When Thomas Jefferson popularised the metaphor of a “wall of separation” between church and state, he was both ensuring the powers of government would not be subject to a religious body, and inversely, that American religion would be free from government purview. But Jefferson, writing in the early days of American finance, could not foresee another interaction: that of church and market. Charity might be the first call for the religious-minded, but investment has long been, and is now the primary method by which religious groups entrench their wealth—to be used in turn for salary or grants or, in a round-about way, good old charity.
Though much of the discourse today speaks of ‘impact investing’ as a new-fangled idea, its antecedents lie in Jefferson’s day. American Methodists of the 1700s refused to invest their money in liquor, tobacco or gambling products, an attitude soon taken up a century later by the Quakers. In 1802, when Jefferson invoked the image of a separated church and state, financial markets were piecemeal. It was early days for public investing; just ten years prior had the Buttonwood Agreement been signed, the instrumental document that founded the New York Stock Exchange.
With the finances of most religious groups mostly tied up in charity and property, any mention of church and market interlinked would have raised eyebrows. Yet today in the US, there are innumerable purportedly Catholic organisations whose sole purpose is to invest donations—vaguely collected from the Vatican and from local donors—and accumulate profit for uses unclear, from charity to undesignated funds. The wealth of the Catholic Church and its organisations is not limited to the US. In Australia alone, the Church holds net assets upwards of A$30 billion, making it one of the largest non-government property holders in the nation.
Yet such assets raise the question of how the Church, though an institution centuries old, has maintained and continued to multiply its wealth. There is historical precedent for murky finances; in the fifteenth century, the Medici Bank loaned money to the Church yet was remiss when it came to repayment; the pope reportedly supplied them with silks and jewels as compensation.
That was some six hundred years ago of course, but problems continue to plague the Church’s books. The snowballing leak of documents from the Vatican grew into the ‘Vati-Leaks’ scandal, which from 2012 has shown the world patterns of corruption and blackmail at the highest level. The scandal even led to a book that suggested bribery by then incumbent Pope Benedict XVI. To boot, Cardinal Angelo Becciu was charged in 2021 with embezzling US$412m in church funds to use for a property deal in Chelsea, England–resulting in the first trial of a cardinal in Vatican court.
With such a chequered past, one rightly approaches claims of success within the Church’s treasury with caution. In 2017, the Catholic Church made news for becoming “an impact investor”, in part due to the formation of various impact funds with church money. The Economist noted, however, that only US$1bn–a fraction of what would be worldwide church net worth–was then put towards impact investing.
A change in papal opinion may be a better explanation of what happened in 2017. Impact-mindedness would have always gone hand-in-hand with the Church’s espoused values of generosity and compassion; now it appeared they had a pope who put his money where his mouth was. Indeed, Pope Francis– incumbent from March 2013–is vocal about re-aligning the Church’s investments with socially conscious causes. Also in 2017, The Guardian reported a record divestment from fossil fuels by the Church and its associated organisations. Where that money is now going, however, is a pertinent question.
When Pope Francis calls for impact investing in not so many words—“precious and primordial unity between profit and solidarity,” he called for in 2014—he alarms those within the Church who perceive a conflict with Catholic values. Seeking a profit should not, critics say, conflict with the primary goal of charity. For wishful thinkers, the pope could well be referring to a religious, spiritual profit—a profit of the soul by investing in socially-beneficial impact. Where that departs from usual activity though, and what is driving the internal controversy, is the profit generated alongside that impact.
As Church finances have historically been secretive and continue to be—despite news headlines that report smaller parts of the bigger picture (such as the divestment)—it is difficult to ascertain the extent to which the pope backs up his words with action. Adding to the issue is the fractious state of Church organisations—there is the Vatican at centre and various non-profit and charity organisations around the world that accept donations from local Catholics and presumably from the bequest of the pope himself.
Is the Church now holding true to their values in the way they invest, or are the divestments from fossil fuels just a small piece of the pie posing as the whole? God only knows. But would the Vatican keep out of further controversy if a Jeffersonian wall existed between church and market? Well… is the pope a Catholic?