Twenty-five years ago, Gillian Zacharias wrote an outstanding MA thesis for the School of International Affairs at Carleton University comparing the Catholic Church, its organization and management, to that of a multinational corporation. The thesis provides a background for current developments taking place at the Vatican head office, where the Cardinals have elected a new Pope, and in the Catholic Church throughout the world, where its subsidiaries are offering competing brands of the dogma of Catholic beliefs. Recent events suggest how a corporate type analysis helps in understanding what is going on.
Selecting a Pope
Prior to March 13th, 2013, much of the focus was on which of the voting cardinals would get two-thirds plus one of the eligible votes to become Pope. The 38 cardinals over 80 are disqualified from voting, although the newly elected, Cardinal Bergoglio, to be known as Francis I, at age 76, will likely lead the organization well into his eighties.
The voting was rumoured to be split between supporters of a Cardinal with either conservative or ultra conservative views. None were in favour of women joining senior management by becoming either Pope, Cardinal or Bishop, although some candidates suggested that there is room for women to take a greater role in the church. The glass ceiling of the Sistine Chapel appears to have none of the cracks which have appeared in public corporations. This means that the church, in its marketing, could alienate about half the people who might consider their religious brand. On the other hand, it does appeal to a niche market, males, who make up the other half the world’s population.
In Europe and North America, Catholicism is losing market share against competing religions, while in Africa and Latin America it is gaining members. The head office remains in Rome, which is understandable as the Vatican is recognized as a state, but Europe with 24% of the world’s Catholics has 34% of the cardinals – Italy alone has 28 cardinals and the rest of Europe 32. Meanwhile, Latin America has 41% of the Catholics and 11% of the cardinals. The fact that Francis I comes from Argentina may help to correct this. Due to sunk costs, I doubt the head office will be moved.
One group of cardinals lives and works in the Vatican where they get to know each other, while those who travel to Rome, if they decide to run for office, or if they want to lobby for a papal candidate, have a harder job campaigning. In this sense, the church is more like a government or exclusive club than a corporation, as in the election of a pope the shareholders/church members have no say, leaving it to the present Cardinals, who have been appointed by former Popes to act as the electorate for a new one. The voting procedure is closely monitored and the ballots burned so that there is no direct way to undertake a recount.
Headlines involving the Vatican in recent years include the relationship which priests have with each other, with young boys, women, and with members of their congregations. All this makes for salacious reading, which receives public airing and sometimes, but probably not often enough, leads to the disciplining of priests. In an era of social media and the willingness of insiders to leak information, which then becomes public knowledge over what has happened and how the church has responded, the church can no longer hide the facts. Social media has also allowed victims to liaise with each and to coordinate their responses. The message goes viral.
The other public relations disaster which the church has had to deal with relates to financial management or mismanagement, a situation not unknown to private sector firms. Publicly traded firms are forced to have published annual audits undertaken by independent auditors. Accounting firms and elected directors can be sued for releasing misinformation and carry insurance to limit their legal liability. (I don’t know whether church executives carry such insurance).
No similar disciplining forces relate to the Catholic Church (and similar religious organizations of other faiths) which are usually treated as charities for tax purposes, and where the Cardinals as senior managers are appointed by the Pope as CEO, who in turn is elected by the Cardinals. Charities are given tax breaks and do not make profits, however in any year their income may exceed their costs in which case the surplus (profit with a fairer name) can be used to construct buildings like the Sistine Chapel and support lifestyles, not unlike executive perks in the private sector. Their surroundings and way of life becomes difficult for ecclesiastical management to explain to their congregations, especially those in poor countries in Africa and Latin America. Francis 1 may be an exception, as he chose to live in an apartment not the available palace in Buenos Aires, and he is a strong supporter of an Argentinian soccer team.
The dubious financial dealings of the Vatican have arisen a number of times. An example from the eighties involved The Institute for Works of Religion, known as the Vatican Bank, located inside Vatican City and managed by a CEO who reports to a committee of Cardinals and ultimately to the Pope
“The Institute was involved in a major political and financial scandal in the 1980s, concerning the 1982 $4.7 billion collapse of Banco Ambrosiano, of which it was a major shareholder. The head of IOR from 1971 to 1989, Archbishop Paul Marcinkus, was under consideration for indictment in 1982 in Italy as an accessory of the bankruptcy; however, he was never brought to trial due to the Italian courts’ ruling that the priest, being a high-ranking prelate of the Vatican, had diplomatic immunity from prosecution. As a private organization performing banking-like functions for religious institutions, it is not subject to public scrutiny.”
Subsequently, Roberto Calvi, President of the Bank, was found dead hanging under Blackfriars Bridge in London. The week before, his secretary, after denouncing him, committed suicide by jumping from a window in Rome.
A balance sheet
In one sense the Catholic Church has substantial assets in terms of the buildings and furnishings at the Vatican, and throughout the world. Assets also include the goodwill it has generated over time, although adversely affected at times. Its liabilities include, amongst others, any outstanding debts from borrowing and for claims resulting from court cases.
However there is a problem with the tangible assets. If the Vatican or parts of it are put up as a guarantee to a lender, that lender may realize the difficulty posed if foreclosure is necessary. This arises for any church or historic building which offers its buildings as collateral for a loan. Tangible assets exist but may be difficult to use as in order to raise money.
As the earlier research discussed, many aspects of the Catholic Church are similar to those found in a profit driven multinational enterprise. It also has aspects of a political organization or club with its voting and appointments procedures. A combination of economic and political analytical tools helps to explain its operation.
While it is easy to focus on the church’s scandals past and present which make for good reading, Catholicism has been around for 2000 years, and as an organization it has outlasted governments and corporations by centuries. One indirect comparison is the British Empire which lasted for about 500 years, but was only a major world force for about 20% of this time. If anything, the Catholic Church is a survivor, and while it might benefit from learning how corporations operate, the reverse may apply and corporations learn from the Church’s survival in competition with other major religions.