VATICAN CITY — The new American pope is looking to his MAGA compatriots to shore up the Vatican’s finances after decades of scandal and mismanagement.
The conclave that brought Pope Leo to power was overshadowed by painful divisions within the Church, a war between modernity and tradition, and bitter reflections over his predecessor’s complex legacy. But more prosaically it was also plagued by angst over a serious fiscal squeeze that is forcing the spiritual leader of the world’s 1.4 billion Catholics to moonlight as a fundraiser.
Despite the Vatican’s vaults of priceless masterpieces, Leo has ascended to the papal throne amid a steepening liquidity crisis aggravated by a major downturn in donations from the U.S., making it increasingly difficult for the city state to function.
Leo needs to fix it — but to do so he needs to keep traditionalist U.S. Catholics on side.
Insiders say that Leo was elected in part because as an American he exuded an Anglo-Saxon financial seriousness. He was also seen as well positioned to bring back donations that have dried up thanks to persistent scandal and the hemorrhaging of support from powerful American Catholic conservatives.
Already, the gambit seems to be working.
“Talking to some of the biggest donors in the country, they’re absolutely thrilled,” said one conservative Catholic leader in the U.S., granted anonymity to speak candidly. “I don’t know that they’re already writing their checks. I don’t see that necessarily yet. But as far as their optimism and excitement, it’s a 10 out of 10 — absolutely.”
A boost to donations is desperately needed. According to Reuters, the latest internal figures show the Vatican ran a deficit of €83 million in 2024, more than double the €38 million reported in its last-published financial report in 2022.
The annual shortfall adds to liabilities including half-a-billion in pension obligations to the Vatican’s superannuated beneficiaries and past losses from the Institute for the Works of Religion (IOR), the Holy See’s scandal-riddled investment vehicle, also known as the Vatican Bank.
The Vatican’s income is mainly derived from property assets and donations including from bishops and Peter’s Pence, the annual June collection by churches for the pope’s “mission” and charitable works. But donation revenue has fallen with increasing secularism and financial scandals.
Donors from the U.S., the number one contributing country, were put off by Francis’ more liberal teachings on LGBTQ+ and marriage as well as corruption scandals including a botched investment by the Vatican’s top financial institution in London real estate, said John Yep, president of Catholics for Catholics, a conservative NGO.
‘Very equilibrated’
The momentum behind Leo as a bridge-builder emerged in pre-conclave lobbying sessions, when cardinals began to envisage that Leo’s alignment on hot-button conservative issues would help appease U.S. Catholics. Leo went on to secure more than 100 votes in the conclave, two well-placed insiders say, indicating that his support was broad and included right-leaning clerics.
Pope Leo “is a very equilibrated person, and he can give something to the right, without shifting the pontificate to the right,” one cardinal told POLITICO.
According to the cardinal quoted above, his constituency even included several of the die-hard Francis critics led by the arch-traditionalist American cardinal Raymond Burke. Burke himself reportedly received Leo — then Cardinal Robert Prevost — in his Vatican-owned apartment before the conclave, and spoke with him again after, according to one person familiar with the matter. Burke’s office could not reached for comment.
In turn, Leo has signaled a willingness to address traditionalist priorities, drawing particular praise for his decision to move back to the original papal residence from his predecessor’s basic lodgings, as well as for his penchant for singing in Latin.
This year’s conclave also happened to coincide with an annual Vatican fundraising jamboree known as “America Week,” a week of lavish Rome parties, that saw €1 billion committed to the Vatican should the “right pope” be elected.
The upshot is — theoretically — more money from across the pond.
“American philanthropists want to see that so they will open up their coffers again,” said Yep.
Electing Leo “was a very smart choice because they absolutely need the American money. The church is in a terrible position financially,” said the Catholic leader in the U.S. quoted above. “They need the American money. And they were able to pick an American who’s not that American. It was kind of a perfect pick.”
Legacy of corruption
But restoring confidence will also require a credible overhaul of the Vatican’s financial plumbing and accounting after years of scandal that also tainted the Church’s international image.
Insiders often blame the shoddy financial situation on the Vatican Bank’s alleged links to a sprawling money-laundering scandal in the 1970s that reportedly involved Italian freemasonry, the mafia, the CIA, anticommunist militias in Latin America and a Milanese banker who was found hanging dead under London’s Blackfriars Bridge in 1982.
Creative accounting persisted over the years, and the shock resignation of Francis’ predecessor, Benedict XVI, was partly driven by a raft of financial scandals leaked to the Italian press. Under a transparency drive, Francis hired former Deloitte accountant Libero Milone to audit the Holy See’s finances.
Milone’s first task was to draw up accounting for the various dicasteries that make up the Curia, the Vatican City government. What he found stunned him.
“They created a proper framework to bring Vatican financial reporting into the 21st century,” Milone told POLITICO. “But when I was brought in to do the audit work, we were still operating in the previous century.”
Financial accounts were written in pencil by nuns on “pieces of paper” and stashed in drawers, Milone said. Theologians with rudimentary financial knowledge massively underestimated the future costs of the microstate’s pension obligations, he said. When Milone began to notice discrepancies in various ministerial budgets, he was accused of being a spy. He was eventually brought in for questioning and compelled to resign — then found that a resignation letter had already been prepared a month prior.
Francis didn’t sit on his hands. The Vatican Bank is profitable again, after he ended some of its shadier practices, and he also presided over the conviction of Cardinal Giovanni Angelo Becciu, a powerful secretary involved in a €200 million scandal involving a botched London property investment in 2014. As well as a hiring freeze and salary cuts, Francis set up a new fundraising commission and centralized the Vatican’s budgeting.
But the broader reform effort was seriously derailed by the departure of Milone, as well as Cardinal George Pell, an Australian who had been brought in to head a new Secretariat for the Economy but was called back to Australia to face charges relating to the clerical abuse scandal. Officials describe an enduring lack of transparency as well as internal resistance to the slow-going reform efforts from entrenched interests in the Curia, with staffers complaining about the effort to mediate spending. Representatives for the IOR and the Holy See’s Secretariat for the Economy declined POLITICO’s requests for interviews.
So far, Leo has hinted that he will prioritize fundraising over austerity, announcing a €500 bonus to curial staffers. He has also signalled that he wants to distance the Vatican from scandals of the past, sanctioning a new investigation into a key witness against Cardinal Becciu’s conviction which could help overturn his conviction at the appeal this fall. On top of that, he will look into ways to boost profits in the Holy See’s vast real estate portfolio, after prelates complained about underinvestment, said the cardinal quoted above.
How all this pans out will depend on not only American largesse but whether Leo can empower the growing caucus of Church pragmatists who recognize that even the Holy See must occasionally lower itself to earthly responsibilities like basic financial planning. For others, the divine mission still trumps all — whatever the cost.
“There will always be a way to get money, just like there will always be the poor,” said one prelate in St. Peter’s Square last month. “Right now, my concern is lunch.”
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