I’ve been a Catholic all my life, but I’m teaching a theology class for high schoolers and they keep stumping me! They asked: How is the Vatican funded? Is all the money donated? Where is the income source?
Short of an explanation from a Vatican spokesman of the Vatican’s finances, I can only offer a general speculation: The Vatican does rely on donations, on the national, diocesan, parish, and individual levels. For example, Peter’s Pence is the Vatican charity that relies on donations from Catholics in order to support the needs of the Church and the relief of the poor.
By the way, I can also mention that the Vatican’s art treasures are not assets that the Vatican can sell or borrow against. According to John L. Allen Jr., Vatican correspondent for the National Catholic Reporter, such treasures are considered part of the patrimony of mankind entrusted to the Vatican’s stewardship and their upkeep costs the Vatican a great deal of money. They are valued in the Vatican’s records at one euro each. For a helpful resource on the inner workings of the Vatican, see the recommendation linked below.
All the Pope’s Men** by John L. Allen Jr.