Before being hospitalized for double pneumonia, Pope Francis faced strong resistance from some cardinals. The issue? How to address a widening gap in the Vatican’s finances. Just three days before his hospitalization, he ordered the creation of a new high-level commission. Its goal? To encourage donations to the global Catholic Church.
The “Commission on Donations for the Holy See” was announced as Francis spent his 13th day in the hospital. It came after pushback from senior figures within the Roman Curia. They opposed his proposals to cut budgets and seek external funding. In a closed-door meeting late last year, department heads resisted both budget cuts and external funding ideas.
For years, Francis has worked to stabilize the Vatican’s finances. Since 2021, he reduced cardinal salaries three times. He also mandated a “zero deficit” policy. However, these measures seem to have had limited success. Although the Vatican hasn’t released a full budget report since 2022, recent accounts showed an 83-million-euro ($87 million) shortfall. This is significantly higher than the 33-million-euro deficit reported in 2022.
The Vatican has traditionally managed deficits by rebalancing accounts and relying on investment income. But the gap has grown significantly in recent years. This raises concerns about long-term sustainability. Rising liabilities in the Vatican’s pension fund add to the problem. Estimates put the fund’s liabilities at 631 million euros in 2022. Experts believe this figure may now be even higher.
Rev. Tom Reese, a Jesuit priest and Vatican finance commentator, warned of tough decisions ahead. These could include scaling back charitable activities or reducing diplomatic presence worldwide. “If you can’t pay your bills, you can’t do much,” Reese noted.
Factors contributing to the financial strain include the loss of tourist revenue during the pandemic. Planned cuts to the Vatican’s multi-language media operations will save at least 40 million euros annually. Despite controlling only its own budget, the Vatican must address growing fiscal challenges.
At a recent meeting, Francis suggested that Vatican offices explore external funding options. Some cardinals resisted, fearing potential conflicts of interest. While specific funding sources remain unclear, wealthy Catholic foundations in the U.S. and Europe could help. The newly formed commission will focus on soliciting donations from lay Catholics, national bishops’ conferences, and other benefactors.
Adding complexity is the Vatican’s pension fund. Appointed in November, the new administrator warned of possible changes to its operating model. Like many public pension funds, it may underestimate life expectancy projections. This creates long-term budget imbalances.
The Vatican relies on three primary income streams. These are donations via the pope’s official fund, profits from investments (including rental properties), and museum admissions. After suffering during the pandemic, museum revenues rebounded strongly in 2023. Investment profits reached 45.9 million euros in 2024, partly due to improved property management.
Donations have remained relatively stable, averaging around 45 million euros annually. Spikes occurred in 2018 (74 million euros) and 2019 (66 million euros). Business professor Ed Soule expressed concern. Donors might withhold contributions if they see them funding pensions instead of charity.
Hopes are pinned on the upcoming Jubilee Year in 2025. It is expected to draw 32 million tourists. Ticket sales for the Vatican Museums could boost coffers. But only part of this income will directly address the deficit. Historian J.F. Pollard acknowledged the influx but cautioned against overstating its financial impact.
Reese believes selling assets from the Vatican’s investment portfolio could provide short-term relief. However, it risks diminishing future returns. “This postpones the problem for a future pope,” he said. “Eventually, there will be a reckoning.”
As Pope Francis navigates health and financial challenges, the Vatican’s ability to resolve its fiscal woes remains uncertain. With limited options and growing demands, the coming years will test the resilience of one of the world’s oldest institutions.
