The Vatican’s Balance Sheet

May 31, 2025

Editor(s): Alec Drake

Writer(s): James O'Connor, Sammi Lam, Tony Xie

Priceless artworks, a globe spanning property portfolio and deep financial pockets, the Vatican maintains a complex and opaque financial position. However, with growing global demand for transparency in its operations, the late Pope Francis began a radical reorganization of the church’s millennia spanning bureaucracy.

With Catholicism suffering persistent membership outflows in its traditional European heartland and sizable liabilities, can this change enable the continuation of their dominant financial position? 

Vatican Bureaucracy Overview

In 2022, Pope Francis’ apostolic constitution Praedicate Evangelium reorganized the Roman Curia – the Holy See’s central administrative apparatus – to better serve the Church’s mission of evangelization and charity. The Curia’s departments (now called dicasteries) and secretariats assist the Pope in governing the 1.3-billion-member Church and managing its global affairs.

The Catholic Church’s finances are fueled by both faithful and prudent investments. In fact roughly two-thirds of the Holy See’s income comes from its own investments, property revenues and church-run services, compared to only about a quarter which comes from donations (such as dioceses worldwide Peter’s Pence collection). The remainder is generated by commercial activities like tourism and the Vatican’s bank; for example, the Vatican Museums draw millions of visitors and around $100 million in revenue per year.

Figure 1: Faithful Flock to Vatican During 2025 Conclave.

Overseeing the Holy See’s financial empire, APSA (Administration of the Patrimony of the Apostolic See) acts as the Vatican’s treasury and asset manager, handling investments and thousands of properties. A recent transparency report showed APSA owns over 5,000 properties worldwide. However, reflecting the church’s mission-over-profit approach many of these properties service their communities rather than maximize profits, for example only an estimated 14% of its properties located in Italy are rented at market rates – the rest serve churches, schools or other religious missions. The Vatican’s bank (IOR) holds over €5 billion in financial assets, and its annual profits (around €20–30 million) fund the Pope’s charitable works.

Recent years have brought financial reforms modernizing archaic systems to improve oversight and accountability. Emblematic of this shift, after a London real-estate deal collapsed, costing the Vatican $200 million, Pope Francis stripped the Secretariat of State of its investment funds and brought all assets under APSA’s management. He also mandated that all Vatican departments bank with the IOR for better internal monitoring. Further, new regulations enforce ethical investment guidelines and subject Vatican finances to external scrutiny by auditors and European anti-money-laundering agencies. Today, the Holy See publishes annual budgets and financial statements – a milestone in transparency – to ensure its global resources are managed with integrity and prudence.

Evolution of Catholicism 

Changing dispersion of the Catholic Population

The Catholic population has grown 1.15% worldwide between 2022 and 2023 as reported by the Vatican News, the official news portal for the Holy See. This follows a similar growth in the past two years, with a noticeable rise in Africa and Asia contrasting a decline in its traditional European heartlands.

Africa hosts 20% of the global Catholic population displaying a highly dynamic expansion, having increased the population of Catholics by 9 million to 281 million in 2023. Asia’s Catholic population has also grown 0.6% over the last two years, hosting 11% of the world’s Catholics with its highest concentration in the Philippines and India. America has kept a steady population with 47.8% of the world’s Catholic population. While Oceania has over 11 million Catholic believers in 2023, a 1.9% increase relative to 2022. Contrastingly, Europe has the least dynamic spread with a 0.2% growth over the last two years, almost stagnant growth. Further, the continent’s catholic population fell by almost half a million in 2022.

Figure 2: The Catholic Church’s Shifting Demographics

Globalization of the Catholic Church

Religion like all people, beliefs and the world is ever evolving, absorbing and applying new ideas to face modern problems and social standards.

Globalization describes interdependence and interconnection of the world through trade and technology. This includes the social and cultural aspects of human life and as a religion Catholicism is impacted. 

As the faith and ideals of the Catholic church spreads through the planet, globalization has accelerated the growth of religion, but also brings its challenges. With globalization, a balance of local culture and universal faith is now required, employing the need to “think globally, act locally”.

Liturgical celebration is conducted for the people, and as the people of this earth are uniquely diverse in culture, development, environment and realities, the church must adapt to the different worship of believers of different local environments.

Challenges Faced 

Society has become increasingly polarized between the religious and non-religious. The number of practicing Catholics has steadily declined, further accelerated by the COVID pandemic. Those already with faith have strengthened their belief, while the non-religious population are firm in their disbelief.

Pew Research Center conducted a survey on the religious landscape of the United States. Finding the join/leave ratio of Catholic believers to be notably high. For every person gained, 8.4 people leave, the worst statistic of the groups surveyed. Further Catholicism faces a net loss, with the highest loss of -21.9% leaving the faith compared to a +3.6% joined. Retention rate is at 57%, in the bottom three religions for retaining childhood believers. On the other hand, immigration has pushed up the population of Catholics in the US, offsetting some of the loss.

Figure 3: The Catholic Church’s Inability to Retain Younger Members.

Pope Francis’s Impact

Pope Francis, known as ‘The People’s Pope’, was elected on March 13, 2013. Pope Francis’s Papacy departed from many of his predecessors’ stances, making changes from traditional hard-set teachings on the death penalty, women’s roles in the church, the environment and global warming whilst investigating and imposing financial regulations of the Vatican. This sought to rejuvenate the church’s image, positioning it to recapture younger generations discarding religion.

Figure 4: St Peter’s Basilica the Centre of the Catholic Church

Following the scandals and corruption of the Vatican Bank, Pope Francis reformed the bank radically. Francis replaced leadership to reorganize management and imposed stricter financial regulations to increase the transparency of the bank’s operations internally and enforcing external supervision to hold accountability and uproot corruption. In 2013, the Vatican Bank disclosed its annual reports for the first time, a tangible appreciation of the former pope’s reform.

The Catholic church possesses substantial resources, and with great wealth requires accountability, the Vatican Bank has faced challenges and struggled in this regard. Religion and faith have a deeply intertwined connection with society, having the ability to change society for the better but is also shaped by the society it is entrenched in. While the core foundations remain relevant, Catholicism has evolved and will continue to adapt to the world’s unfolding growth and maturity.

Financial Misconduct and Money Laundering

Catholicism’s financial matters are managed by the Vatican Bank founded in 1942. The more formal name for the Vatican Bank is the Institute for the Works of Religion (IOR). Since the IOR’s inception in 1942, there have been many incidents that have either directly involved the IOR or had direct links to it. The most prominent was the Banco Ambrosiano affair in the early 1980s. The Banco Ambrosiano affair scandal involved Robert Calvi who was the head of Banco Ambrosiano. Calvi’s bank unfortunately collapsed under the pressure of $1.3 billion of debt. The scandal came from the fact that much of this debt was directly linked to shell companies that had a strong association with the IOR. When the news became public, it had a significant negative impact on the reputation of the Vatican further causing a noticeable drop in donations. This matter became even more scandalous when Calvi had a mysterious death in 1982. The police originally reported that it was a suicide before later officially recognizing the death as a murder. 

Figure 5: Robert Calvi, Former Vatican Financial Advisor Tied to $1.3 Billion Fraud.

The scandals didn’t stop there. Italian authorities froze €23 million in 2010 from the IOR. This was due to violations of anti-money laundering regulations. The Vatican bank had attempted to move the funds from Credito Artigianato (a small Italian bank). The majority of these funds had been designated to JP Morgan in Frankfurt with a small remainder being transferred to Banca del Fucino (another Italian Bank). 

Attempts to Reform the Vatican Bank

After the scandal in 2010, the Vatican began a series of reforms to attempt to rehabilitate the IOR’s image. The main initiative was the creation of the Financial Information Authority (AIF) in 2010 by Pope Benedict XVI. The main job of the AIF was to oversee the current operations of the Vatican Bank and the other financial institutions under the Holy See’s Jurisdiction. 

Then in 2013, after Pope Benedict XVI left the papacy, the Vatican increased its effort to continue the reform. This can be shown through Pope Francis ordering external audits which were then conducted by Deloitte. 

Pope Francis didn’t stop the reforms there. He continued to improve the accuracy and compliance of Vatican reporting with the introduction of the Financial Action Task Force now providing follow-up reports acknowledging the substantial progress that has been made. Despite the progress that has been made, the report still mentions that there are large deficiencies in some internal risk assessments. Pope Francis did lead the Vatican without large financial distress or scrutiny. However, his reforms have been extremely costly, placing additional strain on the Vatican’s tenuous finance. The Vatican currently has a €631 million pension fund deficit and remains dependent on donations for their income to support their current and emerging commitments.

Figure 6: Pope Francis’s Connection to Vatican Fiscal System.

Risks and Ongoing Issues

Another key issue facing the Vatican is the financial strain of numerous litigations it is entangled in globally. The settlements holding the Vatican accountable for past and current abuse, particularly sexual abuse, continue to expand and pose a significant risk to the church’s financial stability. The Vatican has already had to pay over $3 billion in legal settlements in the US alone with this number potentially under-reported by $1 billion. The topic of these settlements has also created an image issue for the Catholic church, in turn decreasing the donations the Catholic church receives. This further compounds pressures on the IOR to manage remaining funds efficiently or else risk imperiling their stability and outreach, especially in designated growth regions (Africa, Latin America and Asia).

The repercussions of these global scandals extend past just lowering the Vatican’s donations and reputation. In particular the reputation damage hinders its access to global banking networks, limiting its operations. Historical precedence for this includes JP Morgan closing all Vatican-related accounts in 2012. With the Vatican remaining heavily reliant global investments and service providers, this presents an existential risk, with its current operations unable to be sustained solely through internal organizations.

Conclusion

Thus, whilst the church has substantial financial reserves, historic and emerging risks endanger the Catholic Church’s fiscal stability. Specifically, as historic litigations and pensions come due, the church more than ever must ensure its fiscal stability to ensure it has the requisite funds to support its critical outreach work.

Further, if the church is to arrest its decline in traditional areas and maintain its expansion in new regions it must combat its poor reputation. Not only reinforcing the church’s financial position, but ensuring it doesn’t become isolated from the international organizations it relies on, this is critical for its continued relevance in a rapidly evolving modern world.

References