Oregon HB2060 Imposes Restrictions On State Tax Deductions For Certain Non-Profit Charities, But Churches Unlikely To Be Affected

A bill signed into law in Oregon in June 2013 is triggering questions about its applicability to churches. Oregon House Bill 2060, which will eliminate state and local tax subsidies for charities that spend more than 70 percent of donations on management and fundraising over three years, passed in the state house by a 57-0-3 vote on March 15th, 2013 and in the state senate by a 29-0-1 vote on May 22nd. Governor John A. Kitzhaber signed it into law on June 4th.

-- Read the full text of HB2060 HERE.

According to the Oregonian, HB 2060 allows the Attorney General to issue orders disqualifying charitable organization from receiving contributions that are deductible for purpose of Oregon income tax and corporate excise tax if Attorney General finds that charitable organization has failed to expend at least 30 percent of total annual functional expenses on program services when those expenses are averaged over most recent three fiscal years. It also provides that the Attorney General may decline to issue disqualification orders if certain mitigating circumstances exist. It also specifies exempt organizations, imposes mandatory disclosure requirements for charitable organizations subject to disqualification order, and requires the Attorney General to publicly publish a list of charitable organizations that are subject to disqualification orders. Disqualified charities will also lose any property tax exemptions they may have. State officials estimate fewer than 100 charities will be affected by the law in its first year. A search of the Statesman-Journal's database on Oregon charities reveals no entry for LDS Philanthropies.

Charities disqualified do have the right to appeal. This bill has no effect upon Federal tax deductions. Even some non-profits are hailing the legislation; Jim White, executive director of the Nonprofit Association of Oregon, said "We're the first in the country, and we should be proud of that."

The question has arisen whether or not churches will be affected by this law. Considering the nearly unanimous support for the bill in the state legislature, it seems unlikely, since even Oregon lawmakers are unlikely to vote in favor of anything appearing to attack religion. Here are the non-profits exempted from any disqualification orders under this bill, as spelled out in Section 4:

(a) A private foundation as defined in section 509 of the Internal Revenue Code, as in effect on the effective date of this 2013 Act;
(b) A community trust or foundation operating as described in 26 C.F.R. 1.170A-9(f)(10) and (11), as in effect on the effective date of this 2013 Act;
(c) A qualified charitable remainder trust described in section 664 of the Internal Revenue Code, as in effect on the effective date of this 2013 Act;
(d) An organization that does not qualify to receive tax deductible contributions;
(e) An organization that is not required to file annual reports with the Attorney General;
(f) An organization that is not required to file an Internal Revenue Service Form 990 return or an equivalent Internal Revenue Service return;
(g) An organization that receives less than 50 percent of the organization's total annual revenues from contributions or grants identified in accordance with Internal Revenue Service Form 990 or an equivalent form; and
(h) An organization that has been in existence for less than four years.

But since the word "church" doesn't appear in the exemptions, one person contacted an attorney with the Attorney General's office, and documented the results on the anti-Mormon Recovery From Mormonism website:

"Just got off the phone with an attorney at the office of the Oregon Attorney General. We talked first this morning and he researched and confirmed that this law does not apply to churches, he used the term 'mainstream churches'...He said they would accept complaints, but that they were like to not have merit with respect to this law. Complaints are, however, a way to get this conversation started and he did have interest in many of the points being made about how the Mormon church operates financially, politically, and as a charity".

It is obvious from the tone of the post and the entire thread that some ex-Mormons and anti-Mormons would like to use this law to attempt to inflict damage upon the Church of Jesus Christ of Latter-day Saints, so Church headquarters would be prudent to keep an eye on this development.

Nevertheless, the law itself is well-crafted and well-intended, but would be a better law if churches were specifically exempted in the language of the bill.

LDS-Owned City Creek Center Revitalizing Downtown Salt Lake City, Earns Critical Acclaim, But The Ads Need To Be Cleaned Up

Would you see this at Sacrament meeting?

One of the projects financed by the Church of Jesus Christ of Latter-day Saints triggering controversy even among ranks of observant Mormons is in the news again. On July 9th, 2013, the New York Times published a story entitled "Mormon-Backed Mall Breathes Life into Salt Lake City" which shows that the City Creek Center has made a positive contribution to the economic and cultural life of downtown Salt Lake.

City Creek Center opened in March 2012, and was financed entirely by the LDS Church without the use of any tithing funds. Mall operator Taubman Centers said it owns the retail buildings and operates the place under a long-term lease from City Creek Reserve Inc. The most recent cost estimated published by KSL Channel 5 on June 19th, 2013, says that the cost is widely believed to be $1.7 billion, and that the accompanying condominium towers may have pushed the total cost to $2 billion. The LDS Church neither confirms not denies these numbers. Business leaders and developers credit the mall with spurring new business and enlivening what had been an increasingly seedy downtown core, although there are indications that the nearby Gateway Mall, a more family-oriented center, has paid a price. They saw sales decline around 20 percent to $150 million during 2012, and some of its tenants migrated to City Creek. Here are some of the facts and stats from the story:

-- Added 2,000 jobs and brought more than 16 million visitors into downtown, as well as provided 1,700 additional jobs during construction.
-- Helped downtown retail sales increase by 36 percent, or $209 million, in 2012. Convention visitors account for as much as 35 percent of retail sales.
-- All 111 rental apartments are fully leased.
-- Of the 424 condominiums, approximately 50 percent have been sold. Current market prices range from $486,000 for a two-bedroom unit to $213,000 for a 634-square foot studio.

What the Times did not include in the story was that City Creek Center has already received critical acclaim from a number of sources. On January 15th, 2013, KSL reported that International Property Awards named City Creek Center the Best Retail Development in the Western Hemisphere, and the third best worldwide, citing sustainable design, community collaboration, and breathtaking features and amenities as positives. But in 2008, long before the mall's completion, the Sierra Club issued a report on faith-based environmental initiatives which praised the LDS Church for its commitment to be good stewards in designing the mall. They said the mall placed a high priority on good health, the natural environment and quality of community life, and cited the employment of new-urbanism practices by choosing locations and designing projects that are transit-oriented and encourage walkable communities and more efficient energy and water use.

Nevertheless, the Times cites reaction from two different Mormons to illustrate the split within the LDS community on the project. Derek Staffanson, a local LDS member, has mixed feelings about the mall project:

"...I’m very disappointed with the manner in which the LDS Church chose to develop the area, the use to which they put it, and what that implies about the church’s priorities. If they had really been concerned about the local community and ending the blight, they would have built a mixed-income, mixed-use community, focusing on developing local entrepreneurship, community centers and resources, a playground, more like the true walkable urban communities in Europe. That would have truly revitalized the local community, creating more prosperity for all. For this huge sum of money to be spent on an edifice for commerce and conspicuous consumption seems at best misguided.”

However, Kevin Barney, a LDS member from Chicago who visits Salt Lake on occasion, reacted more positively:

“The church put a whole bunch of people to work during a deep recession. For another thing, downtown Salt Lake City had become blighted, and that area is sort of like the Mormon Vatican. I think the church had a responsibility to do something about it if it could.”

Another issue which has troubled some observant Mormons is the mall's occasional use of advertising considered to be sexually suggestive. Of course, just because a secular mall is owned by the LDS Church does not require it to precisely mirror LDS moral standards. But take a look at the screenshot of billboard advertising replicated below:

Bare Record was troubled by this, writing "...I find all of this to be quite troublesome. What causes me even greater concern is how we choose to market and advertise our LDS Mall. Here are a few photos that I took along the freeway of the new billboards advertising City Creek. In the first billboard shown, the advertisement uses the word: 'Enchants' to describe City Creek. A synomym for the word 'enchant' is 'beguile'. That word sounds familiar". This, of course, is in reference to the Genesis verse where Eve explains to the Lord that the serpent "beguiled" her and she did eat. On Pure Mormonism, H. Rock Waterman expresses similar concerns, and also questions whether City Creek is as financially healthy as touted.

In response to critics who insisted that the LDS Church spend more money "feeding sheep", FAIRLDS issued this statement recorded on March 25th, 2012:

"Some have insisted that funds would be better if directed to charitable works such as feeding the poor. The Church does have an extensive humanitarian effort. Critics on this point often overlook the fact that Church funds are best managed not by sitting in a bank account, but through prudent investment. Investment in land and real estate development is often a wise and ultimately profitable investment approach It is entirely possible that the City Creek Center Mall will eventually become a money making venture, as the Church collects rent from mall merchants. This investment strategy would allow the Church to, over time, recoup its initial outlay or even make money that could be further dedicated to the Church's religious and humanitarian goals

Critics also overlook the fact that if money is spent to feed the needy, that money is gone. On the other hand, if the Church reinvests in Salt Lake City's downtown core, this provides jobs and economic stimulus, for example, via construction and then the service-industry jobs which will fill the mall upon its completion. While providing fewer short term gains, this long term 'teach a man to fish' strategy could ultimately benefit many more people, by allowing them to 'help themselves'".

There's more than one way to feed sheep, and the best long term solution is to teach sheep to feed themselves, and, subsequently, others. This approach doesn't merely sustain the economy -- it actually GROWS the economy. By building this mall, the LDS Church gave back life to a declining community -- which cannot always be measured in pure dollars and sense. They would do well to clean up the ads, even if they do allow alcohol sales in certain areas and close most of the mall on Sunday.

When Jesus Christ Encountered Moneychangers In His Temple, He Didn't Exactly Declare Them "Too Big To Fail" And Give Them TARP Funds

It is amazing how many people idealize Jesus Christ and try to cram him into their own imperfect ideological shoebox. Some say Jesus was a socialist, others say a libertarian, and still others a capitalist.

The fact is, Jesus used whatever worked best in a given situation. In the Parable of the Workers in the Vineyard, He espoused the libertarian approach when He approved of the idea that employee compensation should be strictly a matter between employee and employer, even if it meant not all employees would receive equal pay for the same job.

But Jesus also displayed a socialist side as well when he encountered moneychangers at the temple during one of his visits. Instead of deciding that the moneychangers were "too big to fail" and giving them TARP funds, He reacted quite differently. It's recorded in multiple sources, starting with John 2:13-16:

13 And the Jews’ passover was at hand, and Jesus went up to Jerusalem,

14 And found in the temple those that sold oxen and sheep and doves, and the changers of money sitting:

15 And when he had made a scourge of small cords, he drove them all out of the temple, and the sheep, and the oxen; and poured out the changers’ money, and overthrew the tables;

16 And said unto them that sold doves, Take these things hence; make not my Father’s house an house of merchandise.

From Luke 19:45-48:

45 And he went into the temple, and began to cast out them that sold therein, and them that bought;

46 Saying unto them, It is written, My house is the house of prayer: but ye have made it a den of thieves.

47 And he taught daily in the temple. But the chief priests and the scribes and the chief of the people sought to destroy him,

48 And could not find what they might do: for all the people were very attentive to hear him.

And from Mark 11:15-19:

15 And they come to Jerusalem: and Jesus went into the temple, and began to cast out them that sold and bought in the temple, and overthrew the tables of the moneychangers, and the seats of them that sold doves;

16 And would not suffer that any man should carry any vessel through the temple.

17 And he taught, saying unto them, Is it not written, My house shall be called of all nations the house of prayer? but ye have made it a den of thieves.

18 And the scribes and chief priests heard it, and sought how they might destroy him: for they feared him, because all the people was astonished at his doctrine.

19 And when even was come, he went out of the city.

Note that Jesus did not object to the existence of the moneychangers or their profession; instead, He objected to the location. As it is inappropriate for a woman to show up at sacrament meeting wearing a miniskirt, so it is just as inappropriate to engage in moneychanging on ecclesiastical property. Yes, Jesus is spoken of as the Prince of Peace who counseled us to turn the other cheek, but when He encountered the moneychangers turning His temple into a stock exchange, He didn't turn the other cheek; He took out a whip and parted their cheeks with it. My kind of Savior.

So what about the relationship between the LDS Church and the controversial City Creek Mall in Salt Lake City? Analysis of the Lord's encounter with the moneychangers indicates that the Lord does not necessarily object to His church investing in shopping malls so long as His church invests a higher priority in building chapels and temples. The church's share of the profits from the City Creek Mall are intended to give the Church of Jesus Christ of Latter-day Saints additional income to permit it to continue its mission of preaching the Gospel unto every creature and caring for the needs of the membership even during hard economic times when tithing receipts drop and consumption of welfare resources rises. And considering that the LDS Church has 138 temples in operation, this would indicate the Church has given a higher priority to building temples.

Most importantly, Jesus Christ was always attuned to the will of the Father. When the will of the Father showed that socialism was best, Jesus employed socialism. When the will of the Father prescribed a libertarian approach, Jesus employed libertarianism. And when the will of the Father demanded a capitalist approach, Jesus employed capitalism. Jesus Christ was bigger than all the precepts of men; since He descended below us all at Gethsemane and Calvary, he was allowed to ascend above us all -- but for the purpose of taking us with Him if we choose to follow Him. It is not up to Him to conform to us -- it is up to us to conform to Him.

Bloomberg Businessweek Profiles LDS Church's Business Operations; LDS Church Issues Statement Clarifying Misconceptions

Note: This post addresses the Businessweek article and discusses official LDS reaction; individual rank-and-file LDS reaction is documented in this subsequent post.

On July 12th, 2012, the Church of Jesus Christ of Latter-day Saints issued an official response to an article about the Church's business operations entitled "How The Mormons Make Money", which was published on the Bloomberg Businessweek website on July 10th. In their response, the Church outlined the historical origins of its thriftiness, provided a brief tutorial on tithing and the five key areas supported by tithing funds, and, perhaps most importantly, explained how the Church's business assets support the Church's mission and principles by serving as a rainy day fund.

However, the proposed cover of the print version of Businessweek (upper left) drew a sharper and more critical response from the LDS Church. In a separate email response, LDS Church spokesman Michael Purdy wrote, "The Businessweek cover is in such poor taste it is difficult to even find the words to comment on it. Sadly, the cover is a reflection of the bias and speculative nature of the article itself. It is narrow and incomplete, omitting, for instance, a good deal of information given on how church resources are used. The article misses the mark and the cover is obviously meant to be offensive to many, including millions of Latter-day Saints." According to Politico, the original title of the article was to be the more slanted and provocative “Latter-day Lucre: How the Mormon Church Makes Its Billions”; no explanation for the title change is offered.

Local Utah coverage of this story is also provided by KSL Channel 5, the Salt Lake Tribune, and the Deseret News. The comments appended to each story provide a good snapshot of informal public reaction.

The Businessweek article itself is worthy of further dissection and analysis, because it does provide a well-researched and organized snapshot of LDS business holdings not readily available elsewhere in similar form. First, aside from the controversial cover, the character of the article seems to be particularly pro-Mormon or anti-Mormon; any inaccuracies can most likely be attributed to ignorance rather than malevolence. Extensively cited is Keith B. McMullin, a former member of the Presiding Bishopric who now heads up Deseret Management Corp. (DMC), an umbrella organization for many of the Church’s for-profit businesses. McMullin states “The Church of Jesus Christ of Latter-day Saints attends to the total needs of its members. We look to not only the spiritual but also the temporal, and we believe that a person who is impoverished temporally cannot blossom spiritually.” This last statement is NOT to be confused with the contemptible Prosperity Theology heresy which has infected part of Christianity and which sends the message that God loves the rich more than the poor.

McMullin also states that not one penny of tithing goes to the church’s for-profit endeavors, but the new donation slips used by the Church now state on the bottom “Though reasonable efforts will be made globally to use donations as designated, all donations become the Church’s property and will be used at the Church’s sole discretion to further the church’s overall mission.” Although McMullin did not provide any numbers about the LDS Church's new worth, a recent investigation by Reuters in collaboration with sociology professor Cragun estimates that the LDS Church is likely worth $40 billion today and collects up to $8 billion in tithing each year.

Here's a screenshot of a graphic which shows the relationship between the LDS Church and its major corporate holdings and other economic interests: