The Almighty Dollar
Are churches good money managers?
Photo by Leon Neal/AFP/Getty Images.
Former oil executive Justin Welby was named Archbishop of Canterbury on Friday. Welby openly criticized banking excesses in the run-up to the 2008 financial collapse, and some hope his business experience will help him stabilize the church’s finances. Are churches good at managing their money?
Some are very good. The Church of England invests conservatively, putting most of its $760 million in assets into stocks and real estate. The church’s 5.7 percent annual return just beats the Standard & Poor’s 500 over the past decade (excluding dividends), but that revenue covers only about 15 percent of the church’s operations, with most of its cash coming from parish giving. It’s difficult to compare the Anglicans’ investment performance with that of other major religions, which are generally reluctant to release financial information. It seems relatively clear, however, that the Latter-day Saints are outpacing them, in part because the Mormon Church goes well beyond passive investment in existing businesses. In July, Business Week investigated the Mormons’ money management, noting that the church’s largest investment vehicle pulls in $1.2 billion per year. Its investments include media, hospitality, and insurance businesses. The church also owns more than $1 billion worth of land in the United States alone, used for crops, livestock, and timber.
The Roman Catholic Church is also secretive about its money, but the Vatican financial situation is clearly tumultuous. In recent years, the church swung wildly between losing $10 million in a year to earning $45 million. Earlier this year, the U.S. State Department for the first time included the Holy See on its list of “jurisdictions of concern” because it might be vulnerable to money laundering. JPMorgan Chase also closed the Vatican’s account, providing little explanation for the decision. While the Holy See is moving toward greater financial transparency, it appears that internal controversies over how far to go and a legacy of alleged mafia connections are slowing the process.
Few religious organizations can top the Church of Scientology when it comes to secrecy, making it nearly impossible to determine how the church invests its money. The organization is, however, obviously efficient at extracting revenue from its members. Last year, the St. Petersburg Times (now the Tampa Bay Times) reported the stories of Scientologists who were pressured into giving hundreds of thousands of dollars to the church. One couple, after giving $160,000 to help build a new church, declined to take out a loan to give an additional $90,000. They quickly received an official complaint from Scientology headquarters noting that it would take the couple only a year-and-a-half to pay off that debt. At fundraising events, members have reportedly been blocked from leaving until they donated. The Church of Scientology also makes impressive profits on merchandising, selling holy texts to its members for $3,000 each. Earlier this year, a senior church member broke ranks and complained that the organization was sitting on more than $1 billion in assets.
Large religious organizations rarely fail, but small churches have been going bankrupt at a brisk rate since the 2008 financial collapse. Maryland’s Ark of Safety Christian Church filed for bankruptcy in June, and the Charles Street African Methodist Episcopal Church, which has been active in Boston for nearly 200 years, also declared bankruptcy this year. More than 240 other churches have been foreclosed upon since 2010. In many cases, they have been unable to refinance their mortgages, which, unlike residential loans, come due after five years.
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