A foundation’s endowment is the basis of its work. This capital is preserved in perpetuity and invested in accordance with responsible principles. The income generated from the endowment, together with donations, enables the foundation to pursue its charitable objectives over the long term.
In Germany, charitable foundations are subject to clear legal requirements: their assets must be preserved, and the income generated must be used to fulfil the foundation’s charitable purposes. At the same time, charitable foundations benefit from certain tax privileges, while donations and contributions to a foundation’s endowment may be eligible for tax advantages under German law. This provides a reliable basis for sustained public-benefit work.
The die schwelle Foundation has adopted guidelines for ethical and sustainable investment that govern the management of its assets. An example of such an investment is presented in the article on the “Windfang” project.
In accordance with Section 4 of its statutes, the Foundation’s assets may not be invested in ways that conflict with its charitable purpose. The mission of the schwelle Foundation is to contribute to justice, peace and the integrity of creation. These values are therefore also reflected in the Foundation’s investment decisions.
We seek ethical and sustainable investment opportunities that are consistent with these principles. At the same time, German foundation law requires us to invest the Foundation’s assets prudently, ensuring both security and an adequate return.
The term “sustainable” is understood in line with the definition of the Brundtland Commission (1987), which describes sustainable development as meeting "the needs of the present without compromising the ability of future generations to meet their own needs."
By "ethical" we mean, in particular, additional considerations such as respect for human rights, social responsibility and the strengthening of communities.
As do many other organisations, we distinguish between exclusion criteria and positive criteria.
Exclusion criteria identify economic activities and business practices that are incompatible with the Foundation’s values and therefore exclude an investment. These criteria are set out in a separate list of negative criteria.
Positive criteria help us identify investments that we actively seek to include in the Foundation’s portfolio. These include companies and projects operating in sectors that contribute to a sustainable future, such as Organic agriculture, Fair trade, Renewable energy generation, Sustainable construction, Peacebuilding initiatives and social and affordable housing. Whenever possible, we also seek to invest in regional projects and enterprises.
To ensure that the Foundation can fulfil its mission on a long-term basis, sustainability considerations must be balanced with other important requirements.
The Foundation’s capital must be preserved in real terms. Any annual surplus is allocated to reserves, which help ensure that the Foundation can continue to pursue its charitable purposes sustainably over time.
The Foundation’s investments should generate sufficient returns to support programme activities, administrative costs and the preservation of capital. In doing so, the expected return must always be weighed against the associated level of risk.
The Foundation must maintain sufficient liquidity to respond to short-term market developments and operational needs. For this reason, income-distributing investments are generally preferred to accumulating investments. Adequate liquidity must be maintained to ensure the Foundation’s ongoing financial obligations can be met.
Taking all investment criteria into account, the schwelle Foundation has established the following target allocation ranges for its assets:
| Asset Class | Allocation |
|---|---|
| Fixed-income and low-risk investments | 30–55% |
| Loans to companies or projects that operate in accordance with the Foundation’s funding and investment guidelines | 10–15% |
| Direct equity participations, in which the Foundation provides risk-bearing capital (with special security requirements applying to five percentage points of this allocation) | 15–20% |
| Shares and equity funds (allocation may fluctuate with market developments) | 10–30% |
| Cash and demand deposits | Approximately 5% |
The Foundation distinguishes between five risk classes. Every investment is assigned to one of these classes.
Loans and direct equity participations as described above are generally assigned to Risk Class 3. In addition, no single investment recipient may represent a level of risk that exceeds what the Foundation could safely offset through returns generated from its other investments during the same financial year. As a general principle, up to 65% of assets should be invested in lower-risk and moderate-risk investments (Risk Classes 1–3), while up to 35% may be invested in higher-risk investments (Risk Classes 3–5).
When making investment decisions, the Foundation seeks independent financial advice and also consults the banks responsible for managing its investment accounts. Investment decisions are made by the Foundation’s Executive Board in consultation with its Finance Committee. The aim of this process is to implement the principles and criteria set out in these guidelines.
The Executive Board expressly reserves the right to make exceptions to these guidelines in individual cases. Any such exceptions will be documented and justified.
These guidelines also apply to the dependent Schalomdiakonat Foundation. The association gewaltfrei handeln may be involved in the decision-making process for major investment decisions.
April 2024
schwelle Foundation
Wachmannstrasse 79
D-28209 Bremen
Tel: +49 - (0)421 - 3032-575
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