Is Watchtower Running out of Money?

With the recent sale of the property in Brooklyn, Watchtower stands to make a considerable amount of money. What’s more, there is even a real possibility they could inherit a considerable amount from Prince’s will, if one exists.

Now that the 733,000-square-foot headquarters complex and two other nearby properties, all owned by the Witnesses, have been offered for sale to the highest bidders, a contest that is expected to bring in as much as $1 billion, the sign glows with new meaning — a beacon for development.

Jehovah’s Witnesses Brooklyn Headquarters for Sale

Who Gets Prince’s Money? Jehovah’s Witnesses Could Stand To Gain From Singer’s Estate

But we also know that Stephen Lett, Governing Body member, recently indicated they were losing more money than they were gaining, that they’ve been cutting back on spending for quite some time now, and that they’ve been seriously stepping up their game of directly asking for money from all members.

Please read this article by John Cedars, and watch the video – it’s incredible information. John has already put a lot of research and time into this, so what I’m wanting to deal with is the numbers, and we do have a few we can work with. Having done a little research, let me share what I’ve found regarding their financial situation.

The Numbers

At first, and for some time, I remained skeptical that Watchtower was truly doing that bad. A billion dollars is a lot of money (1,000,000,000 = 1,000 x 1,000,000). Think about this number for just a moment because it needs to have proper perspective. Even if Watchtower lost a million dollars per child abuse case, they could lose 1,000 times. If you look at the news from Australia though, they could potentially lose just that in this country alone.

Let’s say Watchtower put this money into a savings account with just 1 percent interst, like these. This would mean they would make 10 million dollars a year on that money just for having it. They could lose ten cases a year at a million each and it wouldn’t touch the original billion dollars (granted that’s assuming it was allowed to yield a year interest before being touched, but this is just putting numbers in perspective). This is why I’ve remained skeptical of their supposed poor financial situation. This is a lot of money, and it get’s worse if you consider that they’d be far more likely to invest this money and get more than just a 1 percent return. But there’s an important part that I was not considering, and if you’ve been thinking like me this may help you.

Operating Costs

It’s already been mentioned above that they’ve been cutting costs everywhere. The article referenced on JW Survey explains that they’ve cut printing on the magazines by 39% monthly. Chances are also pretty high that you live in an area where congregations have sold their Kingdom Hall and are now sharing one with another congregation. But it’s not just Kingdom Halls, they’ve been selling different properties at an incredible rate. All of this budget cutting is bound to save them ton’s of money.

However, even with the cutting they’ve been doing over these last few years, their operating costs were still 236 million dollars last year.

During the 2015 service year, Jehovah’s Witnesses spent over $236 million in caring for special pioneers, missionaries, and traveling overseers in their field service assignments. ̨ Worldwide, a total of 26,011 ordained ministers staff the branch facilities. All are members of the Worldwide Order of Special Full-Time Servants of Jehovah’s Witnesses.

-2016 Year Book of Jehovah’s Witnesses p. 176

So we know their operational cost last year. They do not provide how much income they had (including donations), or how much they lost to court hearings – which they obviously wouldn’t.  But this is important, we know that their operating costs are a little over 200 million a year, and this is likely why they are selling off real estate. Let me explain.

Capital Gains

A “Capital Gain” is an increase in the value of a capital asset such as real estate. However, this gain is not realized until that asset is sold. You can bet this is why they are selling so much property off – to cover the operating costs. This is very good news because it means they are struggling to stay afloat.

The 2014 yearbook states that 2013 operating costs were 200 million, the 2015 book says 2014 was 224, and as you see above last year was 236. This shows a fairly steady increase, but the important point to remember is that it’s over 200 million dollars per year.

Now, what are their earnings? Well, I couldn’t find any numbers on their donation amounts, but you can bet it’s not that much compared to their investments. Looking at their tax returns for the years 2013 and 2014 you see that in the ’13 return they had earnings from real estate investments.2012 Real Estate Investments

I know this seems like quite a bit of money, but remember that we are dealing with operating costs of over 200 million. This snippet from a return is only for the United States. You know that they aren’t getting these same amounts of earnings from every country, smaller countries are certainly exponentially lower than this number (if they even have such gains from every country). But lets suppose they get 900 thousand from 200 countries yearly. That still wouldn’t cover their operating costs! That would amount to 180 million dollars, and they’d be in the red. For example, in 2015, per their own numbers, they’d have a 56 million dollar deficit.

My Hypothesis Based on the Numbers

What we are seeing is that they are selling property to realize the capital gains, and that their yearly earnings are not enough to cover operational costs – nowhere near enough at all. But what would cause this?

I hypothesize that this is happening because they are true believers. They really believed God would supply all silver and gold for his people. That is, until the numbers started saying that was not going to happen. Add to this that they are really pressuring people to pioneer and what do you get? They aren’t getting much money from their members because they don’t have it. They are either pioneering and not making enough money to donate, not pioneering but struggling to get by without a college education so they don’t have much to donate, or they are pursuing a career on Watchtowers dime as a Missionary or Overseer or some such that adds to Watchtower’s operating cost. All told, we have a business model that absolutely cannot last.

I predict that even with whatever gains they earn from selling their Brooklyn portfolio, the organization will be gone within a decade. If they gained the full billion, that would cover operating costs at 200 million a year for 5 years. It’s likely they’ll continue to make cuts, send more people home from the branch locations and call back missionaries. This will merely slow down the inevitable, but, from these numbers, it looks like they are seeing their own financial Armageddon.

-Rich

Further Reading:

Watchtower 2013 Tax Return

Watchtower 2014 Tax Return

Definition of Capital Gain

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