DiscussMormonism.com

Is $200 billion in a rainy day fund a prudent reserve level, or is it obscene hoarding?

A couple of years ago I posted the following answer to that question on another board and in case anyone is interested, I think it is worthwhile to share again.

@smac97 has tried to justify the size of the Church’s reserves by saying things like:

“Unlike you and me, the Church will exist in perpetuity, so it's stewards have to think about much longer prospects. If we are to survive the "lean years," we need to prepare now.”

“The Church is building a portfolio so that it continue to do "50 years from now" what it is doing today.”

https://www.mormondialogue.org/topic/74 ... us/page/5/

He has also said:

“I think few of us are situated to speak intelligently or competently about good wealth management.”

https://www.mormondialogue.org/topic/75 ... -finances/

On that last point I agree, but good “wealth management” isn't the issue. The objective is to speak competently about the church’s current and projected income, current and projected expenses, and the sum-total of the risks it faces. Dealing with these issues isn’t wealth management; it is enterprise risk management. In my professional life, I am considered an expert on that topic and in that context, I regularly deal with numbers on the magnitude of the Church’s reserves.

To put the numbers into perspective, in the next few posts I’m going to make a comparison between the Church and Northwestern Mutual Insurance Company (NM). NM is currently ranked #97 on the Fortune 500, ranks #1 on Fortune’s list of “World’s Most Admired Companies” in the insurance industry, and gets the highest possible financial strength rankings possible from A.M. Best, Fitch Ratings, and Moody’s Investors service. Like the Church, NM plans on prospering in perpetuity, and everything it does is based on meetings its obligations to policyholders and ensuring its continuing financial strength.

The Church actually owns a few insurance companies. In the comparisons I make in the next few posts, I’ll be referring only to the Church proper, and will bracket all of its commercial entities as components of its investment profile.

The statistics about NM are taken from the following resources:

https://www.northwesternmutual.com/who-we-are/

https://www.northwesternmutual.com/2021 ... l-results/

https://www.northwesternmutual.com/asse ... ements.pdf

To be continued...

Overview:

The Church has about 6 million members who participate in the religion, and perhaps 20,000 full-time employees. It builds and maintains temples and chapels for its members who operate 31,400 congregations on a volunteer basis, administers a missionary program for its volunteer missionary force, owns a group of universities and colleges that it heavily subsidizes, runs seminary and institute programs that are staffed by paid instructors, and maintains and populates the world’s largest genealogical library. It also has a conference center and several visitor centers, and administers LDS Charities.

NM has entered into over 4.9 million contracts that are currently in force with individuals for their insurance needs. Each one of those contracts is a significant liability and risk to NM. Typical contracts include paying a widow $500,000 if their spouse dies, paying somebody $4,000 a month if they become disabled and continuing those monthly payments until age 65 or until the disability ends, paying somebody an annuity worth $6,000 a month every month until they die, or paying for somebody’s long-term care bill (which could be $10,000 a month) until they recover or die, for up to 5 years. These 4.9+ million contracts represent huge commitments on the part of the insurance company. NM also has about 6,700 employees.

Ownership Structure

The Church is a corporate sole and/or a public non-profit. 100% of its “profits” are used to increase the financial strength of the Church.

NM is a mutual insurance company that is owned by its policyholders. Some of its profits are paid back to the policyholders in the form of dividends, and the rest is used to strengthen the company for future generations of policyholders.

Risk Profile

The Church has no debt and is extremely flexible in terms of its finances. It is set up to limit expenses to about 90% of its tithing revenue on a year-by-year basis and doesn’t enter into obligations it doesn’t think it can pay for with future tithing revenue. While it does pay perhaps $500 million a year to members in fast-offering benefits that are financed by passing through fast-offering contributions it receives in addition to tithing, these benefits aren’t guaranteed and are scaled up or down according to fast offering revenue. It’s possible, and perhaps likely, that as time goes by, a smaller and smaller percentage of members will pay tithing and that both total tithing revenue and average tithing paid per member will decrease. It is possible it will resist decreasing its services in the face of decreasing tithing revenue, but ultimately the Church doesn’t need a lot of money to perform its basic functions. It can and does build much less expensive chapels in Africa than it builds in Utah.

NM is legally bound to pay the benefits stated in its 4.9+ million insurance contracts that are currently in force. It finances these contracts by both aggregating risk and by prefunding risk—a large chunk of premiums received in the early years of a policy are saved to pay for benefits that are more likely to be paid in later years. The total amount of life insurance protection it has in place is over $2.1 trillion. In addition it has hundreds of billions of contractually guaranteed benefits for annuities, disability insurance, and long-term care insurance. Because of the nature of these contracts, if there are changes in investment returns, mortality, or morbidity that cost it money, its only flexibility is to change the dividend scale, (and in the case of long-term care insurance, it can raise premium rates). Otherwise, it is on the hook for what it has promised.

continued...

Income

The Church takes in perhaps $7 billion a year in tithing revenue, plus perhaps $500 million a year in fast-offering revenue that is passed-through in fast-offering benefits.

NM received about $22.7 billion in premium revenue in 2021.

Paid Benefits and Expenses

The Church probably pays a couple billion a year on buildings and building maintenance per year, another couple of billion on church education, and a few hundred million a year on the missionary program, and another few hundred million on overhead and everything else. Something like that. Much of this is scalable (e.g. depending upon tithing revenue it can accelerate or decelerate building projects. If its membership grows in third-world countries with low tithing revenue, it can build inexpensive chapels there).

In 2021, NM paid policyholders about $12 billion in benefits, and an additional $6.5 billion in dividends. It spent $4 billion on commissions and operating expenses, and 1.1 billion in taxes.

Liabilities

The Church has effectively no liabilities.

At the end of 2021, NM had about $297 billion in liabilities. What does that mean? Actuarial calculations demonstrate that under moderately adverse conditions, $297 billion, plus earned interest on the $297 billion, plus future premiums, should be sufficient to pay for all of the policy benefits promised in the 4.9+ million contracts that are currently in force.

To be continued...

Rainy Day Funds

We know that including its for-profit business and real estate portfolio, the Church’s “rainy day fund” is somewhere between $100 billion and $200 billion (or whatever you think its secret reports happen to say).

Compare the risks the Church is facing to the risks NM is facing. The Church has very few legal obligations and can scale its operations so that it lives within its means. Joseph Smith didn't need billions of dollars to start the Church, and Russel M. Nelson can figure out a way to continue to operate the Church on less than its tithing income. That formula has worked for 60 years, and there is no reason to think it will suddenly stop working now.

In contrast, NM is legally obligated to pay insurance benefits to millions of policyholders that could theoretically be in the trillions. Remember, NM receives top scores for its financial strength and is the most admired insurance company in the United States.

How big should NM's rainy-day fund be so that given the significant risks it carries, it can maintain its superlatively high financial strength ratings?

As-of December 31, 2021, NM’s rainy-day fund (in insurance parlance its “surplus plus AVR”) was $37 billion.

This gets back to my original point about the size of the Church’s rainy-day fund being obscene. If Northwestern Mutual, one of the largest and most admired and most financially secure companies in the world only needs a rainy-day fund of $37 billion to ensure its ability to fulfill trillions of dollars in contractual obligations to nearly 5 million policyholders, why does the Church need several times that amount in order to continue to provide an infrastructure for church operations that function on a voluntary basis?

The truth is that from a professional enterprise risk management perspective, it doesn’t.

Thanks for this, Analytics. This kind of stuff is mysterious to most of us; our financial Everest was signing the mortgage papers, and the air felt thin when we did it. Billions over decades are so foreign that we can believe anything. But people do deal with this stuff—you, for instance—and it’s not actually unknown what the rules are.

It seems clear that the LDS church has too much money, and no idea what to do with it. It may not be able to do anything with that much money that won’t somehow shock a lot of its people, as being the wrong kind of thing for the church to be doing. So it may be afraid to do anything significant at all.

Perhaps build the starship Nauvoo?

Physics Guy wrote: ↑

Fri Aug 22, 2025 7:47 am

Perhaps build the starship Nauvoo?

Though I rarely comment on them, I always appreciate your literary references. Nice work.

I need to wait for DCP and other Mopologists to spin this before I determine for myself that the rainy day fund is too large.

I’m sure they can come up with a rationalization that actually the fund is too small.

Did you know they have started giving over 1 billion to charity now?

drumdude wrote: ↑

Fri Aug 22, 2025 2:45 pm

I need to wait for DCP and other Mopologists to spin this before I determine for myself that the rainy day fund is too large.

I’m sure they can come up with a rationalization that actually the fund is too small.

Did you know they have started giving over 1 billion to charity now?

That spending only escalated after it became common knowledge just how little of its wealth The Church had been spending on humanitarian causes. And now it can be considered “marketing” budget because they sing their own praises with press releases etc.

drumdude wrote: ↑

Fri Aug 22, 2025 2:45 pm

I need to wait for DCP and other Mopologists to spin this before I determine for myself that the rainy day fund is too large.

I’m sure they can come up with a rationalization that actually the fund is too small.

Did you know they have started giving over 1 billion to charity now?

Isn’t the majority of what “the Church” claims it is giving simply distributing fast offerings?

drumdude wrote: ↑

Fri Aug 22, 2025 2:45 pm

Did you know they have started giving over 1 billion to charity now?

But that's only in "in-kind" donations. The church calculates what the dollar value of the labor rendered by its volunteers would be if it paid them, then considers that phantom money to be donated by the volunteers (in the form of free labor). So the church itself is spending $0; the 1 billion is in donated hours by volunteers.