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ANNUAL REPORT 2010/11

empowering mothers to break the cycle of poverty


 EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2010/11

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CONTENTS Major accomplishments of CfC in 2010-2011

3

From the Chief Executive Officer...

3

About Us / Our Values

4

Organisational Structure

5-6

Our Board of Directors

7

Our Volunteers and Members

7-8

Our Chapters Around Australia

9-11

Sales and Marketing

12-13

External Relations and Media

14

Production and Logistics

15-16

Other Australian Programs

17

Cambodian Operations

18

Programs

19

-

Income Generation

19

-

School Attendance

20

-

Micro-enterprise Program

20

-

Scholarships Program

21

-

Other community support

22

Statistical Information

23

Financial Information

24-29

Future Plans

30-32

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EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2010/11 


From the CEO…

If 2009-2010 was the year of rapid growth and expansion for Carpets for Communities, then 2010-2011 was the year for consolidating that growth. For the first time ever, an executive team was recruited and based in Siem Reap, Cambodia. With five eager and passionate individuals on the ground, we’ve had the capacity to do more than ever before. We’ve also realised this year that fulfilling our purpose is not just about supporting more and more families. It’s also about how much support we provide to our families, and how we do this in a way that is sustainable for our organisation. We have a renewed focus, more stakeholders, and a whole new structure engineered exclusively around our Empowering Communities purpose. Next year, Carpets for Communities, and Empowering Communities, are going to have a greater impact than ever before. We’re excited. I think you will be too. Kylie Hansen Chief Executive Officer

Key accomplishments in 2010/11 • • • • • • • •

We transitioned three of our families out of carpet making into establishing their own micro-enterprises Transitioning families represents the beginning of an empowering and sustainable organisation Our first full-time team, based in Cambodia Our highest income figures to date The launch of our largest fundraising campaign to date We completely re-vamped and re-launched our website We launched our scholarship program – enabling children to further their education at university Secured a long term storage solution via collaboration with a supporter and Trinity Grammar School in Melbourne

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Empowering Communities Inc, is an Incorporated Association in South Australia, Australia. We trade as ‘Carpets for Communities’, our flagship project.

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-fairtrade products, which sell globally.

Big Hairy Audacious Goal (BHAG) By 2012 we will return 2500 children at risk of exploitation to school by empowering 500 families in Cambodia and the world.

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 the 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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Our Structure Until January 2011, the Australian National Management Structure was as follows:

Board of Directors Lucy Chan, Kevin Chan, Melissa Willoughby, Richard Khoo, David Bacon

Interim CEO/Founder

Volunteer Coordinator / HR

David Bacon David Bacon (interim, Aug 10 – Oct 10)

Kerstine Alba

Our Team Structure

Australian Volunteer Base

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

Regional Chapter President

Volunteer Coordinator

Retail Manager

Market Stall Manager

Casual market stall and events volunteers

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Office Assistant Bunchhuon Morn

Organisational Development Officer David Bacon (VIDA)

Social Worker Kimsreang Kun

Field Worker Emda

Poipet Office Manager Chhut Naren

Field Worker Hokseng (Seng)

Field Worker Vanny

Cambodian Country Manager Mongheng Seng (Heng)

Cambodian operations

Program Development Officer Clay Nayton (AYAD)

Chief Executive Officer Kylie Hansen

Logistics Manager Henry McQuinn

External Relations Manager Luana Noroes

Product Development Manager Juju Haifawi

Human Resources Manager Marko Ivkovic

Sales and Marketing Manager Rob Pfeiffer

Executive Team

Australian operations

Finance Manager Dick Hoffmann

Board of Directors Lucy Chan, Kevin Chan, Melissa Willoughby, Richard Khoo, David Bacon

In January 2011, the new executive team began their 12 month contracts. From this point onwards, the organisational structure was as follows:


Our Board of Directors David Bacon (Founding Director) David is currently 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 that by catalysing corporate sector investment in ‘pro poor’ social development globally.

Richard Khoo (Chairperson) Richard is a CPA with over 10 years experience with organisational change and systems development in the financial services and non-profit sectors. Richard a qualified Finance Professional (CPA, CFP, B.Com, DipFP, AMC) and a socially minded change agent.

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 an ecotourism qualification, Lucy has focused 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.

Our volunteers and members “When the Executive team started our contracts in January, our volunteers were dropping in terms of numbers, motivation and dedication. We also faced a drop in sales and that affected the motivation of volunteers. For a couple of months we were struggling with engaging volunteers and trying to create a positive atmosphere. However, bringing in some new volunteers slowly, we managed to create a new momentum that is starting to generate results. One big challenge is that I am based in Cambodia which means I am geographically distanced from my main focus of work. Luckily, it's entirely possible to generate interest with new volunteers. We are hoping to see major achievements in terms of results in the next couple of months.”

From Marko Ivkovic Human Resources Manager


2009-2010 and 2010-2011 compared We currently have active volunteers in Perth, Adelaide, Sydney, Melbourne and Alice Springs. We were very lucky to have sourced a Product Development Manager and have her come over in March 2011 to start working with us, however grants to fund further stages of her position were not successful.

Statistics on volunteers and members Statistic Registered volunteers Average hours spent volunteering States with a carpets presence

2009-2010

2010-2011

80 3-10 hours per month

125 10 hours per month

5

7

Lessons Learned Having a full-time HR Manager in this financial year has been invaluable. However, the number one lesson that we learned from this experience is that the National Volunteer Coordinator/HR Manager role must be based in Australia so they can be closer to the volunteers and diversify recruitment channels utilised.

Focuses for 2011-2012 • • • •

Increasing our number of volunteer to increase sales and our impact Create a volunteer induction and learning cycle, to ensure that our volunteers have the support they need to carry out their work. Hiring a Product Designer, whether it be a volunteer or a contract position to develop new products Establishing a system of volunteer reward and recognition

AIESEC Partnership The AIESEC partnership has continued in 2010-2011, with the executive team all being sourced through AIESEC’s International Mobility Program. In this financial year, we sourced Kylie Hansen (Australia) as CEO, Marko Ivkovic (Serbia) as Human Resources Manager, Robert Pfeiffer (Australia), as Sales and Marketing Manager, Luana Noroes (Brazil) as External Relations Manager, and Dick Hoffmann as Finance and Logistics Manager. Unfortunately Luana was unable to fulfil her contract with CfC for a variety of reasons and left to return to Brazil in May 2011. We hope to continue to source some of our staff through AIESEC Cambodia in future years.

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Our Chapters Around Australia

Western Australia WA has come from strength to strength in 2010-2011. After beginning in late 2009, 2010-2011 is the first full financial year that WA has been in operation. Sales have been steady, although much stronger in last half of 2010. WA has a core group of volunteers who work very hard, but ideally needs to be sourcing new volunteers to fill official roles. Markets are still the number one source of revenue in WA, with Kalamunda Markets and Fremantle Markets providing consistent sources of e342 revenue in this financial year. September 2010 held a record breaking weekend for CfC WA, and CfC nationally, as a combined carpet party and sustainability festival assisted WA in selling just less than 70 rugs in one weekend. Moving forward, WA hopes to focus on an external relations strategy – strategically partnering with organisations that we can work with and through to sell rugs and raise awareness of CfC in WA.

South Australia ‌ from Jessica Fabian South Australia continues to enjoy festivals and events as major methods of revenue raising. These events are highlights for the volunteers as well as increasing sales and awareness of our brand. In July we continued the tradition of 'movie night fundraisers' with a short film festival 'RUGTRIP' which we had two sessions and generated close to $10,000. We then attended the Oz Asian Moon Lantern Festival in September for the second year in a row which provided a great opportunity for volunteers to shine and sell lots of rugs as well as $1000 worth of fairy floss! In December an SA volunteer did an online auction that raised approx $1000. March brought us the WOMAD opportunity, which was a 4 day music event this year. This generated around $3000 in carpet sales plus the awesome opportunity for many volunteers to soak up the exciting atmosphere of WOMAD. The Rundle Street Markets ceased trading, which was a disappointment for CfC-SA, and the new Adelaide Market Square is proving less popular. Volunteers are still keen to sell at markets, and there are two monthly markets in regional SA that we regularly attend. Volunteer numbers in SA have fluctuated over the year, with more activity and numbers needed. Internal communications need to improve for the state to flourish and to grow the volunteer numbers to avoid volunteer burn out.

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In 2011/2012 we hope to begin carpet parties, continue our event fundraisers and festivals and try other methods of selling carpets.

Victoria ‌from Susan Chia Victoria has about 15 solid volunteers whom can be counted on for organising fundraising events, the occasional markets and transport. We are still currently depending heavily on retailers. Particularly this has been the case for winter, however as summer begins, there is more opportunity to sell more rugs. Most of the current volunteers, many students, often do not have a car and this limits transport. This is a particular issue when it relates to retailers, as cars are required to get rugs to retailers, and sometimes multiple times to show them stock in the first instance. Corporate and external partnerships are a great step for Victoria, with Rachael Chan leading the corporate team. The Trinity Grammar School partnership is a good example of venturing into schools to help fundraise for us and spread the word about Carpets for Communities.

New South Wales ‌ from Belinda Brennan CfC in NSW went through a huge growth period from December 2008 to late 2010, with an increase in markets being attended, organisational structure, growth in management team, and the introduction of online sales and retail outlets. However in the last year CfC NSW has scaled back some of the operations, particularly in the area of markets with Bondi and Balmain being cancelled as we just were not selling enough to make it worthwhile. Retail sales reached a plateau and online sales have been steady but low. Week to week attendance continued at Paddington Markets providing a stable income, however carpet sales at markets on average have also decreased. A new management team is taking over from 1 October 2011 with plans to focus on Online and Retail sales as the growth strategy as well as embedding the volunteer base as this has also decreased in the last 12 months. Major successes included maintaining operations at Paddington market with a dwindling volunteer base; kicking off online sales thanks to Alison Harrington and the recruitment of a new Management Team to take over from 1 October thanks to Ian Wang. Points for NSW to improve upon in 2012 include a lack of volunteers; the inability to resource a Fundraising committee to hold a fundraising event; loss of our Retail managers in June 2011 and lack of support from CfC Board & National Executive of Online Sales strategy.

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Northern Territory Our NT chapter has been steadily strong, despite the fact that we have only the one volunteer – Ailsa Breheny – present in Alice Springs. Ailsa has been with us consistently for 3 years and continues to run successful carpet parties, and market stalls during market seasons with little assistance. Ailsa is the Northern Territory chapter, and we are very appreciative of all of her work.

Queensland Queensland has run into some difficulties in the last year. Leaders of the region have come and gone, leaving CfC with the difficult job of recruiting a manager for the entire state (a formidable role description for many potential volunteers). We have had some success in recent months in recruiting 2-3 very promising volunteers, and will be working with them over the next six to twelve months to assist them in building up the capacity of Queensland, and identifying what sales strategies will work best for them.

Tasmania David travelled to Tasmania in May 2011. This trip was fruitful in that David found a church willing to store a small stockpile of rugs and continue to sell them through the congregation. Whilst this has been wonderful, we clearly want to expand further in Tasmania. Similarly to Queensland, we have recently sourced a promising volunteer in Tasmania, and will work with her to find her a team that she can work with in starting to slowly sell some carpets in Tasmania.

Australian Capital Territory Canberra is in yet another similar situation as Queensland and Tasmania. After a couple of false starts, we have found some promising volunteers whom we plan to work with to start up a CfC ACT in the next six to twelve months.

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Sales and Marketing

From Robert Pfeiffer Sales and Marketing Manager

“CfC has seen strong sales and fundraising growth till December 2010, coinciding with strong activity throughout the country for preChristmas sales, and an increase in retail and carpet parties. Then, we saw a massive drop in sales across the country. This was a combination of the Australian retail market being down and due to a drop in volunteers. In reaction to this we implemented a number of short term strategies through price reductions and shifting focus in sales avenues. We implemented fundraising initiatives to transition our families into their businesses and a self-sustaining livelihood. Throughout this period, there are also long term strategies we are working towards to increase the products capacity beyond a boutique nature.

Sales and Marketing

CfC has been put in the direction to show real growth in 11/12 and beyond. I look forward to carrying that through in the beginning of the year to set the platform for sustained growth.”

2009-2010 and 2010-2011 compared Sales averaged $8,726 per month for the period of 2010-2011, with some great months in July 2010 ($11,295), September 2010 ($15,747) and November 2010 ($12,390). This year has seen more comprehensive sales support materials created and diversification of our sales pool. In 2009-2010, the dominant thinking was that market stalls were the primary way through which to sell our rugs.

2009-2010 Carpet sales divided by sales avenue

In 2010-2011 we have diversified this thinking, and the mechanisms through which we make sales to include carpet parties, and more strategic partnerships with other organisations. Some of the other mechanisms which we are trying to shift state focus towards include: • • • •

Retail partnerships – both wholesale and consignment where necessary Carpet parties – similar to Tupperware parties, held in 2010-2011 Carpet sales divided by sales avenue the customer’s home School based partnerships – our Learn2Empower2Learn program has worked well with our pilot school, and we hope to roll this out nationally Partnering with Rotary/Zonta/BPW clubs to present at their meetings and sell directly to members

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

Our most successful sales events included: Name Date

2009-2010

2010-2011

$7,920

$8,726

4.7

3.98

$393

$316

State

Amount

Retail – Wholesale to Discount City Carpets

16 September 2010

South Australia

$3,712

WOMADelaide

11 March 2010

South Australia

$2,910

Trinity Grammar School – Carpets Breakfast

30 April 2011

Victoria

$1,495

Manly Market Stall

28 November 2010

New South Wales

$1,375

Sustainability Fiesta

19 September 2010

Western Australia

$1,374

Sales overall looks to have improved slightly however 09-10 was much more consistent.

Lessons Learned The major lesson learnt in the sales and marketing arena is that a heavy reliance on market stalls and volunteers is not sustainable in the long term. In addition, as volunteers’ lives become more hectic, the first thing that they will exit from is their volunteering pursuits. This means that our current market stall/volunteer framework needs to change. We have also learnt that coordinated and specific fundraising campaigns are highly effective. We plan to capitalise on this knowledge in 2011-2012 to significantly increase our impact on the ground with our families in terms of what we do in development. Finally, we have learnt that our product, whilst popular on a small scale, has many hurdles that impact it's potential scale of sales. For this reason we are trying to find a meaningful way to engage in product development that we can afford.

Focuses for 2011-2012 The major focus for 11-12 will be in developing new roles and teams within the states and really driving towards that shift away from market stalls for sales, while is maintaining a sufficient sales.

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External Relations and Media Luana Noroes was our External Relations Manager from January 2011 until she finished her role in May 2011. During her time here, Luana was able to develop a number of resources: • Professional brochure • Videos for fundraising campaigns • Footage of our families, and interviews with particular families in Poipet Our most recent fundraising campaigns – My Business and My Education – began in May 2011 to fund our mothers’ foray into micro-enterprises, and our scholarships program respectively have been ably managed by Robert Pfeiffer. My Business, or Fund an Entrepreneur, was primarily conducted via Facebook and online social mediums. As at June 2011, CfC had raised out $11,347 of a required $14,800 ($400* 37 families) for this campaign. My Education was, similarly, conducted via social media. It aims to raise funds for Tout Kimchhean, Hing Prempey and Hourt Pesith to attend university in Phnom Penh. As at June 2011, CfC had raised $3,885 out of a required $4,800 ($1,600 per student per year) for this campaign. At the time of writing this report, we have achieved our fundraising targets.

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Production and Logistics From Dick Hoffmann Finance/Production/Logistics Manager Henry McQuinn began as our Production and Logistics Manager in January 2011 on asix month contract. Now that his contract period has ended, Dick Hoffmann has taken over this area in addition to his Finance Manager responsibilities.

Production and Logistics

2009-2010 and 2010-2011 compared The rapid expansion of families in the last financial year meant a large increase in the number of rugs being made. Unfortunately this did not correlate with our sales figures and this financial year we have been accumulating a stockpile of rugs. First, production has been significantly decreased from 2009-2010, through providing a ceiling cap to which families can earn, but they cannot make any more carpets. 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 our families to live on. The price of cotton of-cuts increased significantly during this year, and in recent times we have found it increasingly difficult to obtain a consistent supply of cotton at an economically viable price. To ease the ongoing issues we have faced with storage, we are renting a used shipping container, which was purchased by a CfC supporter, that will be used for the storage of carpets in Australia. Trinity Grammar School in Melbourne has provided storage space for the container on the grounds of their sports fields. After years of generous support from GKR Transport, they have decided to cease their partnership with CfC. Fortunately; we came into contact with Chele Smith of Future Freight, who has very generously offered to partner with us. In the first instance she has provided us with $1,000 in free transport, to ensure the most recent shipment of carpets is dispersed throughout the country.

Statistics on production and logistics Statistic Australian stockpile Cambodian stockpile Total stockpile Australian stockpile/average monthly sales Total stockpile/average monthly sales Rate of production : average monthly sales

2009-2010

2010-2011

350 sqm 380 sqm 730 sqm 5.1 months 10.7 months 1.92 : 1

1104 sqm 1040 sqm 2144 sqm 13.5 months 26.3 months 3.4 : 1

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The three major achievements during the 2010/2011 financial year are: 1. Acquiring Future Freight as a partner for the delivery of carpets within Australia; 2. Securing a permanent lock-up storage location; 3. Establishing a relationship with a local Cambodian shipping agent for discount LCL (less than container load) shipments internationally.

Lessons Learned Supporters and partners of CfC are critical to our success, and as a result, we should take the time to recognise and reward them for their support.

Focuses for 2011-2012 One major focus in 2011-2012 needs to be improved relationships with the Phnom Penh garment industry to ensure a more consistent supply of cotton off-cuts. Cotton off-cuts are integral to our current product, and in order to continue to make this product, we need to ensure we have the supply of cotton to be able to do so. A functioning stock tracker for Australia needs to be a second major focus in 2011-2012. Currently, it takes some work to find out where rugs are located, and whether they have been sold. An effective stock tracker will make staff and volunteers’ lives much easier.

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Other Australian Programs Learn2Empower2Learn Learn2Empower2Learn is a new program effectively looking at proactive ways to partner with high schools, and perhaps universities and primary schools. In Melbourne, there has been a highly successful relationship started with Trinity Grammar School. David has guest lectured in their Society and Environment class, and provided input into creative and interesting ways to incorporate world issues and education about global poverty into teaching. In return, TGS have run a huge Carpets breakfast at the school in our honour, which sold $1500 of our carpets to families of the school. They have continued to fundraise for us through various school events, including a sports day and a house breakfast.

Australian Projects

Learn2Empower2Learn is the roll-out of this relationship with schools across the country. We are looking at new and collaborative ways to partner with schools, which in addition to the above ideas might include: • • • •    •

ways in which we could assist students to achieve their Duke of Edinburgh awards, a role that we can play in educating students about fair trade and poverty, perhaps via S&E classes, connecting schools to our schools in Poipet for cross cultural communication; 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) study tours we could provide in Cambodia for students to visit our families and see our joint impact

We've received very positive feedback from the Trinity Grammar students that CfC has provided a practical example of what can, and is being done, to fight issues of poverty and female empowerment in developing countries.

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Cambodian Operations From Mongheng Seng Cambodian Country Manager

Cambodian Operations

Our Cambodian team holds the critical role of managing the production process whilst engaging and working with our participants. The Cambodian National Management Structure evolved to pass back some pieces of work to the executive team, based in Cambodia (for example, financial management of Cambodia is now completed by the Finance Manager and not the Country Manager). This has been very important for the Cambodian operations as having this extra resource and capacity has enabled the Country Manager to participate in fleshing out other strategies such as the Scholarship Program. In June, 2010 our Office Manager Naren sadly passed away and his position was filled by then, office assistant, Bunchhuon Morn.

Chhut Naren Naren’s was a life largely defined by the protection and support of women and he worked extremely hard for CfC, putting in huge amounts of overtime and even sleeping in the office to keep it safe before any staff lived there. Naren had such a rich life story. He was young when the Khmer Rouge took over the country and his family became displaced, forcing them to flee to Vietnam. After reaching Vietnam Naren was imprisoned under suspicion of being Khmer Rouge and later conscripted to fight against them in a Vietnamese unit. He later deserted after being forced to shoot a Vietnamese officer from his unit in order to protect a Khmer girl from being assaulted. After that he worked in a stone quarry and moved around before meeting his wife and settling in Poipet. He then worked for the Cambodian Women's Crisis Centre before joining CfC. He leaves behind a wife and two children. His wife is a chronic diabetic and due to a disability is unable to work in most jobs. He was completely dedicated to looking after her, spending nearly all of his salary on her treatment each month. Naren had worked with us for the past two years, after being very sick for the last few months. He was unable to find sufficient treatment in Phnom Penh or Vietnam, where he was with his family seeking treatment when he passed. We believe that he died of liver and or kidney failure caused by chronic Hepatitis C and complicated by Typhoid. Both of these diseases are relatively common in Cambodia and it's a sad reflection of the state of the country that he was not able to find treatment.

Rest in Peace, Naren. Page 18 of 34

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Cambodian Programs

Income Generation Program The income generation side of Carpets for Communities has been able to support 45 families, with an average income of $121.82 per month per family. In this period, as outlined under the finances section, our Income Generation project (making carpets) was operating at a significant cash loss. For this reason in this period we had to make very drastic and swift changes to ensure that the organisation would not enter a negative cash flow situation. Related to this, we began transitioning women from making rugs and assisting to enter them into their own businesses. In this period then, our Income Generation program became one aspect of our broader organisational direction, and reduced in scope to something that families engage in forever to something that families engage in for a period of 12-18 months maximum.

Lessons Learned One major lesson we have learned is that many children in the family are still involved in working both at home and outside. This is difficult for CfC to combat, as we cannot monitor families at all times, and it is often considered culturally acceptable for children to play a large role in working at home. We are working on education programs to provide positive incentives to attend school rather than consistently using warnings and punishments.

making it personal

Seng Sean Seng Sean joined CfC in 2008. She has five children and four attend school. The fifth child is more than 15 years old and no longer attends. Before she joined CfC, Seng Sean earned $64.50 per month; now, her average income (as of 2010) is $120 per month. Her husband collects wood to sell and earns about $1.44 per day to supplement her carpet-making income. Although this does not cover their costs every month, they have no outstanding loans. Unfortunately, Seng San and her family live in very poor health. They often seek treatment with an expensive private doctor and need IV drips. Despite these setbacks, Seng San feels 100% confident that she can feed her children and prevent them from further sickness. Her life has definitely improved since joining CfC. In the  EMPOWERINGpast, COMMUNITIES CARPETSFORCOMMUNITIES.ORG 19 ofNow 34 she can due to her |poor health, she normally stayed|at2010/11 home and did Page nothing. earn an income at home making carpets, her children can have an education, and she has the funds to pay for the family’s needed medication.


Weekly School Attendance Monitoring Our weekly school attendance monitoring occurs across 12 schools. Our social worker Kimsreang spends approximately 30% of her time monitoring and checking school attendance. This program also includes follow up support with the mothers when children's attendance drops.

Micro-enterprise Program 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. One grant however is not going to solve income issues so we will help them both build multiple streams of income and also build on current streams by expanding businesses where appropriate. Average cost per beneficiary Statistic

2009-2010

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

$300 $40 $10 $350

making it personal

Kon Sokha Kon Sokha started a fruit selling business when she was funded in August of this year. She sells fruit and vegetables difficult to find in Poipet from Thailand. She works very hard, and now, although her business is still fledgling, she is doing very well, nearly earning as much as she was making carpets. Page 20 of 34

are very proud of her, and so is her EMPOWERING COMMUNITIESWe | CARPETSFORCOMMUNITIES.ORG | 2010/11 

family.


Scholarships Program As much as CfC has helped their families’ lives improve 100% and allowed them to gain an education, finishing their final year of high school, University study is still a stretch from what their families can afford. As part of Carpets for Communities initiatives to further the education of impoverished children in the Poipet commune, we have raised an initiative to further our participants education. Two of our families participants’ sons, and one of CfC’s staff member’s son have applied to and been accepted into our scholarships program. 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.

making it personal

Kimcchean Tout Kimchhean Tout is one of our scholarship recipients. He is bright, entrepreneurial and extremely proactive. He is very active at home and within his community – not only does he help out extensively around the house, never misses school, and in his spare time he teaches younger children in his village English. He also created an invention from rubbish lying around his house which assists his mother in making carpets – it rolls many pieces of cotton at one time. We are very proud of Kimchhean, and very excited that due to CfC  EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2010/11 21 of 34 this year. supporters he has been able to startPage university


Other Community Support In the 2010-2011 financial year, CfC also provided additional support to our families:

Health clinic We organised a medical clinic for our families in Poipet, in April 2010, with a doctor and nurse sourced through Collaboration Cambodia. They donated their time in-kind and we purchased approximately $150 worth of medication to take to provide to the families. Average cost per family Medications Time of nurse and doctor – donated in-kind Total

$3.50 $0 $3.50

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 against labour. Average loan per beneficiary:

$115

School Uniforms for children returning to school One of our Sydney donors contributed their wedding favour budget to our organisation. We do not usually provide handouts, but rather provided one hundred school uniforms at a cost of $5 per uniform. Photos of the children in school uniform will be distributed to guests as party favours at the wedding.

Flood Relief In this financial year we raised approximately $400 for families whose houses were ravaged by the floods in October 2010. Funds were administered to 2-3 separate families to assist them in rebuilding their homes. We hope that, in 2011-2012, as we did in 2009-2010, that we will have more resources (both in terms of labour and financial) to contribute to undertaking good community development work in these areas of importance to our women. We particularly want to assist in ensuring they have access to high quality, low cost health care for themselves and their families.

Warehouse Production Thanks to an online plea for funds, we were able to fund the construction of a small warehouse in An Dong Thma Mies. The participants around this village are located relatively far from Poi Pet and as a result now have easier access to raw production material. The wives asked for the storage space, and the husbands all matched our investment through donating their time in-kind to purchase materials and construct the warehouse.

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Statistical Data – KPI’s

“ 26

more target children were added to the program for

Performance Summary

a total of 210 children.

Development KPI’s • In 2010/11, 26 more target children were added to the program for a total of 210 children • 75.2% were attending school regularly, up from 73.9% in 2009-2010 • Average family income was USD$121.82, up from USD$63.78 in 2009-2010 • 18% of our children are still working for money, down from 29.9% in 2009-2010 • 4 of our children are in years 11 and 12 (a rarity in Poipet) •

3 scholarship applications received and approved

Production KPI’s •

Our current stockpile of carpets is 1040 m2 in Cambodia and 1104 m2 in Australia. - This is up from 380 m2 and 350 m2respectively in 2009-2010

Sales KPI’s • • •

Our average monthly sales (AMS) were AUD$9483 up from AUD$7920 in 2009-2010 We have 26.3 months of rug stocks (based on our stockpile / avg. monthly sales rate) AUD$315 is made on average at each sales event (eg; a market stall), down from AUD$363 in 2009-2010

HR KPI’s •

We have 125 registered volunteers, as compared to 80 in 2009-2010

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Finance From Dick Hoffmann Finance/Production/Logistics Manager As the first person ever to fill in this position full time at CfC, I’ve had the liberty to set up some of the main monitoring instruments. Pretty soon after we started our terms, 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. There is a big difference between a “normal” enterprise and a social enterprise. If we would have been a normal business the solution was simple. Stop production until we ran through most of our stock, after which point we can start producing again. But for CfC we could not do this, because of the major implications this would have for our participants. As a result, in our decision making process there are always two sides of the story. This makes this role very interesting as there are real stories present behind the numbers.

2009-2010 and 2010-2011 compared

Financial Summary

In Cambodia a new financial management system was implemented alongside a Production tracker in April 2010, and this has been the first full financial year in which these systems have been operating. Both of these systems utilise Excel and have only had some small adjustments made. In Australia we have started to use Xero in this financial year. Xero is an online accounting program that is linked to our bank and Pay Pal account. As a result any transactions will feed automatically into Xero after which these transactions can be classified. This significantly reduces room for human error, and gives us an up-to-date picture of the financial reality. Compared to last year Empowering Communities, we have a much clearer picture of the financials of the organisation and the registration is kept up to date as a result of the achievements mentioned previously.

Focuses for 2011-2012 The major focus for 2011-2012 needs to be the tracking and inventory of the rugs. This improvement should be linked with our sales tracker, which due to its dependency on manually entered date from our volunteers is not completely accurate. Furthermore we will need to focus on how to get our financial results audited externally. The high costs involved are a barrier for us, however in order to move forward to the next level of professionalism, this is a step that needs to be taken.

Major Donors UNESCO Planet Wheeler

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$10,320 $30,000

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Financial Year Report 2010-2011 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 - Other Sales Other Income Total Income

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

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

2008-09 1,699 8,746 19,015

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

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

19,676 4,008 7,556 964

$197,321

$122,524

$61,664

2010-11

2009-10

2008-09

11,265 18,989 40,320 4,722 660 2,758 6,377

68,293 1,414 462 247 4,745

3,273 52,430 90 -

3,225 93 20 3,283 9,788

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

3,451 9,708

2,865 15,437

1,747 6237 5,745 -

$186,940

$112,735

$69,523

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

$10,381

$9,789

-$7,860

Income Notes Donations: include the donations we have received at our market stalls and donations from externally organized fundraisers held for CfC. Events: refers to the fees paid by volunteers who attended our conference in March in Victoria.  EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2010/11

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Fundraising: includes all the funds received from specific fundraisers organized by CfC. Examples are our successful Rugtrips held in the winter of 2010 and our more recent campaigns to fund small businesses started by for our participants and university scholarships. Grants: in the last financial year CfC received two grants. A grant of $10.320 was made from UNESCO to expand our operation, and a $ 30,000 grant from Planet Wheeler was made to fund our Executive Team in Cambodia. Market-stall sales: CfC’s biggest source of income, totalling $82,025. Other sales: include our online sales and revenue from custom orders, carpet parties and personal sales. 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: includes 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 our social worker. The development fund also provides interest free loans, described in ‘other community support’, above. There were also other development expenses, all directly related to specific fundraising causes. The Naren Campaign referred to a fundraiser we held for our Poipet Officer Manager, who sadly passed away during this financial year after several months of illness. The fundraiser was organized to support him and his family to pay for the medical bills. All other expenses are described in the annual report information above. Planet Wheeler Expenses: 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 these costs. These figures are in USD as they are made in Cambodia. Table 1 (in USD) Planet Wheeler Expenses December 2010 - July 2011

Total Expenses

Office Costs Team Costs Other Costs On Cambodian Bank Account Total

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6,128 8,125 2,554 2,120 $18,927

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Other costs: are the expenses incurred for furniture and equipment for the office, such as desks and chairs; and the costs related to making the house suitable for living, such as curtains and mattresses, and repairs for the office. Due to the differences in currencies the costs mentioned in our financial statement differ from the total amount mentioned in Table 1. Production Costs: table 2 shows the Cambodian operational costs by category in USD. Development expenses and costs made by the executive team are excluded. Cambodian Operational Expenses (in USD)

Total Expenses

Carpet Labour Charge Carpet Raw Materials Other Direct Costs (inc packing and equip) Total Direct Costs Staff Office / Admin Costs Logistics Sales and Marketing Total

65,785 9,817 1,608 $18,927 19,824 14,126 2,368 901 $114,429

As can be seen, the vast majority of the costs are directly related to the production of the carpets. Our participants together received an amount of $65,785 USD. This means that on average we supported every one of our 45 participants with $121.82 USD a month. 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. A lot of costs are grouped together under other costs. The largest contributors are the costs for our liability and volunteers insurance and other expenses, such as the FTAANZ membership fee. Although CfC mainly thrives on volunteers, in the end of 2010 our interim CEO and HR manager received a stipend. AIESEC fees were charged for the stipend and costs of various internships. This was included in staff costs of $9,788.

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

Breakdown of Expenses Total Operational expenses per SQM The following table and figure are a combination of the Cambodian and Australian operational costs per SQM. The Cambodian operational costs have been converted from US dollars to Australian dollars by taking the average exchange rate for this financial year. In some cases different kinds of costs have been added together in order to keep down the total number of categories.

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Comparison with previous years The table at the start of the ‘Financial Year Report 2010-2011’ section above shows the summarized profit and loss statements for the last three financial years of CfC. All figures are in Australian Dollars.

Income The gross income has risen from $ 60,700 in 2008-2009 to $ 192,016 in 2010-2011. In other words, the gross income has more than tripled within two years. There are two reasons for this increase in gross income. First, the yearly sales numbers have more than tripled over this period, although the major part of this sales growth was realized in the 2009-2010 financial year. Compared to last year sales grew less impressively, but still by $ 17,354 (18%). All sales channels grew in the last year, but the biggest relative growth was realized in other sales (carpet parties, personal sales and custom orders) and retail sales, which grew by 98% and 38% respectively. The other reason is the increase in the funds acquired through grants, fundraising and donations. Compared to the 2008-2009 these sources of income have increased with $ 48,757 (66%). Compared to last year this amount grew with $ 54,513 (130%) as we almost received no grants in the 2009-2010 financial year.

Expenses Compared with two years ago total expenses increased by $ 117,417 (169%) from $69,253 to $ 186,940. Last year our expenses have risen by $ 74,205 (66%). The mean reason for this big increase in expenses is the increase in the number of participants we have taken into our program. As a result production expenses have increased by $ 60,210 (115%) over the last two years which means these costs have more than doubled. Other reasons that help to explain this 160% increase is that costs are made that haven’t been made before. Examples are the set-up of the executive team in Cambodia and the start-up of the development fund. Increased production has also lead to an increase in shipping costs as more rugs are shipped from Cambodia to Australia. Another factor is the increase of the size of the organisation. Starting in 2009-2010 costs were made for having our first full time CEO and short term internships in order to manage operational more professionally.

Net Income While in 2008-2009 CfC made a loss of $ 7860, this has been turned around in the last two financial years. Both years resulted in a net profit of around $ 10,000.

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Future Plans Our first major decision has been to split Carpets for Communities into two clear bodies: • •

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

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. Another major, and the most exciting, change has been the development of a transitionary model for our families. This was created for three reasons: a) Our sales were not sustaining the families’ production, and the organisation was in danger of running out of money; b) Previously there was no exit strategy for families, which meant they could be making carpets forever; c) Related to b) above, this tended to create dependency of the families upon us, and was not the most empowering organisational structure for our families. Going forward our new model will 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.

Intervention (A matter of weeks) During intervention families are immediately entered into the program, earning money straight away through making products. We select families based on their commitment to education. Mothers can learn a variety of skills that are transferable, through experience making a variety of products, and most importantly, their children are immediately entered into the education system.

Stabilisation (6 months) During stabilisation we should be dealing with as many of the negative issues as possible - assisting families in clearing their debts, accessing health insurance, dealing with any major health issues, and addressing other pressing concerns before families think about trying their own income generation activity. As families (perhaps for the first time) have access to a steady income, we can assist them with purchases and actions to solve their own problem (i.e. water filters, glasses, micro health insurance etc.).

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Empowerment (4 months) The empowerment stage includes planning for the future, and is where they plan, acquire skills and knowledge for and actively start working toward a new income. Activities might include • building their own financial literacy, • purchasing equipment required (ie sewing machine), • improving their own management skills, • working with other mothers/families to look at options for cooperation or small business partnership, • accessing micro-business training. • getting involved in improving their situation and the communities (school committee, group projects etc) • exposure visits to markets and around Cambodia • exposure visits to various other income generation projects • visits and talks from others who have succeeded to inspire, motivate and train • creating a plan for sustainable income generation for selves and children • start relevant training / preparation for the activity

Sustainable transition (2-3 months) When they start their sustainable transition, families are establishing their new income. Carpets for Communities will partner with TPC, a local micro-financing firm, to assist the women in receiving low interest loans for the capital to start their ventures. The women will have lower levels of risk associated with them than normal micro finance clients because they have Carpets for Communities providing support and tracking for their small businesses, and ensuring their continual access to the parallel community development and education support initiatives.

Families can continue making products on reduced cap for this period as their fledgling businesses start to earn money.

More than one family member may be involved in the business, or perhaps the family shares a number of micro-enterprises to ensure that the family has a consistent income, regardless of the season. For example, one family may get sewing training for a daughter, start poultry farming as a livelihood supplement, get motorbike mechanic training for an older son and then start up a road side shop. Families can continue making products on reduced cap for this period as their fledgling businesses start to earn money. While none of these activities alone might provide for the entire family, together they should help them live comfortably.

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Parallel community development and education support initiatives (ongoing) These programs aim to assist families in being more resilient to health and financial shocks which can disrupt their income earning ability. Education support programs such as: • teacher training, • non formal classes, • university scholarships will help incentivise school attendance and improve the quality of education. Ideally each family moves steadily through this four stage process. Many will jump back and forth before they exit fully. Some will move quickly and some more slowly. Some will vastly improve their incomes and others only modestly so. Some will even drop out of the project. We know that no program or idea works for everyone. What this approach does offer is a smoother, steadier approach to improving livelihoods that, while not a one size fits all model, does cater to more of the people within the community we work with all their diverse ranges of needs, skills, abilities and potentials.

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empowering communities inc. carpetsforcommunities.org  EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2010/11

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CFC Annual Report 2010/11  

Carpets for Communities Annual Report 2010/11