New Pope facing financial challenges

Most of the news about the new Pope Leo XIV has revolved around his being an American. And for those in Chicago, whether he is a Cubs or White Sox fan. One of the more serious issues the new pontiff has to deal with is the financial crisis facing the Vatican. It is about 80 million euros in debt. This is roughly triple what it was 10 years ago. For all its global influence, the Vatican is tiny. It is the world's smallest country. It sits in the center of Rome, occupying only just over 100 acres. While it is the home of the Pope where the direction of the church is set, it is not where the church generates most of its revenue. The irony is that while the Vatican possess priceless treasures such as gold chalices, the Sistine Chapel, and ornate cathedrals, it does not generate much revenue. It is asset-rich and cash-poor. As with much of what happens at this level of the Catholic church, details about its finances are very secretive. Most of the money collected at local Catholic churches around the world does not go to Rome. Those donations go to the local and national churches. Unlike other countries, the Vatican does not tax its citizens. It relies on income from tourists who visit the Vatican. Tourism at the Vatican funds its embassies all around the world and its small army. It pays for the maintenance of all the buildings and grounds. The Vatican has had a somewhat checkered past when it comes to finances. The Crusades, Sistine Chapel, and Saint Peter's Basilica were all paid for through a sixth century invention called indulgences. The practice of indulgences was considered so corrupt that it helped initiate the reformation. At one point there was a mafia-linked financier who was close to Pope Paul VI who had ties to New York's Gambino crime family. There was also a huge scandal in the 1980s when the Vatican Bank got caught up in the collapse of an Italian bank. By the early 2000s, the Vatican's money problems had become pretty dire. Benedict XVI set up a unit to combat money laundering. But the difficulties proved to be too much. The financial issues were a factor in Benedict deciding he would become the first pope to resign since 1415. Francis, known for his frugality having lived through many financial crises in his home country of Argentina, attempted to modernize the Vatican's bookkeeping. When he first became Pope, nuns were still keeping ledgers with pencil and paper. He hired an executive from the accountant firm Deloitte to audit the Vatican's financial operation. This was the first time the Vatican ever had an outside auditor. This external oversight did not sit well with some of the clergy. The auditor Francis empowered to clean up the mess soon had a target on his back and eventually resigned. Ahead of the start of the recent conclave, Cardinals held multiple sessions to discuss the financial crisis. The financial mismanagement question is a wedge issue with the Cardinals. There are two camps. One group of cardinals see it as an issue they need to address. Others Cardinals argue they are only to discuss matters concerning God and spirituality. It has become evident to many that the new Pope needs to address this financial crisis. Instead of worrying about which Chicago baseball team the new pontiff is a fan of, maybe there should be a discussion of whether he can work with the economists at the University of Chicago. Perry Haan is Professor of Marketing at Tiffin University. He can be reached at haanpc@tiffin.edu.