Mormons Go Keynesian

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While the Church of Jesus Christ of Latter-day Saints has a reputation of being wealthy, the long term fiscal trajectory of the LDS church paints a different picture.

Despite high profile investments and for profit businesses owned by the LDS church, it is primarily dependent on member donations (tithing, or 10% of one's income) for its operational budget. Tithing revenue has currently flat-lined due to demographic and geographical factors both inside and outside of the United States. As baby boomers retire, their incomes decrease significantly. Families are having fewer kids and younger people are taking longer to get going in their careers. This coupled with high unemployment for the last five years or so (and likely the next five years or more) all have a negative impact on tithing revenue.

Geographically more and more members are joining from poorer places in the world (Africa for example) and even in the rich parts of the world, like Western Europe, it is immigrants who are more likely to join who tend to be relatively poor. This also has negative consequences for tithing revenue.

Meanwhile demands on tithing revenue continue to increase. New missions need new mission homes and rapid church expansion in many remote areas means more chapels and temples that need to be built. Run-away costs in higher education make subsidies at BYU, BYU-Idaho, and BYU-Hawaii go up as well. The spreading of the gospel to every nation and tongue also means an increase in spending on translation and publishing. What strategy does the church have to combat this problem?

One might think it's time to turn tithing up to 11%. Surprisingly, harsh austerity measures have not been implemented.

For example, within the Church Education System $100 million could be easily saved annually with higher tuition rates for BYU universities and the replacement of paid seminary and institute teachers with volunteer (called) teachers. The church has been very reluctant to make significant cuts of any kind. While it is true the church has recently restructured some divisions such as printing, it resulted in only moderate cuts and savings. President Monson has asked for more donations for the missionary program, but it was just a suggestion, no change in official church guidelines for tithing or fast offering contributions.

Overall, the church has not engaged in harsh austerity measures. Rather, it has implemented Keynesian economic principles of targeted spending that it hopes will result in church growth and hence a growth in tithing revenue.

For example the resent "surge" in missionary force will likely increase the number of missionaries from around 58,000 to 90,000 by the end of the year. Currently there are already more than 75,000. This resulted in the creation of 58 new missions which will result in a significant increase in expenses for the church. While most missionaries pay for their own mission, or get financial support of ward members, there is still a significant amount of costs associated with them such as the mission home, mission office, living stipend for the mission president, church materials for distribution, and infrastructural costs such as the mission car. This change will also result in a significant increase in both new converts and increased activity rates among current members. Both of these results will increase tithing revenue significantly. The church is increasing spending (both in terms of money and human capital) to promote growth at a time when it is difficult to balance the budgets.

Another recent example of Mormon Keynesianism can be found by the recent "I'm a Mormon" ad campaign. The decision to launch an advertising campaign to blanket New York City and London stemmed from two sources. One, to repair the tarnished image of the church after the prop 8 battle in California and second, to take advantage of the "Mormon moment" associated with Mitt Romney's unsuccessful Presidential bid.

These were expensive campaigns, various sources estimate a range from 6-20 million dollars. Usually an expensive media campaign would be one of the first items to be deducted from a budget during hard times. However, the church saw an opportunity to increase growth. The campaign will surely spike interest in the church. This will help missionary work and also remind members, including non-tithe paying members, of their membership and accompanying commitments.

A third example of Mormon Keynesianism dates back before the great recession to 2001 when President Hinckley was inspired to start the Perpetual Education Fund. This fund provided church subsidized loans to young members from developing countries so they could get an education. The program took some years to get off the ground, but was fully running before the Great Recession hit and has now helped over 50,000 members. According to church statistics, this resulted in a 3-4 time increase in their salaries, which also means a 3-4 time increase in tithing revenue, and higher employment rates compared to those without an education.

While it is not surprising to see the church take significant measures to better their balance sheets, it is surprising to see it adopt a Keynsian approach. The church increased spending in media campaigns, missionary programs, and educational programs that it hopes will lead to growth both in terms of membership and tithing revenue. Revenue generation was certainly not the only or perhaps even the primary goal behind these measures, but it will be an important result of these measures. By implementing a Keynseian strategy, the church will might be able to save some members from consequences of austerity: unemployment, higher donation requirements, higher tuition payments, and a reduction in church educational opportunities.

If these stimulus measures work, the church won't have to turn up tithing to 11 afterall. Some may argue whether these stimulus measures were inspired by God or if they just reflect the American business background of church leaders. There is one thing that we can be sure of: we are all Keynesians now, even the Mormons.

Matthew Crandall is an associate professor of International Relations at Tallinn University

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