Foundation management: Interview with LBBW Board member Rosenfeld

Financial Knowledge

“Foundation assets will increase”

In this interview, BW-Bank Board member Thomas Rosenfeld discusses the challenges involved in modern foundation management.

Supporting foundations is a sensitive and challenging field of asset management. Which particular characteristics make BW-Bank ideally suited for it?

Thomas Rosenfeld: Specialist consultants at BW-Bank are responsible for this support. They have many years of experience in the foundation segment and each advise a manageable number of selected customers. These customers particularly value the fact that they have a personal contact person who supports and accompanies them with all technical issues and investment topics.

The low interest rate environment has been having a negative impact on investors’ earnings situation for years. How do the foundation advisors deal with this?

Thomas Rosenfeld: In general, we can observe that many foundations are realigning their investment policies, since the financial market and economic crisis did not spare German foundations, either.
In order to fulfil their tasks and goals and have a sustained impact, foundations rely on both continuous income and the preservation of their assets. For this reason, prevention of losses is being given increasingly high priority in the investment policy for foundations. When optimizing the guidelines for foundation assets in this way, it is important to support the foundation managers strategically and on a long-term basis. This means first developing a specific asset management concept within the scope of these guidelines that takes account of the relevant requirements. In the second step, this concept then needs to be implemented with the foundation’s decision-makers.

The topic of sustainability is also playing an ever more important role when it comes to investments. Does this apply to foundations, too?

Thomas Rosenfeld: Non-profit foundations definitely take on a pioneering role when it comes to sustainable investment. Even before the topic began appearing regularly in the media, it was important to many foundations to contribute to sustainable social development by arranging their financial investments accordingly. This is because when investors decide which companies to make their invested funds available to in the form of equity or debt, they indirectly influence these companies’ economic activities. Sustainable investment, a good performance and value retention are not mutually exclusive. Our asset management concept can be combined with a sustainable approach. This model consisting of a value-based strategy and sustainability enables foundations to preserve their assets and generate adequate income to sustainably fulfil their objectives. At the same time, the investments go to responsible companies that play a leading role in terms of ecological and social issues, meaning that the foundations make a double contribution to our civil society. In this role, they are ideally suited to act as bridge builders between the past and the future.

There are already more than 20,000 foundations with assets of around EUR 100bn here in Germany. Do you think this number will increase even further in the future, and what effects will this have on BW-Bank?

Thomas Rosenfeld: I am sure that the quantity of foundation assets in Germany will increase significantly in the coming years, since around 70 percent of donors wish to increase the foundation assets with their own funds. In addition, a considerable volume of assets will be bequeathed in the years to come. A portion of these will probably also go to foundations. Above all, a very large quantity of private assets go to foundations. In the foundation assets ranking prepared by the specialist magazine FUCHS-Report, we received the “Top Provider” award for the fifth time since 2011 and were ranked No. 1 out of 55 asset managers.