The current financial crisis of Watchtower in historical context (part 1)

by slimboyfat 165 Replies latest members private

slimboyfat

I wish all the people who are dismissive of Watchtower being in serious trouble would give actual reasons for their view.
I am perfectly open to the idea that I could be wrong and I'm very interested in hearing evidence that, despite all appearances, Watchtower is in rude health. It's perfectly possibly I've overlooked robust sources of income, or evidence of a winning new strategy.
But so far all we've had are comments like 1) you don't actually believe what the GB are saying do you? 2) they can never collapse you're dreaming 3) they've made billions on property 4) or glib put downs like I am "simplistic" or "myopic".
Well maybe you are right, but I'd appreciate some actual evidence or reasoning to support the contrary view.
sparky1

The Jehovah's Witness religion is based on Western 'American style' corporate fundamentals. I am not trying to be rude, but you are woefully ignorant of the way a corporation does business. I have tried to explain to you that what the Governing Body is publicly proclaiming as a shortage in funds is probably a 'smoke screen'. What you see going on here is a 'reverse' ENRON type public face, in my opinion. The ENRON corporation 'pretended' to be 'flush' by bringing forward their 'profit' projections and adding them to their current balance sheet. By doing this they gained more investors. Watchtower is probably bringing forward their 'loss' projections and adding them to their current balance sheet, pretending to be poor. Instantly, Watchtower can claim being 'poor' based on projections but not on the reality of any particular days financial condition, even if it is flush or positive. Claim poor, increase donations. Simple formula.
The Watchtower Society has multiple streams of income. A previous friend of mine had a relative in the old 'Treasurers Office' at Bethel. He said that the average Witness would be stumbled if they knew how much 'business' the organization actually carried on.(Here say, I know) Based on what I know about conducting business in the United States, this in my opinion of the Watchtower income stream:
1. Direct contributions for the Worldwide Work from each Kingdom Hall.
2. Direct contributions (lease Payments) for every Kingdom Hall on the face of the earth.
3. Cash from the now limited sale of printed material.
4. Wills from wealthy witnesses that includes cash, financial instruments,land, jewelry, stocks, bonds, etc.
5. Revenue from the stock market including dividends and interest payments on cash held in their brokerage account. Their quarterly dividends could be huge.
6. Cash influx from donations and 'head tax' from every assembly held around the world.
7. Deposit interest payed on the cash accounts held in any bank at any time including in their checking accounts. I get interest payed on my 'average daily balance' for my business checking account every month.
8. Government grants that they apply for as a 'charity'.
9. Kick backs from companies that they do business with such as Ford or Caterpillar or any other vendor that offers a heavily discounted price up front and then a CASH volume discount in the back door.
10. Paying the Circuit Overseers expenses with a credit card, then have the Circuit meet his expenses and the keep the 'cash rewards' for the Society.
11. Volume cash rebates for insurance. Individual hall pays for their own insurance, organization reaps the 'back door' cash benefits.
12. Making a deal with a credit card processor for cash kickbacks.
You have NO idea how much 'back door' money that American corporations are swimming in. I could go on and on about what they might be reaping for cash. Fisherman stated somewhere that we must remember that this religion is a HUGH multinational corporation.
I am not being glib or putting you down but you have a VERY limited understanding of the corporate world. And make no mistake about it, WATCHTOWER is a corporation first and foremost. You ask for evidence to support views contrary to your own, yet supply no evidence to support your claims, only your own assertions based on your interpretation of the Governing Body's behavior and statements.
As far as your concern of the downloading of publications proving that they are short of funds,this is a moot point. All corporations in America are going this route. In the past, we received our 'weekly' corporate report in a printed format. Now we receive it in an email and print it ourselves for distribution. The cost is now shifted away from the corporation and on to the backs of the entity receiving the information. Simple economic behavior in the 21st century.
shepherdless

I don't completely agree with sbf, because I think there would be further signs, such as further bethel layoffs before the imminent collapse, and the Borg has received some large "sugar hits" from its recent Dumbo sales.
Nevertheless, I respectfully disagree with Sparky. To address some of the points made by Sparky:
I have tried to explain to you that what the Governing Body is publicly proclaiming as a shortage in funds is probably a 'smoke screen'.
I doubt it, but I can't prove it either way.
1. Direct contributions for the Worldwide Work from each Kingdom Hall.
Yes we have an idea of the numbers from what published accounts there are, such as UK and Australia.
2. Direct contributions (lease Payments) for every Kingdom Hall on the face of the earth.
In UK accounts at least, seem to be lumped in with 1. Doubt if much is being received from places such as Africa. An ex-CO recently stated they were subsidizing one Latin American branch about $6 million p.a.
3. Cash from the now limited sale of printed material.
Virtually nothing, now.
4. Wills from wealthy witnesses that includes cash, financial instruments,land, jewelry, stocks, bonds, etc.
Shown separately in UK accounts. Considerably less than item 1 above.
5. Revenue from the stock market including dividends and interest payments on cash held in their brokerage account. Their quarterly dividends could be huge.
Was a significant earner in UK accounts, but recent accounts seem to have mostly sold these.
6. Cash influx from donations and 'head tax' from every assembly held around the world.
I think for UK, that is included in 1.
7. Deposit interest payed on the cash accounts held in any bank at any time including in their checking accounts. I get interest payed on my 'average daily balance' for my business checking account every month.
Yes, but not a lot.
8. Government grants that they apply for as a 'charity'.
Which they then have to spend on a particular project.
9. Kick backs from companies that they do business with such as Ford or Caterpillar or any other vendor that offers a heavily discounted price up front and then a CASH volume discount in the back door.
The Borg probably get none of that. (Although perhaps Apple gave GB members some nice watches for boosting the sale of ipads.)
10. Paying the Circuit Overseers expenses with a credit card, then have the Circuit meet his expenses and the keep the 'cash rewards' for the Society.
Peanuts.
11. Volume cash rebates for insurance. Individual hall pays for their own insurance, organization reaps the 'back door' cash benefits.
Peanuts, if exists at all.
12. Making a deal with a credit card processor for cash kickbacks.
I can't see how that works, for payments to the Borg. For payments from the Borg, peanuts, if anything.
Meanwhile, They have to feed and house 20,000 bethelites, pay about $100 million annually in IT, pay over $200 million to missionaries, spec pioneers and travelling overseers, house a bunch of retired bethelites, operate and maintain Warwick and numerous branches, etc, etc.
According to an old post here, in the mid 1980's the Borg was making about $2 million per week from literature sales. That is all gone. The majority of the income is now the donations from congregations. They have done a "smash and grab" of congregation funds, so they probably cant extract more there.
Anyway, time will tell.
stan livedeath

as i see it--the WTS is in a no-win situation here.
as the management is appealing for more and more money donations---and selling off assets ---they must be in financial trouble to a lesser or greater degree.
or--if they are not in any financial trouble----then they are lying.
Finkelstein

I dont think the WTS right now is in a financial crisis due its recent sales of many of its branches including all the properties in Brooklyn New York but 10 or more years from now will see where the WTS stands when more donations will be needed to sustain the organization.
cofty

Claim poor, increase donations. Simple formula. - sparky
What increase in donations? Any boost following begging talks is small and very temporary. You can't get blood out of a stone. I think Shepherdless is spot on.
dropoffyourkeylee

concerning insurance for Kingdom Halls, I believe that in the US at least they do not carry insurance with any insurance companies. They are self-insured, to my knowledge.
Where they are playing an insurance game is in the disaster relief. It goes like this:
JW in disaster area has damaged house, which is covered by insurance. JW disaster relief uses donated supplies and donated labor to fix the home damage. JW gets a check for the damage from the outside insurance company. JW turns over the check to the WT society 'in gratitude'.
In itself not a bad thing, but basically it is using the construction skills of the JW disaster relief workers to generate income for the WT society.
darkspilver

An interesting thread which I've been enjoying reading.
I view the GB as generally sincere people who truly believe what they say.
Ultimately the problem is that they're an 'end-times' religion, who have lost their end-time.
They need to plan ahead, but when till?
GB 1.0 had it the easiest - they where able to plan ahead in line with the '1914 generation' doctrine.
But GB 1.5 realised it need to change
In 1995 the GB dropped the 1914 one-generation doctrine: The ONLY current GB member who was appointed before the change was Gerritt Losch (in 1994) - the other six where all appointed afterwards
GB 1.5 then felt they also needed to drop the 1935 annointed 'cut-off' date.
In 2007 the GB dropped the 1935 heavenly calling doctrine: The ONLY two GB members at the time of the change announced in the WT May 1, 2007, who where baptized before 1935, where Carey Barber (baptized 1921, died April 2007) and John Barr (dedicated 1929, baptized 1935)
GB 2.0 then had to revise the 1914 generation doctrine
In 2010 the GB introduced 1914 'over-lapping' generation doctrine at the Oct AGM: The last of the 'old' GB where Theodore Jaracz (died June 2010) and John Barr (died December 2010)
The GB's talks / conventions / Watchtowers about 'Don't Give Up!' and counselling against being disappointed that the end has not happened yet etc etc - is as much for the GB themselves as it is for the rank and file JW - remember all the current GB where brought into the 'truth' and accepted the 'truth' that included the 1914-one-generation doctrine - the GB are themselves having to change their own outlook.
Incognito

WT is actually a manufacturer that is currently without a product in which to sell for money.
Even with a large cash infusion due to the sale of real estate holdings, I suspect in performing a long term forecast and in consideration to declining donations, they were forced to predict how long before they would run-out of money. Perhaps the building sale proceeds are only considered to be 'Capital', which is not intended to be used for day to day operating expenses. This then likely forced retaining outside consultants to not only review the operation and provide recommendations to streamline to reduce expenditures, but also suggest other 'products' or 'services' which maybe sold in which to make money. We probably have yet to hear about those products and services as that may not have been decided, yet.
I am suggesting outside (worldly) consultants so as to obtain an objective and unbiased perspective and recommendations. JWs are too invested and prideful of WT's past accomplishments and so in addition to a lack of qualified personnell, would be less likely to suggest new methods and concepts.
While we are all lead to believe the GB are in ultimately control, I think they are more 'figureheads' when it comes to business operations, with others actually running the business. I expect the GB mainly retain ultimate control over doctrine which controls JWs worldwide.
It appears WT was too short sighted and reactive when they adopted the donation arrangement for literature. They expected JWs to provide higher donations than when a cost is stated (remember, expect to pay $50 at a bookstore for a Bible of this quality). They also expected to receive whatever donations were collected at the door. Most JWs didn't feel comfortable asking for donations and many JWs didn't place more than their usual monthly offering into the WWW collection box.
I think WT could have easily continued printing and 'charging' for publications if all that was involved was collecting and submitting sales tax on whatever was sold. Without an alternative, JWs will have been forced to pay sales tax when obtaining literature. That would not really have been an expense to WT.
Consider how Scientology operates selling their literature. If your publications are only available in paper format, your adherents are then forced to purchase that format at inflated prices, then re-buy the same books when there is 'new-light'.
One big problem with printed documents, they cannot be altered. Paper can be archived for centuries and with today's tech, those documents can be easily scanned and shared. Electronic distribution which is viewed when needed, can be easily altered at will. As I understand JWs now use tablets and phones when doing D2D and WT study, I expect many JWs are not printing literature, thereby saving the printing expense. With nothing saved, changes cannot be proven. Even if saved, JWs are always suspicious an unoriginal document has been altered by Apostates.
WT is also prideful and arrogant and didn't accept being required to pay tax for religious literature. I also expect dealing with tax, would result in additional headaches and personnel requirements, making WT an unpaid collection agent for government. Sales tax may also eventually open the door to 'corporate' income tax penalties on profits from literature sales.
As paper is becoming less common for short term (read once) publications, the demand for paper will decline and the cost will rise, not to mention increasing costs for printing, warehousing, packaging, distribution, etc.
While I agree that Franz and Knor made a effective team, times were quite different then compared to now. If technology and sharing of information was as advanced and as easy then as it is now, would the WT and JW religion have grown as they did, or at all? Although there was economic growth post war, I think WT benefitted from wartime uncertainties and from the general public's ingorance and inability to easily research prior to becoming involved.
slimboyfat

shepherdless you make a good refutation of sparky1, but I would respectfully suggest that on a couple of points you don't go far enough.
The biggest one is number 3. the revenue from "limited sales of print material". First of all, what sales? Watchtower hasn't sold a magazine or a book since the 1990s. They give them away free, which costs them money. It is not a source of profit, it is an expense. It would only have continued to be profitable if JWs donated enough to cover the costs and a bit extra. This clearly did not happen. And this is why first they switched to paperbacks, discontinued quality books, then reduced size and frequency, and now appear to be eliminating print altogether. Because the donations received for literature has not met the cost of their production for over two decades now. Since they are making a loss from publishing, by definition it can't be counted toward profit.
Publishing books has gone from being a huge source of revenue for Watchtower to being a significant drain on their resources. A complete reversal. And that's why they are eliminating it sharply. How anyone can list "sales of literature" on such a list as if it's a bonus is a mystery. You might as well list "burning stacks of dollars" as another great source of income.
I don't know what sort of indicatons from Watchtower would indicate to you that the situation is critical. What I see is a long series of cutbacks dating to the 1990s, followed by a rapid series of severe cutbacks since 2015. This suggests to me they became less profitable or even loss making already in the 1990s, that the situation got worse rather than improving, took a sudden turn for the worse again in 2015, and has not improved since.
The latest yearbooks indicate that they cut bethel staff by around a quarter from 26,000 to 19,000 in just one year. That sounds pretty huge to me. I don't know if it means they are at a "critical" stage.
First came the gentle cutbacks of the 1990s:
No food at assemblies, paperback books instead of hardcover
Then came deeper cuts of the 2000s:
Pulling out resources from poorer countries such as India and closing branches
Deeper still in 2010s:
Reducing literature, closing more branches, eliminating district overseers, closing Gilead as a missionary school
Severe cuts since 2015:
Massive downsizing of bethel staff and other "full time servants", heavily reducing literature output
Maybe they are not on red alert yet. If it's a scale of 1 to 10 where 1 is breaking even and 10 is completely bust, maybe they are at 7 or 8 at the moment.
But more important than their exact financial position at this moment in time (impossible to tell) is the overarching fact that they are losing money rather than making money, and have been for some time. Unless they can reverse the trend they will go bust at some point, it's only a matter of time.

The current financial crisis of Watchtower in historical context (part 1)

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