Quick review: prior to November 1990, missionaries and their families paid the actual cost of their missions. Moreover, parents would send money directly to their sons and daughters, with no intermediation from the Church. In May 1990, the U.S. Supreme Court ruled in Davis v. United States that such payments were not tax-deductible, notwithstanding language in the Internal Revenue Code that contributions made “to or for the use of” the Church would be deductible. In November 1990, the Church announced that, going forward, it was equalizing the costs of missions; all (U.S. and Canadian, at least) missionaries would pay a set monthly amount into the Church’s mission fund; the Church would then disperse to missionaries the amount of money they needed. While there’s no indication that the decision in Davis caused the Church to change its policy, I wouldn’t be shocked if the Davis decision at least affected the timing of the change.[fn1]
The Church’s Amicus Brief: The Church was not a party to the Davis litigation. It did, however, have an interest in the outcome. As such, it filed an amicus brief with the Supreme Court.[fn2] The Church’s overall position is that “[n]on-deductibility [of the payments made by parents to their missionary children] would force the Church to choose between preserving the beneficial characteristics of its present program and sacrificing Church objectives to qualify the program for tax deductibility of its members.”[fn3] I’ll list below what the Church considered the beneficial characteristics of these unmediated payments, followed, in some cases, by my thoughts.
- Family Connection to Service Builds Faith.
- Keeps Missionaries Frugal.
- Helps Avoid Tax and Visa Problems in Foreign Countries. The Church points out that, in order to get a visa, missionaries needed to demonstrate that they were sponsored by donated funds from home (so that they wouldn’t create a welfare burden in the country they went to) and that they would not be employed (and thus not compete for jobs in their mission country). I don’t know how the Church has resolved these visa issues.[fn4] I have actually been interested for some time about why the payments from the Missionary Fund to U.S. missionaries isn’t taxable income to them. I mean, we claim to be uncompensated volunteers when we’re missionaries, but ultimately, we pay money into a fund (and presumably get a tax deduction for it, at least if we’re U.S. taxpayers and we itemize), and the fund pays us money. That feels like income, at least for tax purposes. But the I.R.S. said, in Rev. Rul. 62-113,[fn5] that amounts paid from the fund to volunteer missionaries to reimburse them for certain qualified living and traveling expenses, incurred while serving the church, are not included in the missionaries’ gross income, and are therefore not taxable. (That provides a reason separate from the sacred funds argument for the discouragement missionaries receive from spending their money on things that aren’t mission-related: they may be taxable on such expenditures.)
- Reduces Administrative Burdens and Costs. We’ve clearly gotten over this (as we have the rest of the objections); I’m sure computerization has helped. But there always is some cost to administering an additional fund; there has to be some real effort required to figure out how many missions, how many missionaries, what their costs are, etc.
- Responds to Change in Location or Needs. Remember, mission cost didn’t just vary from mission to mission: it varied from area to area. The Church argued that a missionary’s weekly letter home allowed her family to know about changed financial needs faster than either local members or the Church itself could find out. How had my mission handled the change? Every month, every missionary got R$120 (IIRC). The mission paid our rent directly to our landlord, and the assumption seemed to be that rent was the only really variable cost. And it worked, at least in my mission.
A couple other interesting ideas coming out of the Church’s brief: the Church argues that, notwithstanding the potential abuses that could result from deducting payments made directly to one’s missionary child, there was no evidence that any abuse had actually occurred. In fact, the Church argued that its “policies and procedures—particularly those resting on the Church’s objective to keep missionary expenses as low as possible—are an effective safeguard against abuse.”
Also, even before 1990, the Church had a centralized missionary fund. While parents sent money directly to their children, other members who wanted to support mission work could donate to the fund, which would then distribute that money to missionaries who could not by themselves or with their family support their missions. The Church argued that the tax treatment of people who sent money directly to missionaries and those who sent it to the fund should be the same.[fn6] It’s not fair, the Church essentially argues, that one set of donors can deduct their donations, while a second set cannot.
Ultimately, as we all know, the Court found against the deductibility of direct payments to missionaries, and the Church decided to establish the central fund and the equalized cost. As people, we’re often resistant to change, and I suspect that the Church’s amicus brief reflects such resistance, at least to some extent. And ultimately, I think the change has been a good thing—it makes saving for a mission easier and more predictable, and it means the expense of a mission fairer between members. But nostalgia can also be grounded in something real. The Church claimed that, if it was forced to switch from missionaries and their families paying the actual cost of their missions to funding missions through a central fund, something would be lost. So, now that we’ve had the current system of funding missions for almost 21 years, what do you think: did we lose something? And, if so, what?
[fn1] I want to point out that, even if the Church changed its policy entirely as a result of the Davis case, that doesn’t reflect at all on the Church’s truth-claims. I can’t think of a single argument that direct payment of mission expenses is doctrinally required; this seems the clearest example of a Church policy that both can and should change in reaction to changing legal regimes.
[fn2] An amicus brief is a a document provided to the court by a non-party to litigation. Usually the non-party has some sort of interest in the outcome, and tries to provide additional information to influence the court’s ultimate decision.
[fn3] If I could, I’d link to the brief, but I can’t find any free database of Supreme Court briefs that goes back earlier than 1999. If you have access to LEXIS or Westlaw, you can, of course, read the brief yourself.
[fn4] Or maybe it hasn’t—my MTC group was the last one for a year to get into Brazil without visa-waiting, and, when I was teaching at the MTC, Brazilian-bound missionaries again ran into visa problems. I have no idea what the impediment to visas was, but the fear of visa problems was/is undoubtedly a very real issue.
[fn5] Sorry, again, there’s no free link I can provide.
[fn6] This seems to be the one tax policy argument the Church makes: the idea that similarly-situated taxpayers should pay a similar amount of tax is called “horizontal equity,” and is pretty foundational in the design of a fair income tax.