What the Mormon church has in common with Larry Page
One place sunlight doesn't shine is a company named Ensign Peak Advisors in Salt Lake City, Utah. According to a whistleblower complaint first reported by the Washington Post, Ensign manages an astonishing $100 billion in assets while paying no taxes.
The big picture: Ensign achieves its tax-exempt status by dint of being an "integrated auxiliary" of the Mormon church. It allegedly receives approximately $1 billion per year from church members' tithes, while disbursing nothing to charitable causes. Between new contributions and investment returns, it has managed to grow to its current gargantuan size.
- If the complaint is true, Ensign is bigger than the Harvard endowment and the Bill and Melinda Gates Foundation combined.
What they're saying: "The Church chooses not to publish the details of its finances," it has said. A non-denial statement in response to the latest news coverage characterizes Ensign as being "a prudent reserve for the future" that exists "for no other reason than to support the Church’s divinely appointed mission."
- The complaint quotes Ensign’s President, Roger Clarke, as saying that the money would be used in the event of the second coming of Christ. It is unclear what exactly the church would or could do with its assets in such a situation.
Be smart: The IRS requires all tax-exempt organizations to act charitably in a way that is “commensurate in scope with its financial resources,” but religious institutions have generally been allowed broad latitude to run their finances as they see fit. It's not clear that even the IRS, however, was aware of the size of the Ensign portfolio.
What to watch: Ensign would seem to have given even less money to charity than Google co-founder Larry Page's $3 billion Carl Victor Page Memorial Foundation. (Page, who is worth about $65 billion, named his charitable foundation after his late father.)
- According to Recode, Page's foundation has given a total of $570 million to donor-advised funds, and just $21 million to nonprofits.
- While it's possible that the DAFs have in turn given some of that $570 million to charitable causes, they have no obligation to do so.
My thought bubble: The transactions look very much as though they were entered into just to allow the foundation to retain its nonprofit status.
The bottom line: Money naturally flows into tax-exempt vehicles. Without a government agency keeping a close eye on those vehicles to ensure no shenanigans, it's almost certain that the IRS is missing out on taxes from hundreds of billions of dollars of assets.
Go deeper: Erik D'Amato writes about the backlash against so-called philantocracy — rule by unaccountable nonprofits — for Inside Philanthropy.