Under IRS rules, nonprofit organizations “must not provide a substantial benefit to private interests.” In addition, the earnings of tax-exempt religious organizations may not benefit “any private individual or shareholder.”
When Nielsen’s complaint unearthed the massive reserve fund, some sources reported that it was intended for “the second coming of Christ.” But Caussé has said the LDS “methodically follows the practice of setting aside a portion of its revenues each year to prepare for any possible future needs.” The reserves, say leaders, are safeguards against recessions and other financial challenges, and the money also goes toward outreach in poorer regions such as Africa, where member contributions are lower. An executive who oversees the rainy-day fund says it had been kept secret to avoid “a position where people felt like, you know, they shouldn’t make a contribution.”
The Salt Lake Tribune reported that during the 2008 recession, the LDS cut its budget rather than pulling from its reserves.
Tax-Law Expert: Lawsuit Isn’t Likely to Succeed
Tax-law professor Sam Brunson, an LDS member, says Huntsman’s lawsuit is short on specifics and “isn’t going to answer anything.” If a donor doesn’t stipulate where contributions can and can’t be used, he says, then there’s no legal basis for recouping the money.
“The general rule is when you make an unrestricted donation to a charity, it’s the charity’s money,” Brunson says. “And if you later discover that they’re doing stuff with the money that you don’t like, you’re out of luck.”
James Huntsman’s lawsuit has procedural deficiencies and reads more like a statement, adds Brunson. “When you start your judicial complaint with a quotation from Brigham Young…and you bold-italicize stuff in your complaint, you’re not filing a serious complaint.” The quote from Young, an early church leader, references the need to be “honest…in our deals, in our declarations, and in every act of our lives.”
