Frequently Asked Questions
I would like to visit the projects on site. Can I do that?
Gladly! We are happy about every guest on site and especially about photos, films, blogs, interviews that help to bring our forests closer to the world. An arrangement with our local forestry team and the consideration of possible capacity restrictions presupposed.
I would like to be an active member. How can I get involved?
We welcome any commitment that leads to as many people as possible joining The Generation Forest. Whether active participation in our social media channels, the annual general meeting, a project visit on site or personal recommendation. There are many ways to get involved. Contact us for further ideas and suggestions!
How do I become a member?
Membership takes place through the acquisition of one or more cooperative shares. On our “Join Us” page you will find the form for subscribing shares. The easiest way is to fill it in online. You will then receive mail from us with the application form and just have to sign it and return it to us. You will then be accepted as a member at the next board meeting.
Both private individuals and legal entities can acquire shares. Shares can, for example, also be inherited, given away and transferred to (godparent/grandchild) children.
What does a cooperative share cost?
A cooperative share (“business share”) costs 1,200 € +54 € entrance fee (as of 2019), which corresponds to the increase in value of the forest already standing. You can transfer the amount directly, or pay it in monthly installments of 25, 50 or 100 Euros by issuing a SEPA Direct Debit Mandate. There are no further costs or fees.
Can I resell, give away, inherit or cancel my shares?
Yes, you can resell the shares freely. In addition, we offer the mediation and handling of the sale as a service. Alternatively, you can cancel shares. These will then be withdrawn by the cooperative and you will receive the legally regulated settlement credit. In addition, you can also give away or inherit shares.
The easiest way is to mediate via the cooperative, since we know who wants to buy shares. Since the cooperative charges € 1,200 + entry fee of € 54 (as of 2019) per share when issuing new shares, the purchase via the secondary endowment policy market is attractive as soon as the offered sales price contains a slightly lower entry fee and the buyer knows that he has full legal security. The latter is ensured by the transfer of the shares by the cooperative itself to the new owner in a legally binding manner. The cooperative charges a small administration fee for the mediation. There are no costs for the transfer of shares to the new owner, as is the case with a gift or inheritance of shares.
In principle, you can also sell shares directly and freely to any person or organisation, on terms that you can negotiate freely. In this case, the cooperative must be informed of the planned change of ownership in order to update the list of members accordingly. As with any issue of shares, the Board of Directors must also approve the transfer.
If you want to give away your shares, the transfer of shares is not complicated. All you have to do is inform the cooperative of the transfer. We have our own form for this purpose. There are no costs. Legally binding is the transfer with the confirmation / approval by the board.
If shares are inherited by a community of heirs, it must determine who is to receive the shares. Otherwise, the shares are returned to the cooperative and the community of heirs is paid the settlement credit in accordance with the statutory rules, which is calculated in accordance with the Cooperative Act (§73) and the articles of association of the cooperative (§11) and is based on the balance sheet profit of the last financial year. As a rule, the credit balance is significantly lower than the real value of the shares, as it does not include the stock value of the forests – somewhat simplified – but only the profits already realised through the sale of timber.
You can cancel your membership as well as individual shares. If you cancel your membership, the shares go back to the cooperative. The former member then receives a credit balance. It can be assumed that a sale of shares on the secondary endowment policy market will ensure higher proceeds. If you only terminate individual shares, membership in the cooperative is maintained as long as the member holds at least one share.
Is the purchase of a cooperative share a capital investment?
Yes, it is a tangible asset investment. With the purchase of cooperative shares, you jointly acquire shares in the land and the forest holdings of the cooperative, which belongs to us all. We recommend the purchase of our cooperative shares as a green investment for all those who are looking for a double dividend from an ecological effect and a long-term increase in assets or transfer of assets to the next generation. As a financial investment, our cooperative shares are interesting for all those who want to manage part of their portfolio with a steady hand instead of analysing stock market prices and economic trends on a daily basis. Forests are largely decoupled from the turbulence on the capital markets. Just as there is “slow food”, “slow travel” and “slow fashion”, we stand for “slow finance”. The length of time does not exclude the possibility of selling shares prematurely. Because no tree has to be felled to sell a share.
What dividend can I expect?
A chart with the forecast dividends can be found on the “Economy” page. Based on our financial models, we assume an internal rate of return of 4.5%. The figures are adjusted for inflation and are not based on rising timber prices. Our business plan, which has also been examined for profitability by the German Cooperative Association, provides for a higher return.
The dividend is generated by our main source of income, the sale of native precious woods such as mahogany or rosewood. It is also likely that the value of the land will increase; however, we plan to keep our land permanently. From a later date there will be dividend payments when we sell wood from our own forests. Since we plant permanent forests, there are regular distributions – theoretically unlimited forever.
What does internal rate of return mean?
The internal rate of return is used for investments or capital assets that generate irregular and fluctuating returns. The internal rate of return provides information on the (theoretical) average annual return.
Is there a fixed annual increase in value?
No, but we measure our tree stock annually and increase the price of the cooperative shares accordingly with the help of the so-called entrance fee. Existing members can then sell their shares to third parties at a later date with this price premium. The amount of the premium is based on an annual economic analysis of the tree and land holdings of independent third parties. On the basis of this analysis, the General Meeting determines the amount of the price premium (entrance fee).
Due to the uncertainties associated with the long-term nature of the project, we intend to limit the price premium to the 4.5% per annum stated above. However, if you hold your shares for the long term, you may be able to achieve a correspondingly higher return.
What are the financial risks of investing in The Generation Forest?
As with all entrepreneurial investments, a total loss is also possible with an investment in The Generation Forest.
Is there an obligation to make additional contributions?
In the event of the bankruptcy of The Generation Forest, we have excluded a legally binding obligation to make additional contributions in accordance with § 40 of our articles of association.
Do all members have the same rights?
No. We distinguish between ordinary and investing members. With a few exceptions, all members are investing members. Their shares are legally equivalent to the shares of ordinary members, but have no voting rights. We differentiate between voting and non-voting members because we want to ensure that the cooperative does not lose its mission in 50 or 100 years. For this reason, we only allocate shares with voting rights on a very selective basis. These include the founders of the cooperative, first and foremost the members of the Executive Board and the Supervisory Board, who themselves have subscribed to all the shares, as well as a few selected individuals whom we have brought in specifically on the basis of their expertise. We plan to cautiously further develop the circle of (ordinary) members with voting rights.
What is the governance structure of the cooperative? Who decides what? Who is elected by whom?
These questions are regulated in our statutes. Day-to-day business is conducted by the cooperative’s Executive Board. All questions of greater scope require the approval of the Supervisory Board. The Supervisory Board appoints the Executive Board and the General Meeting elects the Supervisory Board. In our case, the restriction applies that investment members have the right to speak but not to vote at the General Meeting.
Who advises The Generation Forest on (tax) law issues?
We have developed the structure of the cooperative in close cooperation with André Le Prince, the managing partner of the auditing company WLP in Hamburg, who for years has been committed to cooperatives as a successful legal form for social enterprises. Our bookkeeping and annual financial statements are handled by SOLITAX GmbH, which specialises in cooperatives. The cooperative is audited by the Auditing Association of German Transport, Service and Consumer Cooperatives (Prüfungsverband der Deutschen Verkehrs-, Dienstleistungs- und Konsumgenossenschaften e.V.) in Hamburg.
Why did you choose the cooperative as your legal form?
In practice, a cooperative is a particularly long-lived legal form that is solidly regulated by the Cooperative Association and, above all, transparent. In contrast to most associations, a cooperative is a commercial enterprise that operates and can manage its own forests and sell its own timber. And the cooperative enables us to continuously accept new members by issuing new shares, without – as in the case of a public limited company – having to formally decide on new capital increases among the shareholders.
What does the cooperative do with the reserves for future years?
About half of the money is used to set aside reserves for future expenses, which are priced into the cooperative’s share. These are partly invested on the capital market and partly used for the expansion of our forest areas. In the first 3-4 years, fewer reserves will be formed, as the fixed cost portion is even higher here.
To what extent do currency risks affect The Generation Forest's business model?
In Panama, the US dollar is legal tender. We therefore have a currency risk that we consider to be lower than if we were working with a rare local currency. The majority of our revenues will be generated in international markets, as we prefer to sell our valuable timber in the European market, including in euros.
How does The Generation Forest organise its operational work on site?
We have a strategic partnership with Futuro Forestal, the first B Corp. certified forest company in Panama, which has developed the concept of generation forests in 25 years of work. The two founders, Andreas Eke and Iliana Armien, have joined our board. This ensures us access to the most suitable areas on site and short decision-making paths.
What areas do you want to reforest and by when?
Our goal is to have planted and financed 1,000 hectares of generational forest by 2022. This corresponds to 20,000 cooperative shares. We currently own 173 hectares of land, of which 25 hectares are already planted and 25 more will be planted in June 2019 this year. We are specifically looking for areas which were cleared several decades ago for cattle breeding and which run the risk of degenerating due to the rural exodus. In many cases, these areas are no longer viable for livestock farming, but are well suited for native valuable timber. In individual cases we also take over existing plantations, which we convert into a long-term sustainable form by using native valuable timber in the second and third generation. before the plantation woods are harvested and sold.
What do you understand by your model of the generation forest?
By this we mean man-made, silviculturally used tropical mixed forests in which trees of several age groups (“generations”) coexist, so that the next generation of trees is already being harvested. The result is a tropical permanent forest that regenerates the soil, water balance and biodiversity. The fact that we mix tree species that grow at different speeds means that the harvest times of the individual tree rows are different, which further increases generation diversity. The generation forest resembles a natural forest in many respects. It is mostly or completely populated with native species and performs the same ecological functions (habitat for animals and plants, water reservoirs, humus formation, etc.), but differs in that – in contrast to natural forests – we plant a drastically higher density of valuable woods and maintain the forest in terms of forestry. Depending on the state of thinning, between 150 and 1100 precious woods stand on one hectare of generational forest. In a natural forest there are often only one or two trees per hectare, which can be classified as marketable precious wood.
What does a hectare of generation forest cost?
A hectare of newly created permanent forest costs around € 24,000 over the entire period until it is financially self-sustaining and makes a profit. The information is based on the many years of experience of our local forestry partner and a 100-year business plan drawn up as part of a scientific project with Wageningen University. The figures are approximate values which exclude the significant economies of scale (upwards and downwards) in the forestry sector.
Is there a market for rare tropical woods such as Rosewood (cocobolo), American Mahogany (caoba) or Gold Cedar (amarillo)?
These are niche markets. We do not know of any supplier in the world who, for example, cultivates the slow-growing, very valuable rosewood itself. So far, the woods have been obtained almost exclusively from natural forest management, which endangers the stock in the long term. In our financial planning, we assume that native species will achieve similar prices to other, frequently traded species such as teak. We also believe that the traceability of the timber we offer will become increasingly important in the future, which will be reflected in the price in the medium term.
Are our forests in competition with food production?
No. We plant forests where livestock farming is generally no longer economically viable or will no longer be viable in the foreseeable future. Many pastures become free because they are no longer economically viable. There are therefore very large areas of medium soil quality in Panama (and in the tropics in general), which are not suitable for agriculture and livestock farming, but on which native tree species grow well.
Is the purchase of land in Panama by a German cooperative not "land grabbing"?
No. We do not buy land that is actively used by local communities or where – as in the indigenous protected areas – traditional customary rights exist. We primarily buy land that was cleared several decades ago for cattle breeding, but which is in danger of degenerating in the medium term due to the declining bearing capacity of the soil. As a rule, these are areas that are sold because their owners can no longer farm them economically (and many agricultural workers have long since moved to the city, where jobs are in demand due to high economic growth). In individual cases we also buy existing plantations with wood, which we transform into a generation forest.
I want to make my life CO2-neutral. How many shares do I need for this?
That depends on your personal lifestyle. If you already live very ecologically, half a hectare of forest should suffice. This corresponds to 10 cooperative shares. The forest on this area binds 7 tons of CO2 per year. And this every year anew. Those who live less climate-consciously should be on the safe side with one hectare of forest. This corresponds to 20 cooperative shares and 14 tons of CO2, which are newly bound every year. The average CO2 emissions per person in Germany are currently just under 10 tonnes.
How can I as a company use a membership for myself?
We would like to win companies as partners and offer them a wide range of opportunities to become members of our Corporate Social Responsibility Project. Thus, areas of business premises, offices or floor areas of the products sold can be “mirrored” as a generational forest. One share corresponds to an area of 500m2. There are also many possibilities for CO2 compensation. Not through a donation to a CO2 offset program, but in the form of an investment in tropical permanent forests that annually bind 14 tons of CO2 per hectare.