Vatican City, the world’s smallest country, is facing a significant budget deficit.
The city-state primarily relies on donations, ticket sales from the Vatican Museums, investment income, and its real estate holdings to finance the Catholic Church’s central government.
And unlike other nations, the Vatican does not tax its residents or issue bonds.
In 2022, the Holy See published a consolidated budget projecting 770 million euros, with the majority allocated to embassies worldwide and Vatican media operations. However, in recent years, revenue has fallen short of covering expenses.
Pope Leo XIV now faces the challenge of securing the necessary funds to steer the Vatican out of its financial difficulties.
Anyone can donate money to the Vatican, but the regular sources come in two main forms.
Canon law requires bishops around the world to pay an annual fee, with amounts varying and at bishops’ discretion “according to the resources of their dioceses.” U.S. bishops contributed over one-third of the $22 million (19.3 million euros) collected annually under the provision from 2021-2023, according to Vatican data.
The other main source of annual donations is more well-known to ordinary Catholics: Peter’s Pence, a special collection usually taken on the last Sunday of June. From 2021-2023, individual Catholics in the U.S. gave an average $27 million (23.7 million euros) to Peter’s Pence, more than half the global total.
American generosity hasn’t prevented overall Peter’s Pence contributions from cratering. After hitting a high of $101 million (88.6 million euros) in 2006, contributions hovered around $75 million (66.8 million euros) during the 2010’s then tanked to $47 million (41.2 million euros) during the first year of the COVID-19 pandemic, when many churches were closed.
Donations remained low in the following years, amid revelations of the Vatican’s bungled investment in a London property, a former Harrod’s warehouse that it hoped to develop into luxury apartments. The scandal and ensuing trial confirmed that the vast majority of Peter’s Pence contributions had funded the Holy See’s budgetary shortfalls, not papal charity initiatives as many parishioners had been led to believe.
Peter’s Pence donations rose slightly in 2023 and Vatican officials expect more growth going forward, in part because there has traditionally been a bump immediately after papal elections.
The Vatican bank and the city state’s governorate, which controls the museums, also make annual contributions to the pope. As recently as a decade ago, the bank gave the pope around 55 million euros ($62.7 million) a year to help with the budget. But the amounts have dwindled; the bank gave nothing specifically to the pope in 2023, despite registering a net profit of 30 million euros ($34.2 million), according to its financial statements. The governorate’s giving has likewise dropped off.
Some Vatican officials ask how the Holy See can credibly ask donors to be more generous when its own institutions are holding back.
Leo will need to attract donations from outside the U.S., no small task given the different culture of philanthropy, said the Rev. Robert Gahl, director of the Church Management Program at Catholic University of America’s business school. He noted that in Europe there is much less of a tradition (and tax advantage) of individual philanthropy, with corporations and government entities doing most of the donating or allocating designated tax dollars.
