Papal Foundation’s Troubles Show Religious Nonprofits Have More Than One Authority

The Pennsylvania-based Papal Foundation has an unusual mission and an unusual governance structure, which can lead misunderstandings, miscommunication, and distrust, especially when everyone involved assumes how the organization and its leaders will act in a given situation. How the foundation handled a request from Pope Francis to support a hospital in Rome, and the backlash against the decision, illustrates the problem. The Papal Foundation’s annual report lists about $210 million in net assets. It is recognized by the IRS as a 501c3 public charity, but it does not file an IRS Form 990 because it claims exemption from the annual requirement as a religious institution. The board chair’s 2015 annual letter celebrated a foundation record “presentation of $15 million to the Holy Father” for his charitable work.” The letter cites three traditional areas of foundation support: care for the vulnerable, building “centers for worship, service, and evangelization,” and “preparing new generations of spiritual leaders.”However, one of Pope Francis’s selected grant recipients didn’t fit the traditional categories. In fact, the head of the board’s audit committee resigned in protest when it was found that the Papal Foundation, at the request of Pope Francis, had granted $25 million to a scandal-ridden hospital in Rome attempting to rebuild its leadership and programs. While the grants are well within the Papal Foundation’s broad mission to “serve the Holy Father and the Roman Catholic Church,” trustee James Longon and other “Stewards of St. Peter” who provide a major portion of the foundation’s endowment objected to this particular use of their contributions.