The German scion who sees it as his duty to house refugees and young offenders

Tobias Merckle, an heir to one of Germany’s largest fortunes, lives in prison. The 50-year-old’s modest two-room residence is above a joinery workshop at a juvenile detention centre on the outskirts of Stuttgart. He founded the institution to rehabilitate young offenders almost 20 years ago and still runs it, overseeing everything from cooking to carpentry to sanctioned cigarette breaks.

It is an unusual vocation for a scion of a wealthy dynasty. Although the precise value of the Merckles’ assets is undisclosed (they include more than a quarter of the Dax-listed HeidelbergCement and all of pharma company Phoenix), the family are multibillionaires, with the sale of drugmaker Ratiopharm alone fetching €3bn in 2010.

“My father was always clear that I should go into the business,” says Merckle in his heavy Swabian accent. “He would obviously have preferred that.” That future was derailed in the 1990s, after Merckle spent a year in Chattanooga, Tennessee, as part of his studies of social work with drug addicts. Frustrated at the imprisonment of people he felt could be rehabilitated, he decided to dedicate himself to reforming prison systems.

Back home, Merckle opened and seed-funded the first Seehaus, or “lake house”, in 2003 after reaching a deal with his native state of Baden-Württemberg, which for the first time in modern Germany allowed young offenders to serve prison terms in a non-governmental institution. With a sister institution near Leipzig in eastern Germany, the project has had roughly 250 youths — male, as there are very few females of that age in German jails — pass through its doors.

Those chosen from jails by Merckle’s organisation with the help of the prison system live on the leafy campus and its 17th-century manor, and receive on-site vocational training in woodwork, masonry, metallurgy or landscaping, as well as the chance to work on a small farm or a bakery. The inmates are housed in spacious flats, which they must keep clean, and are overseen by families who live in the same building to provide a semblance of structured life. There are no gates, but if inmates abscond and are caught, they are sent back to jail, forfeiting their Seehaus place.

Their daily regime, however, is hardly permissive. “We have to wake up at 5.30am twice a week and go jogging,” says one 21-year-old, who asked not be named. Television viewing is restricted to bi-weekly news programmes, and mobile phones are only allowed for four hours a week, for those who have accumulated the most privileges. “It’s hard to remain motivated,” says the young man, who has three job offers for when he is released. “But you learn many things here that you can take with you into the outside world.”

While some of the offenders come from Muslim families, and are encouraged to deepen their faith, there is a strong Christian ethos at the complex. Inmates are invited to say grace before meals, and much of the available literature is religious in nature.

The programme is not always successful. Some 30 per cent of inmates find they cannot comply with the rigid routine and return to jail. But 98 per cent of those who do complete a Seehaus programme have found a job, according to Merckle, and only a quarter have ended up behind bars once again, compared with almost 45 per cent of those released from regular prisons.

Merckle’s philanthropic projects have extended beyond the penal system. Five years ago, at the height of the refugee crisis, German chancellor Angela Merkel opened the country to almost 1m migrants, a policy reflecting Willkommenskultur, or welcoming culture. But he began to notice cracks in the system. A former student of social pedagogics at Lüneburg university, Merckle says he believes in some controls on immigration, but is critical of the lack of development opportunities available to those who arrive in Europe.

He embarked on a campaign to build bespoke housing for refugees and asylum seekers in Germany. Frustrated by the sight of migrants living in converted shipping containers on industrial sites and being excluded from work, Merckle invested an undisclosed sum in Hoffnungshäuser, or houses of hope, where Germans and foreigners live side by side.

Among the first to move in was Alyaa Elkhudary, now 31, who fled Damascus in 2015 with her brother, leaving the rest of her family behind. “It was hard at the beginning. The situation was different; my immigration status was unclear,” says Elkhudary, who shared a flat in Leonberg, near Stuttgart, with German and Chilean women. “But we danced and we laughed together. With respect, with understanding, you can bridge the cultural divide.”

Rental agreements at the Hoffnungshäuser are unlimited, meaning refugees can stay as long as they like until they are ready to move out. That can prove difficult, even for those who have found employment. On top of the general housing shortage in Baden-Württemberg, “we still have discrimination on the housing market”, says Matthias Seitz, who lives in the Leonberg complex with his wife Cathrin. The couple manage the building and its projects, which include language classes, especially for young mothers; help navigating German bureaucracy, healthcare and education; and employment schemes.

Property entails obligations — it’s very important to have that mindset

When the Leonberg building opened in 2016, roughly 80 per cent of refugee residents were unemployed; today just 11 per cent are. Many work in the car industry — Daimler is just down the road — as well as hospitality and gardening.

The focus of the Hoffnungshäuser, however, is on broader integration into society, and organisers try to avoid housing people of the same ethnicity in the same flats, preferring to mix religions and cultures. “Maybe you will live with someone with whom you have [had] an historical conflict,” says Seitz. “Regular interaction is incredibly valuable — you only get that when you live together.” As well as meeting each other casually every day, residents — there are 80 in Leonberg, half of whom are locals — meet once a month to share their experiences.

“These evenings really help us to understand the system here in Germany,” says Elkhudary, who has found work co-ordinating interpreters for the local authorities. “Those from around here taught us about things like Kehrwoche [a cleaning rota system integral to Swabian culture] or how to divide the recycling.”

Merckle, a devout Christian, says such schemes are about more than just charity. “Integration will be a part of Germany, otherwise we won’t have enough people [to fill jobs] here,” he says. Rather than letting people languish until their immigration status is settled, it would be “much better if we taught them German and a trade from the first day”. Even if those who have benefited from the Hoffnungshäuser are eventually deported they can take the skills they gained back to their home countries, Merckle says.

The idea is catching on. Merckle’s foundation, which has commissioned a local architect to design homes that can be rapidly and cheaply built, runs 15 houses across six locations in Baden-Württemberg and is expanding to 27 houses with 180 flats in total, partly funded by crowdsourcing campaigns.

Merckle does not share the views of those rich Germans who have criticised the accumulation of wealth and is at peace with the country’s social market economy. He will not disclose how much he spends on his philanthropic projects, but he sees his work as symbiotic with the values that drove his Lutheran family to build successful businesses in the first place. “Germany’s basic law says property entails obligations,” he says. “It’s very important to have that mindset. If I am entrusted with something, I have to be a good steward of it.”

Merckle’s father Adolf killed himself in 2009 after losing money in the financial crisis, leaving his heirs to restructure the family fortune. Publicity, Merckle says, is “something that we as a family never searched for”, although as part of his informal campaign to convince others to share their wealth, he is forced to speak out about the imperative for wealthy Germans to do more with their money.

But he will continue to orchestrate such efforts from his home at a correctional facility. “I can’t live somewhere else — I have to lead by example,” he says. “I have a life-long sentence.”

This article is part of FT Wealth, a section providing in-depth coverage of philanthropy, entrepreneurs, family offices, as well as alternative and impact investment