Pope Benedict XVI, the pope emeritus, and George Cardinal Pell, two giants of the contemporary Catholic Church, passed away recently. Both made courageous decisions that had monumental consequences for the Catholic Church. As this blog is about the management of not for profit organizations and not politics or religion, Benedict’s and Pell’s theological views won’t be examined here. That is for others to do elsewhere.
George Cardinal Pell was an Australian charged with the cleanup of the Vatican finances. He worked very hard at it and came too close to uncovering the real problems with Vatican finances. Pell was later accused of sexual assault on a minor, a charge on which he was originally convicted and then exonerated on appeal. There were whispers these accusations were bought and paid for by nefarious forces at work in the Vatican. We of course don’t have evidence of that, but what we do know is that Pope Francis eventually stopped the audit engineered by Pell, fired the auditors and scaled back these efforts. Pell was forced from office and could not complete his work. Recently, an anonymous memo attributed to Pell circulating about the next Papal Conclave addressed some of these management issues. The comments about financial management are excerpted here:
“(A) The financial situation of the Vatican is grave. For the past ten years (at least), there have nearly always been financial deficits. Before COVID, these deficits ranged around €20 million annually. For the last three years, they have been around €30-35 million annually. The problems predate both Pope Francis and Pope Benedict.
(B) The Vatican is facing a large deficit in the Pensions Fund. Around 2014 the experts from COSEA (Commission for Reference on the Organization of the Economic-Administrative Structure of the Holy See) estimated the deficit would be around € 800 million in 2030. This was before COVID.
(C) It is estimated that the Vatican has lost € 217 million on the Sloane Avenue property in London. In the 1980’s, the Vatican was forced to pay out $ 230 million after the Banco Ambrosiano scandal. Through inefficiency and corruption during the past 25-30 years, the Vatican has lost at least another € 100 million, and it probably would be much higher (perhaps 150-200 million).
(D) Despite the Holy Father’s recent decision, the process of investing has not been centralized (as recommended by COSEA in 2014 and attempted by the Secretariat for the Economy in 2015-16) and remains immune to expert advice. For decades, the Vatican has dealt with disreputable financiers avoided by all respectable bankers in Italy.
(E) The return on the 5261 Vatican properties remains scandalously low. In 2019, the return (before COVID) was nearly $ 4,500 a year. In 2020, it was € 2,900 per property. “ (1)
While one has to read this material somewhat skeptically, the overall tone and content of the memo is surely correct. What is the takeaway from this? NFP financial management is often the poor stepchild of NFP management. Nowhere is this more evident than in the largest NFP in the world: The Vatican. Donors do not like to hear their contributions are being squandered. Peter’s Pence, the annual collection taken up for the Vatican in every diocese of the world, has been declining for years now. (2) There are many reasons for this. COVID the declining number of Catholics in the West and the sexual abuse scandals are all factors. Why exacerbate a growing problem with bad news about corruption and mismanagement?
Pope Emeritus Benedict passed from the scene also. It has been long rumored Benedict resigned the papacy because he did not have the personal energy or the will to fight the corruption in the Vatican. This was a courageous decision, as a papal resignation had not happened in centuries. Benedict understood what it would take to combat the Vatican bureaucracy. Looking inwards, he did not perceive an ability to fulfill that mission.
Again, what is our takeaway from this? As an NFP manager, understanding your capabilities is critical. Knowing when to ask for help is a key to success. I had a fairly large manufacturing company as a client. It was owned by two people who were looking to hire a president. One was the head of sales and the other was the head of purchasing. I asked them why they did not want to run the company. After all, they owned it. The answer was surprising at the time, but in retrospect, not now. The answer was simple. They knew they didn’t have the knowledge to address some of the issues the company was facing as it was growing or to manage an increasingly complex organization. Like Benedict, they understood their limitations and sought help, even if it meant giving up day to day control of their organization. Or as one famous modern philosopher put it:
Pope Emeritus Benedict and Cardinal Pell are profiles in courage. The world is much worse off without them. May they rest in peace. The question still remains How do you combat the management issues at the Vatican? They were too big for these two men. It appears drastic action is needed. Perhaps it is time to consider what Constantine the Great did when he found his Rome to be too inflexible to change to new realities. He moved the capitol.