A U.S. Catholic charity has cut short a controversial $25 million grant requested by Pope Francis for an Italian hospital ridden with scandal after donors objected to the massive handout.

The Papal Foundation paid only half of the enormous grant for Istituto Dermopatico dell’Immacolata (IDI), a Catholic dermatological hospital in Rome with a history of financial scandals, after significant objections by lay members who objected to what they saw as an “outmuscling” of lay voices by cardinals and bishops on the board.



The grant, first reported by the Catholic LifeSiteNews, was requested by the pontiff in June. The Papal Foundation typically grants about $8 to 9 million each year to various causes selected by the Pope -- normally about $200,000 per grant.



But the June request for $25 million over three years -- which a source familiar with the grant told Fox News was a stand-alone, urgent request outside of the typically designated approval process -- infuriated and concerned staff.



According to the Associated Press, Italian prosecutors in 2013 discovered an almost $1 billion hole in the hospital's account, and placed 40 people under investigation for alleged money laundering, fraudulent bankruptcy and other crimes. So far 24 indictments have been handed down. The Vatican soon took control of the hospital, but it continued to struggle.



The Foundation, in a letter to lay members or stewards, admitted that there was a “significant degree of discontent” among the stewards over the grant, which was approved in a secret board meeting vote in December -- a vote which included a number of U.S. bishops and cardinals, including Archbishop of Washington Cardinal Donald Wuerl and Archbishop of New York Cardinal Timothy Dolan.



James Longon, the head of the board’s audit committee resigned after he sent a letter to fellow stewards in which he outlined in grim terms the state of the hospital.

“The IDI hospital had been a media and legal disgrace with embezzlement and fraud and bankruptcy. We've been told that the bad guys are gone, but so are some of the notable doctors,” the letter said. “Tinged with scandal, this 147-bed dermatological hospital in Rome has bad morale, inefficient administration and $24 million in unpaid vendor bills.”

He accused the board of pushing through the vote without giving members sufficient information, and without a detailed proposal.

Longon claimed that in a “carefully choreographed process” the 15 bishops outvoted nine stewards with a 15-8 vote of approval (one abstention).

“It was a clear out-muscling of the Stewards. Political favor replaced sound stewardship of our resources,” he wrote.



But a source familiar with the process told Fox News that the foundation did do its due diligence before the vote. The source said claims were somewhat assuaged after a review was conducted that found that the religious order seen as responsible for much of the scandal had been moved away, and the debt was sealed off within that order. Additionally, the Foundation was told that the grant would go to funding the hospital’s operations, not paying down debt.



It is understood that the the niche hospital was viewed as a model within the Italian health care system, particularly for charity-run health care even despite its troubles, and there was concern that its closure would hurt patients and employees.



The backlash from lay members appears to have had an impact. The foundation announced in its January letter that Cardinal Wuerl had written to the Vatican to cut short the grant, of which approximately $12 to 13 million had already been paid out.



Additionally, the board announced a policy by which any grant of more than $1 million must be approved by a majority of both lay and clerical trustees, an apparent reference to complaints that Vatican-connected clergy had rubber-stamped a highly dubious papal request.

A spokesman for Wuerl's office referred Fox News to the foundation, which declined in a statement to comment on individual grant requests.



“The Papal Foundation’s mission and guiding principles have not changed. The grants to help those in need around the world and of significance to the Holy Father are reviewed and approved through well-accepted philanthropic processes by the Board and its committees,” the statement said.



The lay-based revolt is the latest to anger grassroots Catholics and inflict damage on Pope Francis' often-troubled time leading the church.

DESPITE DENIAL, POPE FRANCIS RECEIVED SEX ABUSE VICTIM'S LETTER: REPORT



The Vatican is still reeling from a fateful trip to Chile in January in which Francis backed a powerful bishop he appointed to a Chilean diocese who was accused of shielding a priest who sexually abused minors. Francis said the bishop, Juan Barros, was the victim of slander and that there was no evidence against him.



While the subsequent outroar from victims marred his trip and forced him to apologize, it became a full-blown crisis after it was revealed that Francis had in fact received a hand-delivered letter detailing an account of the abuse and the subsequent cover-up in 2015.