Meanwhile, Back in Rome…
Vatican financial reform efforts are still underway, even this far into Pope Francis’ reign. The current state of affairs is described by John L. Allen in an excellent article published on the Crux website. That article can be accessed here. It seems the Vatican sustained an eye popping loss of $130 million dollars disposing of an ill considered investment in the London real estate market. To add insult to injury the original investment was made from Peter’s Pence, the annual collection taken up in every Catholic Church in the world to help defray Vatican operating costs.
The upshot of this mess is Peters’s Pence collections, a major source of income for the Vatican, has been much reduced. There is no doubt the Pandemic was a major reason for the decline, but even the Vatican has been forced to admit the recent bad publicity has a lot to do with this. (Please click here for an article from CNA about this).
I have made similar comments such as these many times in this blog, but for those of you that are new and may be managing NFP organizations, they bear repeating:
- Changing the “corporate culture” often requires replacing the entire cast of characters and not just “the boss”. Yes, the cardinal who foolishly invested in London real estate has been dismissed, but what about all of those that assisted him? The Catholic Church has been loath to do such things. Time and time again we have seen the clergy rally to “protect itself” from “outsiders”. Extreme clericalism is not a healthy culture by any stretch of the imagination. Deep cancer often requires extensive surgery to uproot it. Has this happened at the Vatican?
- Has an investment policy been adopted? Any organization with any amount of money needs to have an investment policy. This will at least hinder miscreants from making such horrible investments as we have seen here. A proper investment policy could have prevented such speculative investments as we saw here. Is there one now in place?
- Will there ever be a real audit of Vatican finances? If the Pope and the Curia really wanted to get to the bottom of the problem then it is time to bring back PriceWaterhouse or another respected international accounting firm to give the books a good once over. The Vatican seems to be reacting like a vampire afraid of sunlight. A little more transparency please. (Note: this is good advice for bishops in their dioceses as well…)
- Does the Vatican understand the implications of prospect theory for its donors? Prospect theory, the brainchild of Daniel Kahneman and Ivan Tversky, states people on average feel economic loss more than twice as much as they feel economic gain. That is why publicly traded corporations try to get all bad news out at one shot. They do not want investors to continually keep hearing bad news and feeling pain over and over again. Such conduct will get CEOs and CFOs fired. Hopefully, the Vatican has been completely transparent about this affair and no more bad news will come out. Hopefully.
To be fair, it seems Pope Francis has taken some measures to correct the situation. He was late to the game though. Only time will tell if he has done enough to restore the confidence of the laity in the pews