We developed criteria for making loans. The most important principle was the projects' economic viability. After all, we did not want to subsidize the projects with our money, but rather aimed to give them the opportunity to pay interest to us rather than to a bank or other private entity. That meant (and still means today) that we use legal means in the event of a failure to fulfill obligations. Our committment is to protecting the Foundation′s capital and distributing only the interest income.
In the initial years, there were plenty of groups that borrowed money from us, or for whom we bought real estate and then made it available to them as a hereditary leasehold. This also meant that the land could not be appropriated privately. As a rule, most groups have met their financial commitments to us promptly and regularly.
It proved problematic to invest funds in social or cultural projects. There are cases in which the projects went broke, we incurred losses or had to foreclose. These final steps often followed a very unpleasant process. People refused to believe (and still refuse to believe) that our Foundation cannot disburse its capital and does not seek to do so. In just one case, there was a combination of investment and support. We bought a house and leased it to a group to house women refugees (Villa Courage). At the same time, the project was supported with funds from the working groups. But unfortunately, that was not enough. The project could not sustain itself, did not receive enough additional support, and the building had to be sold.
Of the two pieces of real estate donated by the benefactor, we still own the apartment building in Berlin-Kreuzberg and have modernized it step by step. The villa in Berlin-Zehlendorf was leased for many years to a project for young drug addicts. The group had to move out, however, when Berlin′s city government refused to pay a higher rental fee, which had increased due to necessary maintenance. The building was sold in 2007.
In recent years, collectives have become less common, and there were no longer many projects submitting funding applications to us. For this reason, we were forced to invest an increasing portion of our money in securities, in other words, releasing it into general financial circulation. This was preceded by invariably painful discussions – we wanted to realize as much income as possible while also investing our capital as "ethically" as possible and avoiding significant risk. It is a practically impossible balancing act, and no doubt we did not always make the right decisions. However, so far we have been spared truly nasty surprises.