Partially prompted by this other question "Were Hitler's anti-Jewish sentiments known at all to those who voted him to power in 1933?"
According to the information in above question, the antisemitism and private death squads of the Nazi party were already public knowledge.
The New Catholic Encyclopedia (1967), Vol. 11, p.415 says, in the article PIUS XII, POPE as follows under the subheading "Concordat with Germany" (emphasis added):
Soon after the concordat with *Austria, whose chancellor was *Dollfuss, another was concluded (July 20) with the German Republic. The *Hitler regime had first proposed it at Easter; it was the German government that initiated the proceedings. Previously (March 24), the *Center party and the Bavarian People's party, whom German Catholics rightly considered representatives of their interests, had approved the enabling act that gave Hitler unlimited powers. Also the German bishops had declared unequivocally (March 28) that Catholics could cooperate with the new State despite obviously irreconcilable differences between the Catholic Church and *National Socialism.
(reference below)
The bishops that unequivocally declared that Catholics could cooperate with the new State were Catholic bishops; the declaration was adopted in the Fulda Bishops' Conference (Fuldaer Bischofskonferenz) on March 28, 1933.
The Center (Zentrum) party mentioned above as having approved the enabling act was a denominational Roman Catholic party.
At the time of this declaration, the person who would later become known as Pope Pius XII was known as Cardinal Pacelli.
According to this article at skepticism.org, a result of the declaration was that
Nazi Party members are also permitted to receive the sacraments while wearing Nazi uniforms, even if they appear in large groups. This not only opens the door for the signing of a Concordat between Hitler and the Vatican, but also encourages broader collaboration between Catholics in Germany and the Nazi regime
Update: Before this declaration, the Catholic clergy had been forbidden to participate in the National Socialist movement. For example, the Bavarian Bishops' Conference issues a set of instructions to the clergy about National Socialism on 12 February, 1931. About these instructions, skepticism.org says:
Priests are henceforth forbidden from joining the Nazi Party. Moreover, Nazi flags and uniforms are prohibited during Catholic church services.
The question I wanted to ask:
Considering what was known about about National Socialism at the time, and the stance of the Catholic Church until 1933, what were their reasons for this seeming u-turn in adopting this declaration?