The Secret Finances of the Vatican Economy

Little-known facts about how the Vatican makes money

Because the Vatican has published very little over the centuries about its finances and investments, most people don’t know how it generates revenue as a sovereign city-state. Vatican City covers just 110 acres within Rome and has a population of under 1,000, making it the world’s smallest country. Despite its size, it has a significant financial presence through investments in banking, real estate, and private enterprises.

Key Takeaways

• The Vatican is the world’s smallest country, with an economy that relies on donations, private enterprises, and investments.

• Its finances are shrouded in secrecy, and some believe the reported figures are more estimates than precise numbers.

• The Holy See, the Vatican’s governing body, generates revenue through donations and invests a portion in stocks, bonds, and real estate.

• Vatican City earns income from museum admissions, collectibles, and publications.

• The Vatican Bank has faced scandals, prompting Pope Francis to implement reforms for greater accountability and transparency.

Understanding the Holy See and Vatican City

To grasp the Vatican’s economy, it is important to distinguish between Vatican City and the Holy See. The Holy See is the governing body, while Vatican City is the physical territory. Most contracts are signed with the Holy See rather than the city-state itself.

Holy See’s Revenue

The Holy See raises funds primarily through Peter’s Pence, an 8th-century tradition of donations from Catholics worldwide. Contributions come from individuals and dioceses via a dedicated department. The Holy See also earns money from interest and investments of its reserves.

Holy See’s Investments

Historically, the Holy See focused on Italian industries, keeping stakes below 6% and following a conservative “buy and hold” strategy. Its international investments were limited, though more recently it has diversified into Western European currencies, bonds, and the New York Stock Exchange. Real estate holdings worldwide, especially land and churches, also form a key part of its portfolio.

The Holy See avoids investments that conflict with church values, such as companies producing birth control. As of September 2024, it faced economic challenges but continued reforms aimed at zero-deficit spending.

Holy See’s Deficit

The Holy See has run deficits for many years. In 2012, an $18.4 million shortfall was attributed to a weak European economy, employee costs, and funding Catholic media and outreach. In 2019, an estimated 70 million euro deficit prompted cost-cutting measures directed by Pope Francis. The pandemic in 2021 further affected revenues, resulting in a 49.7 million euro deficit.

Despite reforms by Pope Francis and Pope Benedict XVI, the finances remain somewhat opaque, with many figures regarded as broad estimates. Nevertheless, the Holy See holds significant reserves.

Vatican City Revenue

Vatican City generates revenue through tourism and commercial ventures. Major attractions like the Sistine Chapel, St. Peter’s Basilica, and the Vatican Museums draw millions of visitors each year. Income comes from museum admissions, guided tours, collectible stamps and coins, and the sale of publications. Exact figures are not publicly disclosed.

The Vatican Bank (IOR)

The Vatican Bank, or the Institute for the Works of Religion (IOR), is a controversial but central part of Vatican finances. Founded in 1942, it has faced scandals including accusations of mismanagement, fraud, and money laundering.

In 2018, the bank charged its former president and lawyer with embezzling 50 million euros. That same year, the bank reported a profit of 19.8 million euros, down from 36 million euros in 2017, with assets valued at roughly 5.6 billion euros. Its account holders include clergy, employees, and religious orders worldwide.

In 2022, Pope Francis clarified that the IOR manages all of the Holy See’s financial assets, with regulations aligned under a new statute in 2023. The bank remains relatively independent, overseen by the Vatican supervisory authority ASIF.

The IOR is structured as a juridical canonical foundation with no shareholders and is governed by a Board of Superintendence reporting to a Commission of Cardinals and the Pope. Since 2014, Jean-Baptiste de Franssu has served as president.

Oversight and Audits

Vatican finances are overseen by multiple entities: the Secretariat for the Economy handles daily financial matters, the Council for the Economy supervises operations, and external auditors like PricewaterhouseCoopers review statements. Audits help ensure compliance with regulations and promote transparency.

Funding Charitable Work

The Vatican funds charitable activities primarily through donations such as Peter’s Pence, supported by investment income and commercial revenue from museums and other sources.

Tax Status

Vatican City is tax-exempt within its territory, though this may not extend to individuals or entities associated with the Vatican in other countries. Globally, churches, including the Vatican, are often exempt from taxes.