A stroke of luck for the university

3 December 2015

The Mainz University Fund Foundation was created in 1781. Since then it has survived not only the closure of the original electoral university by Napoleon, but also both world wars. The foundation's capital is invested in rental apartments and property, but primarily in attractive agricultural land and vineyards. These days, the revenues from the fund provide an important resource that helps support research and teaching at Johannes Gutenberg University Mainz (JGU).

"When it comes to our Mainz University Fund Foundation, we are a rich university," says Dr. Waltraud Kreutz-Gers. "There are of course other institutes of higher education that are financially better off than we are," explains the chancellor of Johannes Gutenberg University Mainz, "but only very few of them have access to this type of fund."

It all began in 1781, when Prince-Elector Friedrich Karl Joseph von Erthal decided he would provide the badly run-down old Mainz University, originally founded in 1477, with a more solid financial foundation. With the authorization of the pope, he ordered the dissolution of Mainz's three main city abbeys Altmünster, Reichenklara, and that of the Carthusians.

At 9 a.m. on November 16, 1781, the prince-elector's specially appointed superintendents headed to the abbeys to enforce what amounted to an abrupt act of secularization. "The entire operation was completed within an hour," reported the newspapers. "The members of Mainz University came together that same day to express their gratitude to the prince-elector for this extraordinary endowment."

Vineyards for the university

The abbeys "and all of their holdings" became the property of the university. This clause proved to be particularly significant as the three abbeys possessed expansive tracts of agricultural land in their surroundings. Their vineyards were of particular value. Indeed, the wine produced there always gets a mention when the revenues from the university's assets come under consideration.

"The fund's most important capital is represented by its agricultural properties," says Kreutz-Gers. The Mainz University Fund Foundation owns a good 850 hectares of land, 800 of which are actively farmed and include numerous vineyards. "The university also owns over 400 leasehold properties in the city of Mainz and in the Rhine-Hesse region. And when the latest construction project, the so-called Haus am Schloss, is completed, the fund will have roughly 200 rental apartments to its name.”

The Haus am Schloss is the fund's largest project right now. The building, which is nearly finished, is situated in close proximity to the Electoral Palace in Mainz and has 33 apartments as well as commercial premises on the ground floor.

Kreutz-Gers is both the university's chancellor and the fund's chairwoman. When she assumed office on September 1, 2013, she made some changes to the management structure of the university fund. "It was important to me that responsibilities within the various areas of business were placed in a couple of competent hands," says Kreutz-Gers with an eye on the four-member board.

EUR 80 million in assets

JGU holds nearly EUR 100 million in endowment capital, with the lion's share of about EUR 80 million being consolidated under the aegis of the Mainz University Fund Foundation. "Revenues from the university fund are directed towards research and teaching. That is the foundation's declared mission. Since 1965, EUR 27 million have been funneled into the university, and in recent years revenues have seen a welcome increase. 2014 was by far the best year to date in which we gained EUR 1.8 million."

The fact that the university fund survived all these centuries of change is a story in and of itself. At the end of the 18th century, Mainz was occupied by the French and under Napoleon the university was officially abolished in 1798. However, the university fund remained intact. Naturally, the funds were channeled elsewhere, schools were supported on occasion, for example, but the core of the finances was preserved.

Shortly after the end of the Second World War, Mainz University was reopened in May 1946 on the initiative of the French forces. The new Johannes Gutenberg University Mainz was built on the grounds of a former anti-aircraft barracks, and two years later, on April 9, 1948, the young university was given supervisory powers to manage the Mainz University Fund Foundation.

"The university fund played an essential role in the post-war period, when the goal was to increase the size of the university’s premises," explains Kreutz-Gers. Neighboring farmers were offered land and vineyards owned by the fund in exchange for their properties. They often profited considerably from the deals, but it was the only way to extend the university's campus.

Enabling more flexible management

Those turbulent times are thankfully in the past, and today the fund is an independent, nonprofit foundation incorporated under public law. "We manage it very carefully and cautiously. We don't take any risks." Holdings only tend to be sold in exceptional circumstances. "During the financial crisis, some property owners were keen to buy ground leases, and that was understandable. But we had to turn down the applications in view of economic considerations."

The millions in revenue keep flowing steadily and reliably. "In terms of the entire budget of the university, the income the fund generates doesn't seem very significant, but these funds are actually very important," adds Kreutz-Gers. All in all, the regular core budget of Mainz University is some EUR 250 million, which is provided by the state, plus special financing or third-party funds. "The majority of it is of course already allocated."

With the profits from the fund, the university is able to react more flexibly to urgent matters. "For example, we are planning a multipurpose building at the Philosophicum complex where we can accommodate personnel that we have taken on as part of the Higher Education Pact. That wouldn't be possible having on hand just the regularly available funding." This is where the university fund's revenues prove very helpful.

The fund itself is an integral part of the foundation structures at Mainz University, but it is also the trump card at a university whose chancellor knows she has to be very careful in her calculations. "Look at our running operating expenses, for example. The funds available from the state have hardly increased at all in real terms over the past ten years." That is in the context of constantly rising costs for books, electronic media, and energy, for instance.

"The Mainz University Fund Foundation gives us a bit of freedom to maneuver in a time when finances are tight," says Kreutz-Gers. "It's a real stroke of luck for our university."