Five percent return – that’s how it works

Foundations invest cautiously and still make money by breaking away from daily rates. Anyone can do it.

The Frankfurt community foundation is located in this little castle.

Whe asks how the past year went financially for the foundation, initially receives a negative answer. But that is not due to secrecy in financial matters – nor is it due to shame in front of a failure. “I’m only interested in that downstream,” says Rainer Maucher, Managing Director of Asset Management at the non-profit Hertie Foundation and thus master of the capital of one billion euros. Every year the fortune has to throw in enough millions for the Frankfurt Foundation to have the brain researched or to support the Hertie School of Governance it founded in Berlin. This depends on the income from the assets, but on the way there, the financial result of a year only counts to a limited extent. “A calendar year is a completely random event for eternal investment. We tend to think in terms of an average of five years, ”says Maucher from the Hertie Foundation, founded in 1974.

His calm is amazing. After all, foundations find it more difficult to get an adequate return on their immense capital. According to a survey by the Federal Association of German Foundations, four out of ten foundations expect a return that will not exceed the inflation rate in 2018. That is twice as much as a year earlier, it is a consequence of the European Central Bank’s zero interest rate policy.