Outsourced CIO (OCIO): Sector in Brief

Carlo Rossi
Chairman of the Monte dei Paschi di Siena Foundation

An inflationary climate has created new challenges for foundations around the globe: with underlying projects seeking larger disbursements to cover their increased costs, there is a need for higher, stable, predictable income. The recent bfinance Endowment and Foundation Investment Survey highlighted key tensions.

Against this backdrop, Carlo Rossi—President of Monte dei Paschi di Siena Foundation in Italy—recently discussed strategy and priorities with bfinance’s Gennaro D’Amore and Ottavia Sebastiani in an Investor Spotlight interview below.

While rising interest rates have facilitated stronger income generation, investment returns may not necessarily have kept pace with inflation-fuelled requirements. “The management of assets should ensure adequate, stable and programmable income flows that possess the potential to increase over time,” Rossi explains. The “instability and volatility of the financial landscape” adds to the difficulty, making the achievement of objectives “very complex.”

Q: Asset management: What are the most significant challenges that the MPS Foundation faces in managing its assets, considering the constantly changing financial landscape and the grants targets that are set on an annual basis?

The MPS Foundation's mission is the economic and social development of its territory. We aim to ensure a stable average annual flow of disbursements, which we hope will increase in the medium to long term, in order to take into account economic growth and - especially in periods such as this -inflationary dynamics. The possibility of ensuring a certain continuity and stability of distribution volumes over time also allows for a better capacity and effectiveness in planning institutional activities. Consequently, the management of assets should ensure adequate, stable and programmable income flows that possess the potential to increase over time, as we mentioned above. The instability and volatility of the financial landscape clearly makes the achievement of these objectives very complex.

Q: Interaction with stakeholders: How does the MPS Foundation mediate between stakeholder objectives, political 'interests' and the needs of the community? In other words, what governance structure have you given yourself to manage this complexity?

We try to combine continuous listening and discussion with stakeholders with a qualitative and quantitative analysis of the area's social and economic dynamics. We believe that this approach is the most reliable way to carry out an accurate analysis of needs.

In this sense, the MPS Foundation acts as a 'connecting point' and promoter of social relations and institutional and territorial cohesion, also in the role of 'incubator of innovative projects' at the service of the community.

We try to combine continuous listening and discussion with stakeholders with a qualitative and quantitative analysis of the area's social and economic dynamics. We believe that this approach is the most reliable way to carry out an accurate analysis of needs.

The Governing Body, composed of members nominated by the Stakeholders, and the President, as a representative of the organisation, alongside the engagement initiatives approved by Deputazione Amministratrice and implemented by the operational structure, certainly play a crucial role in the intermediation and dialogue with the Community.

Q: Sustainable growth: What initiatives is the MPS Foundation taking to ensure sustainable growth, taking into account financial and social changes?

The theme of social and environmental sustainability, as well as economic sustainability, is at the centre of the planning of interventions and consequent implementation actions: 'For sustainable development' is in fact the slogan that guides all our activities.

In pursuing sustainability goals, we believe it is appropriate to work with perseverance but also with a healthy and fruitful pragmatism and with progressiveness, which are fundamental elements to better ensure their achievement in the medium and long term.

Q: Regulation and Compliance: What are the main challenges related to regulation and how is the MPS Foundation committed to maintaining compliance?

The MPS Foundation is attentive to the evolution of regulations, both those directly referable to the Foundation and those relating to the context in which the institutional activity is carried out.

On the first point, the presence of constant updating systems and control structures inspired by best practices is certainly an important safeguard for maintaining compliance.

In relation to the second aspect, the MPS Foundation is essentially a 'generalist' non-profit body, with a broad spectrum of possible intervention actions. In an increasingly complex and dynamic society, relations and continuous comparison with the various players in the area, possible partners or beneficiaries of intervention, represent an essential element of knowledge and updating.

Q: The role of the financial partners: How do you think your financial partners (asset managers, risk managers, financial advisers, service providers, ...) can support the MPS Foundation in managing its assets and addressing the challenges mentioned above?

We believe that it is essential to understand the logic and objectives of the organisation as a medium-and long-term investor, along the lines and desires set out above.

The right balance in determining the level of risk defined by the directors, the level of technical expertise of the structures in charge, as well as the ability to provide the most appropriate, customised if necessary, and economically efficient consequent solutions, are the key elements in defining and sharing a long-term financial strategy with advisers

About Carlo Rossi

Rossi was appointed President of the Monte dei Paschi di Siena Foundation and President of the Accademia Chigiana Foundation in 2018. In the same year he joined the Board of Directors of the Toscana Life Sciences Foundation, taking on the role of Vice President. Rossi currently holds several positions, including member of the National Council of Acri (Association of Savings Banks and Banking Foundations); member of the Board of Directors of the Fondo per la Repubblica Digitale (a social enterprise set up by Acri to implement and enforce the digital transition in Italy) and of the ONC Foundation (National Monitoring Body on Volunteer Service Centres); Deputy Chairman of the Board of Directors of TLS Sviluppo Srl In June 2020, Rossi was elected Coordinator of the Consulta Regionale delle Fondazioni di Origine Bancaria della Toscana (a body that promotes cooperation between foundations in the region). With a degree in Economics and Banking from the University of Siena, Rossi previously served at Chianti Banca, holding various senior positions.