The Foundation Model

More leeway and individual responsibility

The foundation model for universities in Lower Saxony was introduced in the context of an amendment to the Higher Education Act in 2002. This means that the State of Lower Saxony is no longer required to act as a responsible body for higher education institutions. Instead, a foundation established for this purpose and positioned between the state and the university undertakes the tasks formerly performed by the state. The foundation model aims to strengthen the autonomy of higher education institutions by being less dependent on the state, while increasing management competences and individual responsibility. In particular, this applies to finances, buildings management and appointment matters.

Benefits of the foundation model at a glance

  • Increased decision-making authority in budgeting
  • No more budget or recruitment freezes imposed by the state during the fiscal year
  • Option to accumulate foundation assets via external donations
  • Legally binding authority to plan and implement building projects
  • Possibility to use available funds for building projects in a more purposeful, flexible, time-efficient and sustainable manner
  • Greater autonomy from the State of Lower Saxony
  • More leeway in many areas
  • More effective long-term planning with regard to strategic issues
  • Permanent right to appoint professors
  • Independence regarding the establishment of professorships including the right to change salary scales, such as from W2 to W3

Challenges of the foundation model at a glance

  • Assigning ownership of properties required for maintaining university operations
  • Greater leeway in terms of planning the university’s future

The foundation as an employer and superior authority

The foundation takes over the role of employer formerly held by the state and becomes a superior authority. How does this affect members of staff? As defined in the Lower Saxony Higher Education Act (NHG), conditions stipulated in collective agreements and other regulations for members of staff employed by the state also apply to members of staff of a foundation. Existing claims regarding pension schemes and survivor benefits remain valid if the university becomes a foundation. The foundation is obliged to join a state-run employers association that is a member of TdL (Tarifgemeinschaft deutscher Länder). Since the foundation is a superior authority, civil servants employed by the foundation become indirect civil servants of the state. The unions and the state government of Lower Saxony have agreed that if a foundation model is established, termination of employment for operational reasons is not permissible.

If members of staff originally employed by a foundation start a new position in direct civil service, periods of employment under the foundation model will be recognised as employment in direct civil service. Members of staff employed by foundations benefit from the same further education and training opportunities provided by the state and its facilities. Since the membership structure of the university is maintained, traditional participatory rights of its members - including members of staff - are preserved. Additional personnel will be required to manage the foundation. Depending on their size, higher education institutions in Lower Saxony that have already implemented the foundation model have employed one or just a few additional members of staff to perform new duties, such as in financial and property management or in order to support the foundation council (former University Council).

Foundation council performs extensive tasks

In the foundation model, the University Council is replaced by the foundation council. Just like the University Council, the foundation council comprises five higher education experts appointed by the Ministry of Science and Culture of Lower Saxony (MWK) in agreement with the Senate, that are not members of the university, as well as one member of the university appointed by the Senate and one ministry representative. The duties and decision-making powers of the foundation council exceed those of the University Council, which is only permitted to provide statements. For example, the foundation council appoints and dismisses members of the university’s Presidential Board in agreement with the Senate, determines the annual financial statement and discharges the foundation’s Presidential Board.

The Senate exercises a permanent and decisive influence on the composition of the foundation council and the Presidential Board, including both the appointment of members and voting members out of office. This increases the regulatory power of the Senate.

The foundation council also decides on changes of and charges on basic assets as well as loans and the development plan. Simultaneously, it supervises legal issues at the university, including the Presidential Board.

A foundation is based on three pillars

  • Buildings and properties

    The foundation assumes ownership of plots and properties. Furthermore, the foundation has the authority to plan and implement building projects. Therefore, funding available for building projects can be used in a more purposeful, flexible and time-efficient manner. Leibniz University Hannover has already been granted the authority to plan and implement building projects by decree of the respective ministries; however, by transferring the authority to the foundation, this would be legally binding.

    The foundation model facilitates selling, letting and leasing property as well as reinvestments in buildings that are in need of improvement. There are no budgetary restrictions for renting, which will enable the university to address room shortages more efficiently.

  • Right to appoint professors and superior authority

    As a superior authority, the foundation is authorised to independently create professorships within the scope of a fixed budget. In addition, the foundation council has the right to change the salary scale of a professorship, such as from W2 to W3. Moreover, the foundation council independently determines the field in which a professorship is established and grants approvals.

    This will increase the university's flexibility to a significant extent, especially in terms of developing its scientific profile, but also with regard to its reputation as an employer.

    Although the university has already acquired the right to appoint professors - which means that LUH is authorised to confer appointments independently and can therefore manage appointment matters in a more time-efficient manner - this right has only been granted for a limited period. The MWK can revoke this right after three years. In the foundation model, the right to appoint professors is granted indefinitely. This enables universities to make long-term plans and implement a long-term strategic course of action. The foundation acts as an employer for all members of staff at the university. As defined in the NHG, conditions determined in collective agreements and other regulations for members of staff employed by the state also apply to members of staff of a foundation. Existing claims regarding pension schemes and survivor benefits remain valid if the university is converted into a foundation model.

  • Finances

    According to the constitution, the State of Lower Saxony is obliged to maintain its universities. Therefore, the state will continue to provide funding, allocating an annual amount to the foundation so that the university can fulfil its duties.

    This is an added advantage, as the foundation - and therefore the university - benefits from greater leeway in budgeting. For example, budget or recruitment freezes imposed by the Ministry of Finance during the fiscal year are no longer possible. Any surplus funds that have not been spent after three years may be converted into foundation assets.

    Furthermore, the university can build foundation assets through external donations from private sources, thus achieving long-term financial independence. In particular, this will have positive effects when interest rates start to rise again.

The foundation model: tried and tested

Universities in Göttingen, Hildesheim and Lüneburg, as well as the University of Veterinary Medicine Hannover and Osnabrück University of Applied Sciences have been successfully implementing the foundation model for quite some time. On the occasion of a joint symposium in 2013, the universities gave a positive review of the past 10 years. Furthermore, the scientific commission of Lower Saxony (WKN) approves of the model. In an evaluation published in 2019, the WKN concludes "that the foundation model for higher education institutions in Lower Saxony has proved a success". The commission encourages "higher education institutions in Lower Saxony that are currently funded by the state to evaluate the possibility of implementing the foundation model."