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ANNUAL REPORT 2011/12

empowering mothers to break the cycle of poverty


Empowering Communities Inc Annual Report 2011/12 published: October 2012 by Empowering Communities Inc last edited: 27/11/2012 content contributors: Kylie Hansen Kun Kimsreang Rowan Klaassen David Bacon

Dick Hoffmann Richard Khoo Anna Jolly

edited by: Kylie Hansen design and layout by: Kevin Chan cover photo by: George Nickels © Copyright Empowering Communities Inc 2012

 EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2011/12

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CONTENTS Major accomplishments of CfC in 2010-2011

3

From the Chairperson of the Board...

3

Strategic Direction of the Program

4

Brief History of CfC

5

Structure of the organisation

6

Our Volunteers and Members

11

Sales and Marketing

17

External Relations and Media

20

Production and Logistics

22

Cambodian Operations

26

Making it Personal

33

Statistical data

35

Financial Information

36

Future Plans

43

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EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2011/12 ď ź


From the Board …

A social enterprise in many ways is one big experiment and with a vision like ours that's exactly what it is. An early question for us was ―Can we get a group of passionate people together and make a difference in other people‗s lives through the effective use of market mechanisms?‖ The answer to that has been a resounding yes. But we‘re not doing this to help a few women and kids in a few villages in the corner of Cambodia. We do it because we believe we can create a solution that millions of people around the world will benefit from.

We haven't solved the problem yet, but this year we got closer. More than 7 years down the track and we are becoming an increasingly well established and sustainable organisation while at the same time we have retained our entrepreneurial fire and dynamism. Many organisations find it difficult to share a truly honest account of where things are at and the challenges they have faced but we feel that if we are to reach our mission then learning from our mistakes and failing fast is the only way we will. In this annual report we share our wins and our losses; our success and our learning. I believe one of our greatest strengths as an organisation is that no topic is off limits. We don‗t have all the answers and are always open to learn and grow and especially hear from those who could help us on this journey. We hope you find this annual report an honest account of where we currently are. For us, our confidence that we are on the right path is what allows us to share out failings openly and our commitment to finding the ultimate model that solves poverty is what keeps us going.

Richard Khoo Chairperson of the Board

Key accomplishments in 2011/12     

All of our families were transitioned into their micro-enterprises; First female Cambodian Country Manager entered leadership team; Signed our first large US contract with retailer Gaiam; Applied for and was successful in becoming a Fair Trader of Australia with the Fair Trade Association of Australia and New Zealand (FTAANZ) Received a $30,000 grant to expand our Development operations from Australian Ethical Investments

 EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2011/12

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Our organisation is Empowering Communities Inc, an Incorporated Association in South Australia, Australia. Empowering Communities Inc is an umbrella for our social enterprise, ‗Carpets for Communities‘; and our related development-focussed activities.

Our Purpose The founding purpose for Empowering Communities is to create the ultimate social enterprise model that empowers children, families and communities to lift themselves out of poverty and create true freedom for their futures.

Our Mission Our core work is to offer immediate intervention to give at risk children an education through empowering their mothers to produce eco fair-trade products, which sell globally.

Our Values Education Through continued education, people and communities can continually better themselves. It enables people from all backgrounds to have a more enriched life.

About Us

Innovation We take actions in a way that dynamically increases our impact. Respect We provide all individuals with the opportunity to express their views and contribute their skills in any given area. Sustainability Social, economic and environmental sustainability guides our actions and strategies to developing long-run solutions to wider issues. Equality We take actions that lead towards equal opportunities for all individuals. Integrity Our actions back up our words, with full honesty and sincerity. Passion We love what we do, and this comes out in all our work with everything coming through with energy and drive.

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EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2011/12 


Brief History of

Carpets for Communities Founded in 2005 as a joint effort between some Australian Volunteers, a Thai Factory, A Thai Foundation and a local Cambodian Foundation, CfC grew slowly for the first 2 years. It primarily made wool and silk carpets for the Thai carpet factory eventually reaching 18 women and 58 children. In 2007 we lost funding for the project manager and were no longer able to produce the technically difficult wool and silk rugs. We started focusing on a product that we had developed that we could market ourselves - the cotton off cuts rugs that are now seen in our stalls. This effectively cut out the middleman and made the project more fair-trade, generating more income for the women for the same amount of work done. While the transition meant a reduction in productivity, this also led to the start of a period of strong growth for the organisation from 2008-2010. In 2008 we registered as an independent organisation in Australia and later in Cambodia. In this year we also started setting up volunteer run market stalls in Adelaide and in Sydney. In 2009 we expanded around the country until we had volunteer groups running market stalls in Adelaide, Sydney, Melbourne, Alice Springs, Brisbane and Perth. This allowed us to expand the number of families at the end of 2009 to 40 families and 180 children. The financial year 2009-2010 was a year of rapid growth and expansion for Carpets for Communities, as we recorded our highest ever sales figures. Much of this growth happened organically however, and so 2010-2011 was a year of consolidating that growth. In 2011 for the first time ever, a dedicated executive team was set up in Cambodia to manage the project full time. This led to better information, higher quality management of the organisation, and the following major strategic decisions – 

The theoretical splitting out of our social enterprise Carpets for Communities from our development activities (to be followed later by a practical and legal split under the Empowering Communities Inc umbrella); The development of a transitionary model for our families, whereby women are empowered and supported to create sustainable livelihoods beyond carpet making.

The financial year 2011-2012 has been coming to terms with and implementing these changes for the organisation.  EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2011/12

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Our Team Structure

Our Structure No changes were made to the Regional Management Structure of our organisation in each state. This remained as follows:

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Regional Chapter President Volunteer Coordinator

Retail Coordinator

Event Coordinator

Logistics Coordinator (VIC ONLY) Casual market stall and events volunteers

EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2011/12 ď ź


Up until January 2012, the organisational structure was as follows: Board of Directors

Lucy Chan, Kevin Chan, Melissa Willoughby, Richard Khoo, David Bacon

Cambodian operations

Australian operations

Chief Executive Officer

Kylie Hansen

Executive Team

Cambodian Country Manager

Kimsreang Kun

Finance and Production Manager

Sales and Marketing Manager

Dick Hoffmann

Rob Pfeiffer

Poipet Office Manager

Bunchhuon Morn

Field Worker

Field Worker

Emda

Vanny

Human Resources Manager

Marko Ivkovic

Field Worker Hokseng (Seng)

Program Development Officer Kat Chaousis (AYAD), resigned May 2012


In January 2012, the new executive team began their 12 month contracts. From this point onwards, the organisational structure was as follows:

Board of Directors

Richard Khoo, David Bacon, Kylie Hansen, Dick Hoffmann

Cambodian operations

Australian operations

Chief Executive Officer

Lindsey Ritchie (resigned July 2012)

Executive Team

Cambodian Country Manager

Kimsreang Kun

Poipet Office Manager

Finance and Logistics Manager

Sales and Marketing Manager

David Fischler (resigned July 2012)

Rowan Klaassen

Bunchhuon Morn

Field Worker

Field Worker

Emda

Vanny

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EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2011/12 ď ź

Volunteer Engagement Manager

Anna Jolly


Our Board of Directors David Bacon (Founding Director) David currently works with the Red Cross as a Case Manager, after spending time working in Cambodia to assist CfC in furthering its development activities on the ground. David was the recipient of the 2009 AIESEC Young Alumni Contribution Award. David‘s goals are to create innovative self funded organisations by catalysing corporate sector investment in ‗pro poor‘ social development globally.

Richard Khoo (Chairperson) Richard holds his CPA, and has over 10 years experience with organisational change and systems development in the financial services and non-profit sectors. Richard is both a qualified Finance Professional (CPA, CFP, B.Com, DipFP, AMC) and a socially minded change agent. Richie is now an independent IT consultant.

Kevin Chan (Treasurer) Kevin is currently a successful independent Software Developer. Kevin has a background in financial management and has a degree in International Business with a major in International Management. Kevin is heavily involved in developing modern intentional communities and is currently the Treasurer of the Aldinga Arts Eco-Village.

Lucy Chan (Secretary) With a degree in Eco-tourism, Lucy has a focus on environmental education, hoping to inspire the next generation to care for their world. Now a full time mother of two young children, she volunteers with Carpets for Communities and is an active member in the eco village where her family lives.

Melissa Willoughby Melissa studied a Bachelor of International Business with a major International Marketing, and has worked primarily within the Human Resources area. Recently, Melissa has coordinated major fundraising initiatives and other campaigns such as a National Short Film Festival in 2010, and the container deposit scheme campaign in 2011.

 EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2011/12

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Changes on the Board of Directors In the 2011-2012 financial year, Kevin, Lucy and Melissa decide not to stand for re-election to the Board. This represents a significant milestone for the organisation, as this group of five individuals made up the founding Board of Directors for the organisation. We could not have asked for a better founding Board. Their passion and dedication to the project is what developed Carpets for Communities from a South Australian grass roots initiative to the national organisation that it is today. Empowering Communities would like to recognise them for their years of commitment and hard work to make Carpets for Communities the organisation that it is today. Kevin, Lucy and Melissa remain good friends of the organisation, and involved in its activity. We welcomed two new Directors –

Kylie Hansen (Secretary) Kylie has extensive experience managing programs and projects, both paid and voluntary, throughout the corporate, government and not for profit sectors. She holds tertiary qualifications in project management, community development, political science and international relations, and commerce. Kylie set up the WA Chapter of Carpets for Communities in 2009 before becoming the first Carpets for Communities CEO based in Cambodia in 2011. Kylie has now returned to Perth and works full time at the Western Australian Council of Social Services (WACOSS) as a Program Manager. Kylie is interested social enterprise, and more broadly how business, community and government intersect and collaborate to create the best possible outcomes for communities. She is also a keen animal rights advocate and vegetarian.

Dick Hoffmann (Treasurer) Dick is the only non-Australian on the Carpets for Communities Board and is based in Amsterdam, the Netherlands. Dick graduated from the University of Amsterdam with a Master of Business Economics, and was part of the first team that was based in Cambodia in 2011 as the Finance and Logistics Manager. Dick was invited to join the Board upon his return to the Netherlands, and now works as a merchandising controller for the second largest DIY company in the Netherlands. During his studies Dick was involved in a student organization that supported education projects in the Balkans for local youth. Dick believes that education is one of the best ways for youth to develop themselves and to increase their chances for a better future.

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EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2011/12 ď ź


Our Volunteers and Members ―When I commenced with CfC at the end of March, I was introduced to a base of quite disengaged volunteers. In a similar situation to last financial year, there was a significant gap between the previous HR Manager finishing with CfC and me commencing. The lessened support during this period undoubtedly affected the motivation of volunteers. I faced quite a challenge in re-establishing a supportive, engaging atmosphere whilst also trying to push the chapters to conduct more sales events following consecutive months of low sales.‖

From Anna Jolly Volunteer Engagement Manager 2010-2011 and 2011-2012 compared 2010-2011 saw active volunteers in Perth, Adelaide, Sydney, Melbourne and Alice Springs. 2011-2012 has been a period of rapid growth: we have retained the above chapters as well as extended our presence to Hobart, Canberra, Geelong, Newcastle, the Gold Coast, and Brisbane. Activity is still most consistent in longer running chapters; however of the newer chapters, Canberra in particular, has generated consistent sales. Major fundraiser events early in the 2012-2013 financial year are expected to generate recruitment momentum and kick start regular sales activities in establishing chapters. Unfortunately, we are currently in the process of closing our Alice Springs chapter. A further development compared to last financial year is that each chapter now has a clear structure to provide greater accountability allowing for smoother operations. Each chapter consists of a Chapter President, Volunteer Coordinator, Retail Coordinator and Event Coordinator, plus a variety of general volunteers.

Engagement Whilst recruitment of volunteers has presented few hurdles, activating volunteers within the chapters, and then retaining their interest and keeping them active and engaged continues to present challenges. There are several factors contributing to this: 1) With markets generating low sales, especially over the winter months in the colder chapters, volunteers continue to lose interest in this key sales activity. 2) New volunteers are sometimes not well integrated into a chapter. 3) The nature of sales activities within a chapter are somewhat disconnected, meaning at times, there may be minimal contact between volunteers within a chapter. This presents difficulties in developing team morale. 4) Being a geographically segregated team presents issues on how to maintain a positive, engaging atmosphere in a digital environment.

ď ˝ EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2011/12

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Key focuses for 2012-2013 1) Continue to drive Yammer (our internal ‗Facebook‘). This tool has proven very effective in connecting volunteers to the project and to each other, with both of these factors improving engagement levels. 2) Diversification of recruitment channels, with a greater focus on developing partnerships with Universities. These partnerships have proved an effective recruitment channel in 2011-2012, and university students‘ keenness for professional development and their flexible schedules have also proved advantageous. 3) Recruit multiple Retail Coordinators for larger chapters. Retailers generate steady sales with minimal time required by volunteers. 4) Standardise and institutionalise volunteer induction processes, including sales and OHS training. 5) Development of a leadership pipeline to promote internal succession. 6) Development of a formal, strategic intern program. 7) Develop formal reward and recognition processes. This continues to prove difficult in an organisational context of scare resources, but is critical for volunteer retention.

Statistics on volunteers and members Statistic Registered volunteers Average hours spent volunteering # of CfC Chapters

2009-2010

2010-2011

2011-2012

80 3-10 hours per month

125 10 hours per month

70* 10 hours per month

5

7

10

*Many volunteers from 2010-2011 were identified as inactive, and so have been removed from our figures.

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EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2011/12 


Our Chapters Around Australia

Western Australia … from Brooke Jones The Western Australian chapter made steady progress over the 2011-2012 financial year. In December, the chapter organised a screening of ‗Spinning Dreams‘. The event was held in Fremantle and was a great success. Following this event‘s success, the team in WA organised a volunteer gathering which doubled as a banquet dinner in recognition of Khmer New Year in April. This event was a similar success raising just under $600. Special once-off events and carpet parties also proved strong sales channels this financial year, with the Mosman Park Ecofair generating $750 worth of sales in May, and carpet parties generating $400 on average. The WA chapter has expanded its volunteer base this year, welcoming a dynamic new Retail Coordinator and Volunteer Coordinator, along with several other general volunteers. The focus has now shifted to retention and engagement strategies. The broader focusses for the 2012-2013 financial year will be on expanding retail presence, and making pricing more transparent to customers.

South Australia … from Jessica Fabian The 2011-2012 financial year started extremely well in South Australia with the most successful CfC movie night fundraiser to date! The event attracted over 320 guests and raised approximately $4000 for CfC. In December 2011 Adelaide took part in the exciting global screening of Spinning Dreams, which was simultaneously screened in 7 cities across the globe. Timing was a major contributor to poor attendance rates in Adelaide, though it was still amazing being part of a fundraiser which saw volunteers from across Australia working with volunteers from Gone Cyclin' in Singapore, Ho Chi Minh and our Executive team in Siem Reap.

 EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2011/12

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From the second half of the financial year, the SA chapter started experiencing a loss of several long term, active volunteers, leading to the slowest level of activity in this chapter to date. Without strong leadership, the few volunteers that were retained were not successful in improving the activity level of the SA chapter. Early 2012 saw several key management roles filled which was promising for the SA chapter. A highly motivated Chapter President was recruited in June and 2012 / 2013 looks extremely positive with these new developments.

Victoria …from Amy Tung and Rachael Chan The Victorian chapter was consistently active throughout the financial year, with a very tight knit team remaining relatively stable and growing with a few new promising volunteers. Two key fundraisers were held, a banquet dinner in September, where over half of revenue was generated from games and raffle tickets, and a Spinning Dreams event in December with strong attendance, a great reception to the movie and lots of interest and carpet sales. Victoria have tested a variety of market s including the Ivanhoe Market and the People‘s Market, and the North Melbourne market was established as a key regular market, consistently generating good sales. Victoria has introduced a key new management role this financial year, that of Logistics Coordinator. The role has proved very useful and has ensured smoother and timely domestic logistics. Victoria is hoping to significantly expand its volunteer base in 2012-2013, seeking a Finance Coordinator, Event Coordinator, Market Coordinator, carpet party volunteers and more market stall volunteers.

New South Wales … from Yana Polyanskaya The Sydney chapter started the 2011-2012 financial year with a consistent management team. However, due to other commitments this faltered, and by the end of the financial year, we were seeking a whole new management team! Long term market volunteers also took a step back, and a few new volunteers were introduced. High volunteer turnover and lack of volunteers continue to be the main challenges in Sydney.

A key win for the Sydney chapter this financial year has been the acquisition of a free storage unit at Storage King. This is sure to allow for much smoother logistics.

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EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2011/12 


Paddington markets continue as the regular market every Saturday, with average sales of 1 to 5 carpets a week. We also trialled additional markets this financial year with mixed results – Manly Fair Trade, North Sydney and Dural. The Autumn and Winter months in particular saw quite low sales. With markets not being consistently profitable and requiring a lot of volunteers and planning effort to run each week, Sydney will switch focus to retailers and events in the coming financial year. With the recruitment of a new Retail Coordinator and new Event Team (planning a Spinning Dreams for early in the 2012-2013 financial year) we hope to see strong growth in both areas and generation of sustainable sales!

Australian Capital Territory … from Amanda Palmer The ACT Chapter of Carpets for Communities was established in late 2011 and its small volunteer base has been exploring a range of markets and opportunities for sales throughout their first six months of operations. Volunteer recruitment is ongoing, with several new volunteers coming on board in the first half of 2012 although resources available are still quite low. The chapter is currently focused on market stalls as a key means of generating regular revenue, with mixed results at various markets in the Capital Region (ACT and surrounding regional NSW). These regular markets have included Bungendore Markets, Captains Flat Markets, Bredbo Community Markets. Irregular markets and fundraiser events have also proven successful. Significant achievements during the year have included attendance at the Canberra Environment Centre's Eco Christmas Market in December 2011 which saw almost $1000 in sales; and a screening of the Spinning Dreams documentary at Canberra Girls Grammar in June 2012, which attracted approximately 40 people and took in almost $1000 in ticket sales, donations and carpet sales.

Tasmania The 2011-2012 financial year saw significant progress in the Hobart chapter. A chapter president was officially recruited, along with another 5 volunteers. The chapter held a stall at the Fair Trade Fiesta with a local non profit organisation advocating about Fair Trade, in April. The very first market stalls for Tasmania were held late in the financial year. Team Tasmania confirmed their very first retailer and is in negotiations with several others as this report is published! The chapter also managed to establish a partnership with Troona High School, received some media coverage in local newspapers, and is organising a trivia fundraiser event for early in the 2012-2013 financial year.  EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2011/12

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Queensland Brisbane has been very resilient this financial year whilst being very light on the ground. With other commitments keeping their few volunteers busy, Steph Bacon made a massive solo effort to keep the chapter alive. Queensland ran a Spinning Dreams fundraiser in March, and has had several stalls at special events or once-off markets. We are currently seeking a management team to really get Brisbane off the ground.

Alice Springs Unfortunately, following the loss of our key volunteers and subsequent several months of poor sales, our Alice Springs was officially closed down at the end of the 2011-2012 financial year.

Gold Coast, Newcastle and Geelong The Gold Coast, Newcastle and Geelong chapters, a.k.a. our ―piggyback‖ chapters, have made some great progress thus far! We have several enthusiastic, committed new volunteers on board in each region, and each chapter has markets, stalls at special events and a fundraiser event confirmed for early in the 2012-2013 financial year.

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EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2011/12 


Sales and Marketing

Sales and Marketing

―I entered my role in January 2012, after CfC had just run a successful round of fundraisers. This financial buffer gave us the space needed to focus on implementing the strategic strategies developed at the beginning of 11/12. We decided not to push for market stalls but instead focus on developing an online store and retail catalogue. One of the first things we did was to bring our carpets to 5 star hotels in Siem Reap and get them photographed in an exclusive boutique environment. We were especially excited to photograph them in the Heritage Suites, a hotel in which our carpets looked absolutely gorgeous. Some of the most exciting sales developments that happened in 11/12 include the shipment of carpets to Singapore, where they are now being sold through a personal network. We also signed our first large bulk order from America. Exploring new markets through external distributors and producing stock according to large orders are two options which we will continue to explore and where we hope the most sustainable sales avenues can be created.‖ ―I entered my role in January 2012, after CfC had just run a successful round of fundraisers. This financial buffer gave us the space needed to focus on implementing the strategic strategies developed at the beginning of 11/12. We decided not to push for market stalls but instead focus on developing an online store and retail catalogue. One of the first things we did was to bring our carpets to 5 star hotels in Siem Reap and get them photographed in an exclusive boutique environment. We were especially excited to photograph them in the Heritage Suites, a hotel in which our carpets looked absolutely gorgeous. Some of the most exciting sales developments that happened in 11/12 include the shipment of carpets to Singapore, where they are now being sold through a personal network. We also signed our first large bulk order from America. Exploring new markets through external distributors and producing stock according to large orders are two options which we will continue to explore and where we hope the most sustainable sales avenues can be created.‖

From Rowan Klaassen Sales and Marketing Manager 2010-2011 and 2011-2012 compared During 2010-2011 we started with implementing new sales strategies to diversify our revenue stream. The new strategies focussed mainly on:  Retail partnerships – both wholesale and consignment where necessary  Carpet parties – similar to Tupperware parties, held in the customer‘s home. As we entered the new financial year, these strategies had been proven successful as we had pushed back our market stall share of our total sales revenue back from 83% to 69%. While we continued in 2011 - 2012 to expand our retail presence in Australia and promote Carpet parties beyond customer‘s homes and into the corporate and  EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2011/12

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community environments (think work lunch time carpet parties, and Rotary clubs), we also focussed on two new sales avenues:  

Events – Selling carpets at fundraising events, as seen in our successful Spinning Dreams fundraising rounds. Online Store – Increasing sales by making our carpets easily available online.

By focussing on events as a sales avenue, we managed to increase this avenues‘ sales revenue share from 1% to 14%. While the opportunity of selling at events relies heavily on the availability of human resources, it has proven to be effective. In our most successful month in this financial year, December ($10,711), over 65% of our sales were made at events. Our continued promotion of carpet parties in combination with the launch of our online store and entering the Singaporean market through personal networks, led us to further reduce our dependability on market stalls. A comparison of sales by avenue between 20102011 and 2011-2012 can be seen in the graph below:

Statistics on sales and marketing Statistic Average monthly sales Average number of market stalls per week Average sales per event

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2009-2010

2010-2011

2011-2012

$7,920

$8,726

$5,832

4.7

3.98

2.5

$393

$316

$264

EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2011/12 


Our most successful sales events included: Name Date

State

Amount

Gone Cyclin‘ Singapore

9 December 2011

Singapore

$5,980

WOMADelaide

9 March 2011

South Australia

$1,451

Hulbert St Sustainability Fiesta

25 September 2011

Western Australia

$1,400

Intercontinental Christmas Fair

27 November 2011

Cambodia

$1,090

Rugged Up – Movie Night

19 Augustus 2011

South Australia

$1,014

Lessons Learned As noted last year, relying on volunteers to drive sales is not a sustainable long term approach. Pushing commercial activities, such as market stalls, negatively effects volunteer engagement. During 2011 – 2012 we explored many different sales avenues but saw monthly revenue decline. New marketing materials such as professional product shoots, new brochures, and a retail catalogue, did not create the change required; and demonstrated that large scale retail partnerships are impossible with current stock and production processes. On the whole, lack of engagement and support are the main reasons for the lack of retail sales across the country. In order to attract new volunteers to manage the retail presence, there should be a strong volunteer network already established in the state, or we should work with highly independent and motivated individuals.

Focuses for 2012-2013 1. Further develop our markets and products. 2. Actively focus on developing new products and entering new markets.

 EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2011/12

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External Relations and Media External Relations and Media strategies have suffered from not having dedicated resources to drive this area; however we have still hit a number of important milestones and goals throughout this financial year. Some achievements made during 2011 – 2012 include:  Production of new brochures and business cards;  Regular video updates from Cambodia;  Professional photo materials of our products;  New professional photo material from our project in Poipet  Product shots featured in G Magazine and Sanctuary;  The awarding of Fair Trader status from the Fair Trade Association of Australia and New Zealand. This acknowledges our status as an organisation paying fair wages to our participants, and positions us very favourably within the market.

One of the highlights in 2011 – 2012 was the publicity generated through Spinning Dreams. This documentary premiered in 5 cities and successfully raised over $60,000 SGD for Carpets for Communities. There have subsequently been a number of successful fundraisers based around the screening of Spinning Dreams. The premiere of the documentary screened in –  Singapore, Singapore  Adelaide, SA  Perth, WA  Alice Springs, NT  Melbourne, Victoria Some of the published articles about Spinning Dreams included: Humanity – Making a difference one pedal at the time – August 2011 Phnom Penh Post – Spinning Dreams Movie Premiere – April 4th 2012 Canberra City News – Inspiring Journey – June 2012 ABC Canberra Radio – Interview with Ashwin – June 2012

Published product shots of CfC carpets in 2011-2012 G Magazine – Spotlight On... – June 2012 Sanctuary – Carpets for Communities Hand-Hooked Cotton Rugs – June 2012

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EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2011/12 


Other Media spotlights Easter Courier – Cambodian compassion sparks film fundraiser – August 2011 Connect Magazine – A Journey of Learning – Nov 2011 – February 2012 TV – The Project – May 11, 2012 The Herald Sun – Shop Front – May 10, 2012

My Business My Business was a fundraising campaign that began in May 2011 to fund our mothers‘ foray into micro-enterprises. My Business, or Fund an Entrepreneur, was primarily conducted via Facebook and online social mediums. By the end of December 2011, CfC had raised the total amount required - $14,800 ($400* 37 families) to enter all of our families into microenterprises and other sustainable livelihoods.

My Education My Education was, similarly, conducted via social media. It aimed to raise funds for Tout Kimchhean, Hing Prempey and Hourt Pesith to attend university in Phnom Penh. As at December 2011, CfC had raised enough for all three scholarship recipients to attend their first year at university. Now we have changed our scholarship program to not rely on fundraisers but on sponsors. We are currently looking for individual sponsors for each of our scholarship students.

 EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2011/12

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Production and Logistics From Rowan Klaassen Sales and Marketing Manager David Fischler started out as our Finance and Logistics Manager in January 2012. David unfortunately resigned in July 2012, and the management of Production and Logistics was incorporated into our current resources.

Production and Logistics

2010-2011 and 2011-2012 compared In 2010-2011 production significantly decreased from previous years through the provision of a ceiling cap. This allowed our families to produce only a limited amount of carpets a month. This was necessary as the production rate was vastly outstripping our sales capacity. This ceiling has still proven to be a ‗fair wage‘ according to the Fair Trade Association of Australia and New Zealand, and is ample for participants to support their families on. To further decrease production families were transitioned to our new four-stage model, empowering them to think about life beyond making carpets and create their own micro-enterprise or other sustainable livelihood. This model allowed more and more families to earn an income independent of CfC. This way, we planned for production to slow further and reach a temporary stop in January 2012. At that time all families were supported by their micro-businesses. As a result of the reduced production rate in 2011 – 2012, the costs per SQM have significantly changed from last year with overhead costs being carried by a much smaller stock pool. Currently the total stockpile is 2230 sqm. Therefore, future production will be focused on producing cushion covers, new product prototypes and custom orders. As the stockpile is cleared, new families will be taken on board in order to produce new carpets, and the four stage model will continue to cycle through. At the start of 2011-2012, a new stock tracking system was introduced and all carpets were labeled with an SKU (Stock-Keeping-Unit) code. This has provided a better overview of which carpets are located in which state and allows easy analysis of sales by color and size.

Statistics on production and logistics Statistic

2009-2010

2010-2011

2011-2012

Australian stockpile

350 sqm

1104 sqm

1002 sqm

Cambodian stockpile

380 sqm

1040 sqm

1228 sqm

Total stockpile

730 sqm

2144 sqm

2230 sqm

10.7 months 26.3 months

19.6 months

Total stockpile/average monthly sales Rate of production : average monthly sales

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1.92 : 1

3.4 : 1

1 : 2.3

EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2011/12 


Lessons Learned The major lesson learned in this period is to align our production with our sales capacity. We need to manage our supply chain in a manner that is more professional and aligned with business best practice.

Focuses for 2012-2013   

The focuses in 2012-2013 will be to develop new products and train new families to produce these. This is integral to ensure we have other products to complement our current line of carpets, and strengthen our brand. The possibility of buying new cotton at higher prices will be investigated, to sustain our supply chain. Finally, another key focus for 2012-2013 will be in improving our stock management system. The infrastructure is sound, however some of the processes require some improvement.

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Other Australian Programs Schools Partnerships Trinity Grammar School in Melbourne is still our only school partnership. The partnership has continued quite successfully in this financial year. CfC has been working with Trinity for over a year now in a partnership to fundraise for our programs and to educate Trinity students about Cambodia and the work we do in empowering women. In August 2011, the school raised over $2400 from two events: a sausage sizzle at the school athletics day and 'Cover for Cambodia' which was a hugely successful talent show. The money raised from these events funded two entrepreneurs, Seng Sean and Seng Eng, to start their micro-enterprises and also went towards supporting our scholarship students. In September 2011, previous CEO, Kylie Hansen spoke at the Sutton House Breakfast where another $1100 was raised for scholarship students.

Australian Projects

The 2012-2013 financial year also promises to be an exciting year for the partnership with a number of events planned for the latter half of 2012. More generally, we are looking at new and collaborative ways to partner with schools like Trinity, which in addition to the above ideas might include: o ways in which we could assist students to achieve their Duke of Edinburgh awards, o a role that we can play in educating students about fair trade and poverty, perhaps via S&E classes, o connecting schools to our schools in Poipet for cross cultural communication; o education and fundraising events ran through the school, which serve multiple purposes:  involving students and educating them in events management  selling carpets  raising money for various initiatives (for CfC and the school) o study tours we could provide in Cambodia for students to visit our families and see our joint impact

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Cambodian Operations

Cambodian Operations

From Kimsreang Kun Cambodian Country Manager

Our Cambodian team holds the critical role of managing the production process whilst engaging and working with our participants. Our previous country Manager Heng left in October 2011. Kimsreang was our social worker at the time, and has been promoted to be the National Program Manager. As an organisation valuing gender empowerment, we are very happy to be able to welcome our first female Cambodian country manager.

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Cambodian Programs

CfC Social Enterprise (Income Generation) In this financial year we have worked with 34 families, in production and in microenterprise development and support. In December 2011, production was brought to a halt temporarily, as we transitioned families into their own businesses and worked on decreasing our large existing carpet stockpile. Between January – June 2012, we have still met custom orders, expanded the production of new products (ie cushion covers and necklaces) and begun retail custom orders for a specific US contract. On average, Carpets for Communities has supported 34 families, at an average income of $101.50 per month.In this financial year we have worked with 34 families, in production and in micro-enterprise development and support. In December 2011, production was brought to a halt temporarily, as we transitioned families into their own businesses and worked on decreasing our large existing carpet stockpile. Between January – June 2012, we have still met custom orders, expanded the production of new products (ie cushion covers and necklaces) and begun retail custom orders for a specific US contract. On average, Carpets for Communities has supported 34 families, at an average income of $101.50 per month.

Lessons Learned Many children will get involved with their parents work after school, and it is very difficult to stop this. We have questioned whether we must stop it, considering that it is a cultural norm for children to help their families more than in Western societies. Generally we are monitoring families to ensure that children are not exploited, and continually searching for answers to these kinds of questions.

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Micro-enterprise Program (Income Generation) As at June 2011, approximately 10 of our families had started micro businesses and most are doing quite well. The rest of the families will start their micro businesses between June and December and will finish producing carpets at the end of December. We ran a fundraising campaign to raise the funds for this initial transition. The total raised was approximately $13,000 for 37 families. Approximately $1,850 ($50 per family) was used to hire, and to continue to hire, a Khmer consultant to assist in developing the program and administering training, and to contribute to the social worker‘s wages. We provided the first round of loans at 70% grant, 30% loan and the second round at 50% grant and 50% loan. The idea is that this will make it easier for them to take the risk and also give them some feeling of pride when they repay it. However, one grant is not going to solve all their income issues so we will help them build multiple streams of income and also build on current streams by expanding businesses where appropriate through further programs which are currently being developed for 2012 such as; vocational training for other household members, loans for livelihood activities, loans for second businesses and more. Type of business

% of families

Mushroom farming Sewing Moto driver Recycle merchants Pig farming Fruit selling Grocery selling

3 40 15 6 9 18 9

Level of success

% of families

Very well (ie are making a profit from business that is enough to support their family) Well (ie breaking even, maybe a small profit but needing to diversify their income) Not well (ie not quite breaking even, are requiring more intensive support) First business failed, but second business is successful (ie they are making a profit enough to support their family) Business has failed, and family has given up on that particular business idea Very well (ie are making a profit from business that is enough to support their family) Well (ie breaking even, maybe a small profit but needing to diversify their income)

24 21 24 12 20 24 21

The average income from micro-enterprises is $144.38 per month.

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Lessons Learned The key lessons we have learnt from the development of micro-enterprises have been – 1. Families often did not contribute any of their own income, which makes them feel like the business is ‗CfC funded‘. They take less ownership over their success in this way. 2. Our internal staff does not have training with financial management. Whilst we developed their business skills to provide assistance to the families, there are still more skills that we need to assist them to develop to provide the best level of support to families. 3. More intensive financial training needs to be undertaken with families prior to setting up their businesses. 4. There is a difference between the skill required to get businesses to a level of success, and the skill level of our families. This is a difficult barrier to tackle. Cost Item

Cost

Capital Training (ie financial literacy, etc) Overheads (ie staff time, costs related to fundraising campaign)

$300 $40 $10 Total $350

Weekly School Attendance Monitoring Our weekly school attendance monitoring occurs across 11 schools. As we no longer have a dedicated social worker, the field workers have taken on this responsibility and so far this is working well. Our field workers spend approximately 20% of their time monitoring and checking school attendance. This program also includes:  Follow up coaching with the mothers when children's attendance drops.  On average, field workers follows up 3 families per day  This equates to approximately 15% of field worker time Average cost per family per month Statistic

2010-2011

Fielder Worker Time

$2.11

Scholarships Program The scholarships program was implemented to further the education of impoverished children in the Poipet commune. Although carpet production and microbusinesses ensure a stable income for our families, with an average of six children per family, and university fees and living expenses at around $2000 per year, university study is still a stretch from what they can afford.

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Our scholarship program provides recipients with $1,600 over the course of a year.This amount include tuition fees, basic living costs and study expenditure. Despite the increase in welfare our families have attained through our income generation programs, this amount annually remains out of their reach. Breakdown of scholarship costs Tuition Fee Bicycle Rent and Utilities Living Costs Study Costs

$400 p.a. $30 (once off) $30 p.m. $55 p.m. $12.50 p.m. Total

$1600 p.a.

Our three scholarship students, Kimchhean, Pesith and Premprey, commenced university studying electrical engineering, IT and laboratory studies respectively. All three have achieved some excellent results, both at university and within a variety of community service programs.

Kimchhean When CfC found out about one of Kimchhean‘s inventions when he was still attending high school, it was clear that Kimchhean would be one of the first scholarship students, and no surprise that he would be studying engineering. While his mother was involved in carpet production, she was spending a significant amount of time hand rolling t-shirts off cuts into the rolled cotton that the carpets are made from. From scrap wood, a recycled paint roller, an old talcum powder bottle, and an old tin can, Kimchhean created a machine which rolls the cotton with significant ease. This piece of equipment saved his mother a considerable amount of time and enabled her to create more carpets, thereby generating more income. Genius! You can visit our website to see Kimchhean‘s amazing semester 1 results.

Premprey Premprey volunteers from Monday to Wednesday as a Health Coordinator at ACE, the student centre where he lives. As a Health Coordinator, Premprey organises and conducts health and hygiene trainings to the youth and children of various ACE centres in Phnom Penh. ACE told us that their kids and youth are healthy mainly because of Prempreys hard work! In addition to volunteering at ACE, Premprey joins English class from Monday to Wednesday every week. On Thursday, he attends Leadership classes and on Friday he joins the Rotary Club of Phnom Penh Metro meeting. This club consists of 20 members who come together and discuss how they can help their own community through social services. As  EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2011/12

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Premprey comes from a poor rural background, he is very motivated to work with other Cambodian youth who are living in poor conditions and help them to improve their situation.

Pesith Pesith volunteers at ACE, the student centre where he lives, from Monday to Wednesday as the Administrative Officer and as part of a training team. He hopes that this work gives him work experience and enables him to find a good job after his study. Like Premprey, he also joins English classes every Monday to Wednesday, a Leadership class every Thursday and the Rotary Club of Phnom Penh Metro every Friday. In the 2012-2013, we will welcome one more scholarship student to the program, Hing Vuthy - Premprey‘s younger brother! We hope to welcome many more students in the coming years. To achieve this, the 2012-2013 financial year will see us focus on promoting the program to both parents and students alike. Our quarterly community meeting planned for early September 2012 will see the three current scholarship students return to Poipet to speak to the community about their experiences, and encourage students to apply for the next academic year.

Education Program – Poipet commune It is very common for us to hear from our families that they are very unhappy with the quality of education in Poipet. Often children need to pay ‗extra‘ for ‗private tutoring‘ when in fact they require extra assistance just to meet their minimum graduation requirements. As this is a significant community issue that affects more than just our families, we have started creating the infrastructure within Poipet for an education initiative. This has been made possible through the financial support of Australian Ethical Investments (AEI). We have developed a relationship with the Puthi Kumar Organisation (PKO), an organisation established in 2005 to build the capacity and development of intellectual, well-being and economic for children and their community. This is a Khmer run organization, and an expert in implementing the development approach of Participatory Learning in Action (PLA). For this reason, CfC is very excited to work with them. The initial groundwork undertaken to date has been to for PKO/CfC to conduct discussion sessions with the four directors of the schools we have identified. These discussion sessions identified the four main areas of need    

A need to strengthen and establish the management system for the director of the schools; A need in building the capacity of the teachers, education authorities and the relevant stakeholders; A need in establishing the environment to support learning. This must include work on gates, fences, latrines, gardens, etc and A need of participation of parents and communities.

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Having identified these needs, PKO and CfC will work together to find effective community sourced and led solutions. This work will begin in the 2012-2013 financial year.

Other Community Support In the 2011-2012 financial year, CfC also provided the following additional support to our families:

Second micro-loans Some families have required a second loan, either because their first business was not successful, or because they required a little extra capital to expand their enterprise. In 9 circumstances we have provided a second loan to families. Three of these families have already paid back their first loan. Average cost per family Average loan per beneficiary Average loan repayment per month

$156 $37

General purpose micro-loans General purpose micro-loans provide assistance in circumstances where families can be financially vulnerable (ie health concerns and hospital visits, sons and daughters weddings, etc). This is currently only provided during the stage that they are producing carpets and is essentially an advance lump sum payment aga inst labour. Average loan per beneficiary:

$115

Financial training We conducted some basic financial training for families, to help them gain a basic understanding of income and expenditure, and the importance of record keeping. This was conducted over a week by our Country Manager and field workers. More than just business financial management, we also provided some advice and guidance on managing household finances. Average cost per beneficiary:

$2.57

Sewing Skill workshop Many families who wanted to start a sewing business only had a very basic level of skill in sewing. As many of these families were located in the An Dong Thma Mes village, we provided a basic sewing skills workshop for 2 days a week over a 2-3 week period. Average cost per beneficiary:

$3.46

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Making it Personal... Koul Pow

joined the project in 2009. She has seven children—two under the age of six, and five between six and 15. Before entering the project, some of Koul Pow‘s children were not enrolled at all in school, and the rest, while enrolled, did not attend regularly because they had to beg or work as cart-pushers to support the family. Since their mother joined CfC, all of the children have the chance to study full-time at the local school. When Koul Pow was involved in carpet making, she could earn $115 on average each month. Even so, she had to purchase commodities on credit at times, because she also supports her elderly mother. Her son, who works in Thailand, also sends the family money and now they manage.

Koul Pow was excited to start her own business and requested a $350 loan from CfC in October. She used this loan to buy a motor for her husband so that he could work as a motor taxi driver. This business gives her family the average wage of $2.50 per day, which is just enough for food and for their children to go to school. While her husband worked as a motor driver, she decided to sell jewellery on the Thai market, as she has noticed that many Thai people really like jewellery. Koul Pow invested 1000btha ($300) in jewellery and started by carrying jewellery around in a big basket to sell around the Thai market. With this business, she could earn $3 per day. This money allowed her to repay her monthly repayments to CFC and her monthly repayment interest to a moneylender.

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Koul Pow then requested a second $300 loan to increase her capital to buy more jewellery. Given her success to date, we supported this decision, and this has increased her average daily profit to $6/day. This allows her to repay all her old debt, rent a store for her business in the Thai Market, and expand her house to be bigger and more comfortable.

Lay Leang and her family joined the project in August of 2010. She is a single mother and currently has five children. Previously, one of her daughters (age: 10) did not attend school and the oldest child only attended sporadically to stay home and do the housework. Now, all the children attend school regularly, and during their holidays, they sometimes help her make carpets. Lay Leang was excited to start her own business in August 2011 and requested a $270 loan from CfC to start a fruit selling business. She bought a cart and fruits and walks around the community to sell her wares. She works hard in her fruits selling business and comes back home late in the evening after a full day‘s work. This business works well during every season as other fruit sellers sometimes don‘t make it to the village during rainy season. Lay Leang is now the regular supplier. Lay Leang is flexible, and this has enabled her to be successful in her business. She would like to buy more things like vegetable, fish, fruits and other foods which she thinks would sell. As she pushes her cart with inventory through the community, she stops in the main road and carries some foods directly to her customers‘ houses. As people can‘t get out of their house during rainy season, she can sell door-to-door for some extra profit. Lay Leang now has an average wage of around 300bath ($10)/day. This wage supports her to buy daily foods and to get her kids to go to school. Additionally, she has been able to save, and buy a new land and house in a good location in Poi Pet city. This costed her $5000, for which she made a $1200 deposit and now has to pay a monthly reduction of $181.

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Statistical Data – Key Performance Indicators (KPIs)

“106

target children were in the program

Performance Summary

compared to 125 children in 20112012.

Development KPI’s  94% were attending school regularly, up from 75.2% in 2010-2011  Average family income was USD$101.50, down from USD$121.82 in 2010-2011 (As discussed, due to our impending cash flow concerns.)

   

10.3% of our children are still working for money, down from 18% in 2010-2011 2 of our children are in years 11 and 12 (a rarity in Poipet) 3 University scholarship applications received and approved in 2010-2011 1 scholarship approved in 2011-2012, for a total of 4 supported students at University

This is due to the fact that we had less target children in the program due to a change in our organisational structure

Production KPI’s Our current stockpile of carpets is 1228m2 in Cambodia and 1002m2 in Australia.

Sales KPI’s   

Our average monthly sales (AMS) were AUD$5832 down from all previous years We have 19.6 months of rug stocks (based on our stockpile / avg. monthly sales rate) AUD$264 is made on average at each sales event (eg; a market stall), down from AUD$315 in 2010-2011

HR KPI’s 

We have 70 active volunteers, with 40 active in any one month

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Finance From Dick Hoffmann Director - Treasurer ―More than 1.5 year ago I arrived as the first person ever to fill the financial management role full time at CfC. I now sit on the Board of Directors as Treasurer, and as a result, I‘ve had the liberty to set up some of the main monitoring instruments. In 2011, it became clear that with the unexpected drop in sales and the high production rate, cash flow management would be one of my top priorities. This focus has been maintained over the last financial year to ensure the organization‘s sustainability.‖

2010-2011 and 2011-2012 compared The financial year 2011-2012 was the first where CfC had a Financial Management role full time for the entire year. This turned out to be crucial in the beginning of this financial year when CfC made use of an overdraft facility to weather the storm.

Financial Summary

This overdraft provided us the time required to re-organize the organization to become more sustainable for the future. Over this financial year we have made a significant profit, which will all be reinvested in our normal operations and our development programs.

Focuses for 2012-2013 A major focus for 2012-2013 will be to see whether the activities of the Finance Manger can be split and managed by the current staff in Cambodia, or whether we need this position to be filled in permanently. This is the current arrangement given our circumstances; however we also acknowledge the importance of maintaining a constant analytical and critical eye on our financial reporting. Financial reporting will therefore be a focus as we ensure the standard of our financial information does not slip with our lessened experience on the ground.

Secondly, we will need to conduct an external audit for our next financial year. The high costs involved are a significant barrier for us, however in order to move forward to the next level of organizational professionalization this is a step that needs to be taken.

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Financial Year Report 2011-2012 The following table shows CfC‘s profit and loss statement for the last 3 financial years. The following part will give further explanation on many of these figures. All amounts are in Australian Dollars except when mentioned otherwise.

Revenue Donations Events Fundraising Grants Sales - Market Stalls - Retail Sales - Carpet Party Sales - Other Sales Other Income Total Income

2011-12 9,014 1,922 46,344 35,000

2010-11 4,439 813 32,645 40,320

2009-10 2,240 2,634 17,771 1,058

34,011 15,825 6,922 13,253 -

82,025 10,167 21,607 5,305

75,630 15,675 5,140 5,010

$162,290

$197,321

$122,524

2011-12

2010-11

2009-10

15,783 11,011 61,135 6,744 1,431 1,891 3,263

11,265 18,989 112,640 4,722 660 2,758 6,377

68,293 1,414 462 247 4,745

3,936 3,186 3,032 2,422 488

3,225 93 20 3,283 9,788

3,344 446 1,380 1,536 12,830

4,387 9,498

3,451 9,708

2,865 15,437

$128,208

$186,940

$112,735

$37,118

$10,381

$9,789

Expenditure Cambodian Expenses - Development Expenses - Executive Team (Wheeler) - Production Event Expenses Financial Expenses Fundraising Expenses Market Stall Expenses Other Expenses - Insurance - Marketing / Sales / Promo - CEO Tour of Duty - T-Shirt Printing - Storage Expenses - Other Expenses Staff Transport Fees - Australian Domestic - International Total Expenses Net Surplus

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Income Notes Donations: include the donations we have received at our market stalls and donations from externally organized fundraisers held for CfC. Events: to the fees paid by volunteers who attended our AGM in October in NSW and our Conference in Victoria in February Fundraising: includes all the funds received from specific fundraisers organized by CfC. Examples are the fundraisers organized for Gone Cyclin‘ and for our scholarships and Micro- enterprise campaign. Grants: In the last financial year CfC received one grant of $35,000 from Australian Ethical Investments. Market-stall sales: CfC‘s biggest source of income, totalling $34,010. Other sales: include our online sales and revenue from custom orders, carpet parties and personal sales. This year CfC start to focus more on Carpet parties, which has become an significant part of CfC‘s sales number. Other income: includes volunteer membership fees, delivery charged for sending rugs to retailers, etc.

Expenses Notes Cambodian expenses: the Cambodian expenses consist of three forms of costs. Expenses incurred for the production of the carpets, expenses made for developing the Poi Pet community and the expenses that were incurred to install and support the executive team in Cambodia. The latter expenses are covered by a grant from Planet Wheeler. Development Expenses: Development Expenses include the expenses to set up a development fund. In 2010 CfC started with a development fund after successful fundraising events in Australia. From this fund we have hired a social worker for the biggest part of this financial year. The development fund also provides interest free loans. This financial year specifically to fund our participant‘s Micro Businesses. An amount of $ 9711 USD has been provided as loans. CfC also started with a scholarship program in this financial year, an amount of $5061 USD was spend to cover our students tuition fee, rent and other living expenses

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Planet Wheeler Expenses: As mentioned earlier, the Planet Wheeler Foundation funds the costs for installing and supporting the executive team for one year in Siem Reap. Table 1 gives a summary of the costs for the first executive team before they left in January 2012. These figures are in USD as the expenses are made in Cambodia.

Due to the differences in currencies the costs mentioned in our financial statement differ from the total amount mentioned in Table 1 and Table 2. Table 1 (in USD) Planet Wheeler Expenses December 2010 - July 2011

Total Expenses

Office Costs Team Costs Other Costs

$5,561 $7,479 $248 Total

$13,288

Team costs: are the salary for the team, food allowance for lunch and dinner, food staples (such as bread, milk and eggs) and drinking water. Other costs: are the rent of the office, utilities and a cleaner. Production Costs: table 2 shows the Cambodian operational costs by category in USD. Development expenses and costs made by the executive team are excluded. Table 1 (in USD) Cambodian Operational Expenses (in USD)

Total Expenses

Carpet Labour Charge Carpet Raw Materials Other Direct Costs (inc packing and equip) Total Direct Costs Staff

$ $ $ $ $

12,294 2,369 2,308 16,971 21,263

Office / Admin Costs Logistics Sales and Marketing

$ $ $

16,464 3,774 1,755 $114,429

Total

As can be seen, a large part of the costs are directly related to the production of the carpets. Our participants together received an amount of $ 12,294 USD in wages. The other two big sources for costs are the staff‘s salary expenses and office/administration expenses which are incurred in order to make the production of our carpets possible. Office and administration expenses include the office rent, utilities, office equipment and stationary for our current office and warehouse in Poi Pet and Siem Reap Logistics includes the transport of raw materials to the warehouse and finished products to Phnom Penh. The sales and marketing consists mainly of promotional material (banners, business cards and flyers). Page 38 of 44

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Due to the differences in currencies the costs mentioned in our financial statement differ from the total amount mentioned in Table 2 Financial Expenses: includes the fees charged on our bank account, fees for the international transfers to Cambodia plus fees Pay Pal charge for every transaction on our account. Market Stall Expenses: which consist mainly of the fees to hire a stall, but also include reimbursements of expenses volunteers incur to attend the market such as petrol and toll. These expenses totaled $ 3,263 last year.

Many costs are grouped together under other costs. The largest contributors are the costs for our public liability and volunteers insurance, storage costs, which included the purchase of a storage container which was funded by one of our supporters and cost of our CEO visit to Australia. As CfC thrives on volunteers in Australia, staff costs were only $ 488, which consisted mainly of AIESEC fees. The final source of costs are transport fees, which includes the costs of shipping the rugs from Cambodia and delivering them to the specific states from the port.

Breakdown of Income Income The following figure shows the different types of income for CfC in this financial year and their relative contribution.

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Comparison with previous years The following table shows the summarized profit and loss statements for the last three financial years of CfC. All figures are in Australian Dollars.

Income In the last year CfC‘s gross income has decreased with almost 40% because of a drop in sales from$ 197,321 to $165,325. Compared to the 2009 – 2010 income last years income is still $40,000 higher. However, in the last financial year the funds acquired through grants, fundraising and donations have increased. Compared to 2009-2010 these sources of income have increased dramatically to $ 69,829 (329%). This is due to the fact that we received very few grants in the 2009-2010 financial year. Compared to 2010-2011, this amount grew by $ 12,954 (17%), due to successful fundraising campaigns for the Micro Businesses and scholarships, Gone Cyclin‘ and a grant from Australian Ethical Investments.

Expenses Last year showed a decrease of $58,659 (31%) in expenses. Our expenses in this period are almost completely related to the decrease in the production of carpets. As a result the total costs of the organization have moved much closer to the costs of 2009-2010, when the total costs were $110,909 The only two groups where costs increased are the development expenses and the other costs. The development expenses are up 40%, to $15,783 compared to last year. This can be explained by the Micro Credit loans that have been provided to our families as well as the expenses for the scholarship program. The other costs increased because this Financial year for two major reasons –  

CfC purchased a container on behalf of a supporter, who provided CfC with the funds for this purchase Costs were incurred in order to send our CEO on a 3 month tour through different states within Australia.

Net Income In the last three financial years, CfC‘s net income has been positive. All these profits have been or will be reinvested in our production and development programs.

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Future Plans Last year, we identified that our organisation needed to split clearly into two bodies. At the time, we had planned for this to be a dual split –  

The social enterprise Carpets for Communities o Encompassing carpet production and sales The broader programs umbrella Empowering Communities Inc o Encompassing everything outside of carpet production and sales

As previously explained, the reason for this demarcation was that in the past, production has consumed any funds put aside for other development purposes. Therefore, the social programs we run currently are limited, due to not having had the resources to develop programs and apply for funding for them. If we resource the NGO/programs side of what we do independently, it can focus on getting funding for and implementing complimentary social programs instead of waiting for the enterprise side to be profitable enough to fund programs. Subsequent further planning for this split continued throughout 2011-2012, resulting in what is in fact a three-way division. Empowering Communities remains the umbrella organisation. Sitting underneath Empowering Communities is our social enterprise, Carpets for Communities and our development activities, loosely termed Developing Communities at this point in time. It is anticipated that in the future, Carpets for Communities and Developing Communities would produce separate annual reports or at the very least have two very clear, demarcated sections within a broader Empowering Communities annual report. The strategic planning process for this structural change involved the development of a purpose, core work and a five year goal for each element. We are pleased to unveil these here.

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Empowering Communities Purpose

The founding purpose of Empowering Communities is to create the ultimate model that empowers children, families and communities to lift themselves out of poverty and create true freedom for their futures.

Core Work

We innovate, test and develop scalable models for addressing poverty and share them globally.

Carpets for Communities Purpose

To create the ultimate social enterprise which offers immediate intervention to give at-risk children a education.

Core Work

Empowering mothers to produce eco fair-trade products which sell globally.

Five year goal

We prove the model and can show we are profitable and self sustaining, producing positive outcomes for 500+ new kids pa with over 80% school attendance.

Developing Communities Purpose

To empower families and their communities to be sustainable, self driven, resilient and thriving.

Core Work

We deliver participatory programs which address the root causes of poverty and are continually learning and improving our approach.

Five year goal

To have developed our approach and it has proven to be so effective that other people are coming and asking for it.

The second major change that was outlined in our 2010-2011 annual report was the development of a transitionary model for our families. Our new model is to be a cycle where we work with women initially for a period of 12-18 months, and assist them through four stages – Intervention, Stabilisation, Empowerment and Transition to Sustainable Livelihoods. To date, we have not fully integrated this new model into our operations. This has been for a number of reasons, however the predominant reason is that, once all families had been transitioned into their new sustainable livelihoods, we made a strategic decision to pause production of carpets given the significant stockpile we currently possess. We anticipate that we will be piloting our new transitionary model for the first time in November-December 2012 with products other than carpets.

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empowering communities inc. carpetsforcommunities.org  EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2011/12

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Carpets for Communities' Annual Report 2011/2012  

annual report carpets for communities

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