Latter-day Saints lawsuits raise questions over Mormon tithing – can churches just invest funds members believe are for charity?
Three men have filed a lawsuit against the Church of Jesus Christ of Latter-day Saints – also known as the LDS or Mormon church – and its investment arm, Ensign Peak Advisors, Inc.
- Three men have filed a lawsuit against the Church of Jesus Christ of Latter-day Saints – also known as the LDS or Mormon church – and its investment arm, Ensign Peak Advisors, Inc.
- LDS church doctrine requires its members to tithe – that is, give 10% of their income to the church.
3 kinds of relief
- The men are seeking three forms of relief.
- They’re also requesting other monetary relief, including that the LDS church pay their legal fees.
- In February 2023, the U.S. Securities and Exchange Commission found that Ensign Peak, the church’s investment arm, had failed to make required disclosures of its securities portfolio.
- By a whistleblower’s estimate, it may be as high as $100 billion.
Donors generally have no say
- Charitable donations, generally of money or property, are often deductible for tax purposes because churches qualify as exempt under section 501(c)(3) of the Internal Revenue Code.
- While donors cannot get their money back when they are disappointed by a charity, they will probably stop making donations.
Fiduciary duty – for the institution
- They argue that the church breached its fiduciary duties to its members – all of whom are also its donors.
- Fiduciary duties encompass a special duty to act in the best interests of someone or something, based on certain legal relationships.
Allegations of fraud
- In Utah, plaintiffs must file fraud suits within three years of when they discover or should have discovered fraudulent behavior.
- And the Ensign Peak allegations first surfaced in 2019 – four years before the plaintiffs filed this lawsuit.
- Their lawyers argue that the statute of limitations does not bar the case, because the LDS church hid how it used the money and plaintiffs could not have discovered the alleged fraud until recently.
Seeking relief
- But they are also asking for the court to order the LDS church to make periodic financial disclosures and to appoint an independent authority outside the church to oversee the church’s finances.
- Appointing somebody to oversee how the LDS church raises and spends its money would violate this doctrine.
Samuel Brunson is practicing member of the Church of Jesus Christ of Latter-day Saints.