

Boring.

Ah, man. Finances. So... Boring...

I watch my family budget and our investments and try to be responsible enough but I really hate it and don't understand why we can't just go live off the land and sell the zucchini we grow or something because I hate finances.

And I just don't understand why I need to care about any of us this.

If the cold dispassionate tax folks do their fair thing I will heed whatever punishment or lack thereof they give the Church.

But why must I get up in arms because I don't want to!

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Guest Mores
8 minutes ago, Backroads said:

Ah, man. Finances. So... Boring...

Hey!  Watch it, lady!  (just kidding).  My wife agrees with you.  And she's ALWAYS right.

8 minutes ago, Backroads said:

I watch my family budget and our investments and try to be responsible enough but I really hate it and don't understand why we can't just go live off the land and sell the zucchini we grow or something because I hate finances.

Wouldn't that be nice?

8 minutes ago, Backroads said:

And I just don't understand why I need to care about any of us this.

If the cold dispassionate tax folks do their fair thing I will heed whatever punishment or lack thereof they give the Church.

But why must I get up in arms because I don't want to!

Well, you're supposed to care as much as Harold Hill wants you to care about a pool table in River City.  Let me know if you're a bit young for that reference.

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1 minute ago, Mores said:

 

Well, you're supposed to care as much as Harold Hill wants you to care about a pool table in River City.  Let me know if you're a bit young for that reference.

Never, sir. Never too young.

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14 hours ago, Just_A_Guy said:

Tax law isn’t really my thing (@JohnsonJones, aren’t you a lawyer too?).

I actually stink with Taxes and use an accountant to do my taxes (among other things) for me.

My uneducated guess is that while a entity they use for finances MIGHT (emphasis on MIGHT) have done things that are not what they are supposed to do, the church itself will not be in trouble.  Many churches in their non-profit arms have similar expenditures and at least one (I think) is wealthier than the Church of Jesus Christ of Latter-day Saints (the Catholic Church).

If they go after the Church of Jesus Christ of Latter-day Saints too far, it could set a dangerous precedent that could affect OTHER churches and bring into question the relative involvement regarding the Freedom of Religion and such.

But, in truth, regarding tax law, I'm definitely not the guy to ask.  More of a History Professor and all that.  Now, if it comes to my specific field of History...I'm a whizz...beyond that...I'm an amateur historian just like everyone else!  (or at least those who are interested in it like I am).

Edited by JohnsonJones
grammar...spelling

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Guest Mores
15 hours ago, MarginOfError said:

At the end of the day, the guy took the risk to file a legal affadavit with his allegations. He isn't just mouthing off whatever he wants on TV...he's believes his allegations enough that he's willing to face serious legal consequences if its determined that he's lying.

That is a good point.  Even if his ultimate motivation was his hatred of the Church (I'm assuming, of course) he wouldn't have signed affidavits to anything he didn't personally witness.  So the question is...

15 hours ago, MarginOfError said:

That being said, my understanding is that the corporate culture of the place he worked at was pretty strong on only giving people access to the information necessary to do their jobs. This is an important information security principle, and so those that aren't managing across multiple groups don't always see the whole picture.

Exactly ... did he see enough of the picture so be accurate in his description of what he singed his name to?  I doubt it.

15 hours ago, MarginOfError said:

I'm not convinced that the Church did anything wrong. But I also wouldn't be surprised if some of their investments operated in legally ambiguous spaces. Welcome to reality.

Exactly.  It may sound strange to have a person who works with finances and the IRS to say that income tax is immoral.  But think about it.  Wouldn't you want such a person to help you through existing tax laws to minimize (legally) your tax liability?  Every corporation takes EVERY legal channel that their best accountants can think of to reduce their tax liability.  And that often means getting somewhat creative with categorizing expenses and so forth. 

What most people don't know is that the IRS is also aware of all of these ambiguities and every loophole, and they don't have a problem with it.  The IRS's job is NOT to get every penny they can out of you.  It is to make sure paperwork meets the standards they set.  And if the paperwork isn't perfect, then may God help you.

Obviously, there are some limits.  You can't categorize your insect and vermin population as "livestock", for example.  But the things that are commonly done in large corporations are all allowed, or else the IRS would strike down upon them with 1.21 gigawatts.

15 hours ago, MarginOfError said:

But I also am ready to question the motives of a whistleblower just because he is making allegations against an organization I hold in high esteem.+

I don't think we need to question his motives.  There really are only two motives in this scenario.  The thing is that it doesn't have to be an either or.

He was motivated to try to find something that he could call out the Church on.  He thought he found something.  So, he pounced.  He'll soon find that the presumption of innocence has as much to do with protecting the accuser (from getting egg on his face) as it does the alleged perpetrator.

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Guest Mores
14 hours ago, Midwest LDS said:

Fair points, I'm just always skeptical of Anti Mormons when they try to paint themselves as 100% involved in a righteous cause. You are correct, if this was any other institution this fact wouldn't bother me.

And we all should be.  As I stated to MOE, it pays to start with the presumption of innocence.  When all is said and done, I foresee two outcomes.

1) Nothing was done wrong and the accuser gets egg on his face.
2) The IRS finds some minor error in their forms, the Church pays any minor amount due + penalties, and life goes on.  Oh, the whistleblower only makes money if the value of recovered taxes is greater than $2 Milllion.  There are some provisions for less than $2 Million.  But details, details that would bore the heck out of @Backroads :) So, basically he could potentially get a couple hundred grand in this kind of scenario  -- IF something is found at all.

I really doubt that with the Church's accounting system, that there was any gross negligence or intentionally broken laws.  Life will go on.

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Guest Mores
10 hours ago, Scott said:

This isn't a criticism, but a question. 

Why doesn't the Church disclose financial statements anymore?

Here is the Church's official statement on it:

Quote

The Church is not a financial institution or a commercial corporation. It has no other objective than preaching the gospel and inviting all to come unto Christ. While the Church chooses not to publish the details of its finances, the Church does provide public information on the financial principles it follows, the financial controls in place to protect Church funds and the source and use of these funds. The Church also provides all financial information required by law.

It doesn't exactly answer your question.  But it does give some background.

10 hours ago, Scott said:

   They used to do it.  Most other churches that I am aware of do it.  So I'm just curious as to why they don't anymore.  

"Most"?  I'm not so sure.  The bigger the church, the less likely they are to publish it.  The Catholic Church publishes some things, but a lot is still kept private.  Smaller churches may be completely transparent.  But not many.  So, I'm skeptical about the "most" label.  Here's why.

It really is never a good idea to let EVERYONE know how finances are being spent.  There is certainly a need for oversight.  There needs to be some checks and balances.  But the larger any group is, the more likely there will be someone who disagrees with a single expenditure.  And with as many expenses are required for the Church's entire financial network, there are a LOT of things someone can get their panties into a twist about.  But from a business standpoint, it makes all the sense in the world.

My personal opinion, therefore, is that they are not published because of ignorant busy-bodies.  They see something that they believe is simply wrong.  WRONG! I tell you! WRONG! and they blather about it.  Well, the WaPo / SLtrib article is a prime example.  But when looking at it from the standards of business, organizational management, long-term goals, IRS and other regulations... there really is nothing wrong here.  But here is someone who has left the Church over it.

There are many fine, well-meaning people out there who really know nothing about business or how finances work to be able to properly judge whether something is proper or not.  But they see something and blow up about it.

One stake building in Guatemala (many years ago) asked for a refrigerator.  At the time, Guatemala didn't have the electrical grid that we're used to in the US.  If they could power their few lights, that was a comfort.  If they had enough money to own and operate a TV, they were rich.  So, a refrigerator, which uses a LOT more power than a TV was a luxury that few people even thought of.  But this stake wanted a refrigerator in the building.  

The Church's position was that no one in Guatemala uses refrigerators.  So, why would they put it in a building?  But they pointed to the first world countries who had them.  Eventually the Church gave in.  The stakehouse was given a refrigerator.  After a little while, they found out how much electricity it used by just sitting there.  No one actually used it.  So, they unplugged it.  So, they have it.  And... nothing else.

This is the kind of crap is what they have to deal with all the time.  I can see them wanting to keep expenses a secret, just to stop having to deal with it.

In its place, they have oversight with many bodies of the Church looking over everyone else's shoulder.  But it is by people who are in leadership (GAs) as well as industry professionals who know when something is a legitimate business expense, and when it is not.

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Church's Official Statement - First Presidency Statement on Church Finances

Quote

We take seriously the responsibility to care for the tithes and donations received from members. The vast majority of these funds are used immediately to meet the needs of the growing Church including more meetinghouses, temples, education, humanitarian work and missionary efforts throughout the world. Over many years, a portion is methodically safeguarded through wise financial management and the building of a prudent reserve for the future. This is a sound doctrinal and financial principle taught by the Savior in the Parable of the Talents and lived by the Church and its members. All Church funds exist for no other reason than to support the Church’s divinely appointed mission.

Claims being currently circulated are based on a narrow perspective and limited information. The Church complies with all applicable law governing our donations, investments, taxes, and reserves. We continue to welcome the opportunity to work with officials to address questions they may have.

 

Edited by NeedleinA

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1 hour ago, Mores said:

I don't think we need to question his motives.  There really are only two motives in this scenario.  The thing is that it doesn't have to be an either or.

He was motivated to try to find something that he could call out the Church on.  He thought he found something.  So, he pounced.  He'll soon find that the presumption of innocence has as much to do with protecting the accuser (from getting egg on his face) as it does the alleged perpetrator.

I apologize.  I omitted the word "not" in my statement "I am also not ready to question the motives..."  

I've generally been served better by taking people at their word until there is sufficient evidence to show that they've been deliberately misleading. 

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