Video: Catholic capital

By Nanette Hansen Anchor
CNBC
updated 4/19/2005 5:53:53 PM ET 2005-04-19T21:53:53

What if you were the CEO of a multibillion dollar corporation, rich in assets in every pocket of the globe, but not allowed to use those assets to generate more wealth?

This is one of the biggest financial challenges facing the modern Catholic Church and Cardinal Joseph Ratzinger of Germany, the man elected as its next leader.

Like his predecessor, Pope Benedict XVI will become the chief executive of a vast and valuable empire. The Catholic Church in America alone would rank right in the middle of the Fortune 500 list of companies, competing with the likes of drug giant Schering-Plough and home builder Pulte Homes. 

The Catholic Church has numerous assets, including a vast amount of real estate. It owns more land globally than any other organization on the planet, but trophy properties like Saint Patrick’s Cathedral in New York City produce little income, cost a considerable amount of money to maintain and will certainly not be “flipped” for a profit.

And don’t expect the church’s opulent basilicas, its museum-quality art collection or jewelry to hit the market either. They may amount to priceless ancient treasures, but the church values most of its artwork and valuables at just 1 euro, so they will never be sold.

“Those assets are not liquid and they can’t be put to use for the Catholic Church in the way they could be for, say, a corporation,” said Gabriel Kahn, Rome Correspondent for The Wall Street Journal.

What’s more, most companies have the luxury of selling off unprofitable divisions, but not the Catholic Church. And unlike ordinary corporations, the church’s main revenue source comes from parishioner contributions notes Joseph Harris, who analyzes Catholic Church trends.

Total donations made at a parish level in 2003 were $8 billion said Harris. And while Harris’ research shows donations increased at an average annual rate of 4 percent from 2000 to 2003, there’s no guarantee that growth rate will continue.

So might Pope Benedict XVI have to be a money manager as well as a spiritual leader? We do know that the church currently has a very conservative portfolio of investments, mostly in dollar-denominated accounts that in comparison with the euro are not earning great returns.

And recent sex abuse settlements have drained hundreds of millions of dollars from church coffers, resulting in mounting pressure for the pope to pursue a more aggressive investment strategy.

“Perhaps [he’ll] use some of these holdings, some of these assets, some of these paintings, some of this real estate as a way to back bonds or other revenue generating measures,” speculated the Journal’s Gabriel Kahn.

So far, such a course of action has been a taboo subject in the Vatican. The issue now is whether Joseph Ratzinger of Germany will change that. In doing so, he’ll change the course of history.

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