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Fair Anlegen & Stiften (Fair Investment & Endowment)

German foundations in the sustainability check

Facing Finance reviews the investment guidelines of German foundations


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Charitable foundations in Germany are largely financed by the investment income from their endowment assets. However, so far only a few foundations have publicly committed to sustainable investment guidelines. Legal regulations are also lacking. With the project “Fair Anlegen & Stiften” (Fair Investment & Endowment), Facing Finance wants to sensitize German foundations to anchor sustainability criteria in their investment guidelines in order to act in accordance with their foundation purpose. The project is funded by the German Federal Environment Agency (UBA).

Germany has the largest foundation sector in Europe, with more than 23,800 foundations (as of 12/2020). Around 92% of these foundations are non-profit: in line with their purpose, they finance projects that are intended to have a positive impact on society and the environment – for example in the field of child and youth welfare, development cooperation or nature conservation.

However, what foundations spend money on is only one side of the coin when it comes to the social and ecological balance sheet of foundations. After all, the financial resources for implementing charitable projects usually come from the returns generated by investing the foundation’s assets on the capital market.

With an estimated total capital of €110 billion (as of 3/2021), German foundations represent a particularly wealthy investor group. As such, they influence society and the environment not only through their funding activities, but also to a considerable extent through their investment decisions. If foundations hold shares or bonds in companies, for example, they may benefit in the form of interest and dividends from harmful business models that ignore social and ecological standards or human rights, environmental and climate protection. In this way, foundations may be financing themselves through abuses that they often actually want to eliminate (according to the purpose of their statutes).

Paradoxically, there are as yet no legal requirements for ethical and sustainable standards in the investment of foundations’ assets. In the absence of government regulation, foundations therefore have a great responsibility, which they must fulfill by means of strict guidelines and engagement processes. However, only a few charitable foundations have so far publicly committed themselves to sustainable investment practices.

The “Fair Anlegen & Stiften” project aims to encourage foundations to see their investment practices as an essential part of their charitable purpose.

More information on the importance of sustainable and transparent investment guidelines as well as a corresponding evaluation of the 38 best-funded German foundations can be found in our current guide to charitable giving and social-ecological investment:

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Facing Finance is initially attempting to promote sustainable investment guidelines as part of a dialog with German foundations, and to make existing investment guidelines more sustainable as part of voluntary commitments and to apply them in a binding and transparent manner. Finally, the project results will be published in the form of a study.

Interested foundations can contact Facing Finance directly:

Emilia Tafel
Project Coordinator
+49 (0) 30 3266 1679

This project is funded by the Federal Environment Agency and the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety and Consumer Protection. The funding is provided by resolution of the German Bundestag.

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