Is the Vatican misleading donors? Peter’s Pence, explained.

Yelixa Hernandez helps collect donations during Mass at St. Willebrord Church in Green Bay, Wis., April 26. (CNS photo/Sam Lucero, The Compass)

An article published yesterday by the Wall Street Journal, by Francis X. Rocca, had a provocative, even shocking headline: “Vatican Uses Donations for the Poor to Plug Its Budget Deficit.” Focusing on Peter’s Pence, a worldwide collection for the pope’s charitable needs, the article stated that only 10 percent of the yearly collection, which the article estimated at $55 million (though in past years it was higher), goes to charitable works and that two-thirds of the money is used to cover the Vatican’s growing deficit.

Is the Vatican misleading donors to Peter’s Pence? The website of the United States Conference of Catholic Bishops explains the purpose of the charitable drive, usually held in U.S. parishes on the last weekend in June, as follows: “Today, the Peter’s Pence Collection supports the Pope’s philanthropy by giving the Holy Father the means to provide emergency assistance to those in need because of natural disaster, war, oppression, and disease.”

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The fact that the Vatican has been using funds from Peter’s Pence to balance its budget has hardly been a closely kept secret.

The Vatican itself is more circumspect in its description of the charitable drive. “It is an offering that each member of the faithful decides to give to the Pope so that he can provide for the needs of the entire Church,” states the Vatican website for Peter’s Pence, “especially in those places where the Church experiences greater difficulties.” Further, the pope’s charitable works “extend to the whole of humanity, at whose service the structures of the Church exist. For this reason, Peter’s Pence also contributes to the support of the Apostolic See and the activities of the Holy See.”

Another site from the Vatican Secretariat of State adds more detail:

The faithful’s offerings to the Holy Father are destined to Church needs, to humanitarian initiatives and social promotion projects, as well as to the support of the Holy See. The Pope, being Pastor of the whole Church, is attentive to the material needs of poor dioceses, religious institutes and of faithful in grave difficulties (the poor, children, the elderly, those marginalized and the victims of war or natural disasters; concrete aid to Bishops or dioceses in need, Catholic education, assistance to refugees and immigrants, etc.).

The fact that the Vatican has been using funds from Peter’s Pence to balance its budget has hardly been a closely kept secret, however. In his 1992 book A Flock of Shepherds, Thomas J. Reese, S.J., the former editor in chief of America, described Peter’s Pence as “a world-wide collection that assists the pope in his service to the whole church. In 1989, $13.6 million was collected in the United States. This money used to go to the pope’s charities but now helps balance the Vatican budget.” Father Reese then quotes Cardinal John Krol of Philadelphia, who had worked to raise money for the Vatican, that “they started taking a little from Peter’s Pence, then more and more, and then all of it” to balance the budget. The deficits should be covered by alternate sources, Cardinal Krol said, and “the Peter’s Pence money must go back to the pope for the needs of the poor.”

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When contacted for this article, Father Reese commented that “without the Vatican being more transparent in its finances, we have no way to judge the truth of the Wall Street Journal story, but we know that in the late 1980s, Peter’s Pence was used to balance the budget.”

Pope Benedict XVI called Peter’s Pence “the most characteristic expression of the participation of all the faithful in the Bishop of Rome’s charitable initiatives in favor of the universal church” in a 2006 speech.

Benedict and Francis

Pope Benedict XVI called Peter’s Pence “the most characteristic expression of the participation of all the faithful in the Bishop of Rome’s charitable initiatives in favor of the universal church” in a 2006 speech cited on the Secretariat of State’s website. “The gesture has not only a practical value, but also a strong symbolic one, as a sign of communion with the Pope and attention to the needs of one’s brothers.”

Pope Francis himself has defended the way the Vatican manages the fund, terming it “good administration.” An Italian journalist asked him during a press conference on the papal plane as he returned from his November trip to Japan to comment on the use of Vatican finances to purchase multimillion-dollar properties in London, saying people “are somewhat baffled by this use of Vatican finances, in particular when Peter’s Pence is involved.” She then asked if Francis was aware of such financial operations and if, “in your opinion, is the way Peter’s Pence is being used correct?”

“When the money from Peter’s Pence arrives, what do I do? I put it in a drawer? No. This is bad administration,” Francis said. “I try to make an investment, and when I need to give, when there is a need, throughout the year, the money is taken and that capital does not devalue, it stays the same or it increases a bit. This is good administration.

“And yes,” Francis continued a moment later. “One can also purchase a property, rent it and then sell it—but on a sure thing, with all the safety measures for the good of the people and of Peter’s Pence.”

“When the money from Peter’s Pence arrives, what do I do? I put it in a drawer? No. This is bad administration,” Pope Francis said.

The History

Peter’s Pence derives its name from a ninth-century English custom started by King Alfred the Great, who collected money from landowners as financial support for the pope. Further money came from fees for weddings, funerals and confirmations. Early Peter’s Pence collections also included special taxes to fund the Crusades. Over the centuries the practice declined, especially after the French Revolution, when the papacy found itself at the nadir of its political fortunes.

In 1870, as the Italian Risorgimento brought about the unification of Italy, the Vatican lost significant land holdings and assets. “The agenda of the Italian Risorgimento was predicated upon the destruction of the temporal power of the papacy,” wrote Jeffrey von Arx, S.J., in America, “[or] the pope’s governance of the Papal States, upon which the political independence of the papacy and its position as an international actor were presumed to rest.”

Under Pope Pius IX, the Vatican began to encourage a revival of Peter’s Pence throughout the Catholic world. It was known in Italian as Obolo di San Pietro (“offerings from the faithful”), and the collection was to be used not only for charities but also for the Vatican’s daily operating expenses. In God’s Bankers: A History of Money and Power at the Vatican, Gerald Posner offers a highly critical account of the pope’s motives and methods: “Not only did Pius need money to survive, the pitch went, but the church also required a professional army to protect what little it had left” after the loss of the Papal States.

Both economic conditions and public perception of the papacy have played a factor in the fundraising success of Peter’s Pence.

“The poor and uneducated were induced to donate by tales that Italian inquisitors had chained the pope to a prison wall. One fraud even sold samples of ‘holy straw’ from the nonexistent cell’s floor,” Mr. Posner writes. “Catholics in different countries competed with one another to see who could raise the most.” The pope would send signed photos, titles and blessings to the largest donors.

Starting in the 1880s, Pope Leo XIII began investing Peter’s Pence into Roman real estate to provide a better return, which succeeded in stabilizing the Vatican’s finances. But donations to Peter’s Pence fell during the Great Depression and remained low through World War II. The yearly total rose to $15 million under Pope John XXIII but again crashed, to $4 million, by the time of the death of Pope Paul VI in 1978. In 1992, more than halfway through John Paul’s papacy, the yearly collection had risen to $67 million. It rose again in the first years of the papacies of Benedict XVI and Francis. Both economic conditions and public perception of the papacy, in other words, have played a factor in the success of Peter’s Pence—a somewhat ominous indicator for the Vatican as the church faces continued scandals around sexual abuse and financial malfeasance.

After the year 2000, Peter’s Pence ceased to be an entirely cash collection, and the Vatican began to allow credit card payments and wire transfers as contributions to the fund. It also encourages online donations.

The Better Business Bureau in the United States recommends that a nonprofit should spend “at least 65% of its total expenses on program activities.”

The Controversy

According to The Wall Street Journal, “no more than a quarter of the annual Peter’s Pence contributions is available for investments, after the bulk is spent on the Vatican’s operating costs, according to the people familiar with the fund.” (No sources are identified in the article, though Vatican politics often require that clerics avoid being named as news sources.) That contrasts strikingly with general guidelines for charities and nonprofits around the world, where “overhead” costs are scrutinized by watchdog groups and industry accountability experts. For example, the Better Business Bureau in the United States recommends that a nonprofit should spend “at least 65% of its total expenses on program activities.”

Charity Navigator, a prominent U.S.-based evaluator of charities, praised The Rotary Foundation of Rotary International for spending 90.6 percent of its total expenditures on the programs and services “it exists to deliver” last year. “Our data shows that 7 out of 10 charities we’ve evaluated spend at least 75% of their budget on the programs and services they exist to provide. And 9 out of 10 spend at least 65%,” Charity Navigator explains in its Financial Efficiency Performance Metrics. “We believe that those spending less than a third of their budget on program expenses are simply not living up to their missions. Charities demonstrating such gross inefficiency receive 0 points and a 0-star rating for their Financial Health.”

But is the Holy See really comparable to an American nonprofit or traditional charity? Rick Garnett, a law professor at the University of Notre Dame, sharply criticized the article as comparing apples to oranges. “Operating the Holy See—which oversees the largest charitable enterprise in human history—costs money, and Catholics should be willing to contribute to paying those costs,” Mr. Garnett tweeted on Wednesday, adding that “I don’t concede that (a) the Pope using contributions to pay the Church’s costs is meaningfully analogous to (b) a charity using contributions to pay administrators.”

Rick Garnett: "Operating the Holy See—which oversees the largest charitable enterprise in human history—costs money, and Catholics should be willing to contribute to paying those costs."

In addition, Pope Francis may be the first pope in many years to address the problems associated with Peter’s Pence. Austen Ivereigh, a papal biographer and journalist who has written for America, noted in his recent book Wounded Shepherd that within months of his election in 2013, “Francis criticized what he called a ‘nouveau riche’ mentality, a culture of self-entitlement and carelessness about costs that gobbled up revenue from Peter’s Pence, which was supposed to be used for the pope to assist the needy, not to plug budget deficits.”

Mr. Ivereigh also credits Cardinal George Pell, whom Francis appointed to clean up Vatican finances, for introducing “professional accounting standards, as well as timely and dependable budgets” to the Vatican. (Cardinal Pell, who was convicted of sex abuse charges in Melbourne in April 2019, is jailed in Australia. He is appealing his conviction.) While financial waste was curtailed to a degree, Mr. Ivereigh notes that well into 2017, Cardinal Pell was complaining that “the portion of Peter’s Pence being used to subsidize the deficit was still too high.”

The projects the Vatican advertises as “works realized” by Peter’s Pence in 2019 include a donation of 100,000 euros for Albanian relief aid in the aftermath of that country’s 2019 earthquake; another gift of 100,000 euros to Caritas Hellas Greece to support asylum seekers and refugees; the renovation and expansion of a children’s hospital in the Central African Republic; a $50,000 gift to assist the struggling survivors of Nepal’s two 2015 earthquakes; a $500,000 donation to support migrants in Mexico; 100,000 euros to the populations affected by floods in Iran; 150,000 euros to support those devastated by a cyclone that hit Mozambique, Zimbabwe and Malawi; and $100,000 for survivors of Indonesia’s 2018 earthquake.

Due to sex abuse revelations as well as recent financial scandals mentioned above, the Vatican is expected to receive fewer funds in the coming year from Peter’s Pence, though it will remain the primary vehicle for the pope to provide humanitarian relief.

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