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German taxpayers subsidise over 90% of faith-based social services German taxpayers subsidise over 90% of faith-based social services

Dr. Carsten Frerk, an authority on church finances, reveals for the first time in English that social service employees of German religious organisations number 2.5 million and that the German churches pay for less than 10% of their “good works”, with the taxpayer left to foot the rest of the bill. 
  Church-run home for the aged goes to court for an inheritance 
 How Caritas and the Diakonisches Werk began

By Dr. Carsten Frerk
Author of Finanzen und Vermögen der Kirchen in Deutschland (2002) 
Caritas und Diakonie in Deutschland (2005)
Violettbuch Kirchenfinanzen: Wie der Staat die Kirchen finanziert (2010)

Translation of
Vorfahrt für Gott”, Jungle World, Nr. 14, 7 April 2005

 In the last few decades corporate providers of social services have grown massively and are now the largest private employer network in the world.  Between 1960 and 2003 the employees of the German Caritas network of Catholic charities increased by 263 percent, from 137,496 employees to 499,313. The number of employees of its Protestant counterpart, the Diakonisches Werk, rose by 160 percent between the start of the 1970s (175,000) and 2002 (452,244). Together, that means more than 950,000 people employed by the two church charities. There are as many as 1.45 million people employed by confessional organisations outside of the churches.[1] These include the Kolping Society and other large independent organisations that are not members of the large confessional networks and are not included in their figures quoted above. Even just the two confessional networks employ more workers than the auto industry in Germany (434,5000) and are certainly larger than the Siemens AG with its 426,000 employees. How did this come about?

30 golden years

In 1961, under pressure from the churches, a Christian Democratic government introduced the “subsidiarity principle” into the Federal Social Welfare Act (Bundessozialhilfegesetz/BSHG) and also into the amended Youth Welfare Act (Jugendhilfegesetz, Sozialgesetzbuch VIII). The subsidiarity principle just means that a larger organisational unit should step aside when a smaller organisational unit can also do the job. This idea was developed by the Liberals in the 19th century and was immediately taken over by Catholic social theory, since both groups had the same goal, to roll back the activities of the state.

The relationship between the state agency for social welfare and the charities is set out (BSHG §10) as follows:

In implementing this law the social welfare agencies shall work together with churches and religious organisations that are public corporations, as well as with private charities, whilst respecting their self-sufficiency in setting their own goals and carrying out their functions.

This describes a kind of protected zone where, above all, the confessional agencies could conduct business without oversight. The Act continues,

If the assistance is given to the individual by the private care charities, the [state] social welfare agencies shall refrain from carrying out their own measures; this does not apply to the granting of financial means.

This has had two important consequences. First, it has made possible a “right-of-way law”, according to which the charities could found organisations as they pleased, and only the (unprofitable) remainder that they didn’t want was left to the state. And second, it also clearly stipulated that the financing was to be carried out exclusively through tax money from the state.

A generation later, in 1994, another Christian Democratic government brought in the new Nursing Care Insurance Act (Pflegeversicherung, Sozialgesetzbuch XI). Here, as two key articles show, the subsidiarity principle was not only continued but also expanded and decisively altered.

§ 2 Self-determination. (3) Consideration is to be given to the religious needs of those requiring care. They are to receive in-patient treatment at an institution where they can be ministered to by a cleric of their faith where they have expressed a wish to this effect.

§ 11 Rights and duties of the care facility. (2) In the implementation of this (law) book there is to be consideration given to the multiplicity of the agencies running care homes, as well as to their self-sufficiency, self-image and independence. To be taken into account is the task of the church and other agencies from the independent charitable care sector to nurse, care for, comfort and provide terminal care to people who are ill, frail and in need of care. Independent [church] charities and private agencies have priority over public agencies.

Through this regulation the associations of the independent care sector were able to continue in the Social Law Book XI (Sozialgesetzbuch XI) the subsidiarity principle which had been introduced in 1961. It is also singular how bluntly church and “other” agencies were able to get written into the law book priority for themselves in their self-proclaimed “task” of support, comfort and terminal care.

Thus in the 1990’s the reduction in state facilities for health care and social services was allowed to continue. However, at the same time this health reform opened up to competition the territory of the charities, (church and private), which had been relatively well protected up to then, by putting them on a par with private commercial facilities. This has exposed the charities to what they feel is threatening competition in all the profitable areas.

Since then, many other measures have changed the previous blanket principle by which the state covered the costs of these facilities, and replaced it with a system of financially calculated service agreements. With the disappearance of the cost-reimbursement principle, the charities have lost the blank cheque obliging the government to cover their costs across-the-board. Now they have had to make do with previously-set budgets, instead. One result of this is that the confessional agencies are giving up unprofitable facilities.

The Protestant church charity, Diakonisches Werk

The Protestant Diakonisches Werk is organised geographically into 24 state associations and thematically into 90 professional associations. It includes the diaconical institutions of nine different Protestant churches (Mennonites, Salvation Army, Independent Protestant-Lutheran Church, Methodists, Moravian Brethren, Old Catholics, Association of Free Evangelical Churches (Baptists/Bretheren), Evangelical Old-Reformed Church).[2] Membership in the Diakonisches Werk functions as a kind of Protestant certification: economically risky enterprises like building societies (Siedlungswerke) and church banks are not included.

In 1989 Communist rule ended in East Germany, which united with West Germany. The eastern part of the country was traditionally Protestant and it is not surprising that soon the size of the Diakonisches Werk increased significantly. Between 1978 to 1998, (a period which includes the addition of the eastern German states) the number of employees increased 70 percent (from 17,800 to 30,100) and the number of places or beds increased 51 percent, (from 713,000 to 1.08 million), while the number of full-time employees almost doubled (from 215,000 to 420,000).

After this expansion into the new eastern states, consolidation set in and from 1998 to 2000 the Diakonisches Werk actually contracted slightly. The reduction in the number of facilities and services was 13 percent, employees 5 percent and places or beds 3 percent. Only the small sections concerned with “special help” and “training” showed any growth.

Then from 2000 to 2002 all the key numbers rose in terms of the number of facilities and the beds or places, however, they did so only by 1.4 percent and 4 percent respectively, while the number of employees rose by 13 percent through the addition of 51,764 new positions.

This comparatively small increase in the number of facilities and places or beds, coupled with a strikingly large increase in the number of employees implies a change in employment policies. This is born out by the fact that the reduction by 19,958 employees from 1998 to 2000 affected almost exclusively full-time workers, whose number declined from 245,733 to 227,288, while the number of the more flexible part-time workers sank by only about 500. The surprisingly large increase in the work force between 2000 and 2002 applied therefore to both kinds of employment, but of the 51,764 new places, only 16,246 (or 31.4 percent) were full-time positions, while 35,518 (or 68.6 percent) were part-time.

That means that in the years from 1998 to 2002 the proportion of part-time employees rose from 41.4 percent to 46.1 percent, and while in 2002 the number of full-time workers remained under the level of 1998, the number of part-time workers increased, not only relatively, but also in absolute numbers. 

What is going on here? Two facts are suggestive. One is that during its quick expansion into the former East Germany, the Diakonisches Werk was obliged to hire people with no church affiliation. The second is that a decade later it was finally in a position to begin insisting on church membership and, as an official of the Diakonisches Werk admitted, to offer these employees a permanent job only when and if they joined the church. [3]

The charity of the Catholic Church, Caritas  

In 1916 the pre-existing Catholic social services were decentralised and placed under the bishops to form the Caritas Association of the Catholic Church. Until the beginning of the 1990’s the bishops had a strong influence on decisions about personel in that they varied their committees according to how they wanted their wishes carried out. At present, however, only an institutional committee is allowed.

The trend toward decentralisation in Caritas gave a certain autonomy to the regional Caritas associations. However, the limits of this independence were made clear, for example, in the discord over the legally-required counselling before it is possible under German law to get an abortion. Caritas offered what is called “counselling about pregnancy conflicts”  (Schwangerschaftskonfliktberatung) and at first some regional Caritas counselling centres thought they could issue women certificates that they had received the required counselling and were then free to apply for an abortion, but they soon learned that no certificates to this effect were allowed by the Church.

The German Caritas Association has about 40 percent of the employees in the whole of the Federal Association of Voluntary Welfare Work (Bundesarbeitsgemeinschaft der freien Wohlfahrtspflege), which makes it the largest member. It has about 25,000 facilities and offices, some 1.2 million places or beds and around 5000,000 employees.

From 1960 to 2003 Caritas reduced the number of facilities from 35,000 to 25,000, by 27.2 percent. However, the number of places or beds rose by 42.5 percent from 834,000 to 1.2 million, while the number of employees exploded. They increased by 263 percent from 137,496 to 499,313. In the last four years (2000-2004) the number of facilities, as well as of places and beds has slowly, but steadily shrunk, while at first sight the number of employees has continued to climb.

However, this is because there has been a switch from full to part-time jobs. In 1975, of the 248, 174 employees, only 49,430 were part-time, which is 19.9 percent. By 1999 it had climbed to two fifths and in 2003, with 48,7 percent, part-time employees made up almost half the workforce of Caritas

Perfectly legal discrimination

The confessional associations have their own labour law (Arbeitsrecht der Kirchen). This excludes worker participation, grants no right to strike and binds the employees to uphold “loyalty guidelines” (Loyalitätsrichtlinien) whose interpretation lies exclusively with the employer.

For example employees of the Catholic Church and of Caritas are still being fired for marrying someone who is divorced, for leaving the Church or for being gay.

In August 2006 – under threat of fines from the EU – Germany finally passed its antidiscrimination law (Allgemeines Gleichbehandlungsgesetz/AGG). Section 1 of the German antidiscrimination law runs:

The aim of this law is to reduce or remove discrimination on grounds of race or ethnic origin, of sex, of religion or worldview, of disability, of age or of sexual identity.

That appeared to be very comprehensive and there was strong opposition from commercial and conservative circles. But not from the churches, and for good reason. This is because the law also ensures that what one could call “mission-driven enterprises” (Tendenzbetriebe) will be exempted. These are non-profit or not-primarily-for-profit because they have some non-commercial “aim” as, for example, political parties, trade unions, newspapers and charities.

Section 9 gives the confessional charities permission to discriminate.

§9 Permissible unequal treatment on grounds of religion or worldview

(1) Notwithstanding §8 (Unequal treatment because of occupational requirements) unequal treatment because of religion or worldview in the course of employment by religious communities, by facilities attached to them whatever their legal status, or by associations which have as their task the common fostering of a religion or worldview, is also permissible when a particular religion or worldview adduces, in consideration of the self-image of that religious community or association for their right to self-determination or, depending on the kind of function, a justifiable occupational requirement.

(2) The prohibition of unequal treatment because of religion or worldview does not affect the rights of the religious communities mentioned in paragraph 1, of facilities attached to them whatever their legal status, or of associations which have as their task the common fostering of a religion or worldview, to be able to require from their employees loyal and upright behaviour in the sense of their particular self-images.

In other words: the churches, Caritas and the Diakonisches Werk still have the right to define their own "ethos" and demand that employees adhere to this as part of their "duty of loyalty". Employees punished for contravening this "ethos" are not considered as having suffered discrimination: this remains perfectly legal. (Editor's update: However, the way in which the courts are interpreting this law appears to be shifting to take more account of EU norms.)

The taxpayer foots the bill, not the churches

How much do the churches contribute to finance all the activities of Caritas and the Diakonisches Werk? The churches’ share amounts to 1.8 percent. In monetary terms, this means that of the 44.5 billion Euro costs of the facilities of Caritas and the Diakonisches Werk the two churches contribute only 828 million Euros. This means that a mere 4.8 percent of the money of the churches is used for social purposes.

A breakdown of the areas that receive church subsidies shows that it’s mostly just three fields of activity: 376 million Euros as subsidy for day care centres (in which their own children are cared for from the church tax), 146 million Euros for confessional advice bureaus, (such as those “counselling about pregnancy conflicts”) and 300 million Euros for administration, (since the two associations have now such large centralised services that these can no longer be covered by  membership contributions.

The idea that the churches finance their own charities has shown itself to be a myth.


♦  The Hidden Wealth of the Catholic Church (in Germany), Spiegel, 14 June 2010.

♦  Millions for the bishops: Why the German state pays the wages for the church, transcript of Spiegel video, 7 June 2010.


Church-run home for the aged goes to court for an inheritance

Even though they are almost totally subsidised by the taxpayer, the overwhelmingly church-run homes for the aged are tempted to tap another source of income. In 2001 Germany had to change a law to try to protect residents from pressure to leave the home a legacy. This case shows why.

How Caritas and the Diakonisches Werk began

Catholic charities were expanded by laymen as part of the Counterreformation. However, the first centralised German church charity was established by the Protestants as a response to the threat posed by the socialist workers' movement. Its Catholic counterpart was only permitted as a decentralised organisation of local associations, each under a local bishop.

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