A society, not a monolith: What the Catholic Church is, and is not

A Pillar Explainer

On Thursday morning, Associated Press ran a report accusing “the Roman Catholic Church” in the United States of “sitting on billions” while it “amassed taxpayer aid” through the Paycheck Protection Program. 

The AP article, which follows a similar AP report published in July 2020, takes as a whole the assets and investments of the Catholic dioceses, parishes, schools, and other charitable institutions affiliated with the Church in the United States and treats them as a parts of a singular whole.

“Overall, the nation’s nearly 200 dioceses, where bishops and cardinals govern, and other Catholic institutions received at least $3 billion. That makes the Roman Catholic Church perhaps the biggest beneficiary of the paycheck program,” AP concluded.

What is the “Roman Catholic Church,” and can its dioceses, parishes, and other institutions be treated as one single institution? 

Here are the highlights:

  • The Catholic Church is a society, not a monolith. The Catholic Church understands itself to be a communion of people and institutions, not a singular organization. Its legal structures are designed to reflect that theology.

  • Many news reports fail to understand the legal and theological distinctions between a diocese, a parish, a Catholic school, and other Catholic institutions like a cemetery. Those organizations are canonically distinct, and almost always distinct in civil law as well. Bishops don’t control the cash of most organizations within their jurisdiction - and for theological reasons connected to the Church’s basic self-understanding.

  • The Vatican has insisted for more than a century that U.S. Catholic bishops ensure the legal and financial organization of Catholic institutions reflect Catholic theology, and that distinct realities are not treated in law or practice as a single organization.

  • Many dioceses are associated with affiliated but independent Catholic foundations, that exist to make grants to Catholic institutions and projects from the revenue of investments. While those foundations are often asset-heavy, their cash is restricted by the intentions — often legally binding — of the donors who gave the money, and the agreements spelling out its use.

Want to know more? The Pillar takes a deeper look at how the Catholic Church in the United States is organized:

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The Church in the U.S.

As anyone who has followed national Church affairs in the last few years will know, the bishops of the United States meet together and - according to canon law - “exercise certain pastoral functions” through the United States Conference of Catholic Bishops. 

While the USCCB is funded by individual dioceses, and coordinates some action at a national level, the bishops and the dioceses they lead are distinct theological institutions, and distinct legal entities in canon law. 

Dioceses are not subordinates or subsidiaries of the USCCB. There is no “national Catholic Church” that governs or manages “Catholic assets” in the U.S.

The global Catholic Church is a unity of communion -- defined in Catholic theology as a communion of discipline, teaching, and sacraments - but not a single legal or financial entity. 

While the pope is defined in canon law as the supreme authority, “ownership of goods belongs to that juridic person [like a parish, school, charity, or religious order] which has acquired them legitimately.” 

Put simply, Catholic legal entities are distinct from one another in American civil law because they are distinct from one another in Catholic theology and canon law — so much so that the Vatican has itself insisted that bishops never treat parishes and other institutions as part of a giant “Catholic” common fund.

Dioceses

The diocese is the territory under the governance of a bishop, and the basic governing structure by which the Catholic Church is organized. 

Each diocese is itself divided into parishes, each with their own territory, and the diocese as a whole is expected to have certain institutions - run through the diocesan chancery - which serve the entire local Church.

How each diocese is structured under U.S. law can vary. In many dioceses, each individual institution is separately incorporated, with its own bank accounts, bylaws, and clearly defined mission and structure. While the bishop sometimes has some position on the boards of those institutions, each remains its own unique legal entity under his jurisdiction, and must, by both canon and civil law, be governed that way.

The AP noted that some dioceses operate revolving funds for their parishes — essentially small, internal, savings and loan banks on which parishes can place deposits, and from which parishes can receive low interest loans. The money on deposit in those funds does not belong canonically to the diocese operating the funds, and is not available for use by the diocese for its own purposes.

Some U.S. dioceses — but fewer each year —  are organized as  “corporations sole” in U.S. law, with ownership of all local Church assets, from the chancery building to the local parish hall, held in trust under the direct and sole ownership of the bishop. This practice, U.S. courts and the Vatican have warned, creates confusion, blurring the institutional separation which exists in canon law and theology.

For an entire century, the Vatican has issued repeated instructions to dioceses in the United States to avoid using this model of corporate organization. Most have listened, but a few remain organized under the diocesan corporation sole model, in large part because the process of transitioning to a new model is extremely time-consuming, and can be expensive.

In addition to blurring the canonical separation between, say, a diocesan seminary and a local parish, the “diocesan corporation sole” model also creates legal problems for some dioceses. 

In some places, lawsuits filed against the bishop, or against the diocese, can make a claim against the assets of all the Catholic institutions of the diocese - even if those entities are legally distinct in canon law and the bishop has no power to treat their goods as common property.

The Associated Press story reported that the Archdiocese of Chicago “had more than $1 billion in cash and investments in its headquarters and cemetery division as of May,” but “Chicago’s parishes, schools and ministries accumulated at least $77 million in paycheck protection funds.” 

While the archdiocese is a corporation sole, the archbishop, Cardinal Blase Cupich, cannot, under canon law, divert money held by the archdiocese away from the express purpose of maintaining Catholic cemeteries in perpetuity. Nor could he legitimately take seminary money and use it for a parish project. If he did, the Vatican would invalidate the action upon appeal. 

The AP report suggested that dioceses like Chicago could “raise capital by selling bonds to investors,” and quoted an assessment by Moody’s saying that “that the $1 billion in cash and investments held by the archdiocese headquarters and cemeteries division could cover about 631 days of operating expenses.”

However, the Church sets strict legal limits around how cemetary funds can be leveraged because it considers their perpetual upkeep to be a sacred responsibility. Endowments established for that purpose are, according to canon, to be deposited in a safe and seperate account and “cautiously invested” only for the benefit of the foundation.

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In addition to the distinction between the separate legal entities, canon law also protects donor intentions. So, for example, Catholics who have paid or donated into a cemetery maintenance fund for that specific intention cannot have their money diverted on the whim of the bishop to fund other projects, however worthy the bishop might find them.

Among “Catholic assets” often cited by media are those held by Catholic foundations, independent non-profit foundations which are often associated with dioceses or groups of dioceses. 

Those foundations exist to give grants to Catholic schools, parishes, and other Catholic projects, usually through bequests left by donors, or given by Catholics wishing to see annual operational support to particular programs. Ordinarily, those foundations are only permitted, by legally binding agreements, to disperse investment returns, or a set percentage of initial capital invested annually — so while they appear cash rich, most of their assets are legally spoken for, and rarely able to be redeployed to other projects.

Those foundations are also legally and operationally independent from the dioceses in which they exist, and usually prefer to have limited operational engagement with local bishops. 

Parishes

Parishes are often thought of as effectively branch offices of the diocesan chancery. They are not. 

Parishes are defined as “a portion of the people of God within a given territory”- the parish is, in law, the people who live somewhere.* 

While those people are subject to the governance of the bishop, the property of the parish is not “his property,” and - in the context of the covid-19 Payment Protection Program - parish employees are exactly that, employees of the parish, which is legally represented by the pastor.

While many parishes work with and through the diocese to centralize processes like payroll and employee benefits to achieve economies of scale, that practice does not change the legal reality that each parish is its own separate entity, with its own rights and responsibilities.

The biggest “asset” for most parishes is the land they sit on. But parish properties are not easily alienated. In order to protect the investment of the donors who helped buy parish property and build parish churches, pastors are usually prohibited from selling parish real property without permission from a local lay-led finance council, a diocesan lay-led finance council, and, depending on the value of the property, from the Vatican itself. 

Because it represents an investment generations deep, the real property of the parish is not meant to be conceived as an asset that can be sold except as a measure of absolute last resort.

While the local bishop exercises a governance function over parishes, and can tax parishes to support the structures of the diocese, his control of parish assets and resources is neither immediate or at his own good pleasure.

The complexity of the legal realities of parishes is illustrated by the process many large U.S. dioceses have taken to close or combine parishes in major cities in response to declining numbers of Catholics and donations.

In more than one instance, an American bishop has attempted to summarily suppress a parish or transfer assets from a rich parish to a poor one, only to find the process halted and reversed by the Vatican for failing to follow proper legal processes.

In some cases, bishops have tried to combine multiple parishes into one, looking to sell off the surplus church buildings to boost diocesan finances, they then discover that the assets of the distinct parishes are actually owned by the new parish they created by the merger.

*Even though the Church defines nearly all parishes by a given territory, most parishes don’t functionally operate as territorial realities, and many people are completely unaware of the territorial nature of most parishes. There are a lot of interesting questions about that, and we may explore them in future coverage at The Pillar. But they’re not directly connected to legal questions we’re looking at in this coverage. 

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Schools

Catholic schools take different forms, depending on their history, their connection to other Catholic institutions, and the policies of the diocese in which they are located. Some are directly linked to a parish and under the authority of the pastor. 

Other schools are run by religious orders, and, while they might work with a diocesan Catholic schools department, they are not diocesan property - as some bishops have discovered.

In some dioceses, often those incorporated as corporations sole, the civil legal structuring of the relationship between schools, teachers, parish employees, and the diocese can fail to reflect the real canonical and theological separations which exist between the different institutions.

But the separations are real - this is the reason several U.S. dioceses successfully sought an exemption to small-business caps placed on PPP applications, limiting applicants to fewer than 500 employees. While a “diocese” may appear to employ thousands of people, the canonical reality is that a teacher in a Catholic school and a lawyer in the chancery do not work for the same entity.

Institutions and charities

In addition to parishes and schools, there are a range of other institutions which are “Catholic” properly speaking, but which cannot be counted as simply an arm of the local diocese.

Many dioceses support Catholic charities organizations, either as stand alone outreaches, like local food banks, or as part of a network of Catholic charities across the country. Each of those has its own distinct legal character, often including its own board, bank accounts, and bylaws, and many are distinctly recognized as “juridic persons,” or canonical corporations.

Many Catholic hospitals and hospital systems exist under the sponsorship of religious orders, or under the aegis of purpose-built canonical “juridic persons” that are subject directly to the authority of the Vatican. 

Catholic universities are sometimes the apostolates of religious orders, sometimes under the direct supervision of a bishop, and often are governed by independent, self-perpetuating lay boards, with only very limited involvement from the diocesan bishop, mostly in regard to sacramental ministry.

While all of these different entities might properly merit the name “Catholic,” and come under some kind of ecclesiastical oversight, it is a mistake to replace the idea of Church as communion with the notion of singular institution.

The role of a bishop in his diocese is defined in law as three-fold: teaching, preaching, and governing. But the Catholic Church is a society, not a personal fiefdom or a monolith: it has laws that must be respected, and governance is not the same thing as ownership.