Money talks?
Vatican's deficit makes headlines, but situation is not hopeless
The balance sheet of the Holy See has been released. As is always the case with numbers, they can be read one way or another. Something like those companies that publish triumphant profit and loss accounts and their competitors, using the same numbers, claim that those companies are moribund.
The Vatican financial system involves managing significant revenues and expenditures across multiple institutions, with a focus on operational needs, global charitable activities, and ensuring financial stability. In 2023, the Vatican reported €47 million from Peter's Pence (that’s the annual donations from Catholics worldwide for the Pope’s charitable activities) €40 million from museum revenues, and managed investments worth approximately €2 billion. Despite these revenues, a €53.8 million deficit highlighted the need for continued financial reforms and efficiency measures.
A brief outline:
1. Organizational Structure of what we know as "the Vatican".
Holy See: Central governing body with administrative, diplomatic, and pastoral activities.
Vatican City State: Manages its budget and infrastructure.
2. Key Financial Institutions
Administration of the Patrimony of the Apostolic See (APSA). Manages real estate and financial investments.
Institute for the Works of Religion (IOR). Vatican Bank manages assets and financial services for Church entities.
3. Revenue Sources
Peter's Pence Annual donations from Catholics worldwide for the Pope’s charitable activities. 2023 Revenue: €47 million.
Investments and Assets Income from real estate, securities, and other financial investments. 2023 Total Investments: Approx. €2 billion.
Vatican Museums Revenue from entrance fees paid by millions of visitors annually. 2023 Revenue: €40 million from over 6 million visitors.
Other Sources Sale of stamps, coins, publications, and diocesan contributions (N/A)
4. Expenditure Categories
Operational Costs: Salaries for Vatican employees & Maintenance of properties and facilities. 2023 Expenses: €307 million.
Charitable Activities. 2023 Allocation: €51 million for global humanitarian aid and projects.
Administrative Costs. 2023 Expenses: Included in operational costs, significant portion for departments and diplomatic missions. From the total operational costs, it is reasonable to estimate that a significant portion, often around 30-40%, goes towards administrative expenses. So the Vatican's administrative costs for 2023 are estimated to be between €92 million and €123 million, covering salaries, office expenses, and diplomatic missions, forming a substantial portion of the total operational budget of €307 million. This estimate is based on the general allocation of operational expenses typical for large organizations, with a significant part dedicated to administrative functions.
5. Financial Oversight and Management
Secretariat for the Economy. Oversees all economic and administrative activities. Reports a €53.8 million deficit for 2023.
Council for the Economy. Provides strategic direction and oversight.
Office of the Auditor General. Conducts internal audits ensuring transparency and accountability.
6. Financial Challenges
Deficit Management. 2023 Deficit: €53.8 million.
Initiatives to reduce costs and increase revenue.
Transparency Reforms
Ongoing measures to enhance transparency and address mismanagement.
Some reflections and comparisons
1-) Peter's Pence and the Vatican museums have almost the same income. It should be noted that the Peter's Pence are direct donations to the Vatican and not, for example, those that can be made to a parish in Belgium. We will not judge the generosity or stinginess of Catholics with Peter's Pence, but we can see that in the income ranking, the Vatican Museums (40 million a year) with its incredible artistic jewels, could do much better. Here are some examples of what other important museums in the world earn:
Louvre Museum (Paris, France), Annual Income: Approximately €100 million - €150 million
Metropolitan Museum of Art (New York, USA). Annual Income: Approximately $300 million (~€270 million)
British Museum (London, UK) Annual Income: Approximately £70 million - £90 million (~€80 million - €100 million)
Rijksmuseum (Amsterdam, Netherlands) Annual Income: Approximately €65 million - €75 million
Museo del Prado (Madrid, Spain Annual Income: Approximately €50 million - €60 million
State Hermitage Museum (St. Petersburg, Russia) Annual Income: Approximately $40 million - $50 million (~€36 million - €45 million)
National Gallery (London, UK) Annual Income: Approximately £60 million - £80 million (~€70 million - €90 million)
Tate Modern (London, UK) Annual Income: Approximately £65 million - £85 million (~€75 million - €95 million)
Museum of Modern Art (MoMA) (New York, USA) Annual Income: Approximately $145 million - $170 million (~€130 million - €150 million)
2-) The figure of 307 million euros in operating costs (i.e. the money that has to be spent to keep everything running) may seem very high. We do this newsletter with considerably less budget. But considering the size and importance of the Vatican, it is a far cry from the operating costs of other institutions and organizations. Some examples:
University of Cambridge, UK. Operational Budget: Approximately £2 billion (~€2.3 billion) annually. Specific departments or colleges within large universities often have budgets comparable to €307 million.
Boston University, USA. Operational Budget: Around $2.5 billion (~€2.3 billion) annually. Smaller colleges or significant research centers within the university can have budgets around €307 million.
Zalando SE. Annual Revenue: Approximately €10.3 billion.Operational Costs: Segments or regional operations within the company can have costs around €307 million.
Amnesty International. Annual Budget: Approximately £300 million (~€350 million). Includes global human rights campaigns and administrative expenses.
World Wildlife Fund (WWF). Annual Budget: Around $350 million (~€320 million). Covers global conservation projects and administrative costs.
National Endowment for the Arts (NEA), USA. Annual Budget: Approximately $180 million (~€165 million). Combined with other cultural funding bodies, total operational costs can approach €307 million.
UNICEF - Country Programs. Annual Budget: Country-specific programs can have budgets around €307 million, especially in larger or high-need areas.
3-) About the deficit of 53 million in 2023. Indeed, any economist wants to flee from the red numbers like the plague, but the real danger of the deficit is not having the resources to get out of it. Here are some examples of famous companies with similar deficits over time
Airbnb, Inc. Airbnb has experienced quarterly losses in the range of $30 million to $100 million, particularly during challenging periods like the COVID-19 pandemic.
Uber Technologies, Inc. Uber frequently reports quarterly deficits that can range widely, with some quarters showing losses around €50 million to €100 million, especially in less profitable or early expansion phases.
Tesla, Inc. While Tesla has become profitable in recent years, it reported quarterly losses in the range of $50 million to $100 million during its earlier years of ramping up production and development.
Lyft, Inc. Similar to Uber, Lyft has had quarters with losses around $50 million (~€45 million) as it balances growth with operational expenses.
Spotify Technology S.A. Spotify has reported quarterly losses in the range of €30 million to €80 million during periods of heavy investment in content and expansion.
WeWork (The We Company) WeWork has had significant financial difficulties, with some quarterly losses aligning around €50 million, especially during its restructuring phases.
Snap Inc. The parent company of Snapchat has reported quarterly losses that can be around $40 million to $70 million (~€35 million to €60 million) during various periods.
In short, the situation is not good, but it is not convenient to get nervous. Ideally, those in charge should apply 21st century solutions, that is to say, look for new sources of income and improve the existing ones and not those of the 19th century (which curiously are the first ones to which the puppies of the business schools resort: it is the fault of the workers who earn a lot).
And never forget that the real wealth of the Church is in the altars and not in the bank accounts.