Papal Foundation Divided Over Massive Grant to Troubled Italian Hospital

According to foundation stewards who object, the $25-million grant is of unprecedented magnitude and departs from the foundation’s usual objectives; other members say the grant is consistent with the mission.

(photo: Bohumil Petrik/CNA)

An organization known for its tradition of providing grants to help the world’s poor, the U.S.-based Papal Foundation is drawing heavy criticism from within its ranks for approving a $25-million grant to an Italian hospital with a history of corruption and mismanagement.

“I could not have ever foreseen this happening,” said a foundation steward who asked to remain anonymous. “It’s beyond breathtaking.”

Over the last few months, lay members of the foundation had largely kept their displeasure with the move inside the foundation, attempting to address their concerns from within.

But now, after LifeSite News reported details of the grant and published leaked foundation documents, several members, including James Longon, the former chairman of the foundation’s audit committee, are speaking out, agreeing that it is time for a spirit of transparency.

Cardinal Donald Wuerl, chairman of the foundation’s board of trustees, did not respond to the Register’s request for an interview on the matter. But a Jan. 19 letter obtained by LifeSite, signed by Cardinal Wuerl and the lay and episcopal members of the foundation’s executive committee, acknowledged “that there is currently a significant degree of discontent among the Stewards of the Foundation” over the foundation’s decision to approve the $25-million grant. However, the letter stated, “We believe that those who sought or voted in approval of the large grant that is in question have acted in good faith at the behest of the Holy Father.”

Begun in 1988 during the papacy of Pope St. John Paul II as a way “to support the Holy Father and his witness in the world,” the foundation is supported by donors, known as stewards, who pledge to give at least $100,000 a year for a total of $1 million over 10 years.

The foundation is governed by a board of trustees, comprised of the eight U.S.-domiciled cardinals, who serve as ex officio members and who approved the seven bishops and archbishops and nine laypeople who serve as elected members.

Grants are to be allocated to needs that are of particular significance to the Holy Father, and, often, they have been made to institutions and organizations in Third World countries.

In 2017, for example, grants included $70,000 to construct a primary school in Bangladesh, $90,000 to complete a library for high-school students and the local community in Nicaragua, and $100,000 for an orthopedic and physiotherapy unit for the St. John Paul II Medical Center in Ghana.


Questions From the Outset

Last summer, Pope Francis made the request to Cardinal Wuerl for a $25-million grant from the foundation for the Italian hospital Istituto Dermopatico dell’Immacolata (IDI), a large hospital in the center of Rome that specializes in treating and researching skin diseases. Longon said the board’s audit committee immediately questioned the grant.

Although over the last several years, the foundation has approved some grants to fund conferences and other Vatican projects outside developing countries, Longon said this one was extraordinary.

There appeared to be no indication of proper due diligence, he said. Apart from the fact that the grant was going to a Church-owned dermatology hospital and not a developing country, he said its magnitude was “monstrous” compared to other foundation grants, which typically have not exceeded $200,000 and in 2017 did not exceed $100,000.

“Yes, we’ve got the money,” he said, “but this is not good stewardship, and Matthew 25:30 talks about what Christ says will happen to the bad steward.”

The IDI hospital, although said to be recovering from its checkered past, is known for its record of embezzlement, fraud and bankruptcy.

In 2013, a priest who had been its chief executive was arrested by Italian financial police for allegedly taking money from the facility and running up a massive debt that led to bankruptcy. According to an article published by the Italian news agency ANSA in March 2016, “Finance police discovered IDI was 845 million euros in the red and 450 million euros in tax evasion, while 82 million euros had been diverted and 6 million euros in public funds embezzled.”

In addition, in 2015, a cardinal was reportedly suspected of diverting state funds for a children’s hospital to save the Italian dermatology hospital.

However, despite the corruption allegations, the hospital continues to have a reputation for delivering high quality care.

IDI and the other two Catholic hospitals owned by the same foundation treat more than 1,000 patients a day and employ nearly 1,500 specialists, researchers and hospital workers.

“It is the most specialized facility on dermatological disease in all of Italy and probably one of the best in Europe. That’s why the hospital is so important,” said Andrea Gagliarducci, news analyst for ACI Stampa, the Italian-language branch of Catholic News Agency.


‘New Type’ of Grant

Longon said the audit committee supported raising its objections to the full board, but that despite hearing their concerns, the board voted 15-8 (with one abstention) to approve the grant to the dermatology hospital. No lay member voted to approve the funds.

A Jan. 5 report to the foundation stewards, one of the documents leaked to LifeSite News, acknowledged that the grant, to be made over a three-year period, was a “new type,” but said it had been requested “in the larger context of the Holy Father’s commitment to confront and eliminate corruption and financial mismanagement both within the Vatican itself and in outside projects with which it was involved or sponsored.”

The report also said the request had been carefully reviewed and approved with the understanding that use of the funds would be verified through quarterly reports on the hospital’s financial, operational and administrative status.

James Coffey, the vice president for advancement for the foundation, declined to respond to questions about the grant. He said in a statement that it is not the foundation’s practice to comment on individual grant requests.

Dissatisfied with the grant approval and the response of the board to their objections, many lay members of the foundation continued to voice their concerns via email. Longon, for example, emailed the stewards saying he was resigning his position as chairman of the audit committee and as a member of the board. He said he was inviting all stewards to join in refocusing the foundation on its mission of serving the poor globally.

“We are all sophisticated philanthropists, and had we allowed such recklessness in our personal careers, we would never have met the requirements to join the Papal Foundation in the first place,” he said. “Let us hold our charitable giving through the Papal Foundation to the high standards by which we live our business and personal lives.”

The Jan. 19 letter said Cardinal Wuerl had written to the Vatican secretary of state to ask that the Holy See decline any further money from the grant, half of which had already been funded.

The letter also said that the executive committee would be recommending a new grant policy: Any grant exceeding $1 million would have to be approved by a majority of both lay and clerical trustees (if that requirement had been in place, the IDI grant would not have been approved, as no lay trustees voted in favor).

However, proposals that the governance structure of the foundation be revised were rejected in the belief that “the current structure has served us well for 30 years.” The letter also mentioned the possibility of future amendment, but said, “heading down that path should be done with cool heads and magnanimity.”


Differing Views

The steward who asked to remain anonymous said many of his fellow stewards who objected to the $25-million grant thought the reduction request was a victory. But he disagreed, saying the grant still considerably exceeds the largest the foundation has ever given any organization. He added that it went “to an institution that is totally outside the realm of what we’re supposed to be doing.”

But another foundation member who spoke to the Register on condition of anonymity rejected the assertion that the grant contradicts the foundation’s grant criteria.

“I think we all owe each other a presumption of good faith and goodwill,” the source commented. “It’s okay if you disagree [with the grant]; it’s okay to disagree with how it was handled, too.

“But you can’t say this disagrees with the mission; it’s printed on the website — if you can show me how a grant to the Vatican violates the mission of the papal foundation, good luck.”

According to the “Our Grants” page on the foundation’s website, “Each year the Board of Trustees designates a portion of the proceeds from the Papal Foundation’s endowment to fund projects and programs of particular interest to the Holy Father. The award may be a small, one-time donation to make repairs to a damaged church or a large, multi-year initiative to teach faithful Catholics how to participate successfully in the Church’s New Evangelization efforts.”

The Jan. 19 letter to the stewards stresses that the IDI grant money was not sent to the hospital, but to the Holy See, adding, “and there is little doubt of its charitable purposes.”

That same letter expressed the wish that in the future none of the members again experience the division and disharmony that has characterized the disagreement over the grant and called for charity toward one another in future dealings. It also said that throughout its history, the foundation, by virtue of its name, is one that works in conjunction with the Pope.

Stated the letter, “We don’t approve every request he makes, but he is the Pope, and we listen to him, and we listen intently.”

 Judy Roberts writes from Graytown, Ohio.

Register staff contributed to this report.