Existential risks for foundations as a result of economic developments and financial system dangers – scenarios, options for action, checklists

(Existenzrisiken für Stiftungen aufgrund von volkswirtschaftlichen Entwicklungen und Gefahren des Finanzsystems – Szenarien, Handlungsoptionen, Checklisten)

Report (200 pages) published in German in May 2006

Foundations require continual capital gains in order to fulfill their duties and responsibilities and survive in the long-run. In this sense, foundations are dependant upon the vitality of the financial markets, a positive economic development, and the stability of the financial system.
Current economic and political developments, as well as financial system risks, represent serious existential risks for foundations.

The history of economics, banking, and finance is one characterized by repetitive collapses and crises – crises which endanger foundations. Most recently, this was the case in the 20’s and 40’s of the previous century.

A sustained economically successful development following the Second World War gave and still gives society, politics, and the economy the deceptive feeling that the times of economic instabilities were finally overcome.  Instead of facing reality, politics, the economy, and the financial industry devoted themselves to a questionable calculated optimism.  It is based particularly on the continuation of past development – while veiling times of crisis.

Standing in the way of this calculated optimism are economic and financial risks which have increased immensely in recent years. The global economic change and the boom in speculative financial investments are, among other things, responsible for this. The repressed dangers are presented in this book. At the same time, it studies which kind of security is offered by individual investment instruments in a large-scale economic or financial crisis.  And finally, aspects are identified which foundations can take into consideration when choosing capital investments and financial service providers while minimizing risk.

Andreas Becker: „Existenzrisiken für Stiftungen aufgrund von volkswirtschaftlichen Entwicklungen und Gefahren des Finanzsystems – Szenarien, Handlungsoptionen, Checklisten“, Studienbüro Jetzt & Morgen, May 2006.

www.existenzrisiken-fuer-stiftungen.de