When I left graduate school to work at a major investment bank, I was surprised to learn that, from a financial standpoint, the Roman Catholic Church is essentially a franchise. But you learn that quickly when evaluating bond deals for improving Catholic facilities. Each diocese – and really, each parish – is an independent financial entity. This is also true for the myriad social service organizations and educational institutions that Catholics support.
Many folks – even practicing Catholics – assume that the Vatican stands behind the financial decisions of every church in the Catholic faith. When they hear about churches falling on difficult times, they make comments like “eh, just go sell a Michelangelo.” Their impression is that the church as a whole is really, really rich.
But the Catholic Church does not work that way. Much like a Chick-Fil-A or McDonald’s, money flows from tithes and other financial support at individual parishes to the keeper of the brand, the Vatican, and from there to the church’s overall religious priorities as the Vatican dictates. Money does not flow in the opposite direction. When a diocese fails financially, it fails alone. Its creditors cannot seize any Michelangelos. Instead they seize income from donations from ordinary people. This is mechanically how the Vatican has sheltered its wealth across the centuries.
This is important to know in order to understand the toll that the clergy abuse scandal and a controversial pope have had on the church in the United States. The aggregate cost of ongoing leadership failures in the church is immense. The opportunity cost to religious activity in individual parishes is even more immense.
This is why conservative US Catholics can’t stand the pope and want him to go away so someone new can clean house throughout the church. His remaining in place is jeopardizing the very survival of the church.
The cumulative cost of the abuse scandal to dioceses vs the Vatican budget
In the past 20 years, Catholic orders in the United States have spent $4 billion to investigate and litigate abuse claims and pay settlements to victims. That’s $4 billion from collection plates that is going into the black hole of the church’s problem with pedophilia. And most of that expense has accrued in only the last few years, meaning the increased cost is probably going to be exponential from this point on.
It’s not coming from the pope, who in many cases now has acted to shelter and even promote deviant clergy. Heck, altar boys were even getting abused in St. Peter’s Basilica. That’s how unserious the Vatican is about abuse.
The Vatican itself has a budget deficit of $71 million, out of a budget of $332 million, thanks to many years of wasteful spending and corruption that Francis has been unable – or unwilling – to control. Nearly half of the Vatican’s budget goes to pay salaries to over 3,000 employees. Many of the pope’s critics suggest that the Vatican could eliminate thousands of redundant employees to balance its budget, but firing tons of people does not mesh well with the pope’s socialist worldview. And so the Vatican’s own financial crisis persists.
In the 2018 fiscal year alone, Catholic dioceses in the US spent $302 million on abuse investigations, settlement, and “treatment” for predator priests. The Archdiocese of Chicago paid out $80 million to victims through just one of its law firms. Cardinal archbishop of Chicago, and BFF of Pope Francis, Blase Cupich has said that global warming is a bigger concern for the church than the abuse scandal. The pope put him on a council for determining the Vatican’s response to abuse claims.
US dioceses are filing for bankruptcy protection en masse
Dozens of Catholic dioceses in the United States have filed for chapter 11 bankruptcy protection, mostly due to abuse claims. A week ago, the Diocese of Rochester in New York – which is facing several dozen lawsuits under the state’s Child Victims Act – became the latest. Many more will likely follow. I’m sure most people had no idea that a diocese could even file for bankruptcy, as these events get almost no attention from a media that is singularly obsessed with playing gotcha with President Trump. (There can be no other “news” anymore, which is why almost everyone I know has stopped watching/reading it.)
Filing for bankruptcy usually means that the assets of a diocese are sold off to create a fund for abuse victims:
Jerry Topczewski, chief of staff for the Archdiocese of Milwaukee, which filed for Chapter 11 protection in 2011 and emerged from the process in 2015, said the archdiocese over the years sold its pastoral center, liquidated property that had been set aside for a cemetery and future parish sites, and cut its staff by more than 45 percent.
“You start cutting things when you can, and when you are a service organization, like a central office of a diocese is, it’s people who are the bulk of our budget,” said Topczewski. He told CNS the Chapter 11 process enabled the archdiocese to maintain day-to-day operations while creating an equitable system that distributed $21 million to 355 priest-abuse survivors and established a $500,000 fund to cover victims’ personal therapy expenses.
The diocese still maintains some funds to allow for the continued operation of its parishes, but they are operating at significantly lower funding levels.
Younger generations refuse to support the church financially
These are just the direct costs, however. More than a quarter of Catholics told the Pew Research Center in a recent study that they have stopped donating money to the church. Partly this is to send a message to the Vatican that they want the abuse problems to be taken seriously. And partly this is because they don’t want to take money away from their own household to pay for the sins of a priest, who in many cases have been shopped from one diocese to another by the Vatican or its representatives to avoid public disclosure of their assaults.
In terms of the long-term debts occurred by the church, the financial risk is very real. Many of the people who continue to donate to their dioceses despite the abuse scandals are older generations. Will younger generations step up to fill the void when they can no longer support the church?
In the US, dioceses have formed a mutual insurance corporation to handle new claims of abuse. This organization now polices background checks on clergy, church employees, and even volunteers. But it seems to be more about collecting data on people in the parish than actually managing risk.
It strikes me that the Vatican’s strategy on abuse is concealing and redirecting claims 2.0. Instead of shopping around predator priests, the pope focuses on distracting the media through ongoing challenges to church orthodoxy. He changes the format of the Mass, the catechism on the death penalty, mints pro-LGBTQ cardinals. This sucks him into opposition with the conservatives that the media despises and further diverts attention from the fact that the church is going bankrupt and can no longer fulfill its real mission. This holding pattern is going to continue until the Vatican changes, but the pope is stacking the bench, so to speak, to keep himself and his allies in power.
Francis says he does not fear a schism over his increasingly insane policies, which is good. Because he’s probably going to be responsible for the church finally splitting in half.