The Italian Cardinal has defended the money he spent on the apartment saying that he funded the renovations himself.
However leaked Vatican documents suggest that around €200,000 (around £1460,000) used on his home came from the Bambino Gesu Foundation.
Mariella Enoc, head of the Bambino Gesu Hospital said that he had donated the money for medical research "to make amends".
Speaking to the BBC, she said that the Cardinal Bertone recognised this allegation had "damaged our hospital and our foundation... and thus he is making amends to us with a donation".
The 81-year-old was Vatican secretary of state, role similar to prime minister, but was replaced when Pope Francis was elected in 2013.
The cardinal has also defended the luxury flat, overlooking Saint Peter's Square, and says that it is shared with a community of nuns.
Ansa, an Italian news agency has quoted Cardinal Bertone saying that the money gave was "a voluntary donation".
It was claimed he said: "It's not reimbursement, because I personally haven't done any damage."
He continued, saying money would be donated via instalments from his savings and from contributions for charity that had been made to him over the years.
He repeated: "My life is not luxurious."
Earlier in the month an Italian woman on trial at the Vatican accused of leaking confidential documents claimed that the scandal so far is nothing compared to what she can reveal next.
Fracesca Chaouqui, a PR guru, said that two books published that alleged greed and financial misconduct in the Vatican are only "15 per cent" of what she knew.