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VATICAN CITY: The world’s smallest country has a big budget problem.

The Vatican doesn’t tax its residents or issue bonds. It primarily finances the Catholic Church’s central government through donations that have been plunging, ticket sales for the Vatican Museums, as well as income from investments and an underperforming real estate portfolio.

The last year the Holy See published a consolidated budget, in 2022, it projected €770 million ($878 million), with the bulk paying for embassies around the world and Vatican media operations. In recent years, it hasn’t been able to cover costs.

That leaves Pope Leo XIV facing challenges to drum up the funds needed to pull his city-state out of the red.

Withering donations

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.” US bishops contributed over one-third of the $22 million (€19.3 million) 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 US gave an average $27 million (€23.7 million) 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) in 2006, contributions hovered around $75 million (€66.8 million) during the 2010’s then tanked to $47 million (€41.2 million) 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.

New donors

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 ($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 ($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 US, 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.

Even more important is leaving behind the “mendicant mentality” of fundraising to address a particular problem, and instead encouraging Catholics to invest in the church as a project, he said.

Speaking right after Leo’s installation ceremony in St. Peter’s Square, which drew around 200,000 people, Gahl asked: “Don’t you think there were a lot of people there that would have loved to contribute to that and to the pontificate?”

In the US, donation baskets are passed around at every Sunday Mass. Not so at the Vatican.

Untapped real estate

The Vatican has 4,249 properties in Italy and 1,200 more in London, Paris, Geneva and Lausanne, Switzerland. Only about one-fifth are rented at fair market value, according to the annual report from the APSA patrimony office, which manages them. Some 70 percent generate no income because they house Vatican or other church offices; the remaining 10 percent are rented at reduced rents to Vatican employees.

In 2023, these properties only generated €35 million euros ($39.9) in profit. Financial analysts have long identified such undervalued real estate as a source of potential revenue.

But Ward Fitzgerald, the president of the US-based Papal Foundation, which finances papal charities, said the Vatican should also be willing to sell properties, especially those too expensive to maintain. Many bishops are wrestling with similar downsizing questions as the number of church-going Catholics in parts of the US and Europe shrinks and once-full churches stand empty.

Toward that end, the Vatican recently sold the property housing its embassy in Tokyo’s high-end Sanbancho neighborhood, near the Imperial Palace, to a developer building a 13-story apartment complex, according to the Kensetsu News trade journal.

Yet there has long been institutional reluctance to part with even money-losing properties. Witness the Vatican announcement in 2021 that the cash-strapped Fatebenefratelli Catholic hospital in Rome, run by a religious order, would not be sold. Pope Francis simultaneously created a Vatican fundraising foundation to keep it and other Catholic hospitals afloat.

“They have to come to grips with the fact that they own so much real estate that is not serving the mission of the church,” said Fitzgerald, who built a career in real estate private equity.

CAIRO: Nestled in the Sinai mountains, the ancient St Catherine's Monastery has been the centre of recent tensions after an Egyptian court ruled last week that it sat on state-owned land.

Dating back to the sixth century BC, the UNESCO World Heritage Site is the world's oldest continuously inhabited monastery, attracting hundreds of pilgrims and tourists every year.

Following warnings from the authorities and Orthodox Church in Greece that the ruling threatens the monastery's status, a government delegation is travelling from Athens to Cairo on Wednesday to discuss the situation.

The monastery was founded by Byzantine Emperor Justinian in the sixth century at the biblical site of the burning bush at the foot of Mount Sinai, where Moses was believed to have received the 10 commandments, according to the world's three major monotheistic religions.

It was named for Saint Catherine of Alexandria, whose remains are housed in the church, along with rare iconography and manuscripts.

It is headed by the Archbishop of Mount Sinai and Raithu, under the ecclesiastical jurisdiction of the Greek Orthodox Patriarchate of Jerusalem.

According to UNESCO, "the entire area is of immense spiritual significance" to Christianity, Islam and Judaism.

The organisation says the monastery is "the property of the Greek Orthodox Church and belongs to the Archdiocese of Sinai".

Last Wednesday, an Egyptian appeals court ruled that the monastery "is entitled to use" the land and the archaeological religious sites dotting the area, all of which "the state owns as public property".

The ruling, only a brief of which has been published by Egyptian media, has drawn criticism from the Orthodox patriarchates in Athens, Jerusalem and Istanbul.

Archbishop Ieronymos, head of the Greek Orthodox church in Athens, warned the monastery's property could now be "seized and confiscated".

Egypt has defended the court ruling, saying it "consolidates" the site's sacred status.

President Abdel Fattah al-Sisi said Egypt was "fully committed to preserving the unique and sacred religious status of Saint Catherine's monastery", in a phone call with Greek Prime Minister Kyriakos Mitsotakis.

Mitsotakis meanwhile emphasised the importance of "preserving the pilgrimage and Greek Orthodox character of the monastery".

The delegation from Athens is expected to lay out its position on Wednesday.

According to Greece's state news agency, that position "is supported by a UNESCO document, which proves that Egypt had acknowledged in writing since 2002 that the ownership of the land and buildings belongs to the Greek Orthodox Church and the Archdiocese of Sinai".


Construction began in March 2021 in the Saint Catherine area, which includes the eponymous town and a nature reserve, for a government megaproject known as the 'Great Transfiguration' of Saint Catherine.

The project aims to bring upwards of a million tourists a year to the serene mountain village.

Its many construction projects include an events hall, hundreds of hotel rooms and a new residential area housing hundreds of units.

Observers say the project has harmed the reserve's ecosystem and threatened both the monastery and the local community.

According to a report by World Heritage Watch, the project has "destroyed the integrity of this historical and biblical landscape".

UNESCO in 2023 requested that Egypt "halt the implementation of any further development projects", conduct an impact evaluation and develop a conservation plan.

The government, which is campaigning for former tourism and antiquities minister Khaled al-Enany to head UNESCO from October, said in January that 90 percent of the project was complete.

The peaks and valleys around Saint Catherine attract large groups of hikers, peaking at 2,000 visitors to Mount Sinai in a single day last December, local authorities reported.

The area, 1.5 kilometres (one mile) above sea level, is particularly popular with both Egyptians and foreign tourists seeking a reprieve from overcrowded Red Sea resorts elsewhere in Sinai.

The area is home to the Jabaliya tribe, whose name derives from the Arabic word for "mountain".

Said to be the descendants of the Roman soldiers who came to guard the monastery in its early days, they maintain a close connection to Saint Catherine, with many working as tour guides today.

For decades, they have been calling for better infrastructure, including reliable water supply, emergency services and telecommunications coverage to improve their work and daily life.

According to World Heritage Watch, they are currently outnumbered by the thousands of labourers building the megaproject.