Operating and financial data



FINANCIAL PERFORMANCE

On 31st December 2015 the book value of the net assets of the Foundations of banking origin amounted to €40.8 billion accounting for 84% of total assets which added up to €48.6 billion. In this financial year, the book value showed a decrease of 1.2% with a net decrease of almost €491 million. From 2000 – the year in which Ciampi’s law became active – to 2015 there has been an annual average growth rate of 0.94%. In the same period 2000-2015 the Foundations were able to allocate resources to a value of €19.3 billion (€9.24 billion in the period 2008-2015 alone) and to set aside further funds – to a value of about €2 billion – for future philanthropic activities, reaching a total of €21.2 billion.

Grouping the Foundations by geographic area reveals that those located in Northern Italy (47) hold capital to the value of more than €30 billion, 74.9% of total gross capital. In the North-Western part of the country in particular, where 5 of the 18 largest Foundations are located, the average net assets have a value about two and a half times the general average (€1,095 million versus €463 million). However in Southern Italy and the islands where, for historic reasons there are only 11 Foundations, the average asset holding is recorded as €170 million, less than half of the general average. The 5 largest Foundations (accounting for 46.4% of total assets) are: Fondazione Cariplo, Compagnia di San Paolo, Fondazione Cassa di Risparmio di Verona Vicenza Belluno e Ancona, Fondazione Cassa di Risparmio di Torino, Fondazione Cassa di Risparmio di Padova e Rovigo. The net assets of the 18 largest Foundations1 represent 76.4% of the overall system, while the 18 smallest Foundations weigh in at little more than 1.3%.

About 95% of the total assets of the Foundations of banking origin (€48.6 billion) consists of financial activities, while tangible and intangible fixed assets represent only 4%. Fixed financial assets are unchanged; they amounted to €27 billion and represented less than 56% of the assets against 58% in 2014.

Even the investment in financial assets has remained unchanged and amounted to €15.6 billion; assets under management decreased by €2.1 billion, offset by increased investments in the transferee and investments in funds.

Investment in financial circulating assets (either immobilized or not) amounted to €1.58 billion, with a decrease of €983 million compared to 2014. This reduction is the net result of increases in total €734 million registered by 11 Foundations (over half of them for backs against previous write-downs), the disposal of investments €735 million by 14 Foundations and write-downs and losses of €982 million made by to 13 Foundations.

By 31st December 2015 of 88 Foundations, 31 no longer held shares in their original spun-off banks, 47 had a shareholding of less than 50% shares in their original spun-off banks that are part of banking groups, while 10 of the smaller Foundations – in line with existing legislation– continued to have a major shareholding in their spun off banks. Furthermore, 85 of the 86 Foundations associated with Acri, approving of the Memorandum of Understanding - signed 22nd April 2015 by the Association and the Ministry of Economy and Finance - which aims to optimise the combination of profitability and possible risks when utilising their capital, have accepted the principle of an appropriate change. It particularises that a Foundation should not utilise more than a third of its total assets, either directly or indirectly, on an individual subject, using “fair value” to evaluate the exposure and composition of the said assets. In such an operation, all the financial instruments will be included in the evaluation. The Foundations have three years from the date of the signing of the MoU in which to reduce the amount of excess risk exposure where trading of financial instruments on the financial markets is involved and five years where the financial markets are not involved. In both cases the necessity of safeguarding the capital value will be taken into account as will market conditions and any effects from the transfers that take place.

The total proceeds for the financial year 2015 were €1,410.4 million showing a decrease of 37.9% compared to the previous fiscal period (€2.271,41 million). If we analyse this we see that while the interest on shares were slightly reduced, total dividends paid showed an increase, as well as those distributed by the spun-off banks which went from €361.1 million to €395 million. Results from capital management is more than halved from €254.5 million to €95 million; but considering that the investment in management has halved, it is observed that the rate of return has decreased by only a few percentage points, from 5.7% to 4.5%. Financial instruments management showed a positive balance of about €62 million, down sharply from 800 million in 2014, for the reasons already explained in Note 4. Other income from non-financial resources amounted to €37.8 million (€134 million in 2014) while extraordinary items added €147.8 million to the total proceeds (€69.5 million in 2014).

The average net return on the total assets4 of the Foundations in 2015 was 3.4% (5.5% in the previous year). Beyond doubt a positive result in both absolute and relative terms, considering that the profit is net of the high direct and indirect tax burden.

Operational costs for all the Foundations fell in 2015 by 1.6% passing from €258 million to €254 million. This variation is due to the significant reduction in passive interest.

The fiscal charges – for direct taxes on income received and indirect taxes such as Irap and Imu paid throughout the year – came to over €305 million of which: €158 million for withholding taxes on investment income; €118 million for Ires; €4 million for Imu and €3 million for Irap. This significant increase in the last years is due to a number of factors:
• the growth in taxation on income from financial investments - from 20% to 26% as from July 2014;

• an addition of 20 percentage points on taxation on dividends as a result of the increase from 5% to 77.74% on taxable income, effective on all dividends distributed since the beginning of 2014.

Operating surplus on total revenues reached 68.6% (73.2% in 2014) amounting to €967.4 million against €1,662.7 million in 2014. The decrease of 41.8% is broadly in line with total revenues.

With regard to the reserve funds set aside from the capital, for 2015 the Supervising Authorities confirmed a rate of provision for the “Reserve Requirements” at 20% of the operating surplus and fixed a top rate of 15% for provision to the “Reserve for Asset Integrity”. The Foundations, therefore, were able to allocate resources to their capital, to a variable degree – from a minimum of 20% to a maximum of 35% of the operating surplus. This margin of flexibility made it possible to gradually increase the extent of the total provision in relation to the operational result and to the necessity to safeguard the funds destined for philanthropic activities. For all the Foundations combined, the data shows a sum of €300.2 million set aside for the capital reserve (€533.3 million in 2014).

The sum of €800.8 million, comprising 82.8% of the total operating surplus, was allocated to institutional activities and to funds destined for future activities, against €1.165.2 million in 2014.

INSTITUTIONAL ACTIVITIES

The institutional activities of 2015 follows the trend of gradual recovery recorded in 2014, when it was the trend reversed after six years, from 2008 to 2013, of uninterrupted contraction. 2015 proposes the positive changes in the year-on-year loan volumes (+ 2.7%), while recording a slight decrease in the number of interventions (-5.4%).

Including provisions for special funds for voluntary ex art. 15 L. 266/91, in 2015 the institutional activities of the Foundations accounted for €936.7 million (+ 2.7%) for 21,564 projects compared to €911.9 million for 22,805 projects in 2014.

The average amount per project rose to €43,437 (€39,985 in 2014), while slightly decreases the average number of projects achieved per Foundation: in 2015 was about 251 against 259 in 2014.

Sectors of Activity

From the 21 “eligible sectors” (by law5), the Foundations focus on 7 sectors for the major part of their grant-bestowing activities. Based on the amount of the funds allocated, the sector for Art, cultural activities and heritage came first, receiving €280.1 million - 29.9% of the total (29.9% in 2014). Within this sector, funding was provided mainly to the sub-sector labelled Conservation and enhancement of historic buildings and archaeological sites (33.5% of the sum allocated to the sector). In second place was the sub-sector Initiatives to support artistic and literary productions (accounting for 32% of the funds allocated to the sector). Next came Museum activities (11.6%) followed by the sub-sectors Promotion and Enhancement of Visual arts (10.6%); Library and archives (3.7%) and Publishing and other communication media (3.5%).

The second sector was that of Social assistance with €138.2 million, 14.8% of the total (13.6% in 2014). The greater part (98.9%) went to the sub-sector Social services, followed by Services providing aid in the event of natural disasters, Civil protection and Refugee assistance (1.1%). Recipients included firstly the disabled (61.6%), then children (14%), next the elderly (12.1%) and those with drug/alcohol dependencies (1.7%). Other beneficiaries (families at risk, people with no fixed abode, prisoners, etc.) received 10.5%.

The third sector was Voluntary activities, philanthropy and charity receiving a total of €127.3 million, 13.6% of total funding (14.4% in 2014). Of this amount, the largest share went to the subsector Promotion and support for voluntary organisations (28.8%). This was followed by Contributions to grant-providing foundations and other philanthropic charities (27.7%) i.e. funds allocated to such entities as community foundations, and other non-profit entities that channel resources to third sector organisations; next came Special reserve funds for voluntary organisations (23%, over €29 million); Humanitarian and philanthropic initiatives (5.6%); Cultural exchanges and international cooperation (4%); Support for the development and living standards of poor countries (3.4%).

In fourth place was the sector Research and Development with €118.4 million, 12.6% of total funding (12.5% in 2014). The sub-sector Research and experimental development in the medical field received 28.5%. To Research and development in the field of mathematical, physical and natural sciences went 21.7% followed by Dissemination and expansion of Technological knowledge with 18.9% followed by Research and development in the field of human and social science with 18.4% and Research and development in the Engineering field with 6.8%.

In fifth place was the sector Education, learning and training with €113.5 million, with 12.1% of the total allocated (13.3% in 2014). The main sub-sectors were: Higher education, i.e. university or equivalent education (34%); Primary and secondary education (30.6%); Professional instruction and Adult training (19.2%) and Youth development and training (14.3%).

The sixth sector selected was Public health, receiving €62.8 million, 6.7% of the total (7.6% in 2014). In this field we find sub-sectors including: Hospital services (67.4%), which range from the provision of medical equipment to the implementation of specific projects and the construction and restructuring of essential facilities; Other health services (14.9%), ranging from home assistance for the ill, to support for the treatment of the terminally ill and the disabled; Psychological and mental pathologies and disorders (2.9%).

Significantly, 35.1% of funding (nearly 35.6% in 2014) equal to about €380 million was awarded to Welfare under which umbrella we find the sectors Social assistance, Public health and Volunteering, for projects not covered by public services.

And finally in seventh position was the sector Local development with €56.8 million, 6.1% of the funds allocated (against 5% in 2014). This sector includes projects for the Promotion of economic development in local communities (78.9% of the total allocated to the sector); Accomplishment of public works or utilities (10.8%); Social housing construction projects (7.9%); Public popular housing (1.9%), Microcredit projects (0.3%).

Concluding the classification we have Environmental protection and quality, with funding of €17.7 million (about 2% against 2% in 2014); Sport and recreation with €10.8 million (1.2% against 0.9% in 2014), Family and related values with €10.4 million (1.1% against 0.7% in 2014), and lastly, Civil rights; Religion and spiritual development; Crime prevention and public safety altogether received more than half a million euro for a total of 63 projects.

Regarding the choice of sectors for their allocations, more than half of the Foundations operates with a high degree of sector specialization, while the remaining part stands at an average level. This means that the Foundations choose to concentrate on just two sector a sum between 40% and 60% of total funding. These percentages document the full alignment of erogative policies of the Foundations to the already mentioned laws which impose to allocate at least 50% of funds available to no more than five “eligible sectors”.

The average number of sectors of each Foundation is 6.8 (in 2014 the average was 7). All of the Foundations polled operate in the sector Art, Cultural activities and Heritage. Regarding the other sectors, those with the highest presence of the Foundations are Voluntary activities, Philanthropy and Charity6 (where 85 Foundations operate); Education, Learning and Training (78 Foundations), Public health (66 Foundations), Local development (57 Foundations), Research and Development (55 Foundations).

The percentage of grants allocated that are higher than €100,000 was 69.5% (68.5% in 2014) with the number of corresponding projects standing at 6.8% (5.9% in 2014). The percentage of those higher than €500,000 was 43.6%. The allocation of sums of €5,000 or lower decreases slightly from the preceding year, representing only 2.6% of the total allocated (2.9% in 2014) while the percentage of projects decreased to 46.9% (49.2% in 2014). The long-term grants7 are stable both in the amounts and in the number compared to 2014 (11.6% of the amounts and 2.8% in the number of projects).

Beneficiaries

The recipients of the grants provided by the Foundations are always private non-profit organisations – accounting for 68.4% of total funding (67.7% in 2014) and 70.6% of all projects (69.1% in 2014) – or public institutions. The principal private recipients include: foundations (naturally not the Foundations of banking origin) who, with 34.4% of total funding, confirmed their first position among all the beneficiaries, both public and private. The foundations are followed by Associations (13.9%, of which 1.2% was devoted to socially-oriented Associations); Other private organisations (8.5%), which includes Committees, private IPAB, ONG, private schools and health facilities; Voluntary organisations (4.8%); Religious Institutions (3.3%); Social cooperatives (3%); Social enterprises (0.3%). Among the public institutions, who received in total 31.6% of the total funding, were: Local authorities (16.8%); Public schools and Universities (7.1%); Public Health authorities and businesses (4.1%); Other public authorities (3%) and Local governments (0.7%).

Territorial Distribution

The Foundations continued to focus strongly on their local communities in 2015: grants provided to the Foundations’ own regions accounted for the great majority of the total (87.9% of total funding and 94.5% of total projects). As to geographic distribution Northern Italy received 71.3% of total funding of which 41.6% went to the North-West and 29.7% to the North-East; Central Italy received 22.3%, while Southern Italy and the Islands received 6.4%. In the Southern territories and islands the Foundations also operate through the Foundation with the South which in 2015 carried out activities to the value of €18.7 million.

Partnerships

Among the projects that the Foundations share with other financial organisations a particular emphasis has been laid, during the last few years, on those realized in conjunction with other Foundations of banking origin, within a vista of a system of operations that are co-ordinated and developed with a long-term view. It is possible that this concept has come directly from the Foundations, deciding among themselves to “form a consortium” or else it has matured in the ambience of Acri. These are projects needing a deep breath, of great national impact, regarding which the “communal” approach is seen as an essential factor for success. On the one hand it allows the use of a common professional factor developed by the individual Foundations within their own local territories, while on the other it encourages an increase in project efficiency and rationalisation. When the same projects are carried out separately by a number of different organisations there could be a risk of fragmentation or duplication and the loss of useful information, while shared planning allows the synchronised direction of strengths which therefore must have a greater impact.

 



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(1)Foundations are grouped by net assets in five quintiles: large Foundations (net assets from €481 million and up); medium-large Foundations (net assets between €196 million and €481 million); medium Foundations (net assets from €114 million to €196 million); medium-small Foundations (net assets between €60 million and €114 million); small Foundations (net assets up to €60 million).

(2)A waiver introduced in 2003 (art.4 Law no.143/2003 converted into Law no.212/2003 which substituted para.3 of art.25 of legislative law no.153/99

(3)The data of 2014 is affected by the particularly positive result recorded by a single Foundation, in relation to situations that have not played in 2105; this phenomenon tends to amplify the variations observed between the figures for the two years.

(4)This report is based on a numerator of the total revenues, and a denominator of the average asset value, at the book value shown at the beginning and at the end of the financial year.

(5)Legislative Decree no. 153 of 17/5/1999, article 1, paragraph 1c: Family and related values; Education, learning and training, including the purchase of publishing products for schools; Voluntary activities, philanthropy and charity; Religion and spiritual development; Assistance to the elderly; Civil rights; Crime prevention and public safety; Food safety and quality agriculture; Local development and low income housing; Consumer protection; Civil protection, Public health; Preventive and rehabilitative medicine; Sports activities; Addiction prevention and recovery; Psychological and mental pathologies and disorders; Scientific and technological research; Environmental protection and quality; Art, cultural activities and heritage. To this we add public utility works and infrastructure growth following Legislative Decree no. 163 of 12/4/2006, article 153, paragraph 2 and article 172, paragraph 6.

(6)It is to be considered, for the proper assessment of the data, which in this area are included provisions for special funds for voluntary, to which all the Foundations of banking origin are required in accordance with art. 15 of Law 266/91, on the basis of operating surpluses.

(7)For multi-year projects, reference was made to the amounts attributable to the fiscal year.