A harsh spotlight was turned on the more mysterious aspects of how the Roman Catholic Church was financed when Roberto Calvi, “God’s banker”, was discovered hanging from Blackfriars Bridge in London in 1982.

The murder of the Milanese financier triggered damaging claims that he had been involved in criminal activities linking the Vatican Bank, Mafia money-launderers and a Masonic lodge with connections to the CIA.

The speculation – revived this month when five men were acquitted of his murder at a trial in Rome – was fanned by the centuries-old perception of the Church as an opaque institution harbouring hidden riches.

The Catholic Church in England and Wales is financially independent from Rome, but, like its “mother-ship”, it faces huge challenges – the biggest since the Reformation, according to some experts – in fighting such perceptions and in reforming itself to stave off a potential financial crisis.

A sharp reduction in attendance at Mass – the weekly collection plate is the Church’s main source of income – has forced it to become ever more resourceful as it faces mounting costs. Innovative fundraising methods are being deployed, surplus money is being invested in private equity funds and supplies of equipment such as candles and photocopiers are being purchased in bulk.

“The Church has been hit by a number of things,” Father Paul Embery, the director of the National Office for Vocations, says, “but history has shown that finances have always been an issue [for us]. Contrary to what many people think, the Church in this country does not have many assets that can be easily liquidated. Most of what it has is held in the value of property, which includes its churches and school buildings.” Accusations of secrecy and concealment are fuelled, in part, by the Church’s decentralised set-up. No consolidated balance sheet exists for the Roman Catholic Church in England and Wales; instead, it is split into a patchwork of 22 dioceses, each of which is a cluster of parish churches. Every diocese is an autonomous unit under canon law and civil law, with its own registered charity number and its own set of annual, audited accounts.

Diocesan expenses, such as the salary and expenses of the bishop, are met through a weighted annual levy on all parishes, which rely mainly on the weekly collection to meet the needs of the church and its priest.

A review of the Church’s accounts shows that the financial state of dioceses varies greatly. In 2005 Westminster, one of the wealthier parishes, had funds of £96 million helped by collections of £23 million and rental income of £1.5 million. By contrast, the Diocese of Lancaster is struggling. Last year the discovery of a £10 million hole in its finances triggered a review by the Bishop.

Priests’ salaries also vary, although the payment tends to be capped at about £10,000. Cardinal Cormac Murphy O’Connor, the Archbishop of Westminster and the head of the Church in England and Wales, receives no more than a parish priest.

Each diocese accounts for its land and other assets, but their real market value is often unclear. It is equally hazy on the art and treasures it holds. The accounts for the year to the end of 2005 state that to disclose details of its works of art, treasure and plate would be unwise because it would be “prejudical to their safe custody”.

Much clearer is the sharp fall in Mass attendance. Research by Anthony Spencer, of the Pastoral Research Centre, shows that over the past three decades attendance has slumped by 40 per cent, baptisms by 50 per cent, Catholic marriages by 60 per cent and confirmations by 60 per cent. Fewer than one million people now attend Mass weekly.

Yet the pressures on the Church’s resources are mounting. Leading considerations include the upkeep of buildings. Catholic Directory figures reveal that the Church in England and Wales has more than 2,000 schools and more than 3,000 churches and chapels to maintain. Compliance with a mound of red tape and regulation is further eating into the institution’s reserves, as does the cost of caring for about 700 retired priests.

The introduction of a more centralised financial system could help the Church to keep track of its finances and in making it more efficient. But it is not, insiders say, an option: the local structure is one followed by the Church the world over and is a fundamental part of its mission.

The accounts of the Catholic Bishops’ Conference – the voice of the Church in England and Wales – reveal a modern financial outlook, too. Investments held by it in the year to the end of December 2005 included £51,600 in a private equity fund. The kind of high-profile fundraising funded by the Catholic Church in America could become more of a feature over here. The English Church already counts many City big-hitters, including Michael Spencer, the Icap head, and John Studzinski, among its members.

Falling numbers

-The Roman Catholic Church in England and Wales has 22 dioceses and 2,765 parish churches

- Weekly Mass attendance in the past three decades has fallen by 40 per cent to about one million

- The Church has responsibility for more than 2,000 schools and more than 3,000 churches

- The head of the Catholic Church, Cardinal Cormac Murphy O’Connor paid around £10,000 – the same as a parish priest

- The Church follows an ethical investment policy under which companies must be assessed on their corporate practices as well as their financial efficacy

- The sole financial link between the Church here and the Vatican is via “Peter’s Pence” – an annual collection towards the Pope’s good causes

Source: Catholic Directory, The Times archives, Diocesan accounts, Catholic Communications Network.