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Thursday, April 1, 2010

Tithing

The Church of Jesus Christ of Latter-day Saints has a three-year system for collecting and spending tithes.
 
In the first year the funds are collected.
 
In the second year the funds remain invested while a budget is prepared for spending the tithing.
 
In the third year the funds are spent.
 
During the time when the funds are collected (first year), they are put to use in investments or deposits which yield a return.  Similarly, while they remain invested during the second year, they also yield a return.  When the third year arrives, and the funds are being spent on budgeted expenses, until the day they are spent they continue to collect interest or a return.
 
The amount of tithing collected in the first year is the amount designated "tithing" contributions.  This is the amount that is budgeted and spent in the third year.  All of the return on tithing yielded in the form of interest or return on investments is treated as "investment income" not tithing.
 
When the church spends "tithing" on temples, chapels, publications, etc. those monies are confined to the original amount collected as "tithing" only.  
 
When the church spends "investment money" those include the interest, return, etc. collected on the tithing money during the three year cycle from when originally collected until the time it is spent.  It also includes the returns on the returns as they accumulate over the years.
 
Therefore, when the church announces that a project (like the large reconstruction of downtown Salt Lake City) is not "tithing" but is "investment income" of the church, this is the distinction which is being made.

2 comments:

  1. Interesting. Seems more like a game of cat and mouse to me.

    While it is true that such projects are financed with "investment income," there are a number of issues at play.

    Financing projects with investment income, per your discussion, is predicated on positive returns. Assuming projects are financed with investment income, what happens when that investment income shows negative losses? If the negative losses pile up enough, and this investment income dries up, where would the money then come from to finance such ventures? More of a rhetorical question than anything else.

    As recently as the 1960s the church was engaged in some rather serious "deficit spending" upwards of $32,000,000. $32 million more went out then came in...in the 60s. The funny thing is, if we use an inflation calculator to adjust to today's prices, that $32 million then would be the equivalent of almost $225 million today ($225,000,000).

    It was at this time that "corporate financing" was introduced through N. Eldon Tanner and the church was saved from financial ruin. It was also around this time that the annual financial reports stopped being presented at General Conference.

    Today we assume, as a collective church body, that the church will always do well financially and will always be able to keep up with aggressive building and development plans.

    Abinadi and King Noah may provide an interesting parallel here. Just my opinion, though.

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  2. To me this sounds like a wise way to finance projects (or for that matter any increase in personal lifestyle). I for one have been working towards something like this in my personal life... or at least living off of interest, returns, etc. rather than consuming the fruit of my labor.

    Not to boast, but as an example. A couple of years ago I was earning and living off of 10K a month of this type of income (interest).

    However, as Tom mentioned, there can be times when Interest is not earned as anticipated. If managed correctly principle, or capital can be preserved. However, spending of interest expands or contracts as interest earned expands or contracts.

    My spending of interest earned contracted as my investments did. However, they are now on track and expanding.

    Thanks Denver for sharing this insight on how even the widows mite can be utilized and expanded towards building up the kingdom of God on the earth, and to the establishment of Zion.

    The parable of the talents found in Matt. 25 , and even more applicable would be the parable of the pound found in Luke 19. comes to mind.

    My thought is to evaluate your stewardship and "go and do thou likewise."

    -- Randy, Denver's piano tuner ;)

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