Vatican budget shows surplus for 2012, reversing record deficit of 2011 [CWN]
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AllSeasons
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Personally, I find this very interesting. How were they able to do this? Logically speaking, if revenues, i.e. donations, declined, to have losses turned into a profit, operating costs must have declined significantly to offset the decline in revenue.
Since I don’t have access to the actual financial statements, I’m gonna make some educated guesses here. The article says that the largest expense was personnel costs, with communications/marketing costs being a distant second. In order to make any significant dent in operating costs, it’s most likely the reductions came from personnel costs.
So what are the personnel costs? I’m thinking it’s money used to pay for the salaries, pensions, and healthcare for priests and other religious? Does it also include maintenance of churches? I’m inclined to think so. I’m thinking this has to do with the closing and consolidation of churches and Catholic schools, which is very sad. I would also be interested to see if there’s an overall strategy to cut expenses, and/or make operations more efficient. I would hate to see cost-cutting come at the expense of outreach to the faithful.
Moreover, I’m thinking it may have to do with the reduction of payouts to sex abuse claimants. Perhaps the majority of these have been settled, and with new rules in place, it’s far less likely to happen in the future.
Ultimately, it’s good to see the Church finances turn a corner. That said, the decrease in donations is worrisome, although that may have to do with the global downturn. Perhaps when the economy improves, so will the donations.
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livingwordunity
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Very simple. They most likely reviewed their budget, figured out which expenses were superfluous, and reduced their spending . Too bad America hasn’t figured out that concept. When America makes cuts it still goes into debt because it’s way of doing it is to cut middle class jobs while giving more money to Planned Parenthood and more money to support Obama’s extravagant lifestyle.
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ProVobis
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That’s pretty much it. I wouldn’t put too much into one year’s budget though. There are a few accounting methods which might have changed, such as spreading certain costs over ten years, for example. But I don’t have access to the financial statements either.
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AllSeasons
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I wish it were that simple. You can review and review and review all you want, but at the end of the day, you will still need to make some tough decisions. There’re only so many low-hanging fruits; if you want to make significant cuts, you will need to go into areas where it’s not so easy, and people will be affected. After that, you will need to worry about implementation, etc., because even the best strategies can fall apart at the implementation stage. Anyway, I digress.
Not sure what kind of accounting methods the Vatican uses, but I’m thinking it’s not GAAP, which is what I’m more familiar with. As far as depreciation is concerned, I don’t know of any significant changes, but I could be wrong.That’s pretty much it. I wouldn’t put too much into one year’s budget though. There are a few accounting methods which might have changed, such as spreading certain costs over ten years, for example. But I don’t have access to the financial statements either.
As to how much insight one year’s budget can provide, well, you need to look no further than Wall Street. Wall Street is extremely near-sighted - or short-term focused - so any change in quarterly revenue/profits could very easily change the stock price. However, the Vatican is a private organization, so it’s not subjected to a lot of the public disclosure rules that public companies have to comply with, so I doubt how much additional information the financial statements can provide, unfortunately. Nonetheless, I agree with you that it would still be nice to see them.
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ProVobis
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I’m thinking too about the revenues that may be in the form of “pledges,” which many dioceses use. Very few entities wait for the actual cash before they decide what needs to be spent. So I agree it’s not so simple getting the numbers to show black all the time even in the best fiscal environment.
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AllSeasons
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Good point. I’m not familiar with how non-profits do their accounting with pledges and donations, but I’m guessing it’s probably something like accounts receivable? Not quite sure, though.
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Brendan
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The large majority of Vatican employees are actually secular laity. So while the Vatican might have reduced some costs by sending priests or religious back to their home diocesese\orders. The biggest cost reductions would have come from fewer street sweepers, postal carriers, garbage collectors etc…
For the major tourist sites, they are nominally sefl sufficient (or supposed to be) via entrance donations.
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AllSeasons
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By “Vatican employees,” you don’t mean just those employed by Vatican City, right?
Does the Church directly employ a lot of street sweepers, postal carriers, etc.? Seems much more efficient to hire an outside company who specializes in such tasks, no?
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ProVobis
Guest
Good point.
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