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German Recession Hits Catholic Church

The Catholic Church is the next bulwark to crumble under Germany's continuing recession. In Berlin, the church now hopes management consulter McKinsey will find a remedy to its financial woes.

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Finances are causing the Catholic Church a headache

Succumbing to the sin of euphoric spending, the Catholic Church in Berlin pumped millions of Marks into the building of schools, kindergartens and an academy after the fall of the wall in 1989.

The Church expected millions of newcomers to flock to Germany's reunified capital, including numerous devout churchgoers from the East. But as the number of attendees failed to hurdle the 3.5 million mark, the Church’s estimations proved dangerously wrong. Today, the Catholic Church in Berlin is reported to have some 75 million euros in debt.

And the Catholic Church in Berlin is not alone in its financial difficulties. Both Münster and Osnabrück have already commissioned the management consultant McKinsey to find a remedy for the Church's running financial woes.

In Essen, the consultants even advised the community to pull down a church in an effort to save money. There are now fears that Berlin, the next Catholic community to be advised by McKinsey, may face the same fate.

A consequence of economic slump

The Catholic Church is the latest social and cultural bulwark to crumble under Germany's ongoing economic slump. According to Andreas Herzig, spokesman of the Catholic Church in Berlin, the current recession is the main contributor to the Church’s strained financial situation.

"Church taxes are tied to income taxes – and with more and more people unemployed, there are less people paying taxes, including church taxes," Herzig says. All Germans are required to pay church taxes, which are based on a percent of their overall income, if they profess belonging to a church. The tax goes to paying for personnel, building projects – including restoration work on historic churches – and social and education projects.

According to the Association of Dioceses in Germany, church tax revenues are expected to drop by 50 million euros to around 4.2 million euros this year. The situation is particularly difficult in Berlin where 14 percent of the city's population is unemployed and therefore exempt from paying the church tax.

"In Berlin, we were mislead by the euphoria in the early nineties," Herzig told DW-WORLD. After reunification, the Catholic Church in Berlin expected the city's population to grow to 5 million. The church started building schools and hospitals with an enthusiasm common during the early years of reunification.

But the population failed to rise as rapidly as expected, and for several of the Church's larger building projects, including the Catholic Academy, the church had to seek help from the banks.

Fewer believers

In addition, the Catholic Church in Berlin is faced with a problem which has affected the Church throughout the country: In recent years, the number of members has plunged, from 28.2 million in 1990, to 26.6 million today. Because the amount of money the Church receives from taxes is based on the number of its members, a dwindling figure means less in the coffers.

Critical estimates put active churchgoers at less than 10 percent of members of Germany's combined 50 million strong Catholic-Protestant community. More forgiving estimates say around a third.

It is mainly for this reason that the church in Essen was pulled down: Here, the Catholic Church had commissioned management consultant McKinsey to find a solution for its financial difficulties. McKinsey's diligent research showed that in one community churchgoers and members had dwindled to such an extent that there was no reason for maintaining the local church. Thus, it was pulled down to prevent further loss of revenue.

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The soft approach in Berlin

Rumors circulating in the German media have now sparked fears that Berlin, which has also turned to McKinsey for help, may now face a similar fate. Herzig negates these rumors: According to him, the 120 Catholic churches in Berlin are usually full.

"So far we have chosen the soft approach to save money," Herzig says, including a stop to further recruitment, more early retirement and a general budget freeze.

McKinsey now has until the end of next year to find ways of cutting down the Catholic Church's huge 153 million budget in Berlin. The management consultants will now work their way through all areas of the church, including administration, schools and hospitals. "If the current recession carries on, the need to curb spending will only become greater," Herzig says.

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