Transparency in service of Church's mission: APSA releases 2022 financial report

By Nicola Gori – L’Osservatore Romano

In 2022, the Administration of the Patrimony of the Apostolic See (APSA) contributed €32.27 million to cover the needs of the Roman Curia. This is the outstanding figure that emerges from the publication – on Thursday, 10 August – of the Vatican institution’s financial report for 2022.

APSA’s economic bottom-line therefore amounted to “breaking-even”, as the contribution paid to the Roman Curia, in accordance with the provisions shared with the Secretariat for the Economy, was equal to the surplus revenue achieved.

“The pages presented and the numbers contained therein,” writes the president of the APSA, Bishop Nunzio Galantino, in the letter accompanying the financial statements, “describe an administration that, like everyone else, has had to and continues to reckon with the effects of the pandemic crisis and the uncertainty arising from ongoing conflicts.” Nonetheless, these pages “nourish an ambition: to shed light on an area, that of administration and management, that thrives on competence, square dealing [It. lealtà], and transparency; but also on trust, as the great economist Antonio Genovesi stated already in the 18th century.”

Another element that emerges from a reading of the financial report is the amount paid by APSA in direct and indirect taxes deriving from the management and possession of real estate on Italian territory. For the 2022 tax year, it paid €6.05 million for IMU [Italian real estate tax] and €2.91 million for Ires [Italian corporate tax]. Of those, APSA alone paid 4.65 million for IMU and 2.01 million for IRES.

In this regard, Bishop Galantino explains that “the transparency of numbers, the results achieved, and the procedures defined is one of the tools we have at our disposal to dispel, at least in those who are free from preconceptions, unfounded suspicions regarding the size of the Church’s assets, its administration, or the fulfilment of the duties of justice, such as the payment of taxes due and other fees.”

On the other hand, the Bishop notes, “a little over a year after the publication of the Apostolic Constitution Praedicate Evangelium, the nature and tasks assigned by Pope Francis to APSA are becoming increasingly clear.” But, he continued, “the part of responsibility that rests upon it” is also evident. Indeed, through “comprehensible, effective, and transparent procedures, APSA is called to contribute to the Church's evangelising mission.” In this sense, the president points out, “we are all now convinced that the Church's reputation in the management of what is entrusted to it by the generosity of the faithful is a prerequisite for the credibility of its proclamation.” This is “one of the reasons that justify the publication, for the third consecutive year, of the annual financial report.”

“With the cooperation and professionalism of the entire APSA community,” the Bishop says, “the process continues to achieve the objectives set out in the three-year development plan, which is continuously updated and submitted to the supervisory bodies of the Holy See.” He notes that “he objective of everything is the economic support for the mission of the Pope and the structures that, with him, share the task of evangelisation.”

Precisely in this spirit of transparency, the financial report provides an overview of the results achieved and the economic difficulties faced. In particular, from an economic point of view, the 2022 fiscal year, following the Covid-19 pandemic period, was also characterised by the “negative financial and economic consequences” resulting from the conflict in Ukraine. In addition, as was “already apparent in the first months, there was inflationary pressure and a significant rise in energy costs, which had a negative impact on the operating results of APSA’s various areas of activity.”

On the bright side, the figures for the real estate management show an increase of €32 million compared to 2021.

On the other hand, it must be remembered that APSA is called upon to administer liquid and real assets of the Holy See according to certain ends. Firstly, the objective is not profit, but the preservation and consolidation of the patrimony received as a dowry through recourse to what Pope Francis has called “investments of widows.” It is a popular expression that highlights the criteria with which, even today, APSA’s investment Office operates; i.e., not pursuing speculative ends but rather “lower rates and proven social impact.” In this particular period, with signs of a resumption of normal activities, APSA is called upon to carry out a credible and reliable administration, based on the processes of rationalisation, transparency, and professionalism demanded by the Pope.

With regard to securities management, APSA's investment policy, in accordance with criteria of prudence and never speculative, continued to be characterised by “a fitting balance between risk and medium to long-term profitability, favouring a prudent asset allocation.” In 2022, despite an uncertain economic situation, it was deemed “more appropriate to have a conservative strategic allocation of the portfolio, characterised by a limited equity exposure (of around 25%, including the alternative assets component).” But also “a reduced average maturity of the bond segment of about 4/5 years and a high level of precautionary liquidity,” to meet both the Holy See's future and uncertain financial commitments and “the changes in governance, also linked to the new Apostolic Constitution.”

Specifically, the result from securities management was -€6.7 million, compared to a positive result of €19.85 in 2021. This led to a difference of €-26.55 million compared to 2021. Likewise, the operating costs increase from €10 million to €13 million. Given the high market valuations, fragile economic growth, a sharp drop in corporate profits, and an inflationary spiral, APSA preferred to “maintain a portfolio positioning largely unchanged compared to 2021, while still adopting a constant and careful risk control policy.” Investments in alternative assets were still kept on stand-by, insofar as they could have an impact on liquidity management.

The financial investments managed by APSA amounted to approximately €1.777 million as of 31 December 2022, and include both property management and third-party management (entities of the Holy See or related to it). APSA also manages other activities, which include the costs related to the operation of the entire organization, including the Peregrinatio ad Petri Sedem (a papal institution that facilitates travel for pilgrims visiting Rome and other sites throughout the world). In the report attached to the budget, reference is made to the three-year plan undertaken to optimise results and improve working methods. In particular, a benefit of €55.4 million is estimated once the objectives have been achieved. This will be done by implementing the “returnable vacancies” [It. sfitti a rendere] programme to achieve a gradual decrease in vacant building units. In the two maxi-lots into which the project is divided, 79 properties have already been renovated and are already being marketed. For the second lot of 61 units, the renovation phase has already started.

This article, in Italian, appeared originally in L'Osservatore Romano.