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for the year ended 30 September 2012

Shared Interest 2 Cathedral Square Groat Market Newcastle upon Tyne NE1 1EH Tel 0191 233 9100 socialaccounts@shared-interest.com Shared Interest Society Limited an Industrial and Provident Society Registered Number 27093R Shared Interest Foundation Registered Charity Number 1102375

Shared Interest is very grateful for the help and advice received during the preparation of these accounts. We would like to thank everyone who has been involved, especially Patrick Boase, Judith Brown and Philip Angier for taking part in the Social Audit Panel. The Social Audit Network has continued to be a useful source of guidance and training. These accounts have been independently audited and the full Social Audit Statement is on page 118. We would also like to thank Tracy Mitchell and David Parker for supporting the preparation of the report. Finally, we would like to thank all our stakeholders for their involvement, comments and survey responses. We are grateful to the staff team involved in the process of preparing this eighth set of social accounts, particularly Andrew Ridley, Sally Reith, Chris Pay, Louise Mounsey, Chris Allcock, Denise Sumner and Elisabeth Wilson as well as to other staff who contributed to specific areas.

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for the year ended 30 September 2012

Page

1 Welcome

5

2 Summary

7

2.1 Examining our impact

7

2.2 Key developments during the year 2.3 Where the funds are used to support fair trade

11 14

2.4 Payments to producers analysed by the human development index

15

2.5 Social capital

16

3 Vision, Mission, Values, Objectives and Activities

17

3.1 Vision, mission and values

17

3.2 Objectives and activities

18

4 Analysis of the Social Accounts 4.1 Objective 1: Provide financial services and so make livelihoods and living standards better for disadvantaged communities in some of the world’s poorest countries

20 20

4.2 Objective 2: Enhance our sustainability by increasing share capital, investing it wisely and ensuring a social return

56

4.3 Objective 3: Provide business support and so make livelihoods and living standards better for disadvantaged communities in some of the world’s poorest countries

70

4.4 Objective 4: Work in partnership with people who share our commitment to fair and just trade

83

4.5 Objective 5: Conduct our business in a manner which reflects the principles of stewardship and environmental sustainability

89

4.6 Objective 6: Encourage staff’s talent and commitment in an environment of mutual respect

98

5 Social Audit Statement

118

6 Next Steps

120

More About Shared Interest

120

History

120

Governance Legal structure and reporting

121 122

Compliance with statutory and voluntary codes

122

More About Our Social Accounts

124

Process and model

124

Stakeholders Methodology

125 127

Scope

130

Glossary and Abbreviations

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131


for the year ended 30 September 2012

Appendices are available separately to cover the following areas: Appendix 1

to support Objective 1

Shared Interest customers

Appendix 2

to support Objective 1

Customer satisfaction questionnaire

Appendix 3

to support Objective 2

Membership and share capital

Appendix 4

to support Objective 2

Volunteers survey

Appendix 5

to support Objective 2

Regular publications

Appendix 6

to support Objective 2

Members’ views on risk

Appendix 7

to support Objective 2

Geographical distribution of members

Appendix 8

to support Objective 4

Shared Interest partners

Appendix 9

to support Objective 4

Partnership survey

Appendix 10

to support Objective 5

Environmental policy

Appendix 11

to support Objective 6

Shared Interest staff

Appendix 12

to support Objective 6

Staff survey

Appendix 13

to support Objective 6

5-point survey

Appendix 14

to support Objective 6

Ground rules

Appendix 15

to support Compliance

Key aspects checklist

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for the year ended 30 September 2012

Welcome to Shared Interest’s eighth annual social audit report, covering the 12 months to 30 September 2012. It has been a year of sustained achievement in terms of meeting our social impact objectives. In fact, thanks to key developments such as our Social Investment Fund pilot with Comic Relief, we have been able to explore new lending opportunities that will benefit more hard-toreach businesses and communities than ever before. In terms of lending, we have experienced a rapid growth in South America with the value of facilities there increasing by 32%; this year we sent the largest amount of money to Peru – a sum totalling £16.7m. This year saw us open our West Africa office and we were delighted to follow this up with our first piece of lending. The export credit facility for handcraft producer, Havilak, will benefit 850 weavers, many of whom are widows and single mothers. Due to a shortage in raw material, they are looking to increase their volumes by opening a production centre in the south where straw is more plentiful. With regards to investment, continued support from our member base coupled with new investors means that this total has continued to increase. Although this is a great achievement, the need for further share capital, however, remains urgent. While we have opened a significant number of new accounts, we continue to face account closures. As the year came to a close, the total number of members reached 8,790, with share capital totalling £28.7m. This year saw the highest attendance figures ever for our AGM, which was held in Oxford and attracted 180 members. We also carried out our very first volunteer survey, where over 75% of respondents indicated they were satisfied or very satisfied in their role. The challenge we will now embrace is looking at how we can make improvements here but it is reassuring to know that the majority of our volunteers find their roles fulfilling. Following increasing demand from both members and volunteers for online facilities, Shared Interest’s secure area was launched in July. Allowing members to check their statements online and featuring new resources for volunteers, the secure area forms part of our overarching website development project. Our new website, which will continue to evolve, presents producer case studies and films via a dynamic map showing who, where and what types of products we finance across the globe. Shared Interest Foundation saw the first full year of its Swaziland Craft Industry Development Programme reach completion. Funded by Comic Relief, the three-year project has already benefited 129 businesses, helping in areas such as product diversification and market access. New Head of Foundation, Chris Pay, met our in-country partners, SWIFT, and many of the businesses involved when he visited Swaziland earlier this year. Meanwhile, Shared Interest Foundation’s training in South Africa has further strengthened craft producer businesses and also provided the starting point for making them more sustainable. In terms of broadening the scope of our Foundation, a pilot training event took place with coffee producers in Ethiopia. This was a significant first step towards supporting agricultural farmers as opposed to working solely with handcraft producers. We welcomed two new representatives onto our Board of Directors this year. Pauline Cameron and Keith Sadler, collectively bring with them a wealth of experience from the private, public and voluntary sectors. Shared Interest was recognised for its work by a range of award bodies, which resulted in us becoming regional finalists in the Private Business Awards, runners up in national The Observer Ethical Awards, and national finalists in the Third Sector Awards and Co-operative

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for the year ended 30 September 2012

Awards. We have also reached the final of the Social Enterprise Awards but will not know the outcome of this until after this report has been published. These achievements have brought the Shared Interest brand in front of new audiences across the UK and we look forward to building on these platforms going forward. As always, I wish to thank everyone involved in the creation of this report and hope you enjoy reading what it has to offer. We welcome feedback you may have on our work included here and hope you will email us any comments at socialaccounts@shared-interest.com. Kate Priestley Chair of Shared Interest

Clarification of time periods References to ‘the year’ usually mean Shared Interest’s financial year: the 12-month period ended on 30 September. So ‘this year’ and ‘2012’ refer to the 12 months ended 30 September 2012.

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Fair trade is described as being about better prices, decent working conditions, local sustainability and fair terms of trade for farmers and workers in the developing world. As the world’s only 100% fair trade lender, Shared Interest forms the vital link between UK social investors and fair trade organisations needing finance to improve the livelihoods of producers. Through our social accounts, we demonstrate the difference our work is making across the globe. In our social accounts we analyse the impact that our work has on our key stakeholders by closely aligning the objectives and activities in this report with our current vision, mission and values.

Financial services Objective 1 (see page 20) looks at the impact of our financial services and shows that our direct lending to producer groups continues to increase. At the end of September 2012, Shared Interest was lending directly to 79 producer groups bringing the increase over the last five years to 83% by value. We have increased the number of producers we are lending to by eight (net increase) and as a result we have increased the total value lent by 10% to £6.2m. The number of buyers holding an account at the end of September 2012 was 41 but there have been no new buyer term loans this year. Many customers, especially buyers, are now in a position where they can access rates lower than those provided by Shared Interest. However our expertise in pre-finance and export credit and our fair trade focus helps us to retain existing customers. Shared Interest has been chosen to manage £1.3m of funds on behalf of Comic Relief to lend as term loans to farmers and handcraft makers in Africa. As these funds are not constrained by our prudential limits, they allow us the flexibility to consider new lending opportunities that otherwise might not be possible. This year saw a repeat of the Shared Interest producer committee meetings held in-region and hosted by our staff working in our offices in Kenya, Peru and Ghana. The topics discussed included the fair trade movement, a new, secure customer website, and other lending products. The majority of our customers continue to operate in coffee, with some encouraging growth in our lending in fruit; we continue to see a decline in lending to handcraft producers. We have seen huge growth in our overall lending to South America where we have experienced a growth of £2m compared with last year. The most significant growth in lending directly to producer groups is also in South America; this has predominantly been in Peru. In Africa, we introduced nine new customers into the region; the average amount lent there increased by £500k compared with last year. The number in Central America has remained the same partly due to this market being dominated by coffee and our prudential limits in this commodity. Overall, Shared Interest lends money in an unsecured manner in 35 countries to 120 customers and for many we provide a vital source of finance that may not be available locally.

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Members and supporters Objective 2 (see page 56) examines how we engage with our members and supporters. Shared Interest Society is a co-operative, owned and controlled by its members. We also have other supporters including our volunteers as well as other organisations and individuals. Our membership, although still predominantly individuals, continues to grow and diversify, partly thanks to a regional focus that includes faith groups, Fairtrade Towns, small businesses, schools and community organisations. This year we conducted our first volunteer survey to help to inform the development of the volunteer scheme. The survey was sent to our 91 volunteers and we received 36 responses in total. One third of respondents had been volunteering with Shared Interest for over five years. We identified that this commitment may be due to satisfaction with their roles as the survey indicated that these volunteers consider that they are valuable for a variety of reasons. The most frequent reason was for the ‘support in promotion of Shared Interest’, followed by values around the opportunities they offer Shared Interest to reach different audiences. We continued to work on helping volunteers develop their ability to publicise Shared Interest confidently by conducting 10 training sessions across the country, as well as providing induction training to 32 new volunteers. Building on the theme of promoting Shared Interest to family and friends, this year saw the introduction of the Shared Interest Gift Pack - a new concept provides another avenue to invite new members. Another way of supporting our existing members in spreading the word of Shared Interest is the series of postcards attached to the back page of our quarterly magazine, QR, which can be passed on to friends and family. With regard to new members, a variety of media, events and activity continue to be important in engagement and recruitment. We launched a new website which includes secure areas for both members and volunteers. Volunteers can contact one another via our interactive map, as well as post events on the virtual notice board. It is a major development in keeping members updated on their share account activity, created following our 2011 member survey, which showed that 20% of respondents wanted to manage their accounts online. Our AGM remains the focal point for engaging with our members face to face. This year’s AGM had our highest attendance figures yet and also saw the first contested elections for our Council. A theme up for general discussion was ‘view of risk’ and the responses showed that while some believe Shared Interest should minimise the default rate on lending facilities, others felt that this would be a reflection that too little risk was being taken with the lending.

Business support Objective 3 (see page 70) focuses on the work of our charity, Shared Interest Foundation, which offers business support to improve livelihoods in some of the world’s poorest countries. At the moment, this is provided through the delivery of training and capacity building projects and by operating a Livelihood Security Fund. However, we are carrying out a strategic review to consider where the focus should be in future. A significant number of partner organisations and producer representatives are being consulted as part of this to ensure that our future work continues to be needs-based. This year we trained producers in three countries: Swaziland, South Africa and Ethiopia. The groups involved are working within or towards fair trade principles and are run as socially responsible businesses.

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We also completed the first full year of our three-year training project in Swaziland, funded by Comic Relief. This project was designed based on extensive research of the requirements of the local handcraft sector and will see over 3,000 people benefit from our training by 2013. Involving three levels, the project’s first year has seen producers graduate from level one to level two successfully. Overall, there have been strengthened partnerships, new product ranges and increased sales for the artisans involved, who are also experiencing increased incomes and are better able to support their families. In South Africa, we have been working with Fetola, a social and economic development agency based in Cape Town. Together, we have developed and fundraised for a ‘Skills for Sustainable Livelihood’ programme, providing practical business skills so that craft entrepreneurs can earn a fair living for themselves and their families. Following extensive research, we conducted a pilot coffee co-operative workshop in Ethiopia. This was run with Yirgacheffe Coffee Farmers Co-operative Union and focused on how farmers can develop and grow their businesses given the daily challenges they face, including the threat of climate change. Responding to shocks such as natural disaster, the Livelihood Security Fund offers grants to reduce the impact of these unexpected shocks on producer groups, improving their chances of sustainability after their initial recovery from an emergency. A beneficiary this year was Aprainores, a cashew nut producer group of over 60 families in El Salvador, whose warehouse was flooded when the nearby river burst its banks. We believe that Shared Interest Foundation has been further strengthened with the recruitment of a Head of Foundation who forms part of the Senior Management Team. A lead trustee for the Foundation has been appointed to ensure a presence at Board level. We have also commissioned a strategic review of Shared Interest Foundation. After eight years of operation, it is anticipated the review will provide direction for project work, fundraising and communications in particular. With our largest current project being funded by Comic Relief, Shared Interest Foundation has again received almost 50% of our income from individual donors (many of whom are also Shared Interest members). These donors will always be vital to our work, particularly in relation to providing the unrestricted income needed for project development.

Partnership working Objective 4 (see page 83) demonstrates how Shared Interest continues to work in partnership with an ever-growing list of organisations. These partners are vital to the organisation’s activities and the strengthening of its social capital. The 44 organisations that meet our definition of being a partner include Fairtrade networks, co-operatives, media companies and training providers, which depicts the diversity of activities undertaken by both the Society and Foundation. Through the use of some survey questions we have confirmed that our partners agree that Shared Interest is meeting the requirements laid out in the WFTO Fair Trade Principles. Coupled with this, many of our partners find their relationship with Shared Interest valuable and would like to work with us again in the future. We also build relationships through working alongside like-minded organisations. Our overseas staff play key roles in doing this abroad as do our Supporter Relations Team and volunteers in the UK. Our Regional Development Executives in Kenya, Peru and Ghana have good relationships with a number of organisations including Traidcraft Exchange and Fairtrade International. There is also a strong partnership forming with Fairtrade Africa now that our two organisations are sharing an office in Ghana.

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Stewardship Objective 5 (see page 89) outlines how we endeavour to sustain the resources that are entrusted to us. We introduced an environmental policy in 2007 and through regular communication of objectives, appraisals and achievements, we help our staff to implement the policy in their day-to-day work. Staff continue to recycle paper, card, plastics and glass and other office equipment is recycled or reused as appropriate. Where possible, we aim to procure our goods and services from locally-based suppliers, both to minimise environmental impact and to support the sustainability of local businesses. During the year, purchases from local suppliers in North East England totalled ÂŁ326,048 - an increase of 29%. This represents 42% of our purchases for the year. Virtually all (99%) of our cash is held at the Co-operative Bank although this is split into current accounts and different guaranteed investment accounts to maximise interest. We have continued to encourage staff to travel all or part of their journey to work in an environmentally-friendly way (using public transport, cycling, walking or working from home). 74% of staff use public transport for all or part of their journey to work.

Staff As Objective 6 (see page 98) outlines, the opportunity to travel overseas and visit our customers is one way that Shared Interest tries to promote a greater understanding of different cultures. This year 13 UK-based staff travelled to various countries including Ghana, USA, Holland, Swaziland, Peru, Chile and Germany. The response rate to the staff survey remains high and from this year’s results it was shown that the majority of staff believed that Shared Interest positively promotes different cultures. Most staff believed that Shared Interest is a truly international organisation and 26 staff strongly agreed or agreed that this was the case compared with 20 staff in 2011. Results show that the majority of staff are also proud to work for Shared Interest, are satisfied with their current job, believe they have a reasonable workload, and think that Shared Interest has appropriate policies in place to promote work life balance. Shared Interest continues to invest in training and development of staff and results from this year’s staff survey in particular show that the office atmosphere has improved, along with general communication via the staff forum and staff briefings.

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The following section highlights the developments that have occurred within the business as a whole during the year rather than relating to the information being reported on within these accounts.

Social Investment Fund Shared Interest has been chosen to manage £1.3m (USD2m) of funds on behalf of Comic Relief to lend as term loans to farmers and handcraft makers in Africa. These monies were received at the start of the year and as they are not constrained by our prudential limits they allow us the flexibility to consider new lending opportunities that otherwise might not be possible. To date four loans totalling approximately USD565k have been lent to producer groups in Kenya, Uganda, Tanzania and South Africa; the commodities lent to include tea, coffee and handcrafts. It is our intention to have this fund fully lent by the end of next year. Comic Relief is also funding a producer support programme in Swaziland being delivered by Shared Interest Foundation although this is a completely separate project.

Financial services 

We set up a new overseas office in Ghana where we are sharing an office with Fairtrade Africa, part of Fairtrade International.

We approved three facilities totalling nearly USD1m for coffee producers based in Tanzania and Kenya. This was a new product for us in the East African region.

We started working with two new commodities (table grapes and raisins) via MiFruta in Chile.

We started working in Belize and approved an export credit facility for the cocoa producer group TCGA.

We approved 29 new or increased facilities during the year; of these, 20 were for new customers.

We are once again at our coffee prudential limit in South America having approved nine new facilities during the year, five of which were for new customers. These totalled USD2.9m of lending.

We extended our handcraft lending in Peru by providing an export credit facility to Raymisa.

The average amount of money lent to producers has continued to grow (up 10%) against last year. This has been aided by a net increase of 8 new producer organisations holding an account.

Despite a slight fall in buyer lending, overall total lending has increased slightly against last year.

Despite increased competition from other lenders our rates of interest remain competitive.

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for the year ended 30 September 2012

Members and supporters 

Total investment reached £28.67m and we attracted 299 new members leading to a net increase of 27 members compared with a net decrease of 74 in the previous year.

We launched a new website which incorporates references and links to the social accounts throughout the content. It also features a secure area for members and volunteers giving access to their account information including statements online.

We introduced new promotional materials including an event leaflet, key messaging booklet and referral cards which generated almost 1,800 enquiries in the year.

We placed a greater emphasis on events throughout the year improving our engagement with current and potential members

We increased our active volunteer base to 120; a 70% increase from last year. In line with our drive to increase volunteer retention we introduced a new training programme and created a more structured support network for ambassadors.

We conducted a volunteer survey to identify areas of improvement. The survey was sent to our 91 volunteers and we received 36 responses in total. We plan to conduct a similar survey every two years.

Business support 

Our three-year Swaziland Producer Support Project successfully completed its first full year. Training continues following a baseline needs assessment and is resulting in business benefits and increased market access for all level of service receivers.

Following the recommendations in the Organisational Assessment carried out last year, funded by a Comic Relief Common Ground grant, we have increased the focus on Shared Interest Foundation at board level by appointing a trustee with specific responsibility for the Foundation. A Head of Foundation was also recruited and appointed in April 2012.

The project development work for commodity producers in Ethiopia has progressed with a workshop on climate change adaptation and how coffee farmers currently utilise information to help them develop and grow their businesses.

We supported a successful programme of Skills for Sustainable Livelihoods training in South Africa for black-owned businesses and social enterprises in the craft sector.

A strategic review is on-going and will be completed in December 2012.

Partnership working 

We have grown our partnerships by 8 in 2012 to a total of 44 with six relationships ceasing but 14 new relationships beginning.

We have strengthened our relationship with Fairtrade Africa by sharing their office in Ghana.

Our partnership with Comic Relief continued to grow through the Social Investment Fund pilot.

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for the year ended 30 September 2012

Internally 

We conducted a full review of the buying of insurance for the organisation and decided to retain the services of the broker who has worked with Shared Interest for the last six years. We also undertook a brief review of the provision of payroll services, again retaining the current provider.

We replaced our previous server hardware with new servers capable of supporting a modern virtualised IT infrastructure.

We continued to strengthen our staff team and recruited for a number of new positions including a Systems Development Apprentice.

We redesigned our office space to provide a more positive working environment.

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Last year we introduced the concept of social capital to evaluate our partnerships within Objective 4. To build on this and to highlight the links between Shared Interest’s various stakeholders we have developed the diagram below to illustrate how important these connections are to the organisation. We define social capital, in the context of partnerships, as ‘relationships with others which enable us and these organisations to act together more effectively to pursue shared objectives’. Within the context of our stakeholders, social capital is therefore defined as ‘links between stakeholders which enable these stakeholders to act together more effectively to pursue shared objectives’. The circles represent the stakeholders of Shared Interest. The size of each circle reflects the number of links with other stakeholders, the smallest circles showing fewer links and the larger circles indicating more links. The linking lines in blue and red indicate in which direction the benefits of the link travel. Blue lines indicate a reciprocal link with benefits travelling between the stakeholders, for example benefits to customers from members (ie loan finance) and benefits to members from customers (ie social return). The arrows on the red lines indicate in which direction the benefits are moving, for example potential customers benefit from links with existing customers (ie lending referrals) but existing customers do not necessarily draw any benefit from this link. There may be individuals who are represented through a number of stakeholder groups, for example a member could be an ambassador and also involved in a partner organisation, but at present we are not covering social capital in this level of detail.

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Since 2007, the Society and Foundation have shared the same vision, mission and values. The Society’s vision was reviewed last year and the new vision, applicable to these accounts, is shown below. The Foundation’s vision is currently being reviewed as part of its strategic review.

Vision A world where justice is at the heart of trade finance.

Mission Our mission is to provide financial services and business support to make livelihoods and living standards better for disadvantaged communities in some of the world’s poorest countries. We work with people who share our commitment to fair and just trade. Together we take and share risk, because we value the difference that fair and sustainable trade makes. We seek to satisfy the needs of producers as they trade their way out of poverty and to meet the aspirations of our investors and donors to support them in achieving this aim.

Values We will conduct our business in a manner which reflects the principles of love, justice and stewardship. We will: 

Work to recognised fair trade standards

Respect the diversity of different cultures

Value and engage with our members and supporters

Place partnership at the heart of what we do when working with others

Work with our people and encourage their commitment, talents and energy in an environment of mutual respect.

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We aim to report on the impact that our work has on key stakeholders by closely aligning the objectives and activities in this report with our current vision, mission and values. Representatives from the Social Reporting Team discuss their section within their own department to ensure that their objective and associated activities are still relevant and valid to the work that the department undertakes. All objectives and activities are then approved by the Management Team and the Board of Directors. Below you can find this year’s objectives and activities and a description of how, if at all, they have changed from last year.

Objective 1: Provide financial services and so make livelihoods and living standards better for disadvantaged communities in some of the world’s poorest countries Key stakeholders: customers Activities: 1. Providing fair and appropriate financial services. 2. Raising regional awareness of fair finance. 3. Examining and monitoring the impact of our financial services on disadvantaged communities. 4. Assessing our customers’ satisfaction with our financial products and services.

Objective 2: Enhance our sustainability by increasing share capital, investing it wisely and ensuring a social return Key stakeholders: members and other supporters Activities: 1. Engaging with and valuing our members and supporters. 2. Assessing our members’ and supporters’ satisfaction with the utilisation of their investment. 3. Growing and developing the membership and supporter base. We have extended Activity 2 to assess both our ‘members’ and supporters’ satisfaction’ as support for our business grows. Previously we only assessed our members’ satisfaction. This follows on better from Activity 1 also. As we wish to work with our ambassadors to extend their involvement in the business, we inserted the words ‘and developing’ within Activity 3 to reflect this.

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Objective 3: Provide business support and so make livelihoods and living standards better for disadvantaged communities in some of the world’s poorest countries Key stakeholders: service receivers and donors Activities: 1. Providing business support services that are responsive and appropriate to the needs of the service receivers. 2. Examining the impact of our business support services in meeting the needs of the service receivers. 3. Using donors’ funds wisely.

Objective 4: Work in partnership with people who share our commitment to fair and just trade Key stakeholders: partners Activities: 1. Identifying and building appropriate partnerships. 2. Evaluating our partnerships in order to demonstrate social capital.

Objective 5: Conduct our business in a manner which reflects the principles of stewardship and environmental sustainability Activities: 1. Minimising environmental impact. 2. Managing liquidity and operating costs and ensuring prudent financial controls. 3. Considering ethical issues in investment and procurement decisions.

Objective 6: Encourage staff’s talent and commitment in an environment of mutual respect Key stakeholders: employees Activities: 1. Encouraging understanding of different cultures. 2. Offering fair pay and benefits and respecting employees’ work-life balance. 3. Aiming to provide job satisfaction, offering regular reviews and supporting personal development. 4. Ensuring effective communication and participation in decision-making. We altered Activity 3 to read ‘Aiming to provide job satisfaction’ rather than ‘offering job satisfaction’ although we will continue to ‘offer regular reviews’.

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In Objective 1 we look closely at the lending options we provide to fair trade producers and buyers and gain an understanding of the flow of our share capital over the last financial year. We review what is required to become a customer of Shared Interest and also make an assessment of how competitive we are in the fair trade market place. Also within this objective we take a more thorough look at the producers with whom we have a direct lending relationship in order to gain a clear understanding of the products and places for which we provide finance. We conclude this Objective with the results of our surveys sent to a total of 1,010 producers and buyers and establish their perspectives of fair trade.

Activity 1: Providing fair and appropriate financial services Financial products provided by Shared Interest Producer Lending

Buyer Lending

Fair trade export credit

Pre-financing credit facility

Commercial order export credit

Shop loans

Term loans

Term loans

Stock facility

Producer lending Fair trade export credit The purpose of this facility is to provide sufficient money to producer groups to enable them to fulfil their orders, grow their businesses and increase their social impact, by providing sufficient working capital to complete and deliver new orders. Customers are provided with a facility enabling them to borrow a maximum of 80% of the value of any order received (60% for some commodity orders). Repayment is made on delivery when the buyer pays for the order via Shared Interest. We deduct the amount borrowed and any interest due. To access this facility, orders must be placed with a fair trade buyer who has a Shared Interest account. Export credit from Shared Interest has helped to fulfil orders which otherwise would have been cancelled resulting in loss of income for the artisans. Joseph Muchina, General Manager - Trinity Jewellery Crafts (Kenya) Commercial order export credit This facility is for fair trade producer groups who are selling goods to commercial firms or fair trade buyers who do not have an account with Shared Interest. Where a buyer does not provide pre-finance, we can step in and assist a producer group in financing an order which otherwise they might not be able to fulfil. Repayment of lending is made when orders are delivered. On delivery of an order the buyer pays the full value of the order to us and we

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deduct the amount borrowed and any interest generated and then transfer the remaining money for that order to the producer group. Shared Interest contributes to the quality of life of the members by enabling access to funds during the brazil nut harvest; with this the members have resources for their operation as well as to buy food for their families. The funds are later repaid deducting the value of their exported products. Eulogio Suxo, General Manager - Coinacapa (Bolivia) Term loans We offer producer groups term loans for the purchase of assets such as machinery, buildings or vehicles. Borrowing is between one and five years and repayments are set depending upon the circumstances of the producer group. Loan sizes are determined by the financial situation of the producer group and its ability to repay the loan. The credits have enabled us to do projects on time without a big struggle for funds and with reasonable interest. Catherine - Namayiana Maasai Women Group (Kenya) Stock facility We offer producer groups a short-term revolving loan for the purchase of stock. Borrowing is for up to a 12-month period and repayments are set depending on the circumstances of the producer group. Facility sizes are determined by the financial situation of the producer group and its ability to repay the loan within an imposed upper limit. Pre-harvest loans The purpose of this facility is to allow producers to finance the usual farm production processes and maintenance of crops e.g. inputs such as fertilisers. This will provide a direct impact on yields especially where the present level of fertilisation is insufficient. This lending product is very similar to the Stock Facility and will be particularly attractive to coffee and cocoa co-operatives from where we see most demand. Lending to producer groups over the last five years 2008

2009

2010

2011

2012

59

63

77

71

79

136

165

218

223

241

£1,515,203

£2,051,420

£2,506,068

£3,311,143

£3,292,801

183

140

237

217

227

£652,852

£940,660

£1,120,151

£1,786,743

£2,002,801

31

31

26

14

24

Value of term loans**

£1,263,091

£1,225,904

£1,154,710

£603,643

£970,911

Total producer lending**

£3,431,147

£4,217,985

£4,780,929

£5,701,530

£6,266,513

No. of producers groups with credit/loan accounts* No. of commercial order export credit payments* Value of commercial order export credit out on loan** No. of fair trade export credit payments*** Value of fair trade export credit out on loan** No. of term loans***

* ** ***

At 30 September The average total of money drawn on any one day Total number of payments/loans made during the year

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for the year ended 30 September 2012

At the end of September 2012 Shared Interest was lending directly to 79 different producer groups. In the last 12 months we opened 18 new producer accounts and closed 10. This net increase of eight is a big improvement on the previous year when we had a reduction of six producer accounts. Direct lending to producer groups continues to increase. In the last year the average total of money drawn on one day increased by 10% to £6.2m and in the last five years we have seen this lending increase by 83%. In contrast to previous years, commercial order export lending fell slightly, albeit only by 1%. Lending in fair trade export credit continues to increase and this year saw a growth of 11%; in the last five years we have seen a growth of 207% in this area of lending. Last year we saw a reduction in term lending of 48% in value and the number of new loans fell from 26 to 14. This year we have seen growth in this area of lending with 24 new loans and an increase of 61% in the average amount lent.

Buyer lending Buyer pre-financing credit facility Fair trade buyers often want, or are required, to provide producer groups with pre-finance when placing an order. However, buyers can find themselves struggling to provide sufficient pre-finance from their own cash reserves, especially in the current climate. We assist by offering fair trade buyers a facility which can be used to pre-finance orders with their producers. In addition a buyer can also benefit from a further credit period after the order is received enabling them to sell their product and receive an income prior to repayment of the amount borrowed. Shared Interest’s facility allowed us to increase the volume of orders which has also impacted on the producers’ income. Martin Bilodeau, Founding President - GoGo Quinoa. (Canada) We were happy with the reduction in the interest rate and it convinced us to work with Shared Interest rather than our local bank which is less ethical. Brian Albert, Director of Finance - Equal Exchange Inc. (USA) Shop loans Shop loans are specifically designed for retailers of fair trade products. They enable a business to finance its fair trade stock purchases with repayment in an agreed period. We agree the loan amount in consultation with each applicant. At the time of writing we are not currently operating any such facilities. Term loans We provide term loans to buyers for a variety of reasons including the purchase of assets or working capital. Borrowing is for between one and five years and repayments are set depending upon the circumstances of the buyer. Loan sizes are determined by the financial situation of the buyer and its ability to repay the loan.

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for the year ended 30 September 2012

Lending to buyer organisations over the last five years No of buyers with accounts* Value of pre-finance** No of loans*** Value of loans** Total buyer lending** USD/GBP exchange rate * ** ***

2008

2009

2010

2011

2012

43

38

39

42

41

£8,854,579

£10,825,817

£10,010,089

£9,653,791

£10,049,300

26

31

25

1

1

£680,398

£1,664,107

£1,784,403

£1,646,658

£823,984

£9,534,977

£12,489,924

£11,794,492

£11,300,449

£10,873,284

1.84

1.62

1.55

1.55

1.62

At 30 September The average total of money drawn on any one day Total number of loans made during the year

The lending figures in this table are calculated in the same way as the previous table, using annualised monthly averages. There are, of course, very substantial peaks and troughs at various points throughout the year depending on the lending product, type of good and movements in exchange rates. We lend money in four major currencies with the largest amount being in USD; the exact proportion changes depending on customers’ requirements. The borrowing figures have been converted into GBP at the year-end exchange rates and thus the total GBP value is affected by variations in exchange rates. The USD rate shown in the previous table indicates how the USD has moved in the last five years, this can have a significant impact on our income when converted to GBP. The total number of buyers holding an account with Shared Interest at the end of September 2012 was 41. In the last year we opened one new buyer account and closed two giving us a net reduction of one. Despite the overall reduction there was an increase in the average value of drawn prefinance with a rise of 4% or £395,509. However the total drawn is still less than the £10.8m lent in 2009. The average value drawn in term loans fell by 50% or £822,674. This year we have seen some large annual repayments and the repayment of our last shop loan. In fact there have been no brand new buyer term loans this year, the one listed in the table above relates to the conversion of a bad debt from a credit account to a long term loan.

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for the year ended 30 September 2012

Average lending to all customers over the last five years

The total average amount lent over the last year to both buyers and producers was ÂŁ17.1m. This was a minimal increase of ÂŁ137,818 or 1%; it does however continue the positive movement in our overall lending. It is also very encouraging to see that all of this growth is being driven through increased direct lending to producer groups. This year the average amount lent to producers has increased by ÂŁ564,983 which is a 10% increase and 83% higher than it was in 2008. Lending approved, committed and drawn over the last two years

The graph above shows the approved, committed and drawn values over the last two years relating to both our buyer and producer customers. When a new business application, a request for a new lending type or an increase from an existing customer is approved, a value is applied against their account. In order for that customer to be able to access their newly approved lending they must first meet certain

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for the year ended 30 September 2012

conditions. Once the conditions on their account have been met the approved value can then be committed and a value entered onto their account. It is at this point that the customer can start to borrow against their new facility. The previous graph shows the peak of approved lending was in July 2012, reaching £32.1m. It is our intention to have an account committed as quickly as possible after approval. You will notice from the graph that the approved and committed lines for the majority of the period are very close, however there are a couple of instances, both at the same time of year, when there is a noticeable difference. This margin represented £1m of uncommitted accounts. £541,000 of this difference related to an increase for a UK-based Fairtrade nut buyer and £127,000 to a Ugandan coffee co-operative.

Requirements to work with Shared Interest As with any lending organisation the analysis of the borrower’s ability to repay is fundamental. When we receive a new application we ask for particular information in order for us to conduct our due diligence; this differs between buyer and producer organisations. For example we would expect a buyer to produce management accounts and audited annual accounts (or be working towards them). We do not expect all producer groups to do this as they may not have the skills or capacity to undertake such a task. Shared Interest Foundation continues to provide producers with training in bookkeeping and business skills thus improving the data they are able to record and report. Every lending application, whether from a new or existing customer, has to be approved by one of three parties: 

Managing Director – A proposal up to a certain value can be presented to our Managing Director at any time to be approved.

Credit Committee – This comprises five directors who have the authority to approve any proposal within our credit policy. During the year we had four Credit Committee meetings by telephone.

Board of Directors – The Board of Directors can agree to variations in the policy and approve proposals that are out of policy. During the year we held six Board meetings.

If a proposal is approved the successful customer is then sent a credit notification. This outlines the agreed credit limit, credit period, interest rate and conditions of lending. We have general conditions which must be adhered to during the period of lending and conditions precedent which must be met before the facility can be committed. We aim to send a credit notification to the customer within a week of the facility being approved. It is the responsibility of the customer to collate all the required paperwork and return it to us in order to utilise their facility. The offer made remains available for 30 days from the date on the notification.

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for the year ended 30 September 2012

Charging a fair rate One of the principles of fair trade is payment of a fair rate. Translating this to our business we consider whether our lending is done on fair terms. There are two main considerations: 

Are our interest rates fair?

Are our lending terms and conditions fair?

Interest rates The interest rate we charge a customer is a combination of: 

Prime rate: This is calculated from the cost of borrowing the relevant currency plus a margin to cover our operational costs. Prime rates differ by currency lent and are affected by changes made by the central bank that controls monetary policy for that region/country. Shared Interest raises capital from members in GBP and borrows foreign currency as required to meet customers’ lending requirements. We use judgement to determine the level of the margin on each currency necessary to achieve sufficient income in order to meet our yearly budget targets. Any change in the cost of borrowing is communicated to the customer by email usually seven days before it takes effect.

Risk premium: We consider the risks of every proposal and we also conduct risk assessments as part of each customer’s annual review. We assess a number of criteria including turnover, profitability, balance sheet, financial ratios, market reputation and, for existing customers, the manner in which they manage their accounts. We use a pricing matrix, which has clearly defined bands for each risk criteria, to calculate an individual risk premium for each customer.

Lending terms and conditions Almost all of our lending is made on an unsecured basis. Often our customers’ assets or contracts have already been pledged to other lenders. In the small number of cases where we do have security it is in the form of debentures and guarantees. We do not hold any mortgages over land and buildings. Comparisons with other available sources of credit The question of whether our interest rates are fair needs to be balanced against the requirements placed on customers by other lenders both in terms of the application process and whether or not some form of security is required. We have carried out an analysis of our buyer and producer customers and the type of borrowing facilities that are available as well as the interest rates and these are summarised in the tables below. This information was gathered at the time of each customer’s review which took place throughout the year. Consequently a direct comparison of interest rates charged can be affected by a change of interest rates during the year. The tables below show the number of external loans held by our buyer and producer customers and how many of those loans are subject to security. They also show an average of the minimum, mean and maximum interest rates charged in that currency. The same information is then shown for their loans with Shared Interest. We lend money in four currencies however we have shown data for just three currencies. This is because for the other currency (Australian Dollars) we have only one customer.

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for the year ended 30 September 2012

Producer customers borrowing from other sources, 2011/12 Number of loans

Secured

Minimum

Mean

Maximum

USD

247

182

0%

8.15%

28.46%

EUR

19

6

3.80%

8.74%

12.50%

GBP

3

0

7.0%

8.66%

11.0%

Currency

Producer customers borrowing from Shared Interest, 2011/12 Number of loans

Secured

Minimum

Mean

Maximum

USD

76

0

8.50%

9.99%

11.50%

EUR

9

0

11.0%

12.05%

13.0%

GBP

4

0

10.0%

10.87%

12.0%

Currency

As the total number of producers we are lending to has increased so has the number of lending accounts being provided through other sources. The total number of loans has increased from 238 to 269 with 247 of those being against USD accounts. Of those loans 74% are secured compared with 0% of the loans Shared Interest provides to producers in USD. The maximum rate on USD is 16.96% greater than the maximum provided by Shared Interest. The loans where the rate of interest is at 0% are, in most cases, from family, close friends or development organisations. Buyer customers borrowing from other sources, 2011/12 Number of loans

Secured

Minimum

Mean

Maximum

USD

51

34

0%

5.87%

15.0%

EUR

39

24

0%

4.91%

12.0%

GBP

44

19

0%

4.68%

14.0%

Currency

Buyer customers borrowing from Shared Interest, 2011/12 Number of loans

Secured

Minimum

Mean

Maximum

USD

27

6

6.0%

8.70%

11.50%

EUR

7

3

7.0%

10.21%

12.0%

GBP

19

5

5.50%

9.61%

13.0%

Currency

The total number of loans through other sources fell this year from 136 to 134, however the number of those loans secured has increased from 46% to 56%. The total number of loans through Shared Interest was 53, nine more than last year. The number of those loans secured this year was 26% compared with 23% in the previous year. On average the interest rate offered to both producers and buyers is higher than that which they can access through other sources, although this will be region-dependent. In some

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for the year ended 30 September 2012

instances, other sources of finance may not be available. However, when borrowing from Shared Interest, they are less likely to have to provide security and they welcome the years of expertise we have developed in lending in the fair trade market place. Ensuring our sustainability The operating costs of Shared Interest Society are covered by income from two sources: 

Interest on cash held on deposit with our bank



Charges on money lent to customers.

Shared Interest lends money in an unsecured manner in 35 countries to 120 customers and for many we provide a vital source of finance that may not be available locally. We pay our investors an interest rate that is 4% below UK base rate and when the base rate is lower, then nil interest is paid to members. We review our lending rates on a regular basis and in more stable times we have been able to make changes broadly in line with alterations made by central banks. However, the fall in UK interest rates has reduced our income substantially with an impact on our overall business and it is important to ensure our sustainability so that we can continue to operate and provide funds to fair trade around the world. Many customers, especially buyers, are now in a position where they can access rates lower than those provided by Shared Interest. However our expertise in pre-finance and export credit and our fair trade focus helps us to retain these customers.

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for the year ended 30 September 2012

Activity 2: Raising regional awareness of fair finance Business Development Team Our Business Development Team operates from four offices in Kenya, Peru, Ghana and the UK. The Ghana office was opened in February 2012. Each overseas office is staffed by local people and the team uses a variety of methods to increase awareness of Shared Interest’s services. In our UK office we benefit from having a variety of different cultures amongst the staff team. Setting up overseas offices has allowed Shared Interest to get closer to prospects and customers which has allowed a better understanding of the issues facing the producer groups. The producers welcome the opportunity to converse with an RDE (Regional Development Executive) of a similar culture in their own language. During the course of the year, the overseas-based members of the Business Development Team made a number of in-country and in-region trips to attend conferences or visit potential customers. These trips were usually of between one and two weeks’ duration and enabled the RDEs to meet face-to-face with approximately 110 producer groups and fair trade organisations. These trips included several within Peru, Kenya and Ghana as well as ones to Chile, Bolivia, Paraguay, South Africa, Tanzania and Uganda to focus on potential customers in these countries. In March 2012, the RDEs from Kenya and Ghana came to the UK to visit the Newcastle office to spend time with their UK-based colleagues and attend the AGM. A further visit to the UK was made by most of our overseas staff in September 2012. Likewise, trips are made from the Newcastle office to the regions in order to ensure that an acceptable level of general organisational awareness is maintained. This year saw a repeat of the Shared Interest producer committee meetings held in-region and hosted by the RDEs. Seven producer representatives met Paul Sablich in Lima, Peru, on 28 August 2012 and on 29 August 2012 representatives from five producer groups met Rachel Ngondo in Nairobi, Kenya. The topics discussed included the current fair trade movement and climate, the Foundation strategic review, a new, secure customer website, annual reviews as well as other lending products. During the course of the year, various meetings were held internally to discuss the points raised by last year’s meeting. Responses were collated and fed back directly to the producer committees via the RDEs. The RDEs and other members of staff were present at important regional or international industry conferences. Rachel Ngondo attended the FTA (Fairtrade Africa) Conference in Ghana in November 2011 and, along with John Dossou (RDE), the WFTO Conference in Arusha, Tanzania, in September 2012. In October 2011, Tom French (Business Development Officer) attended the Fairtrade Foundation Commercial Conference in London and in February 2012 the Biofach exhibition in Nuremberg, Germany. Aside from the trips, events and conferences already mentioned, the team make short trips locally to meet producers, other social lenders and bodies such as FLO. The team has estimated that direct communication with producers, including Skype and telephone calls, accounts for 30 to 40% of their time.

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Following the launch of the Borrow section of the Shared Interest website (www.sharedinterest.com/borrow) last year – which provides information, regional contact details and a route to apply for prospective customers – the format has been updated in line with the new company website and French and Spanish versions are now available. This is intended to echo the printed literature and provide access to producers and buyers outside the regions where we are located.

Survey of potential customers Following on from last year, we have continued and developed the use of surveys to gather qualitative data from potential customers regarding how Shared Interest is perceived. The questions relate to how producers and buyers heard about Shared Interest, the level of product knowledge they had and what they look for in potential lenders. Across all regions, 50 surveys were sent out and 17 were returned (a response rate of approximately 30%). Responses were received from Kenya, Uganda, Ghana, Chile, Peru and the Philippines. The key observations were as follows:  

 

  

Of the 17 returned, 14 were from producers and 3 were from buyers. Twelve of the respondents were made aware of Shared Interest in the first instance through referrals or recommendations from other fair trade organisations or regulatory bodies, two through conferences and workshops, two via internet searches and one through direct contact from Shared Interest. After first finding out about Shared Interest, the time taken to contact us varied from immediate responses to two years later. The majority of contact was made within six months after first hearing about Shared Interest. In terms of looking for potential lenders, seven respondents were primarily attracted by competitive interest rates and low operational costs, followed by an understanding of their individual operation (six respondents), the ability to form long and trusting relationships (two respondents), and flexibility to requests (two respondents). When asked why they would like to work specifically with Shared Interest, six respondents highlighted the aligned social values and fair trade focus, with three mentioning operational understanding, four the rate of interest, two the working relationship and two the flexibility and responsiveness. Before direct contact with Shared Interest, eight respondents said that they knew nothing at all about the organisation or its products. Six mentioned that they were familiar with the organisation but not with the products it offered or vice versa. One potential customer highlighted the website as their only source of information, while only two respondents advised that they felt well-informed. At the time of completing the survey, eight respondents were in discussion with other lenders. The remainder decided to speak only to Shared Interest. Six respondents were already borrowing: two had terms loans and four had credit lines. When asked if Shared Interest could do anything differently, suggestions included: o “Find a way of marketing and connecting its clients to potential buyers…” o “…provide long term funding… [and] finance conventional sales to strengthen the position of producers [at] the country level…” o “Train its [customers] on succession planning” o “…the actual borrowing and repaying process [is] confusing” o “[Shared Interest could be] less restrictive on formal membership of WFTO” o “Provide loans for projects beyond five years” o “Development of an online marketplace by Shared Interest o “Eliminate bureaucracy and paperwork” o “…work together on financial capacity building and technical assistance.”

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Activity 3: Examining and monitoring the impact of our financial services on disadvantaged communities Shared Interest has a wealth of expertise when it comes to lending to producers of fair trade products. At the end of September 2012 we were lending directly to 79 different producer organisations in 24 different countries. Analysis of producer group customers by region over the last three years

The obvious growth in where we are lending directly to producer groups is in South America; this has predominantly been in Peru. Despite only increasing the number of producers in Africa by one we actually introduced nine new customers into this region. This meant that we closed eight accounts during the same year. This was as a result of non-utilisation, bad debt or quite simply poor account management by the producer. The number in Central America has remained the same partly due to this market being dominated by coffee and the restrictions enforced through our prudential limits. We continue to be restricted by local lending regulations in the Indian sub-continent and have not placed any focus on working in this region. The single customer in the Middle East (Palestine) who held an account has repaid the loan in the last 12 months and as a result the account has been closed. We will continue to look for new opportunities in this region.

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for the year ended 30 September 2012

Analysis of lending committed to producer groups by region over the last three years

The graph above shows the funds committed to producers in each region. The sums are overall limits and not balances; they have been converted to GBP using the year-end exchange rate. The rapid growth has been in South America which is where we have had the greatest growth in numbers of producers. This year the value of facilities committed to South America has increased by 32%. There was an increase of 42% in Africa, however this greater percentage increase represents a lower sterling value. It is nevertheless still a good improvement and the social impact we are able to make, particularly in this region, is so important. Unfortunately in all other regions we have seen a decline in funds committed. Asia has never been a region where we have had a significant amount of money committed and it is disappointing to see that we no longer have any facilities in the Middle East. The decline in Central America has been very marginal this year with a fall of only 2%. Since the closure of our office in Central America we have experienced a fairly static lending portfolio in this region.

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Product mix of the producer groups to whom our lending is committed

The graph above is a consolidated breakdown of the product mix of our producer customers. The majority of our customers operate in coffee, and this area of lending continues to show a steady growth. Because of the volatility of the coffee market we limit the total amount we lend in this market to an agreed proportion of our share capital. For most of the time our coffee lending is very close to this limit, so we must continue to expand the range of products in our lending portfolio. We have seen some encouraging growth in our lending in fruit, in particular bananas, however as an overall proportion of our lending portfolio we continue to see a decline in lending to handcraft producers. This is partly due to the current poor economic climate for handcraft products. Analysis of routes to market by producer group customers over the last three years

The graph above shows a reversal of the trend indicated in last year’s social accounts. This year there was an increase in producers using fair trade export channels and a decline in other exports. Sales via local markets also increased.

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Producer committees Regional producer committees were set up in 2010 by Shared Interest in order to get more direct feedback from the people and groups with whom we work. This year physical meetings were again held in both Kenya and Peru (we even managed to hold a virtual meeting in the latter on 3 July) and the plan is to form a West African producer committee next year once this region is properly established. This year’s physical meetings were held towards the end of August and where possible we retained the same attendees as last year in order to give some continuity. The meeting in Nairobi was held on 29 August and was chaired by Rachel Ngondo, RDE. It was attended by representatives from five producer groups: Pauline Ntombura, Salom Enterprises (handcrafts); Margaret Komen, Mace Foods (chillies); Pamella Kyagera, Nawou (handcrafts); Rachel Murithi, Africa Yetu Creative Centre (handcrafts) and Adolf Sabiti, Mpanga Tea (tea). Three of these groups are based in Kenya while Nawou and Mpanga Tea are based in Uganda. Both Rachel Murithi and Adolf Sabiti were new to the proceedings. The Peruvian meeting was held in Lima on 28 August, was chaired by Paul Sablich, RDE and was attended by the same seven representatives as last year: César Rivas, La Florida (coffee); Fernando Reyes, Cepicafe (coffee/cocoa); Isaac Zuñiga, Naranjillo (cocoa); Gonzalo Ríos, Acopagro (cocoa); Moner Lizana, Intercrafts Peru (handcrafts); José Lecarnaque, Cepibo (bananas) and Gastón Vizcarra, Candela (brazil nuts). All attendees are based in Peru. We drew up an agenda which included the current fair trade climate, the Shared Interest Foundation strategic review, our plans for the customer-side of the website and some internal matters for discussion such as annual reviews of customer accounts. It was clear from the discussions around the world that, as far as small producers are concerned, fair trade still has many challenges. Our participants would say that the main bodies with which we work, namely Fairtrade International (FLO) and WFTO have issues to resolve at all levels: local, regional and international. In certain instances they are disappointed with the way in which the networks are being run as some feel they see little benefit. Apparently no audits are currently being conducted by WFTO; the producer members welcomed this process as a means of improving their businesses. The small producers feel that such organisations need to refocus on market development leading to an improved quality of life for small producers and their families. Consequently some new marks are springing up such as the Sello de Pequeño Productor (SSP) or the Small Producer Label. While this mark is receiving support, our participants also feel that too many new marks merely dilute the fair trade brand. The producer groups are committed to the fair trade movement and consider themselves to be a part of it, with or without membership of or certification by a particular body. One of the committees did comment that “the main benefit of being a WFTO member was access to their SI facility”. There is no doubt that handcraft sales have been negatively impacted by the current international crisis as they are considered to be luxury goods. Fair trade buyers have been particularly badly affected. Some of the attendees feel that it is not always better to trade with fair trade buyers as they are considered to be bureaucratic; it can take a year to receive an initial order. Orders from conventional buyers tend to be larger and more frequent and in general they are perceived to be more reliable, particularly from a payment point of view. A mix of fair trade and conventional buyers tends to be the preferred option. In turn, the international crisis is leading to higher sales locally which is seen as positive as it costs less to produce and ship these orders. One of the East African participants commented that: “we prefer our local buyers as they make payment immediately after

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receiving the products as opposed to export where payments are made after the products arrive at the destination”. Interestingly, none of the South American producers were aware of the purpose of our Foundation although all the attendant African producers were aware of its function. That said, they would like to see the Foundation doing more work directly with Shared Interest’s customers. Many comments were put forward with regard to the barriers to trade that they encounter, training being a particularly strong theme. All these comments will be fed into the current Foundation strategic review for consideration. The attendees made a number of suggestions as to what they felt would be of most benefit to producers on any new secure customer website. These included real-time commodity stock market prices; statements online; latest credit notification; lists of buyers and producers with whom we work; information about the businesses and the people with whom we work, along with links to their websites. All the suggestions made will be considered in more detail as we embark on this project during the next financial year. Likewise, with regard to the annual review of their accounts, our attendees had a number of suggestions to make. This is an on-going process and we are always looking for ways to improve. The suggestions included: asking the producer which is the best month for their review; retaining information from one year to the next so it may simply be updated; keeping the forms to complete as simple as possible; agreeing a format with the other social lenders as we all ask for similar information; sending reminders with the statements about the lending conditions; and continuing to send notification and reminders of impending reviews. Some of the producers did mention that they are reluctant to send information when their business is not doing well as they are concerned this may affect their facility which is not always the case. As far as interest rates are concerned, we are currently thought to be at the expensive end of the scale in South America as some of the groups are able to procure lower rates locally. However, they continue working with Shared Interest as we understand the social impact they are trying to achieve. In East Africa, we were told that our interest rates are cheaper, our conditions less demanding, we are more responsive and we understand their businesses better than local banks. Also, as we do not usually request collateral, the more disadvantaged businesses are able to access credit from us. Lastly, it was felt that we needed to visit existing customers on a more regular basis. “Our company did not have any money in January and we asked Shared Interest for a term loan to buy fertilizer. This has made Mpanga Tea production to double. The banks are only with you when you are performing well and desert you when you are not performing.” Adolf Sabiti, Mpanga Tea (Uganda)

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Analysis of risk The analysis of risk is an integral part of our assessment of a lending proposal. We consider a number of different areas to make an overall assessment of the risks associated with each customer. One area we always consider is the risk element of the country in which we will be lending our members’ investments. We currently use a website (www.coface.com) that is regularly updated with political and economic factors and provides us with a profile and risk-ranking for each country. We use this information to categorise countries on the following basis: Category

Risk assessment

A

The political and economic outlook can vary between very good and somewhat shaky. The business environment is relatively stable although volatility may affect corporate payment behaviour. Corporate default probability is more than acceptable on average.

B

The business environment is mediocre. The availability and the reliability of corporate financial information vary widely. Debt collection can sometimes be difficult. The institutional framework has a few troublesome weaknesses. Inter-company transactions run appreciable risks in the unstable, largely inefficient environment.

C

The business environment is difficult. Corporate financial information is often unavailable and when available often unreliable. Debt collection is unpredictable. The institutional framework has many troublesome weaknesses. Inter-company transactions run major risks in a difficult environment.

D

The business environment is very difficult. Corporate financial information is rarely available and when available usually unreliable. The legal system makes debt collection very unpredictable. The institutional framework has very serious weaknesses. Inter-company transactions can thus be very difficult to manage in the highly risky environment.

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for the year ended 30 September 2012

Number of producer group customers in each risk category

28 21 1 8

19

11

13 11

Amounts committed to producer groups in each risk category

The graphs above show our exposure to the different country risk codes through number of producers and also the GBP value committed to those producers. The rise in category A is as a result of the increase in lending to producers in Peru. The countries found within category D are Nicaragua, Swaziland, Belize, Nigeria and Rwanda. The total exposure to category D countries is GBP1.4m and of this 91% is committed to producers in Nicaragua.

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Impact on other producer groups that receive payments through Shared Interest Support provided to producer groups who are not customers Every year we make payments on behalf of our buyer customers to hundreds of producer groups who do not have a Shared Interest credit facility. This remains one of our main business activities. This year, in addition to the services we provide to our customers, we made payments to a further 321 producer groups, 14 less than last year. These producers were based in a total of 53 countries. As well as making payments we provide these producer groups with the following additional services. Payment and transaction reports We email to each producer group a report showing the details of the payment being requested by the buyer. Once the payment is made we send confirmation to the producer group that the funds have gone with several reference numbers provided by our bank. Payment queries Occasionally the funds do not reach the intended beneficiary. If this happens our Customer Services Team works swiftly to recover the missing funds and resolve the issue, keeping the producer and buyer fully informed. Membership payments We are often contacted by producer groups who are required to pay membership or certification fees (e.g. to WFTO or FLO) but experience trouble and huge expense in sending the funds. They therefore contact us requesting to split a payment due to them and have Shared Interest make the payment on their behalf. Reconciliation of accounts Some producer groups with a high volume of transactions can occasionally have difficulty maintaining records of all of their accounts. If required we will send them details of all of the payments that have been made to them in a given period of time. For further information on the impact of fair trade activity, please also refer to Objective 1 Activity 4 where the survey responses are discussed.

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Development of relevant indicators to demonstrate social impact of lending. Introduction Previous recommendations have been made encouraging us to demonstrate how our lending to producer organisations has a tangible, positive social impact on their business and community. We have experimented this year with a new approach to this challenge. We selected a specific segment of our producer portfolio, Peruvian coffee, and looked at their lending limits from Shared Interest over the last four years. This was to identify any peaks or troughs in their limits, which would reflect movements in their own financial performance and social indicator statistics. The first challenge was finding a large enough sample with sufficient historical data and comparable by both country and product. While we have 79 producer customers, few met our specific criteria of being in the same country with the same product and at least four years’ worth of data. We wanted to work with these specific criteria so that we could not only look at any trends with specific producers but also consolidate the data and look at it as a whole. To do this with a range of different producers with different product mixes and geographical locations would skew the data and make comparisons difficult. The sample used was five Peruvian coffee producer organisations. Methodology As part of a customer’s annual review we gather not only their annual financial statements but also a range of statistics based on the scale of them as an organisation alongside specific indicators. The fields of data gathered for each producer organisation included year-end profit and loss accounts, total number of producer individuals, percentage of women producer individuals, total number of employees and coffee production volumes. These numbers were consolidated over a four year period with growth ratios being calculated. All of these variables were then reflected against the growth ratios of the facility provided by Shared Interest to see if the movements in the ratios of the Shared Interest limits were reflected by the movements in the producer indicator variables. For instance, if there was an increase in the amount provided by Shared Interest, did this reflect growth in the total number of individuals involved with the producer organisation?

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The table below shows an example of the data gathered for a sample producer organisation, with positive (green) and negative (red) trends highlighted. Dec-07

Dec-08

Dec-09

Dec-10

Dec-11

Financial Year End Results (USD) Total Sales

31,833,657

41,188,044

34,522,349

42,962,216

67,012,216

% Growth

7%

29%

-16%

24%

56%

Net Profit

54,546

79,401

31,711

33,170

123,525

% Growth

0%

46%

-60%

5%

272%

3,110,158

3,426,556

3,688,313

3,544,711

5,163,181

10%

8%

-4%

46%

1,000,000

1,000,000

1,250,000

Balance Sheet Value % Growth

Shared Interest Facilities (USD) EC/COEC

500,000

1,000,000

Term Loan

95,000

95,000

Total

595,000

1,095,000

1,000,000

1,000,000

1,250,000

84%

-9%

0%

25%

7,500

7,183

8,000

7,560

0%

-4%

11%

-6%

25%

19%

30%

10%

0%

-24%

58%

-67%

147

137

135

121

0%

-7%

-1%

-10%

346,108

210,000

250,000

0%

-39%

19%

People Number of Producer Individuals

Percentage Women

Number of Employees

7,500

25%

147

Production

Coffee Production Volume (quintals)

346,108

Conclusions The data gathered from the five producer organisations did show occasional trends which indicated that if the Shared Interest facility moved then there was a reflecting movement elsewhere. However the scale of the data gathered was so broad that it was not possible to consolidate into a meaningful table and in turn make any confident conclusions. We also considered that movements in areas other than the Shared Interest credit line can obviously be influenced by many other factors, not only other lending facilities but also exchange rates, climatic changes impacting yields etc. However this process has provided us with the basis of a scaled analysis where we will look to apply weightings against the variables and then establish an overall positive or negative impact through our lending. We intend to explore this in the next 12 months and to report our findings in the 2013 social accounts.

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Activity 4: Assessing our customers’ satisfaction with our financial products and services We took a different approach to our consultations with buyer and producer organisations this year. For buyer and producer organisations that have a Shared Interest account we selected a broad range of customers across different countries and products. Of our total 120 customers we held conversations with 9 buyers and 13 producers. Our approach this year with recipient producers was to utilise the online survey software. This year we wanted to place more focus on the broader impact of fair trade on them and less on the service being provided by Shared Interest. With this in mind we took the decision to contact all of the producers we have an email address for and who have at some point received a payment from Shared Interest. We again offered the incentive for completion of entry into a draw to win USD500. The winner of this year’s draw was The Thaicraft Association based in Bangkok, Thailand who are using it to pay their WFTO membership fees. The survey was sent to 862 recipient producers in 65 countries and we received a response from 33. This was 11 more replies than last year. We used the same software to contact 126 commercial buyers and received a response from nine.

Recipient producers – survey results Objectives, methodology and process The main objective of the survey was to help us understand the social impact of working with fair trade and Shared Interest. The specific objectives were to understand more about: 

The social projects that producers have developed in their community

The salary range of producers

The benefits that producers have as a result of working in the fair trade market

If the price paid for their products is fair

The producer’s quality of life.

The survey was carried out using Survey Monkey, an online survey tool. All information was collected in this way and only a summary of the responses are included in this report. At the end of August 2012, producers were contacted by email and asked to complete an online survey.

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Response to survey of recipient producers by country and region

Year established The majority of producer organisations surveyed were established 20 years ago; 24% were established after the year 2000. Fair trade membership The majority (52%) are members of WFTO and 21% are certified by FLO. 27% were members of local fair trade organisations (in some cases as well being members of WFTO or certified by FLO). Product mix Most of those surveyed produced textiles, garments, furniture, jewellery or other handcrafts. Number of responses by type of product

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Sales channel The chart below shows the route to market for the producers surveyed. 3%

31%

Fair Trade Export Conventional Export 54%

Local Trade Other

12%

Employees and producers The number of employees varied from 6 to 110. There are fewer women employed than men, however the difference is small. There were some exceptions where the number of female employees was greater than the number of male employees. The number of producer groups involved with each recipient organisation ranged from 2 to 60. The number of individuals in these groups ranged from 5 to 600. The majority were female, in some groups, especially handcraft groups, over 80% of producers were women. Community projects Most of those surveyed had developed projects for the benefit of their organisation or their members. There were a few projects which were solely for the benefit of the community. However, most of their projects involved improvement of productivity and investment in health and social projects. It is also important to mention that some of the producers said that due to low sales levels and the global recession which affected their export volumes, they had found it difficult to find funds to run community projects. Salaries 70% of respondents said that the salary paid was higher than the minimum wage of their country. The rest said that it was the same. There were no reports of salaries below the minimum wage. It is important to highlight that 100% of Central and South American producers receive salaries above their country’s minimum wage. Impact of fair trade The majority of respondents said that they had been able to improve the infrastructure and the working conditions of their employees/members since joining fair trade. However there were some producers who could not make any investment to improve their infrastructure although they are planning to do so in the future.

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Fair price The majority of producers agreed that the price paid for their products covered their costs. However a significant number of producers were not happy with the price paid for their products; in most of these cases the producers’ costs had increased considerably. Producers who responded positively said that the price paid by their buyers is fair and helps to ensure their sustainability and the growth of their organisation. They also mentioned that the fair price received from the buyers helped to create loyalty among their producer members. They also highlighted the fact that advance payments are critical to the artisans' ability to deliver their orders. Some of producers mentioned that in previous years the price was excellent but now fair trade buyers have started negotiating and comparing prices with Chinese products. One producer (of handmade paper) said it was difficult to price their commercial goods competitively while maintaining a good salary for their employees. Another producer reported that they are now concentrating on local markets with lower overheads. They mentioned that there are now much fewer export opportunities for handmade products and that their survival will depend on developing fair trade demand in domestic markets Access to services Water: 100% reported that their members have access to water Electricity: 97% reported that their members have access to electricity Education: 97% of members have access to education. Some of the producers mentioned that they also sponsor students to enter higher education Health service / insurance: 93% responded that their members have health service and insurance. It is also important to mention that 100% of the producers’ members in Central and South America reported that their members have access to all the services above.

Producer customers – survey results Objectives, methodology and process The specific objectives were to understand more about: 

The impact of working with fair trade

The accessibility that organisations have to financing

The social and environmental impact of the organisations within the community

The impact that Shared Interest has on the members of the organisation

We selected 15 producer groups at random (while ensuring a good representation of region, product and scale) to take part in a telephone interview carried out by their Customer Service Account Manager. However only 13 groups took part in the survey. Each producer group was contacted two weeks before the telephone interview by email requesting their participation and providing them with the questionnaire in order to become familiarised with the topics that were to be discussed.

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Respondents interviewed: Customer

Person contacted

Product

Country

Coinacapa

Eulogio Suxo

Nuts

Bolivia

Coopecañera

Karen Rodriguez

Sugar

Costa Rica

La Alianza

Christian Mora

Coffee

Costa Rica

Elikem

Winfred Gelli

Sugar, chillies, cocoa

Ghana

Java Ixora

Novi Kusumawardhani

Handcrafts

Indonesia

Namayiana

Catherine/Leah

Handcrafts

Kenya

Trinity Jewellery

Joseph Muchina

Handcrafts

Kenya

Prodecoop

Guillermo Boquin

Coffee

Nicaragua

Pangoa

Esperanza Dionisio

Coffee

Peru

Intercrafts Peru

Moner Lizana

Handcrafts

Peru

Tocache

Gustavo Sigarrostegui

Cocoa

Peru

Swaziland Indigenous

Chris Sikhumbuzo

Natural oils & creams

Swaziland

Gourmet Gardens

Clemens Fehr

Vanilla, cocoa

Uganda/DRC

What has been the main benefit of working within fair trade? There were several areas where the producers felt that they have benefited from being part of fair trade. They felt they were treated as equals, able to interact with more groups internationally, to become known, to share experiences and to find solutions to issues if needed. Fair trade had also opened doors to markets and these experiences had given them ideas to improve their products. Fair trade buyers give the producers assurance that they will receive prompt payments. They also feel that partnership in fair trade is long term. An important point mentioned is that they have more accessibility to obtain international as well as local funding. The certification has helped some producers to be able to export their products. As for the price some producers said that the benefit is greater when the stock price is low, especially for coffee producers; others think it helps to provide the best price ensuring small producers can receive timely payments covering production costs. It was also mentioned that fair trade has given them the opportunity to access training and some buyers reinvest part of their surplus back to producers supporting them with capacity building. What has been your experience of accessing credit locally and internationally? Locally – the general feedback was that the interest rates are higher and in some cases the repayment periods are shorter. Local banks require collateral that some producers are unable to provide. In certain countries although the interest rates are lower, the requirements to access the credit are not possible to obtain, with too much bureaucracy involved. Internationally – the producers think it is beneficial to have a line of credit that supports fair trade as it helps them to access other lines of credit which usually offer flexible repayment methods. International pre-payments in addition to the pre-finance from Shared Interest have helped some producers to do much more than they would usually do with the buyers’ finance only. Although some international lenders have started to request physical/real collateral, being part of fair trade has been a key element to obtain credit.

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Since working with fair trade organisations, do your members have better access to basic services/needs? (water, electricity, health services / insurance, education) In most cases the services already existed, however working with fair trade has helped the organisations to improve, maintain and to cover the costs of these services. Some groups allocate funds to health and education projects and in some cases they have assisted their members to improve their homes or to buy land to build their homes. In other cases the producers lived in very poor conditions and were unable to access basic services, but since they started working with fair trade and obtaining better prices for their products, they now have access to these services. In a specific case our loan had helped the organisation to get electrical connection for the community. Other additional benefits were also mentioned by the respondents to the survey. These included improving monthly income, helping to pay FLO certification fees, purchasing their own land and making improvements to their homes. Has your organisation developed social projects in the community? Due to lack of funds some organisations cannot run social projects; however the majority of the producers interviewed provide training in areas like product diversification, environmental stability, pricing techniques and training specifically for women. Some of the organisations offer flexible working hours especially to parents to be able to look after their children and in some instances the organisation pays for the children of members to attend school. For older children training is provided in specific skills like cupping and preparing coffee so they can earn extra income. Some handcraft organisations open their offices to the community offering library services, water and toilet facilities. These types of organisations have also helped their members by letting them use their warehouses as a workshop at no cost. In some cases providing them with machinery and educating them in international designs and quality standards. Social projects have also focused on improving infrastructure within the community by providing solar dryers in the case of coffee producers or building bridges and homes for the poorest members of some other groups. Has your organisation developed environmental projects in the community? As certified organic and fair trade producers some of the organisations are already advanced with regard to environmental projects. Some have run projects planting trees in schools and public areas, providing farmer training in environmental protection awareness and sustainability of the products. Some groups use recycled materials ensuring environmentally-friendly techniques for example producing natural fertilisers and working towards the reduction of pollution. Please give examples of how you share financial reports with your members Most of the organisations have monthly Board meetings to discuss their current orders, expenditure and projects. Then every quarter or half-year the Board will report results to its members submitting updated reports which are discussed either to be approved or rejected. In the case of smaller organisations, the management team shares this type of information when they visit their producers taking advantage of the transparent relationship they have with their artisans.

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Does your organisation work with NGOs? Do you receive grants? Do you receive assistance/training? Out of the thirteen producers interviewed six had not worked with NGOs, two had worked with some in the past and five groups were currently working with NGOs. In general most of the assistance from NGOs is with funds to hire consultants and/or towards training and technical assistance with experts on design, production and business practices. Buyers also assist groups by sending trainers to the organisations to work on product development and also update them on trends in the market. Some organisations like WFTO Africa organise workshops on pricing, marketing and shipping. Some NGOs also cover costs of trips so the organisations can attend fairs and exhibitions. What is the main impact of this support from NGOs? The main impact of the support received has been that members learn new techniques and skills which differentiate them from other producers. In some cases this gives them a new profession, being able to generate income for their families, covering educational and health costs among others. These programmes have also helped the groups to add value to their products which facilitates access to different markets. These projects have also given the producers awareness in relation to labour regulations, quality of the product, organisation and function of farmer groups and participation in training. As a result of some health projects, the benefit has been better family planning by setting up health clinics. Does your organisation have funds/reserves to cover unexpected losses? Half of the groups have a fund or reserve to cover unexpected losses. In the case of second level organisations, their first level members are the ones who would back them in case of emergencies. The remaining producers do not have the capacity to keep a reserve and in some cases are trying to obtain a grant for this purpose. How is the service provided by Shared Interest helping to improve the lives of the members of your organisation? Overall the view and feedback is positive and in some groups the service has been fundamental for the success of the operations due to the nature of some products. In some cases it has enabled them to obtain fixed assets, to support families and to pay certification fees by splitting payments through their account. Shared Interest’s lines of credit have offered the organisations working capital and liquidity at a low interest rate without requesting collateral, also facilitating their buyers’ payments. The groups have been able to develop their goals in education and health. Some producers provided feedback in relation to our service; they mentioned that the service has been good, fast, efficient and flexible. Some examples of how their lives have been improved include being able to access pre-finance at a reasonable cost over a long term, not having to pledge security, being able to purchase assets for the business and making progress with education, health and environmental projects. The examples mentioned have a direct impact on the organisations which in turn leads to improvements in the lives of their members.

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Buyer customers – survey results Objectives, methodology and process The main objective of the survey was to help us understand the social impact of working with fair trade and Shared Interest. The specific objectives were to understand more about: 

The impact of Shared Interest’s service and how we can improve this

How the buyers support their producers

How the buyers are promoting fair trade

Our customers’ environmental practices

We selected nine buyer organisations at random (while ensuring a good representation of region and product) to take part in a telephone interview carried out by a member of the Customer Services Team. Each customer was contacted by email two weeks before the telephone interview. The email sent included the questions we would be asking in order to give them time to consider their answers. Customers interviewed Customer (buyer)

Person contacted

Product

Country

Cafédirect

Rachel Ford

Coffee

UK

Zaytoun

Heather Masoud

Olive oil, couscous

UK

Equal Exchange Inc.

Brian Albert

Coffee

USA

Andean Naturals

Marcos Guevara

Quinoa

USA

La Siembra

Henk van der Molen

Commodities

Canada

GoGo Quinoa

Martin Bilodeau

Commodities

Canada

DWP

Thomas Hoyer

Commodities, handcraft

Germany

EZA

Andrea Schlehuber

Commodities, handcrafts

Austria

Bean There

Jonathan Robinson

Coffee

South Africa

How is the service provided by Shared Interest helping to improve the lives of your producers? The responses to this question were wide-ranging although the majority felt that it was difficult to measure the impact of Shared Interest’s service on the lives of their producers. However, they said that our service does provide more opportunities for producers as the advance payment gives them the working capital needed to export their products which helps them to grow their business. The majority of respondents thought that the facilitation of an advance payment improves the producer group’s performance. In addition, some of the buyers mentioned that their Shared Interest facility allowed them to increase the volume of orders and therefore had an impact on the producers’ income. In the long term this represents a positive development for producer groups. The buyers also highlighted the fact that Shared Interest gives both the producers and buyers confidence; producers know they will be able to obtain funds before selling their products which helps them to fulfil their orders and buyers feel confident that the producers will fulfil their orders. This helps to maintain

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long term relationships between producers and buyers, enabling the producers to have a secure income. Can you give some examples of where you have provided financial assistance to your producers, for example, donations or grants? Most of the buyers provide training rather than donations. However there were buyers who mentioned that they do provide grants for specific projects. In most cases the projects are to improve productivity or quality which in the long term benefits both producers and buyers. Buyers also mentioned the importance of the Fairtrade premium which is paid to the producers and used for infrastructure or social projects. Most of the respondents encourage the use of the Fairtrade premium to cover their producers’ small projects. There are some occasions when buyers provide funds to cover natural disasters. Some buyers also provide regular donations to their producers. For example, GoGo Quinoa recently gave 1,000 Canadian dollars to a producer in Colombia to help them with sowing seed. Finally, buyers also like to support producers’ organisations in obtaining their Fairtrade or organic certifications. Can you give some examples of where you have provided technical assistance to your producers for example, design or business training? Most of the buyers support their producers with technical assistance. For example EZA provides their producers with product design, business training, monitoring Fairtrade criteria for product design and training on how to monitor this. Other commodity buyers train their producers in organic-farming to enable them to understand more about the process and its benefits. There are also buyers who support their producers in preparing their annual reports and running their management programmes. Coffee buyers in particular mentioned that they train their coffee producers in coffee price volatility and how to mitigate this. Another means of technical assistance is through buyers sharing cases of best practice with their producers. Coffee buyers also helped their producers to run projects in good agricultural practice and how to improve productivity. Handcraft buyers mostly support their producers by providing help with design. This may be done by the buyers’ own staff or by delivering this support through other organisations with expertise in this area. Some of the buyers do not provide capacity development. However they believe that the fee they pay to the fair trade organisations is used in part to build capacity. Can you provide some examples of how you promote fair trade locally and nationally? Locally - All the respondents said that they do promote fair trade in their communities. For example, La Siembra runs promotions and campaigns about fair trade products in collaboration with Fairtrade Canada; they carry out school campaigns and participate in local trade and consumer trade shows. Another way in which buyers promote fair trade is through Fairtrade Fortnight in their local area when they run campaigns in schools and churches. Internationally - The respondents are part of different global fair trade organisations which promote the international fair trade movement. Most of the buyers invite producers to visit them and finance these visits, which helps producers and consumers to gain a better understanding of the fair trade market. For example, EZA invites producers to visit them and share their experience with the local community. It is clear that each of the buyers promotes fair trade in their particular sector.

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Can you give some examples of your organisation’s environmental practices? All respondents said that they have environmental practices in place. The most common practices are: 

Paper and water recycling

Food composting facilities

Keeping travel to a minimum or encouraging use of environmentally friendly transportation

Biodegradable packaging

Avoiding environmentally damaging materials

Use of organic food in staff canteens

Use of renewable energy sources in offices

Use of environmentally friendly cleaning products

Minimising the organisation’s carbon footprint

Avoidance of chemical fertilisers

Energy saving practices within offices

Carrying out environmental audits

Educating producers in environmental practices and helping them to obtain organic certification

Do you feel there are any other areas where Shared Interest could offer more support All customers were happy with the service provided by Shared Interest and some of them commented that it is excellent. We provide them with loyal and continued support for which they are thankful. Most did not have suggestions for ways in which we can improve our service. However, the majority of them agreed that we should decrease their interest rate in order to encourage them to use their facility more. For example some buyers commented that their interest rate had not changed since they started working with Shared Interest. However, Equal Exchange Inc had a different view as they were happy with the decrease in their interest rate and said that it convinced them that they should be working with Shared Interest rather than their local bank which is less ethical. Other suggestions included: 

Trying to link producer partners to make transactions easier

More communication regarding how the facility works

Promoting WFTO membership with producers

Providing Shared Interest’s service to small scale producers

Participating more in fair trade events

Increasing Shared Interest’s facility in line with the growth of the business

Increasing Shared Interest’s facility more quickly

Working together to build business capacity in South America.

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Commercial buyers – survey results Objectives, methodology and process The specific objectives were to understand more about: 

The impact pre-financing has in producer organisations

Commercial buyers’ perspective of the fair trade movement

The survey was carried out using Survey Monkey, an online survey tool. All information was collected in this way and only a summary of the responses are included in this report. At the end of August 2012, commercial buyers who have contact with our customers with export credit facilities were contacted by email and asked to complete an online survey. A total of 126 buyers in 18 countries were contacted and 9 completed the survey. What is your understanding of the service being provided by Shared Interest to your producer groups? Out of the answers received the understanding was that Shared Interest provides finance in the form of loans, revolving credit or advances for materials which is vital for the implementation of the fair trade supply chain and without which the producers would not be able to process orders. Shared Interest acts as a facilitator between exporters and importers making funds available to the producers to purchase relevant materials enabling them to fulfil an agreed contract. What is your understanding of the impact the pre-finance has for your producer groups? The access to funds during the pre-harvest or early in the supply chain is the most important point mentioned by the buyers. With this they feel that the producers can work with “cash-inhand during the harvest instead of scraping by until post-harvest payments are received”. This process also helps the producers’ organisations to understand how international loans work, developing financial skills and experience. Without pre-finance, some producers would not be able to purchase raw materials, produce and deliver the goods; essentially they would not be able to participate in fair trade. Accessing finance is particularly difficult for producers in developing countries and typically attracts premium charges. Buyers are sometimes required to advance support in order to transact business, this makes developing business a high risk process. The possibility for the producers to have access to pre-finance encourages them to make their own financial plans, opening the opportunity for business and control on both sides. Does your company work with fair trade products because it is easier to use a marketing tool or because of the social impact? Overall the majority of buyers work with fair trade because of the social impact with fair trade being at the heart of their companies. They would not be doing what they are doing just to sell products; selling products for most organisations is a tool for economic and social development. Their fair trade partners form one of the pillars that allow them to embrace ethical business as part of corporate strategies. Some of the organisations take into consideration both aspects; the companies were founded on the principles of fair trade and have been active registered buyers of fair trade products since the movement began. These buyers for instance continue to buy

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approximately 95% of fair trade products, but also recognise the market forces that allow the companies to continue. Do you offer pre-payments to producers or help them to obtain financial resources from social lenders? Some buyers offer pre-payments to their producer groups as part of their responsibility in practising fair trade and are open to work with international finance organisations that supply producer groups with resources. Some buyers do not provide pre-finance. In some cases they did but the nationalisation of their local bank has made this complicated, therefore they appreciate the work of social lenders to be able to provide sufficient finance to their suppliers. What is your overall experience in dealing with fair trade producers? In general the experiences have been positive with some organisations exclusively dealing with fair trade producers. In comparison to non-fair trade and/or large established producers, fair trade producers sometimes are more challenging; however they feel that this is a much more rewarding way of conducting business. Are there any areas where you think Shared Interest could improve the service we provide? The overall opinion was that currently they cannot think of any area where Shared Interest could improve. Some buyers mentioned that Shared Interest has been vital to their organisation and to their ability to provide economic and social development through trade.

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Progress (on recommendations made in last year’s social accounts) 

‘Progress the development of the full business-wide website incorporating the availability of communication for producers, in addition to expanding our range of reporting options.’ – Progress has been made on this project. At this point we have redeveloped the transactional element of the website which is used by our buyers to process their daily payments. The next phase of the project is to develop access for producer organisations.

‘Continue to develop relevant indicators to demonstrate positive social impact of lending.’ – We explored an alternative approach in an effort to demonstrate our social impact. The approach was to review the financial performance of a selection of producers over a historical time period where they had been borrowing from Shared Interest. A resume has been included within Activity 3 and we will continue to develop the methodology.

‘Develop further the automated collation of data for annual reviews of accounts.’ – We have introduced a workflow process to assist the Customer Service Account Managers in their efforts to gather review information. Further development of this recommendation will come through the website development.

‘Review and assess the initial impact of establishing a presence in West Africa.’ – Our decision to share an office with Fairtrade Africa in Accra, Ghana has borne fruit. Our new RDE, John Dossou, works closely with their representatives and is aware of which producers are about to be certified. From their point of view, they are better able to point producers in the right direction to access finance. There is clearly a need for our lending products although the uptake has been slower than anticipated but we have focused solely on Ghana since inception. The level of financial information available is limited and the producers are reluctant to forward any details until a relationship has been physically established.

‘Start to monitor the impact achieved by lending from the new Comic Relief Social Investment Fund. Use this knowledge to help us to develop further indicators and start to incorporate these across our lending portfolio.’ – We have developed a detailed Monitoring, Evaluation and Learning Plan which will be used to capture the required details. We were unable to recruit as early as we would have liked due to a paucity of satisfactory candidates but a new Monitoring and Evaluation Officer will start working with us at the beginning of the next financial year at which point all necessary baseline assessments will be carried out. It is our intention to continue this work during the coming financial year.

‘Review how to approach recipient producer groups for feedback.’ - Aside from making direct telephone or Skype communication which can be challenging, the only available option is to contact them via email. We have found that the most efficient way to manage their feedback is via our survey software.

‘Look to respond to comments from the survey of potential customers.’ – This work has been and will continue to be incorporated into our producer committee work.

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Conclusions (from this year’s social accounts) 

We have increased the number of producers we are lending to by eight (net increase) and as a result we have increased the total value lent by 10% to GBP 6.2m.

We have seen huge growth in our lending to South America where we have experienced a growth of GBP 2m against last year. This increased lending has been predominantly in Peru.

Despite only growing net customer numbers in Africa by one, we have seen the average amount lent there increase by GBP 500k against last year.

Buyer organisations are showing less reliance on Shared Interest which is reflected through lower lending.

Coffee continues to be the product against which we lend the greatest amount. In the last year we have seen good growth in our lending in fruit, in particular bananas.

Recommendations (progress to be reviewed in next year’s social accounts) 

Continue the development of our website to incorporate ability for producers to access their account details, submit review information and view reports.

Consider the feedback provided from the producer committees on how we can improve our annual review process.

Monitor the impact achieved by lending from the new Comic Relief Social Investment Fund. Use this knowledge to help us to develop further indicators and start to incorporate these across our lending portfolio.

Continue to develop the methodology introduced this year to try to demonstrate the positive social impact of our lending.

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Introduction The Shared Interest Society operates as a co-operative, owned and controlled by its members. We also have other supporters including our volunteers as well as other organisations and individuals. Our membership, although still predominantly individuals, continues to diversify and includes faith groups, Fairtrade Towns, small businesses, schools and community organisations. The table below shows how membership and share capital have changed over the last five years. Appendix 3 shows these figures since our first year of operation in 1990. Although we have had a high number of new accounts opened this year, we have also seen an increase in withdrawals and account closures, primarily through members consolidating their finances as reported via the correspondence received. Share capital and membership in the last five years 2008

2009

2010

2011

2012

Share capital

£23,629,933

£26,006,924

£27,675,694

£28,207,927

£28,669,111

Membership

8,668

8,743

8,837

8,763

8,790

Social return Investing our funds wisely and ensuring a social return relates to our lending activity. As share capital is invested with Shared Interest to enable us to make loans to fair trade businesses, we have a responsibility to our members to lend wisely and in ways that will ensure a social return. We must also exercise due diligence and consideration in our lending. Investing enables the investor to use their funds in a way which creates value; for Shared Interest members this value is a social return. We interpret social return as “the intangible ‘feel good factor’ of ethical investment and / or charitable donations” and over 50% of our members identified this as being one of the things they most value as a member of Shared Interest (Membership Survey 2011). Social return is highly subjective but the information covered in Objective 1 shows the measurable social impact of our lending.

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Activity 1: Engaging with and valuing our members and supporters Understanding our members and supporters Operating as a co-operative we have a duty to engage with our members. Understanding our members and other supporters also offers us the opportunity to learn from them and to develop our work across all areas of the business. To build our understanding of our members we conduct biennial member surveys covering a variety of issues with the last survey being conducted in 2011. This year we focused on developing our understanding of our volunteers (ambassadors (73) and volunteers (47)) and we conducted our first volunteer survey for social accounts. The aim of this survey was to develop our understanding of the role and value of volunteers within Shared Interest as well as helping us develop our volunteer scheme. In future we intend to conduct member and volunteer surveys in alternate years.

Member events AGM This year’s AGM was held on 16 March in Oxford and was attended by 180 members, the highest recorded attendance for a Shared Interest AGM. Also 1,429 members took part in the postal ballot to elect members of the Board and Council. Members were addressed by Ian Barney, Managing Director of Twin Trading (at the time of our AGM) who spoke of TWIN’s work with smallholder farmers. Willington Wamayeye, Managing Director of Gumutindo Coffee Co-operative, followed and explained the challenges faced by Gumutindo, including the effects of climate change. This year also saw contested elections for our Council, resulting in the election of two new members to Council and the re-election of one member. Following presentations by Shared Interest staff and AGM business, members were invited to participate in one of three discussion groups. The discussion topics this year were: lending to fair trade, view of risk and the Shared Interest Foundation. The topic of risk is discussed further in Activity 2. Edinburgh event As part of our celebrations for World Fair Trade Day we held a members’ event in Edinburgh on 11 May which attracted 65 guests, including 39 members. This event enabled us to thank our members for their continued support as well as tell their guests a little more about our work. Some of those attending had been members of Shared Interest since the early 1990s and this was an excellent opportunity for Shared Interest staff, members, volunteers and partners to meet. We intend to hold similar regional member events in other areas in the future.

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Volunteer scheme We currently have 120 volunteers, with the majority of these also being members of Shared Interest; almost 80% of respondents to our volunteer survey were also members (see Appendix 4 for full survey results). Our first volunteer survey for social accounts was conducted using Survey Monkey via email to our volunteers; a small number were posted surveys where the volunteer does not have regular access to email. The survey was sent to our 91 volunteers as at August 2012 and we received 36 responses in total. The volunteer scheme encompasses different types of volunteer (see Glossary for terms ‘ambassador’ and ‘volunteer’). It provides a valuable opportunity for members and nonmembers to get involved in supporting the aims of the organisation by volunteering their time, skills and knowledge. Shared Interest values many things about its volunteers but it is important to understand how our volunteers perceive their value to Shared Interest and also to themselves. The first graph below shows the values which volunteers get from volunteering with Shared Interest and what motivates them in their role. All options were selected to varying degrees as respondents could select up to three but give an order of preference. ‘Supporting Shared Interest in its work’ is of most value to volunteers followed by the opportunity to support overseas communities and the connection with fair trade. This shows, as we would perhaps expect, that our volunteers support our mission and are involved in volunteering with us because of this. What do you value about being a volunteer with Shared Interest?

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This second graph shows the value volunteers think their volunteering has for Shared Interest. Volunteers consider that they are valuable for a variety of reasons with the most frequent response being for the ‘support in promotion of Shared Interest’, followed by values around the opportunities they offer Shared Interest to reach different audiences. What do you consider to be the value of volunteers to Shared Interest?

In June 2011 we launched a new database to enhance volunteer recruitment, management and monitoring. The system is able to record volunteers’ details, correspondence with staff and events that are attended on behalf of Shared Interest as well as attendance at training sessions and meet-ups between volunteers. It is also useful in volunteer retention as we can now record the reasons that people leave the volunteer scheme. We are also able to monitor enquiries and investment from volunteer activity and in the future we are hoping that our volunteer database will enable us to calculate a cost-benefit analysis of volunteer hours given to the Society.

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Valuing volunteers Results from our survey revealed that one third of respondents had been a volunteer with Shared Interest for over five years. This shows a level of commitment to and satisfaction with their roles. How long have you been a volunteer with Shared Interest?

To understand our volunteers, how we can maintain their interest, enthusiasm and motivation, we need to understand how satisfied they really are in their roles. We are encouraged to note that over 75% of those who responded are ‘very satisfied’ or ‘satisfied’ in their role as a volunteer. However, we recognise the need to increase levels of satisfaction among those less satisfied as well as maintain and build on the satisfaction of all volunteers. Overall, please rate your level of satisfaction in your role as a volunteer with Shared Interest

One of the ways in which we aim to engage with our volunteers is through offering events for them to attend to meet each other, staff and learn more about Shared Interest. In the past we have faced difficulty in organising such events due to low interest so we took this opportunity to ask volunteers for their own input regarding what events they would like to see. Responses included a large number wanting to network with other volunteers but also

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showed an interest in events with guest speakers and further training opportunities. These responses will all be taken into consideration when planning future activity with volunteers. Many of the other responses to our volunteer survey, for example about communication with volunteers, will be helpful in shaping the development of the volunteer scheme and ensuring we continue to meet the expectations and needs of our volunteers. Volunteer events and activities Our volunteer database includes a map function which enables us to see which volunteers are closest to events and to one another so that we can co-ordinate our efforts better and link volunteers together in geographical regions. With the introduction of a secure volunteers’ area on our new website we will also be able to encourage greater networking, ideas-sharing and communication between volunteers. This year volunteers attended 76 events on behalf of Shared Interest across the UK. As we build our records of events attended, through better recording means and greater contact from our volunteers on events they are attending, we hope to see this figure increase. Volunteers’ Week Volunteers’ Week is a national celebration of the hard work and commitment of volunteers throughout the UK. Organisations are encouraged to celebrate their volunteers’ achievements and say ‘thank you’ for their continued support. This year to mark Volunteers’ Week we sent each of our volunteers a special thank you package containing a box of handmade Fairtrade chocolates and a certificate in recognition of their support. Training and meet-ups This year we conducted 10 training sessions across the country, providing induction training to 32 new volunteers, compared with seven training sessions and 34 new volunteers trained last year. We also held a number of meet-up events enabling volunteers, old and new, to meet each other and members of staff. One of these meet-up sessions was held in collaboration with the Bristol Fairtrade Network to enable greater networking and communication between Shared Interest and this group and we hope to partner with other organisations for similar events in the future. We redeveloped our induction training with input from ambassadors and in response to changes in the volunteer scheme. Volunteer resources This year we developed a toolkit of resources to equip volunteers with the information they need to promote us effectively and ensure they can talk confidently about our work. These resources are available to download from the volunteer section of the new website and we have produced a volunteer folder which volunteers can use to store hard copies of all their resource materials; these can be ordered from the office. We provided an updated Powerpoint presentation by USB, also available to download for those with previous versions if they wish to update this for themselves. Likewise the films we produced this year are available to volunteers on DVD and can be requested from the office. Volunteers continue to receive a bi-monthly e-newsletter updating them on various activities across the Society, including call to action requests for support at events. This e-newsletter is currently distributed to 174 recipients with 53% of these reading the newsletter. It is also possible to subscribe to our volunteer e-newsletter via our website.

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Publications and films Shared Interest produces a number of key documents covering both the Society and Foundation, see Appendix 5. This year QR, our newsletter, was given a refreshed look to make it feel more like a magazine and make the publication more accessible to members as well as more memberfocused. We wanted QR to show members how their investment was helping others but also to update them on current issues in the general fair trade and co-operative worlds. In 2011 we redesigned the layout and content of our Annual Review to ensure it remained consistent with our brand and other promotional materials. We introduced a new members’ pack this year which enables members to keep their documentation in one place and contains key information on managing their account. We also sent all our members, as well as volunteers and partners, a festive mailer in December which featured customer Gourmet Gardens, a vanilla producer from Uganda. As we have done for the last few years we produced new films highlighting our work and that of our customers. This year we produced four films, two of these focused on Society customers: Salom, a handcraft producer in Kenya and BOS and Cepibo, banana producers in Peru. We also produced a film about the training in Rwanda run by the Shared Interest Foundation and for the first time we produced a film about our investors. These films are available online and are used at various events to illustrate our work.

Website We updated our web presence this year by developing an interactive and dynamic website, along with a secure area designed to complement existing methods of keeping members updated on their share account. The secure area, is a major development following a growing demand for online services from our members. (Our 2011 member survey showed that 20% of respondents wanted to manage their accounts online). It provides a portal for members to view their share account details and access messages and resources. The secure area of our website was launched in July 2012 and by 30 September 2012 we had approximately 1,500 members signed up to use it out of our total membership of 8,790.

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Activity 2: Assessing our members’ and supporters’ satisfaction with the utilisation of their investment The most effective way of assessing how satisfied our members are with the use of their investment is through asking them directly. In last year’s members’ survey 95% of members who responded stated they were either ‘very satisfied’ or ‘satisfied’. The chart below shows the changes in satisfaction of members over the last decade from 2001 to 2011, excluding 2003 for which no data is available. Analysis of members’ satisfaction from members’ surveys conducted 2001-2011

Satisfaction appears to have increased significantly since the 2001 survey results, with the majority of respondents ‘very or extremely satisfied’ for the following three surveys (2005 – 2009). There was a change however last year with most respondents being ‘quite satisfied’; although there was a smaller difference between this and the second most popular response in 2011 than in previous years. Although we did not conduct a members’ survey this year there are many other ways in which we can understand our members’ views. Discussions and feedback at our AGM, although giving anecdotal and qualitative data, are a valuable opportunity for us to understand the views of our members. Through written, email and telephone communication our members also keep us informed of their opinions. Although some of this communication is about the general organisation, much of it relates to how satisfied our members are with the way in which we use their investment.

Risk as an indicator of satisfaction Part of our mission is to ‘take and share risk because we value the difference that fair and sustainable trade makes’. Risk is therefore inherent to the work that we do and we are explicit about this to our members. One measure of the satisfaction of our members is their

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attitude to the level of risk we take with their investments. Risk is highly subjective and one member’s perception or willingness to take risk may be very different to that of another member. Previous survey results have shown only slight variation over different survey periods in our members’ satisfaction with the level of risk we take. The large majority of responding members indicating they view the risk we take as ‘about right’. However, in the last decade there has been an almost total reversal in the smaller percentages of members wanting us to take more or less risk. In 2001, 12% of respondents wanted less risk and 1% more risk in comparison to 14% wanting more risk and 0% wanting less risk in 2011. While again it is impossible to say why this trend has reversed it does indicate a change in our members’ appetite for risk with more members wanting to push us to take more risk with their investments now than in 2001. Analysis of members’ attitude to risk to their investments from members’ surveys 2001-2011

At this years’ AGM one theme of the discussion groups was ‘view of risk’ and an outline of this discussion can be found in Appendix 6. The responses to the discussion showed some members believe Shared Interest should minimise the default rate, defaults being an indicator of the risk we take, but others felt that without bad debts Shared Interest was not doing its job correctly, possibly because they consider that it indicates too little risk is being taken with the lending. For more on lending, risk, bad debts and default rates see Objective 1. We also received an increased number of enquiries, both from potential and existing members, around the issues of risk and bad debts this year. Although anecdotal we consider this to be in some part a result of the current economic situation where greater caution is being exercised by investors looking to make or increase investments. Trust in financial institutions is also a consideration factor when investing where transparency and accountability become increasingly important. Although risk cannot be viewed in isolation and does not alone illustrate member satisfaction it is a strong indicator of this. It is interesting to note the changes in attitudes to risk over the last 10 years and it will be useful to track this in the future too.

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Distribution of account size

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Activity 3: Growing and developing the membership and supporter base Our membership base had a net increase of 27 members in the last year with 299 new members and 273 closed accounts. The number of closed accounts has remained largely consistent at 3% of total membership for the past five years. Recent marketing activity has focused on retention and development of the existing membership and the recruitment of new members from a similar demographic profile .

Resources Gift packs In the autumn of 2011 we launched the Shared Interest gift pack through which an account can be opened on behalf of someone else. The recipient receives a gift box detailing the fact that a Shared Interest account has been opened on their behalf. They are then able to transfer the account into their own name and invest further funds up to the maximum of £20,000. We have seen 12 accounts being opened as gift packs, all purchased as gifts by existing members. The gift pack has been well received at a variety of events and in the media, with a feature in 'Country Weddings' magazine, and we plan to promote the gift pack much more widely in 2013. Refer a friend postcard Word of mouth continues to be a successful means of generating enquiries and recruiting new members. To support our existing members in spreading the word of Shared Interest we have developed a series of postcards which are attached to the back page of QR which can be passed on to friends and family. Other materials We developed a new enquiry pack for potential members giving an overview of Shared Interest and details of how to open an account. We also produced a new leaflet which gives a short introduction to Shared Interest with a tear-off section which can be sent to the office to request an enquiry pack. We produced a key messaging booklet for staff, volunteers and our Board to ensure we deliver a clear and consistent message to audiences.

Publicity activity We carried out a direct mailing campaign to almost 4,000 enquirers who had requested more information from Shared Interest but had not opened a share account. This mailing, in partnership with Cafédirect, invited the recipient to sit down with a cup of Fairtrade tea, using the tea bag within the mailing from Cafédirect and learn more about Shared Interest. We have so far received invested funds of almost £9,000 as a result of this campaign. We ran 12 insert campaigns this year including a series with The Big Issue and an accompanying website link. We also had 12 advertisements across a variety of publications, including one in a special ethical investment supplement of The Guardian issued in February. Many of the inserts and adverts run this year were placed in publications read by our existing membership (from Members Survey 2011) and therefore are likely to be read by others who may be interested in our work.

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We have been recognised by the Guardian as a sustainable social enterprise becoming part of The Guardian’s Sustainable Business Best Practice Exchange. We are delighted to be part of this network that shares articles with other like-minded businesses who are also working together for a common aim. For the first time we measured the Equivalent Advertising Value of our press coverage which this year equates to £98,044. For a definition of this measure see the Glossary. Radio coverage Shared Interest was offered two slots with BBC Radio Newcastle in July (Thursday 19) and August (Wednesday 8) 2012. The theme for both was to explore banking alternatives, given the distrust of high street banks in the current climate. During Fairtrade Fortnight 2012 we collaborated with Smooth Radio and ran a series of sound-bite adverts, featuring some of the investors who appeared in our investor film, to raise awareness and investment for Shared Interest. These adverts were played over a sixweek period, including during Fairtrade Fortnight, and were accompanied by advertising on the radio’s website. Online marketing activity As previously mentioned, we redesigned our website and we have introduced a number of new applications. A key feature to engage new and existing supporters is the global map showing to where we make payments as well as conveying the social impact of members’ investments through producer case studies and films. By integrating this social accounts document throughout the website, we aim to increase accessibility and readership of the report and emulate how the process is embedded in our work. This has been achieved by a number of strategically-placed hyperlinks to draw people into social accounts from web pages and vice versa. It is hoped that members and general users alike will also enjoy reading the report as an e-book where they can visit specific pages of interest via the index list, as well as flicking through the contents generally. Features such as clear calls-to-action around getting involved as volunteers and opening a share account are showcased. The content is created and controlled by the Supporter Relations Team. This means that emphasis can be placed on key areas such as the Gift Pack or volunteer recruitment according to specific campaigns at any given time. From 1 October 2011 to 30 September 2012 we have had 37,921 visits to the website, compared with 31,103 for the same period last year, an increase of 22%. The number of unique visitors to our website, visitors who have not previously been on the website, has increased from 20,547 to 25,841. The average duration of a visit has decreased from 2 minutes 45 seconds last year to 2 minutes 30 seconds with the number of pages viewed per visit also decreasing from 2.93 last year to 2.91 this year. Specifically, since the launch of our new website in July we have seen an increase in the number of unique visitors, those who have not previously visited our website, from 4,971 for the period July to September 2011 to 8,232 for the same period in 2012. These figures show traffic to our website has increased following the launch of our new site. This year we ran online advertising with The Tablet, The Guardian Ethical Finance Pages, Smooth Radio, The Big Issue and Facebook. In total, advertising accounted for 1,726 additional visits to the website during this period.

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Social media We regularly use Facebook to engage with our fans and spread the word about Shared Interest, fair trade and ethical issues. At September 2011 we had 1,000 Facebook fans and this year we have increased this to 1,550. We run three official Twitter accounts, @SharedInterest @si_foundation and @SIVolunteers, through which we regularly tweet about fair trade and ethical issues to raise awareness and engage with people. On Twitter we are the most influential in the world (according to wefollow.com) for the tag ‘Fair Trade’. Our follower base has grown from 4,500 to 5,839 followers since September 2011. Some staff also use Twitter for networking, building contacts and as a knowledge base.

Events and activities Regional focus We have continued to develop activity across the country but to enhance our Supporter Relations Activity we have concentrated our efforts in eight key regions this year: Bristol, Cardiff, Edinburgh, London, Northern Ireland, the North East and North West of England and Oxford. These regions were identified as areas where there were existing networks, partnerships and activity we could connect with and build on and also show some crossover with an independent review which identified 10 ethical investment hotspots across the UK including the South West and Yorkshire. We have also developed a map of the UK which shows where our own membership hotspots are, see Appendix 7. All of this information is useful in planning activity and events for members and recruitment activity for membership. Awards Recognition through awards gives us a further opportunity to thank our members and volunteers for their continued support and this year we made 14 award submissions. This was a successful year for Shared Interest as we were shortlisted in the Observer Ethical Awards and Third Sector Awards. We were also longlisted in The Guardian Sustainable Business Awards, in the Social Impact category, and we made it through to the third round of the Private Business Awards.

Development of supporters Shared Interest has historically only been able to grow its share capital through the opening of share accounts with invested funds. However, in the last 12 months we have brought funds in via two different routes as described below. Comic Relief This year we embarked upon a six-year Social Investment Fund pilot with Comic Relief. The pilot scheme enables us to reach further and explore new lending opportunities which will be very exciting for both Shared Interest and Comic Relief. The loans made through this pilot scheme will be handled in much the same way as we currently operate but there will be a greater element of social impact assessment. Some of these social impact outcomes, agreed with Comic Relief, are based on the businesses and communities themselves and will push us to achieve maximum levels of social impact. Bond offering In 2011 a member couple wishing to provide more financial support to the Society, lent a sum of £40,000 to Shared Interest Society on a five-year bond.

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Progress (on recommendations made in last year’s social accounts) 

 

‘Implement the new Supporter Relations Plan which focuses activity on retention of existing members, development of existing members and recruitment of members through referral and promotion.’ - We have implemented this plan and evidence of each point referenced has been given in these social accounts. This work is on-going and future progress will be reported. ‘Improve communications for existing and prospective members.’ - We introduced a number of new resources for existing and prospective members as well as the development of our new website including a secure facility. ‘Continue to consider demographics in recruiting new members.’ - This continues to be an important factor when we plan our activities. ‘Engage with our volunteers better, improving retention and increasing the number of ambassadors. Record hours given and evaluate cost/benefit analysis.’ Considerable progress has been made on this with the development of a volunteer survey and, as our monitoring and evaluation of the scheme develops, we will be able to show more detail. ‘Implement robust monitoring and evaluation methods across all supporter relations activity.’ - We have created a new volunteer database to record more information on our volunteer activity and work is starting on a KPI project across all areas of the organisation which will offer us more KPI data next year. ‘Review and feedback on the information received via the members’ survey in QR.’ This was done in issue 82 of QR.

Conclusions (from this year’s social accounts)   

We have developed our understanding of our volunteers and this will continue to inform the development of the volunteer scheme. Membership has grown and the co-ordinated approach of the Supporter Relations Team, including taking a regional focus, enhances this growth. A variety of media, events and activity continue to be important in engaging with members and recruiting new members.

Recommendations (progress to be reviewed in next year’s social accounts)     

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Continue to alternate membership and volunteer surveys. Learn from and develop volunteer scheme following responses from volunteer survey. Evaluate website secure area for members. Consider how to draw out a deeper understanding of members and volunteers through surveys and other means. Record hours given by volunteers and carry out a cost/benefit analysis of the same.


for the year ended 30 September 2012

Introduction Shared Interest Foundation, the charitable arm of Shared Interest, extends the range of services provided to producers in the developing world by offering appropriate assistance to producers through the delivery of training and capacity building projects and by operating a Livelihood Security Fund. In addition to these on-going producer-focused programmes, we make an annual donation of £5,000 to the Fairtrade Foundation to support its work promoting Fairtrade. This year our donation part-funded the Spring 2012 issue of Fair Comment, the Fairtrade Foundation’s newsletter. The newsletter featured a double-page article on our work with a producer focus on Quazi Design in Swaziland (http://fairtrade.clikpages.co.uk/faircomment/spring2012/). We believe that helping small businesses to grow is a vital way of fighting poverty in the developing world. We provide practical support to fair trade businesses and evaluations have shown that our work has changed lives in really tangible ways. We give much-needed business training to allow individuals to create sustainable employment in the community. By nurturing these fledging enterprises we aim to be a catalyst for their success. We are currently carrying out a strategic review which is considering what work Shared Interest Foundation should focus on in the future. As part of the consultation for this a significant number of partner organisations and producer representatives are being consulted. This will ensure that our future project work responds to the needs of the service receivers and is appropriate in the local context. Since this is on-going at the time of writing it is not possible to report on the feedback and outcomes at this stage but a full update will be given in next year’s social accounts.

Activity 1: Providing business support services that are responsive and appropriate to the needs of the service receivers Producer training - summary Collaboration with local partners and experts who are familiar with the needs of the service receiver continues to ensure our training projects are appropriate to the local context. Carrying out a needs assessment prior to training ensures that the programme delivered is appropriate to the needs of the service receivers. In 2011/12 Shared Interest Foundation collaborated with the following local groups: Partner organisation

Country where the NGO is based

Swaziland International Fair Trade Association (SWIFT)

Swaziland

Fetola Mmoho

South Africa

Yirgacheffe Coffee Farmers’ Co-operative Union WFTO Africa (previously known as COFTA)

Ethiopia Kenya

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Project Swaziland Craft Industry Development Programme Skills for Sustainable Livelihoods training Ethiopia Coffee Co-operative Project Rwanda and Swaziland Projects


for the year ended 30 September 2012

During the year we trained producers in three countries: Swaziland, South Africa and Ethiopia. The groups involved are working within or towards fair trade principles and are run as socially responsible businesses. Organisations trained

Country

Project

Swaziland

Craft Industry Development Programme *

129

South Africa

Skills for Sustainable Livelihoods training

19

Ethiopia

Coffee Co-operative Project

24

* 107 individual traders and 22 co-operatives/organisations

In addition, although our previously funded work in Rwanda has been concluded, we have been in contact with RWAFAT and REDO regarding future support. We were encouraged that RWAFAT secured capacity building support from the Belgian development agency BTC and within our strategic review we are considering the best way to continue to support these organisations and their producer groups.

Swaziland Craft Industry Development Programme This year saw the first full year of our three-year training project in Swaziland, funded by Comic Relief. Following an approach by the country’s leading handcraft organisations, this project was designed based on extensive research of the requirements of the local handcraft sector, including service receiver interviews and a pilot training project. The project design also benefited from learning from the Rwanda project, particularly in relation to providing training at an appropriate level to the producer groups’ needs and progression through the levels. Three levels of handcraft enterprises, ranging from small survival enterprises to those who are already exporting, are benefiting from training, with the most promising businesses graduating to the next level of training at the end of each year. The project is being managed through an in-country partner, SWIFT, which is enabling close management of issues and adjustment of the training to best suit the specific needs and abilities of the participants. The latest project report for the year to September 2012 highlights how by conducting tailored “business-related trainings ... focusing on growth and development” SWIFT has ensured “each module subsequently built on the previous module thus cementing concepts learned in previous modules and equipping artisans and businesses with knowledge to develop and improve on production processes and design new high quality products”. The project design included provision of training in business and financial skills, market access and fair trade, as well as HIV/AIDS in the workplace. Our efforts to secure additional funding to broaden the scope to include environmental work, as a response to producer feedback, have as yet been unsuccessful. The project design around product development training has evolved in response to producer needs. During the workshops artisans were challenged to come up with new products and find new locations for their new products. It was noted during follow-up that some artisans were resistant to changing their products. A handcraft competition was designed to incentivise participants to complete new products with the winners being offered opportunities to sell their products in level 3 businesses. (See Activity 2 for a case study on product design.)

Skills for Sustainable Livelihood Training, South Africa Shared Interest Foundation has been working with Fetola, a social and economic development agency based in Cape Town, since 2007. This relationship has enabled us to

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understand the needs of the craft sector in South Africa and to develop and fundraise jointly for the Skills for Sustainable Livelihood programme that was delivered this year. With Fetola’s local knowledge and based on experience gained through the previous training we had delivered in collaboration with them, it was clear that the craft sector had huge potential but most producers lacked important business skills. The Skills for Sustainable Livelihoods programme was designed to meet the needs of craft entrepreneurs by providing practical business skills, business support and an awareness of fair trade. The focus was on blackowned business and social enterprises with the aim of improving their long-term sustainability and creating a pool of local expertise. Encouragingly, not only did working with a local partner mean the training fitted the local context and producer needs well but our support for this programme leveraged further local funds to deliver a larger intervention than we could have funded alone.

Ethiopia Coffee Co-operative Project Following on from the research carried out in previous years, we were in a position this year to conduct our pilot coffee co-operative workshop in Ethiopia. This was run with Yirgacheffe Coffee Farmers’ Co-operative Union. Based on the results of the extensive producer needs assessment, this focused on how coffee farmers currently utilise information to help them develop and grow their businesses and on climate change adaptation in terms of input of information. Producers also explored how they access information on topics such as costing and pricing, market access and other areas of business development. There was also an open day for coffee farmers who are not yet Fairtrade certified.

Livelihood Security Fund We have continued to operate the Livelihood Security Fund to complement our business training programme. This supports producer groups who have experienced a natural disaster or other shock that could impact on their chances of sustainability. The needs of the producer groups involved are assessed using standard grant assessment templates which are completed either directly by the groups concerned or by Shared Interest staff in consultation with the producer group. Details of this year’s grant and its impact are given under Activity 2.

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Activity 2: Examining the impact of our business support services in meeting the needs of the service receivers Shared Interest Foundation carries out needs assessment before initiating any work, whether it is designing business training or awarding a grant. We then collect a combination of qualitative and quantitative data to assess the impact of our work. This includes producer questionnaires and visits, reports by partners, project managers and independent evaluators as well as case studies. We often work in collaboration with partner organisations overseas which has the added advantage of ensuring the capacity building benefits of our projects remain in the countries, increasing sustainability.

Business support training At the start of all long-term business support training programmes, we carry out a baseline study to provide data against which the value of the training can be analysed. To allow a comparison to be made, producers are asked to complete questionnaires at the end of the training. The value of training is judged by comparing these sets of qualitative data, and by collecting quantitative data, case studies and quotes, and making evaluation visits to producers’ businesses to conduct interviews. During and at the end of our projects we review participant feedback and wider evaluations and these are used to improve training for the future and to help us consider whether on-going project work in the area is appropriate. We are in contact with RWAFAT and REDO in Rwanda regarding future support to sustain and expand on the achievements of our three-year Rwanda Producer Support Project. If we are able to secure funding, we would like to provide further training for producer groups that joined the project in later years, capacity building support for RWAFAT and consider ways to speed up the process of fair trade accreditation.

Swaziland Craft Industry Development Programme The Swaziland project is designed around six key outcomes, each with a number of indicators, and progress is monitored regularly by SWIFT, our in-country partner, and reported in their quarterly reports. These reports then form the basis of the annual grant report and the updates below are based on the draft year 2 report that is due for submission at the end of October 2012 to Comic Relief. Key achievements of the project so far include: 

Strengthened partnerships, networking and mutual collaborative efforts among producers, locally established handcraft businesses as well as sharing of customers.

Increased incomes of producers through market access particularly through a SWIFT sponsored marketplace for its producers in an annual arts and music festival

Growing linkages between service receivers at different levels in the programme. Established level 3 businesses with retail outlets are now selling some of the products of level 1 artisans in their shops.

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Outcome 1: SWIFT will increase its member base of fair trade producers and increase its capacity to support producers Six businesses have successfully registered their membership into the SWIFT network since October 2011 (double the target of three in the first year) and, given learning from previous projects, the management and Board of SWIFT have shown an encouraging early focus on strategic direction and sustainability. Outcome 2: Enable 20 out of 100 artisans to graduate to next level by the end of year 1 and become formal suppliers of the local fair trade market by the end of the project In June 2012 after a year of training, 25 out of 107 artisans graduated equipped with skills to run their businesses more sustainably. Graduations were based on training scores, including homework and mentoring, as well as scores on product and business potential. (This model of only providing further training to those who display the most desire to implement it is based on learning from previous projects that participant commitment to change is such a critical factor). Outcome 3: Enable a minimum of five of the intermediate level producer groups to supply the international market place by the end of the project The programme has secured increased access to international markets for participants, including large orders from an Italian store and successful buying visits from a USA-based retailer. Market access is, as planned, an increasing focus of the project over the coming year. Outcome 4: Enable 15 businesses of the most advanced level producer groups to grow and increase sustainability by the end of year 3 Monitoring is on-going for these participants focusing on profitability and sustainability. Sales training facilitated by an external trainer was offered to help increase sales and tailor sales strategies with a focus on sustainable long term partnerships with customers. Outcome 5: Growth of “Handmade in Swaziland� reputation as a source of highquality design centred craft products working under fair trade principles On-going technical input, networking and business support is provided to producers. A book featuring producers from the programme is being produced, combining images of designers and producers with product information and company profiles. The book will be used as a marketing tool, inviting customers to meet the best handcraft companies in Swaziland and opening doors for the businesses to access international markets. Outcome 6: To raise awareness of HIV/AIDS in the workplace throughout all 135 businesses by the end of the project Swaziland has the highest incidence of HIV/AIDS in the world with 25% of the population being affected. HIV awareness activities commenced as planned in July 2012 with all levels being trained prior to developing HIV/AIDS policies. The percentage changes in my sales year to date are a direct result of the proper business practices that we have been guided through by SWIFT. From inventory management through to design development every step has been a complete learning experience for us. We have the product but did not have a clue how to properly manage it or the importance of interpreting data to clearly see what has happened, is happening and more importantly what’s to come in our business. Zoggs Designs PTY (Swaziland)

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Case Study - Making handbags in the hills Del’sile is one of 100 artisans who have benefited from our training in Swaziland. She lives in the hills of rural Swaziland where her children walk for more than an hour to reach the nearest school. From here she can also catch a bus for the long journey to the nearest market. Del’sile sees her time best spent at home in the village, tending to the vegetable plot that feeds her family and weaving grasses from the hillside to make tablemats. However, it is vital she travels to the market every couple of weeks in order to sell these goods and earn a small income. The money goes towards the cost of fertiliser for her vegetables to improve the crop, medicines for the family and school uniform for the children. Del’sile would love to earn more and invest in a goat or expand the range of food she is able to grow. A big dream of hers is being able to save some money for the future. Part of our Swaziland project training is learning about diversifying product range. Del’sile’s core product has always been tablemats and bowls, traditional products which she weaves from grasses which grow naturally on the mountainside around the village. However, following her training, she discovered that by stitching several small coaster-sized mats together she could make a beautiful belt; a matching handbag was soon to follow. Del’sile has also considered different ways to sell her products. Understanding better her costing and pricing, she is able to weigh up the pros and cons of receiving a lower price for selling through a third party, rather than taking the regular trip to the market. There are a range of choices she can now make about her future. Empowered by knowledge and inspiration, it is hoped that more Swazi artisans like Del’sile can take control of their own destiny, and provide a sustainable livelihood for their families. I benefited a lot from the previous module on product development. I used to make carved animal figurines from soap stone as my old collection. After the product development course, I came up with new products. I am now making tea sets using soap stone. The new products are selling very fast and my neighbours are already copying my new products. I will keep finding new ways to improve my collection to stay ahead. I have also benefited from finding new locations to sell my products, e.g. at the Malolotja Game Reserve where I am selling now on consignment. Wonder Dlamini – Soap stone carver from Piggs Peak (Swaziland)

Skills for Sustainable Livelihood Training, South Africa The Skills for Sustainable Livelihoods project was managed by Fetola, as part of their sustainable business development for black-owned businesses and social enterprise programme. The project took place over six months between January and July 2012 and was implemented in six parts starting with producer identification followed by business skills workshops, e-learning, individual support, mentoring and media/PR support. The project took 19 small craft producers through an integrated support programme designed to strengthen their businesses and help to place them in a more sustainable position. The intention is that they will be in a better position to continue to provide a livelihood for themselves and their employees, enabling them to support their families in communities where such opportunities are few. The 19 service receivers were all leaders of small black-owned businesses, social enterprises and community projects. In total 243 individuals are supported in these organisations – 79% are women and 82% black. The service receiver feedback scores at the end of the six-month project show a very high level of overall satisfaction with the project,

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indicating that the programme is meeting service receiver need. 95% of respondents rated the overall programme as ‘excellent’ with all but one participant indicating that they would like to continue being a part of the programme. Nine out of ten of the participants rated the workshops as the most valuable part of programme, with 80% of participants citing the elearning programme as a very helpful learning tool. Now that I have attended the Vision Session, I am motivated and will be on the right track to take my business where I want it to be. Vision Workshop Participant February 2012 (South Africa) In addition to the direct training support, the programme encouraged a climate of sharing through the peer group network. An alumni programme is in development which will link service receivers to an on-going support mechanism even after they ‘graduate’. This ethos of helping each other is strongly encouraged in the programme and our partner is working on ways to support this beyond the remit of the programme. This six-month programme, built as it was on previous training and awareness-raising workshops, has provided the starting point for sustainability and alerted the participants to their potential. We are considering the potential for on-going work in this field as part of the overall strategic review.

Ethiopia Coffee Co-operative Project The training carried out with Yirgacheffe Coffee Farmers’ Co-operative Union in Ethiopia was delivered to representatives from 24 coffee-farming producer groups which between them represent 27,000 coffee farmers in southern Ethiopia. Responding to needs identified by the groups themselves in previous research, the focus was on how adaptable the farmers are to the challenges posed by climate change. The training was able to empower the farmers with practical actions they can take to increase their own adaptability, as well as exploring the other areas in which access to information could improve their income. The final day of the training was spent with the management team of Yirgacheffe to help them think through their own development needs and how they could add value to the co-operatives through the sharing of information. As 12 support officers from the Ethiopian Ministry of Agriculture also attended the training, we were able to facilitate dialogue between government and the farmers regarding how current policy was being implemented on the ground. Both government representatives and farmers reported this as having been beneficial. At the time of writing, training evaluation forms are being translated so cannot yet be summarised for these accounts. Further needs analysis carried out with the farmers during the week will enable us now to explore how we build on this pilot training with a longer term programme which is of practical benefit to this group.

Livelihood Security Fund This fund responds to shocks such as natural disasters – the aim of the grants being to reduce the impact of these shocks on producer groups, securing their assets and/or business base and improving their chances of sustainability after their initial recovery from an emergency. The impact of the grants is assessed by completion of an evaluation form by the businesses assisted. Producers are requested to feed back on what they used the grant for and how it has helped the business to survive and recover from the shock it has sustained. This year we made one grant of USD3,000 to Aprainores, a cashew nut producer group of over 60 families in El Salvador. The families are subsistence farmers whose sole cash income is from cashew nuts. In October 2011 their area endured 10 consecutive days of rain. The nearby river burst its banks, resulting in the warehouse being flooded, with water

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over one metre high ruining desks, computers, production equipment and over 40% of their stock. Due to the flood at the area where Aprainores works, we lost most of our office equipment, including the computer where we had our accounting. With the grant from Shared Interest Foundation, we could replace the equipment and new software that help us control our finances. With this investment in office equipment and software, we can continue our operation in a good manner to offer our members and directors the information that they need to manage the business. After the natural disaster in our facility, we did not even have a chair to sit down and work, with the grant we could restore the equipment and the operation can be done more properly. Grant response form, January 2012 – Aprainores (El Salvador)

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Activity 3: Using donors’ funds wisely Shared Interest Foundation carries out life-changing work in developing countries, always endeavouring to ensure that producers’ needs are at the centre of its activities. In order to develop our projects (to the point where major funders will support them), we seek unrestricted funding for research trips and pilot projects. Shared Interest Foundation continued to receive income from a variety of sources including grants and fundraising events as well as from individual donors and the work described in social accounts would not be possible without the generosity and support of all these donors. The fundraising environment has remained very challenging over the last year, particularly when seeking unrestricted funding. The on-going strategic review includes a review of communication with donors and potential donors with the aim of being able to continue to develop our work in this challenging climate. This section reports on the funds raised, the ways these are managed and the feedback given to donors.

Shared Interest Foundation income Our largest project currently, the Swaziland Craft Industry Development Programme, is funded by Comic Relief. With this being operational for the full year, income from institutional funders increased considerably this year. We again received almost 50% of our income from individual donors (many of whom are also Shared Interest members). These donors will always be vital to our work, particularly in relation to providing the unrestricted income needed for project development. We were pleased to continue to receive grants from trusts and foundations as well as some corporate support and donations from churches and other organisations. We also held fundraising events such as a zip wire challenge which additionally help to promote our work to a range of supporters who would otherwise not easily come across us. Shared Interest Foundation income over the last two years Income source

2011

2012

Institutional funders

£31,123

£112,072

Individuals (inc donations, event sponsorship & gift aid etc)

£74,937

£123,193

Corporate

£12,626

£2,884

Trusts, churches and other groups

£31,925

£14,122

£150,611

£252,271

Total

As part of the strategic review, we are considering future funding opportunities including opportunities to build on current corporate, trust and organisational support. As an example, one corporate supporter has agreed to distribute copies of our Annual Review to over 1,000 customers which should increase our profile amongst a suitable target audience. Trusts and foundations We were pleased to receive support from a number of trusts and foundations and in particular that this year several of the trusts were able to give us an unrestricted grant which

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has enabled us to progress some project development work. It is also encouraging that some trusts have supported us again this year having supported us in the past. Donations by trusts to Shared Interest Foundation, 2012 Trust

Amount

Project supported

Maidenhead Malachi Trust

£7,000

Rwandan Forestation (REDO)

The Rothley Trust

£2,000

Unrestricted

The Bunty Newport CharitableTrust

£2,000

Unrestricted

The Wychwood Trust

£750

Unrestricted

The Dorema Charitable Trust

£500

Unrestricted

The Tisbury Telegraph Trust

£500

Unrestricted

Financial management The Head of Foundation regularly monitors financial results and in conjunction with the Management Team makes decisions on expenditure, maintaining an overview of the level of reserves and ensuring the sound financial management of the organisation. The Management Team and the Board of Trustees review our management accounts at their respective regular meetings. Shared Interest Foundation publishes annual accounts in accordance with charity accounting best practice and UK law. Shared Interest publishes a consolidated Directors’ Report and Accounts (including the results of Shared Interest Foundation) in accordance with UK law and accounting standards. We aim to keep our running costs as low as possible. To ensure the most cost-effective use of resources we use (and are charged for) the Society’s central services such as HR, IT and Finance. This year we have spent 29p on overheads to run Shared Interest Foundation for every £1 spent on charitable projects. This compares to 21p in the previous year. The increase reflects the fact that overhead costs have been shared across a lower value of charitable projects this year. The total overhead cost has actually reduced from £57.5k in 2010/11 to £56k in 2011/12. Shared Interest Foundation expenditure, 2012 Activity

Expenditure

New Projects Staff Costs

£5,755

Rwandan Forestation (REDO)

£9,209

Swaziland Craft Development Project

£212,112

Livelihood Security Fund

£3,528

South African Skills for Sustainable Livelihood

£2,532

Ethiopian Coffee Project

£9,520

Fairtrade Foundation Support

£6,345

Governance and Fundraising

£19,971

Total

£268,972

Note: the Skills for Sustainable Livelihoods training carried out in South Africa this year was paid for at the end of 2010/11 and hence does not appear in the above table of expenditure.

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Donor communication and accountability Website Along with the launch of the new Shared Interest website, the Shared Interest Foundation section has been fully redesigned to provide donors and potential donors with appropriate information on our work to encourage their support. The pages include links to the social accounts as well as to video feedback from producers and to a variety of online donation platforms. We have a Facebook presence and over 250 friends and supporters are following Shared Interest Foundation on Twitter. Our annual accounts can also be viewed online (previously they were only available on request or from the Charity Commission website). Database Work has continued on the development of our donor database which is improving our efficiency in record-keeping as well as supporting us managing relationships with donors. In particular, we have made improvements this year which enable us to be more efficient in the production of claims for Gift Aid to HMRC. Telling our story Following the review in 2010/11 which highlighted some confusion externally between the Society and the Foundation, there has been greater separation between their communication materials. As a result, the work of Shared Interest Foundation has not featured in QR this year. For the first time this year, we produced a separate Shared Interest Foundation Annual Review for supporters and have also published a new leaflet to promote our work to potential donors. Shared Interest Foundation also features in a new key messaging booklet about Shared Interest which is used by ambassadors and others when explaining the work of the organisation. We continue to seek ways to raise our profile outside our immediate network and the ongoing strategic review is enabling us to consider our communications and marketing approach with a view to improving this. We intend to recruit a new fundraiser in 2012/13 who will be able to build on previous experience and networks and implement the review recommendations.

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Progress (on recommendations made in last year’s social accounts) 

‘Continue to work in Rwanda, completing the training for all producer groups, supporting RWAFAT and facilitating market access for producer groups.’ - The previously funded work in Rwanda has been concluded. We are considering the best way to continue to support RWAFAT and REDO and their producer groups. In the meantime the Belgian development agency, BTC, is providing RWAFAT with capacity building support.

‘Ensure learning from the Rwandan Producer Support Project is embedded within the Swaziland project and follow up producer requests for environmental training.’ - We were not successful in the environmental grant application to Comic Relief but are ensuring learning from the Rwandan project is embedded in the Swaziland project.

‘Progress the recommendations within the Livelihood Security evaluation in order to build up a stronger evidence base.’ - Although we are keen to build up the evidence base, we have only been able to provide one grant this year against our current criteria. In order to increase this, we will be looking for opportunities to expand the scope of the fund.

‘Continue to carry out activity aimed at raising the profile of Shared Interest Foundation and build on this to increase our donor base.’ - A separate Annual Review and leaflet have been published, our volunteer base is being developed and the donor database has been updated and cleansed providing us with a good base to build on with a new marketing strategy and fundraiser next year.

‘Develop further links between the Shared Interest Foundation and the Society.’ - The Supporter Relations Team and Foundation Fundraiser worked closely together, the Head of Foundation has been recruited as part of the Senior Management Team, and a lead trustee has been identified from within the Society’s Board of Directors.

Conclusions (from this year’s social accounts) 

Collaboration with partner organisations in the design and delivery of business training continues to lead to projects that closely match the needs of the service receivers.

Our three-year Swaziland Craft Industry Development Programme is progressing well with the first graduations from level 1 to level 2 having taken place. There have been strengthened partnerships, new product ranges and increased sales. Artisans are experiencing increased incomes and are better able to support their families.

The Skills for Sustainable Livelihoods project in South Africa has strengthened craft producer businesses and provided the starting point for sustainability.

We have made progress in broadening our scope to encompass commodities producer groups and this year a pilot training event took place with coffee producers in Ethiopia.

Support from individual donors remains vital to our work, particularly in relation to providing the unrestricted income needed for project development. The new website

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and the publication of the first stand-alone Annual Review have improved our accountability to our supporters. 

We have strengthened Shared Interest Foundation by recruiting a Head of Foundation as part of the Senior Management Team for Shared Interest and by designating a lead trustee for the Foundation to ensure it receives sufficient focus at Board level.

After eight years of operation, our strategic review is providing a timely opportunity for review. It is anticipated the review will provide direction for the future of Shared Interest Foundation, both in its project work and in its fundraising and communications approach.

Recommendations (progress to be reviewed in next year’s social accounts) 

Swaziland – continue to work in partnership with SWIFT and Comic Relief to ensure that the project implementation delivers on expected outcomes.

Review the pilot commodity producers training in order to progress project development plans.

Continue to progress the recommendations within the Livelihood Security evaluation in order to build up a stronger evidence base.

Complete the strategic review (and develop an implementation plan to address the review’s recommendations). Progress future project development work in line with the review’s recommendations.

Continue to seek ways to raise our profile outside our immediate network by implementing the recommendation of the strategic review in relation to communications and marketing approach.

Appoint a new fundraiser to build on previous experience and networks and implement the review recommendations in relation to seeking funds.

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Introduction Shared Interest continues to work in partnership with an ever-growing list of organisations. These partners are vital to the organisation’s activities and the strengthening of its social capital. Following the analysis conducted in the 2011 social accounts we have completed another partnership survey to identify any new developments over the last 12 months. This survey was sent by email to 44 organisations that we have identified as being partners of Shared Interest in the period from October 2011 to September 2012; this is eight more than in 2011. Overall we received 16 responses, eight of which were from partners who also responded to last year’s survey. All responses can be found in full in Appendix 9. The findings are analysed in the activities below.

Activity 1: Identifying and building appropriate partnerships The 44 organisations that meet our definition of being a partner include Fairtrade networks, co-operatives, media companies and training providers which depicts the diversity of activities and projects undertaken by both the Society and Foundation. (For a full list of our partner organisations, please see Appendix 8). These links have enabled us to grow and carry out the work that has helped countless individuals and communities over the last 22 years. The total number of overseas partners included in the survey increased by three although there were actually six new overseas partners in the year as three relationships identified in 2011 were not pursued. All 16 of the organisations that completed the survey also identified Shared Interest as a partner of their own organisation. We received one response from an organisation who did not wish to complete the survey as they had not worked with Shared Interest as much in the last 12 months and would have found it difficult to respond to our questions. These responses are very positive however we do not know how the other 28 organisations feel about their relationship with Shared Interest.

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Length of the relationships between Shared Interest and the partners surveyed

This graph shows that Shared Interest has been successful in identifying and building lasting relationships with partners, especially over the last five years. It also illustrates that we have a number of long-term partners with two of these lasting for more than 10 years. Some of our staff occupy roles within various partner organisations in order to build trust and strengthen Shared Interest’s social capital opportunities. These links also allow us to gain knowledge and experience of the networks within which we operate and in turn we can offer some of our skills to benefit their organisations. The following table shows the time spent by staff members on this type of activity. Partner

Staff member and position/role

Time spent on partnership 2011

2012

Malcolm Curtis (European Board)

11 days

15 days

Malcolm Curtis (Global Board)

18 days

5 days

Patricia Alexander (Board Member / Treasurer)

12 days

15 days

Patricia Alexander (Member)

3 days

3 days

Malcolm Curtis (WFTO Representative)

3 days

1 day

Tim Morgan (Representative)

0.5 days

1.5 days

Sally Reith (Representative)

3 days

0 days

Co-operatives NE

Ruth Taylor (Board Member)

4.5 days

8 days

Co-operatives SE

Sally Reith (Board Member)

6 days

8 days

Newcastle Fairtrade Partnership

Stacey Toth (Member / Treasurer)

6.5 days

6.5 days

Trade Justice Movement

Sally Reith (Representative)

2 days

2 days

WFTO Fairtrade Foundation UK Fairtrade Leaders’ Forum Co-operatives UK

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In comparison to the same information gathered in 2011 the total number of days spent on these relationships by our staff has decreased from 69.5 days to 65 days. This decrease is mostly due to Malcolm Curtis spending less time on work for the Global Board of WFTO, which held an international conference in 2011 but not in 2012. Time spent on most other relationships has either increased or remained consistent over the year. Four of these organisations completed this year’s questions and confirmed that they found their relationship with Shared Interest to be very valuable. We have the benefit of having an officer of Shared Interest on our Board which brings substantial value in terms of her knowledge of the workings of a co-operative but also, more practically, sharing contacts and information. Co-operatives North East Increased credibility, contribution to costs, information regarding investment. Trade Justice Movement We also build relationships through working alongside like-minded organisations. Our overseas staff play key roles in doing this abroad as do our Supporter Relations Team and volunteers in the UK. Our Regional Development Executives in Kenya, Peru and Ghana have good relationships with a number of organisations including Traidcraft Exchange, KEFAT, SNV and FLO. There is also a strong partnership forming with Fairtrade Africa now that our two organisations are sharing an office in Ghana. This relationship is proving to be very valuable as they have been very helpful, inviting us to attend events and suggesting lending opportunities. Our Supporter Relations Officers and volunteers in the UK regularly host and attend events to promote Shared Interest and the fair trade network as a whole. These face-to-face interactions enable us to build trust and secure longer lasting relationships. The members of our Board and Council have a number of other key connections through which they can (and do) educate people and organisations about Shared Interest’s activities and mission. This is useful for the generation of social capital as well as securing new investment. However, as Shared Interest does not work with these organisations directly, it is not possible to class the relationships as partnerships.

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Activity 2: Evaluating our partnerships in order to demonstrate social capital We have developed the extent to which we have applied the concept of social capital this year to cover all our stakeholders. The diagram on page 16 highlights our social capital in the form of links between our stakeholders. In the context of partnerships we define social capital as ‘relationships with others which enable us and these organisations to act together more effectively to pursue shared objectives’. Only one of our partners did not agree or strongly agree that their own vision was in line with that of Shared Interest. This therefore shows that we are in a strong position to benefit from the social capital we are generating through our partnerships. This was emphasised within the partnership survey as the respondents were asked what they consider to be the defining characteristics of a partnership. The results (below) show that mutual benefit and common values were the most defining characteristics of a partnership. What are the most defining characteristics of a partnership?

The 16 organisations surveyed identified examples of where our organisations had provided support to each other in order to pursue shared objectives over the last 12 months. The most common support types were information-sharing and staff expertise with 13 and 10 of the partners respectively identifying these as being activities already undertaken. Another popular form of support has been promotion through web links or via newsletters. Three organisations identified financial support for either themselves or their members as a benefit however Shared Interest also receives financial support through partners encouraging new members.

World Fair Trade Organization Our relationship with the WFTO is classed as one of Shared Interest’s strong partnerships. As well as being members, we have a staff member on both their European and Global Boards. All Shared Interest customers must belong to or be approved by an internationally recognised fair trade body, and many of our customers (especially handcraft producers) are

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members of WFTO. We work with WFTO to ensure that buyers and producers are adhering to the fair trade standards. Shared Interest aims to operate in accordance with WFTO’s 10 Fair Trade Principles. In the survey we asked our partners if they thought we were adhering to these principles. Agree

Neither Agree nor Disagree

Disagree

Strongly Disagree

Don’t Know

13

3

0

0

0

0

10

5

0

0

0

1

Strongly Agree Principle 1 – Plan of action to reduce poverty and support marginalized small producers Principle 2 – Transparency and Accountability to stakeholders

Principle 3 of the WFTO principles refers to maintaining long-term relationships based on solidarity, trust and mutual respect. When asked if they consider there to be a bond of trust between their organisation and Shared Interest, all of the partners agreed that there was at least a partial bond in place. The 2012 partnership survey has shown us that we have been able to identify and build a number of strong partnerships over the last five years.

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Progress (on recommendations made in last year’s social accounts) 

‘Include details of partnerships from the Board and ambassadors and develop our understanding of staff time given to partnerships’ – It is not felt to be appropriate to include input from the Board due to it approving these accounts as part of its strategic remit. We have made comparisons on the amount of time staff spent on partnerships and have confirmation that our partners value the relationship that we have with them. ‘Develop our understanding and use of the concept of social capital as a means to evaluate our partnerships’ – This year’s survey has given us more confidence that we are creating worthwhile partnerships that are valuable to us achieving our overall vision. ‘Evaluate the merits of local level connections, such as those with key individuals, to develop our partnership list’ – The introduction of our West African office has given us the opportunity both to create and strengthen partnerships, especially with Fairtrade Africa, through our new RDE, John Dossou. ‘Utilise partnerships to develop further the work of both the Society and the Foundation’ – Strengthening our relationships with both Fairtrade Africa and Comic Relief have provided us with a number of new opportunities.

Conclusions (from this year’s social accounts)   

Shared Interest continues to develop worthwhile partnerships with organisations that share our vision and enable us to take advantage of social capital. Many of our partners find their relationship with Shared Interest valuable and would like to work with us again in the future. Through the use of some survey questions we have confirmed that our partners agree that Shared Interest is meeting the requirements laid out in the WFTO Fair Trade Principles.

Recommendations (progress to be reviewed in next year’s social accounts) 

To analyse Shared Interest’s network of connections including those through the Board and Council.

Further our understanding of how we can grow and strengthen our social capital.

Analyse how our national partners have contributed to the generation of share capital.

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Introduction For Shared Interest, sustainability is doing the best we can with the resources that are entrusted to us. We introduced an environmental policy in 2007 and through regular communication of objectives, appraisals and achievements we help our staff to understand and implement the relevant aspects of the policy in their day-to-day work (see Appendix 10 for our environmental policy). The environmental team, made up of a cross-section of staff, make use of desk drops, emails and staff sessions to increase awareness of the current environmental issues and what we can do to help. Staff continue to recycle paper, card, plastics and glass and other office equipment is recycled as appropriate – for example we have just recently set up a ‘freegle’ account to recycle/reuse items locally. ‘Freegle’ is a network of local online reuse groups advocating and facilitating the avoidance of landfill by promoting ‘don’t throw it away give it away’. We have introduced some plants to the office this year. As well as improving air quality, plants are good at ridding the air of pollution and toxins and they are also known to stimulate ideas and create a more attractive work environment. In addition to having plants in communal areas, some staff also have plants at their desks. Another new incentive introduced this year to the office is the recycling of coffee grounds and tea bags which are now being composted. This saves the waste from landfill as well as providing nutritious compost for local allotments. Where possible, we aim to procure our goods and services from locally-based suppliers, both to minimise environmental impact and to support the sustainability of local businesses. During the year, purchases from local suppliers in North East England totalled £326,048 (2011: £252,309) an increase of 29%. This represents 42% of our purchases for the year.

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Activity 1: Minimising environmental impact Reduction, reuse and recycling activities by Shared Interest staff The table below summarises the activities we engaged in throughout the year to minimise our environmental impact: Item/Approach

Volume/Percentage

Waste reduction: Scrap paper and double-sided printing

We used 137,195 sheets of new paper (2011: 123,045) during the year from 148,158 (2011: 132,886) print jobs. 0 (2011: 4,159) were printed on reused paper.

Waste recycling: paper collections

A large wheelie bin to collect paper (including shredding) and cardboard is provided for recycling. We have recycled 40 large bin-fulls during the year (20 in 2011).

Waste recycling: milk cartons

We recycle all plastic milk cartons (an estimated 1,479 during the year against 1,428 in 2011).

Waste recycling: other plastic and glass

Staff are also encouraged to recycle other plastics and glass from personal food and other consumables. Approximately 26 bags (1,144 items have been recycled this year); last year we also recycled 26 bags containing 1,040 items.

Waste recycling: ink cartridges

Waste reuse: IT equipment

All ink cartridges are recycled via Reclaim-it, a UK based company, that uses any funds earned from the cartridges to support many different good causes. We recycled 19 ink and toner cartridges during the year. Where appropriate we offer redundant computers to staff for reuse via a ballot process. Where possible, we dispose of all remaining redundant IT equipment via Computer Aid International which professionally refurbishes suitable equipment for reuse in education, health and not-for-profit organisations in developing countries.

We have used 14,150 more sheets of new paper (an 11% increase) this year than we did in 2011.

Reducing / offsetting carbon dioxide emissions arising from our operations The two main sources of carbon dioxide emissions from Shared Interest’s operations are from running our offices and business travel. Emissions may also arise from staff travelling to and from work, however the majority of staff travel either by public transport, walk or cycle to work. In 2008 we implemented the Government’s cycle-to-work scheme which we continue to offer, giving employees the opportunity to purchase a bike in a tax efficient way, paid for in instalments deducted from salary. This year we again conducted a staff transport survey. The survey shows that 91% of staff travel all or part of their journey in an environmentally-friendly way (using public transport, cycling, walking or working from home). 74% of staff use public transport for all or part of their journey to work while only four people use their car for any part of their journey, one of whom cycles part of the way. As a further incentive for staff to use public transport, this year we have introduced a staff travel scheme, providing upfront funding enabling staff to purchase an annual bus and/or metro pass and pay for it monthly via deduction from salary. Seven staff have taken advantage of this opportunity, providing total savings for staff of £1,008, an average of a 21% saving.

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All printed materials are now FSC certified and carbon-balanced, helping to further our achievements around minimising our environmental impact. Newcastle office During the year, our office in Newcastle continued its relationship Southern Electric, to whom we switched in 2010. Southern Electric is part of the SSE Group which generates more electricity from renewable sources than any other energy company in the UK. Our electricity usage for the year was 53,530 Kwh (2011: 38,837 Kwh) which is a 38% increase on 2011. This increase can be explained by a combination of factors: our enhanced server and air-conditioning facilities and the extra heating used over the year due to the weather. We endeavour to minimise our electricity consumption in the office, ensuring heating and lights are turned off when the office is not occupied and computer equipment is turned off when not in use for prolonged periods. Lighting in the toilets is automatic and controlled by movement sensor. Business travel We continued to log all business mileage (car journey, train journeys and flights) throughout the year and to maintain our commitment to offsetting the associated carbon emissions, using the Climate Care website (www.climatecare.org) for calculation purposes. Carbon offsetting This year our total carbon emissions equated to 76.42 tonnes (2011: 42.23 tonnes) which is an increase of 81% on 2011, the increase being due to the inclusion of train travel and electricity consumption which generated 33 tonnes (2011: 24 tonnes). The calculated cost of offsetting this year’s carbon emissions is £573.15 and we are currently investigating where to direct this. During the year, we also followed through on last year’s commitment to plant 11 trees to offset 2011’s carbon emissions. Customer Perspective Further to the recommendations in last year’s report, we have recently commissioned a piece of work that involves looking at our customers with a view to developing incentives to encourage them to behave even more positively from an environmental perspective. This work has only just begun but we look forward to sharing the results and our subsequent plans in next year’s social accounts.

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Activity 2: Managing liquidity and operating costs and ensuring prudent financial controls Managing operating costs Good financial management starts in the critical areas of cash management and bookkeeping which should be done according to certain financial controls to ensure integrity in the bookkeeping process. Financial analysis shows the ‘reality’ of the situation of a business. Financial management is one of the most important practices in management. Management accounts We produce monthly management accounts (for the Society and the Foundation) containing a balance sheet, a profit and loss account and a commentary which shows the breakdown of each expenditure by department or project. This is analysed against budget and reported to budget holders, senior management and the Board in order for results to be monitored at the appropriate level and any decisions to be made and action taken accordingly. It also helps to ensure that decisions to undertake projects are made with concern for the financial structure and if the project can be carried out within the limits of the adopted budget. A further breakdown of departmental expenditure, compared with budget, is also issued to budget holders to enable them to monitor spend at micro as well as macro level. The balance sheet gives the Board a snapshot of the financial position of the organisation every month showing the assets and deposits as well as funds advanced to customers, also the liabilities of the Society and the Foundation, e.g. our foreign currency loans and payments due to creditors. Budgets Shared Interest adopts a formal budgetary planning process, led by the Management Team with support from both the Board and staff. The strategic planning process begins well in advance of the start of the financial year with the building of a business plan, incorporating key assumptions and objectives. This outline, once approved by the Board, is then developed into a detailed and comprehensive plan and a departmental line-by-line final phased budget which is also approved by the Board prior to dissemination and implementation.

Finance The majority of our share capital is invested in GBP in fixed rate deposit accounts (see Activity 3). The funds lent to our customers in foreign currency (we offer facilities in four major currencies: GBP, USD, EUR and AUD) are facilitated by foreign currency loans which are taken out against the deposited share capital. The interest received on all our deposits and the interest we charge on customers’ borrowing are our two main sources of income for the Society. This is offset against interest paid on the loans and the administration, overheads and running costs of the business. Any surplus is carried forward at the end of the financial year in the organisation’s reserves for future use; this includes being used to pay interest to members. The low interest rates on deposits that have been available in recent years have brought challenges to the way we operate and we have had to consider our lending rates carefully, not reducing them as we would have liked, in order to maintain sufficient income to cover our

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operating costs. At the same time we have monitored costs very closely and made cuts and changes in a number of areas.

Internal financial controls We adopt a proactive approach towards internal controls; we are constantly reviewing, updating and making improvements where possible, ensuring that controls, systems and procedures are fit for the purpose as Shared Interest evolves. Authorisation procedures We continue to operate authorisation procedures designed to ensure robust financial controls. All staff have clear job descriptions describing their duties and must act solely within these. Duties are segregated so that the person processing the invoice is not the person authorising the expenditure or the person authorising the payment. All purchase ledger invoices or payment requests must be authorised by the budget holder and be within their authority limit. Managers’ limits apply only to their own budgets and area of responsibilities. Shared Interest’s bank mandate and payment procedures are such that two signatories or authorisations are required in order to process any kind of financial transaction (whether this be a cheque, electronic payment, transfer, loan, foreign exchange spot deal or foreign currency request). Furthermore, the key staff who process and reconcile transactions and have access to financial systems (ie the Finance Manager, Finance Officer and Finance Assistant) have no authority, either from a budgetary control or a payment perspective.

Prudential lending limits The Society operates a number of prudential limits on lending in order to restrict the level of risk to our members’ investments. We have continued to operate under the following prudential limits this year, as set by the Board: 

Approved lending - 125% of share capital

Country risk: Total exposure o

Category C and D: 30%

Country risk: Individual Country o

Category C: 8% (high risk)

o

Category D: 5% (highest risk)

Term lending – 20%

Coffee lending: Total exposure: 40% of share capital

Coffee lending: Regional limits

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o

Central America 17.5%

o

South America 17.5%

o

Africa 5%

Other commodity limit – no more than 10% of share capital against any one commodity (eg tea, cocoa etc).


for the year ended 30 September 2012

Activity 3: Considering ethical issues in investment and procurement decisions Investment decisions Decisions on all investments and deposits are agreed by the Management Team and, if appropriate, any proposals are forwarded to the Board to make a final decision. The current economic climate has had a radical impact on both our customers’ need for cash and our ability to meet this need. We focus on multiple areas to improve the cash and liquidity position while building in plenty of flexibility in order to ensure we can meet the demands of our customers. Our three main considerations when selecting where to place our money are: 

Safety of the deposits

Receiving a good return

Working with ethical partners.

As a matter of good practice, we periodically review the provision of the key services we purchase. This year this involved the review of our insurance provider and we went through a full tender process which culminated in the decision to remain with Gallagher Heath. Distribution of cash investments at 30 September 2012

The chart shows that virtually all (99%) of our cash is held at the Co-operative Bank although this is split into current accounts and different guaranteed investment accounts to maximise the interest we receive. In total 95% of our funds are on fixed term deposit, with terms varying from 3 months to 5 years.

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We have increased our fixed rate deposits with the Co-operative Bank during the year; as well as the interest from our current deposits, we have deposited a further £3.5m. Most of our share capital is invested over periods of one year with the best interest rate available in the current economic conditions. This establishes and implements sound and prudent liquidity and funding policies which enable us to develop effective techniques and procedures to monitor, measure and control the company’s liquidity requirements and position. The deposit of our share capital acts as security for the currency loans we take out (primarily in USD but also in EUR and AUD) which provide a natural hedge against the funds we lend to customers. We match our assets and liabilities by aiming to borrow the same amount as we have lent so that any exchange gains / losses offset each other and the net effect is minimal. From the chart it can also be seen that we have a very small investment in shares, less than 1%. This form of investment is variable but the investment is not liquid and therefore not easy to turn back into cash at short notice. Shared Interest Foundation Shared Interest Foundation has also benefited from the Co-operative Bank’s guaranteed investment accounts during the year, making good use of the advance funds it received from Comic Relief. The Foundation also makes use of a higher interest Treasury account for other funds.

Procurement decisions Shared Interest operates a business model that does not require significant purchasing of goods or services or involvement with sub-contractors but it is still entirely appropriate that all efforts are made to maximise ethical considerations when entering into such business relationships. The fundamentals behind the approach of Shared Interest are examined and explained below with examples of the approach taken during the year in agreeing partnerships and contracts. Fundamentals of Shared Interest’s approach to purchasing Purpose:

The approach will be used to guide and direct the activities of Shared Interest staff when entering into purchasing decisions.

Scope:

While there is not a significant amount of product and services purchased in the day-to-day activities of Shared Interest, it is considered that all effort should be made to promote and support fair trade, environmentally-friendly products and local producers. When purchasing products where fair trade options are available all effort should be made to do so. This currently covers as many food products as possible, mostly through Traidcraft. The LOAF principle (Local, Organic, Animal-friendly or Fair trade) should be followed in as many other cases as possible.

Desirable criteria:

Environmentally-friendly products should be considered in all stationery requirements. Promotional literature should be printed on FSC certified paper. This means it is produced using only material sourced from sustainably-managed forests. Depending upon products required consideration should in addition be given to those sourced from sustainable forests. For kitchen products ecofriendly products should be sourced. Magazines used for advertising and distribution of inserts should mostly be targeted at titles with ethical positioning. Where appropriate, in all other products and services, we should use local suppliers.

All of the above criteria should be taken into account when considering placing orders. While we promote all the above it is recognised that financial implications will have to be considered for all purchases.

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Both our auditors, PwC, and our legal advisers, Watson Burton, demonstrate strong corporate social responsibility policies and support local charities and not-for-profit organisations. We aim to support local businesses where possible and usually use local suppliers so long as their prices are competitive (see also Activity 1).

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Progress (on recommendations made in last year’s social accounts) 

‘Set new overall targets for carbon emissions taking into consideration the opening of a new overseas office’ – carbon emissions have increased this year mainly due to the inclusion for the first time of our electricity consumption which generated 33 tonnes (2011: 24 tonnes). ‘Consider what incentives we could offer our customers to make environmental improvements’ – Shared Interest is working in partnership with a consultant to map the major environmental issues linked to our customer base, particularly producers in the developing world. The intention is to determine whether there is a common theme, for example, with which we could work in order to incentivise or assist customers to have more positive environmental impacts. On reflection we felt that we simply did not have sufficient expertise or knowledge in the organisation to tackle this recommendation without external support.

Conclusions (from this year’s social accounts) 

Although paper usage has increased during the year, we have also increased all forms of recycling and also introduced a number of new schemes, eg composting coffee grounds and tea bags. Due to a combination of additional investments from members and good cash management we have been able to increase our fixed rate deposits with the Co-operative Bank by £3.5m. This will increase the amount of interest we receive which in turn will ensure our ability to cover costs and maintain our sustainability.

Recommendations (progress to be reviewed in next year’s social accounts)   

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Continue to monitor carbon emissions and to strive to achieve a realistic reduction. Conclude our work to identify what incentives can be offered to our customers to make environmental changes. Review the procurement criteria to include relevant indicators of sustainability and local benefit.


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Introduction Methodology This year’s staff questionnaire was completed anonymously using online survey software. It was not compulsory. Responses were collated by the Executive Administrator and reviewed by the Management Team before being shared with staff. The questionnaire mainly composed of Likert-style questions with a small number of comments boxes. Results and conclusions A total of 29 fully completed responses were received (a 93.5% response rate compared with last year’s 91%). Two staff completed some questions but not all the questionnaire. Two staff did not complete the survey. Please see Appendix 12 for the full results. The results of the survey will be shared at an all-staff session.

Staffing On 30 September 2012, Shared Interest had 34 members of staff compared with 31 members of staff on 30 September 2011, of which 19 were female and 12 were male. Please see Appendix 11 for a list of all staff during the 2012 year. Shared Interest staff at 30 September 2012 Full-time

Part-time

Female

20

0

Male

13

1

During the year, five employees joined the staff team and two left. Four of the five new members of staff were recruited to new posts and the remaining one was a replacement for a member of staff who left.

Absence Sickness absence for 2012 was 116.5 days (1.40% of working day) which has greatly improved when compared to 146.5 days (1.93% of working day) in 2011. None of the above absences were due to an accident at work. However it is worth noting that 30 of the days mentioned in 2012 were as a result of an accident outside of work.

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Activity 1: Encouraging understanding of different cultures As an organisation, we believe that everyone should be treated with dignity and respect. We are therefore committed to the development of policies and procedures to promote equal opportunities in employment, personnel practices and the services for which we are responsible. At the same time we value the fact that we are all individuals and that diversity is about recognising, valuing and taking account of people’s different backgrounds, knowledge, skills and experiences and encouraging and using those differences to create a productive and effective team. Staff in our overseas offices are recruited locally and wherever possible they reflect the population of the local community. The overseas teams have also travelled widely in their own regions sourcing new customers and visiting existing ones. Their trips have included visits to Tanzania, Bolivia, South Africa, Chile, Uganda and the United Kingdom. Providing staff with the opportunity to visit our customers overseas is one way that Shared Interest tries to promote a greater understanding of different cultures. This year 13 UKbased staff travelled to various countries including Ghana, USA, Holland, Swaziland, Peru, Chile and Germany. After each trip, staff are encouraged to share their experiences with the staff team via presentations, email or blog. Staff send emails to the team detailing events or celebrations within the regions and countries we work in, providing an understanding of their culture and current issues. For example, Peruvian Independence Day, Chinese New Year and the Queen’s Jubilee were all celebrated. Sharing cultural information is a key element when the overseas team visit the UK office. During their visits UK staff are encouraged to spend time with the overseas staff both in and outside of work. This provides them all with the opportunity to build relationships and improve cultural understanding. Staff also use email and Skype to maintain contact throughout the year.

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Results from staff survey Shared Interest positively promotes different cultures

The majority of staff believed that Shared Interest positively promotes different cultures. This year 28 staff strongly agreed or agreed that this was the case compared with 21 staff in 2011. One person neither agreed nor disagreed this was the case. Two staff did not complete this question. Most staff believed that Shared Interest is a truly international organisation and 26 staff strongly agreed or agreed that this was the case compared with 20 staff in 2011. As an organisation, 26 staff strongly agreed or agreed that we are good at sharing information on different cultures.

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Activity 2: Offering fair pay and benefits and respecting employees’ work-life balance Although we are a small organisation, Shared Interest aims to reward employees fairly for their work. One key element of this is remuneration. The salary review process was carried out during the latter part of last year and despite the global economic conditions increases were awarded in January 2012. The cost of living, performance and salary benchmarking are all taken into account in considering individual increases. In accordance with the Remuneration Policy, we used an external consultant to benchmark our salaries. Using information such as role function, responsibilities, geographical location and size of the organisation, the consultant produced a bespoke report providing market pay assessments for each role at lower quartile, median and upper quartile levels. A comparison of the highest salary against the lowest salary in the organisation provides a ratio of 3.74:1. We also aim to provide staff with appropriate benefits. These include Shared Interest contributions of 9% into a group personal pension scheme, life assurance cover, income protection cover, a sick pay scheme, 33 days holiday (including Bank Holidays), maternity, paternity and adoption leave and pay more generous than the statutory requirements. We operate a childcare voucher scheme and a cycle to work scheme. We have also introduced a travel ticket purchase scheme this year for travel passes for the metro and/or bus services. This involves us providing a short-term loan to an employee to purchase their travel ticket and a monthly amount is deducted from salary resulting in cost savings for staff. We also provide free tea and coffee. Many of our staff consider the fact that they have the opportunity to travel overseas as part of their job as a huge benefit.

Results from staff survey I am fairly rewarded for the job I do 20

18 16 14 12 10

2011

8

2012

6 4 2 0 Strongly Agree

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Agree

Neither Agree or Disagree

Disagree

Strongly Disagree


for the year ended 30 September 2012

The results demonstrate that 20 staff strongly agreed or agreed that they are fairly rewarded for the job that they do compared with 15 in 2011. A further six staff neither agreed nor disagreed with the statement (the same as in 2011), while three staff disagreed or strongly disagreed that they are fairly rewarded compared to 8 in 2011. Sixteen staff members strongly agreed or agreed that they understand the salary review process. A further eight neither agreed nor disagreed with the statement while five strongly disagreed or disagreed. Twenty-two staff reported that they strongly agreed or agreed that they were satisfied with the benefits package compared with 17 last year. Five staff neither agreed nor disagreed with the statement and two staff members said they strongly disagreed or disagreed (compared with three in 2011).

Respecting employees’ work-life balance Shared Interest has several staff policies which we believe support staff in creating a balance between work and their personal lives. Although there are times when workloads naturally increase, we try to ensure that they are not unreasonable and do not have a detrimental effect on staff members.

Results from staff survey Shared Interest provides appropriate policies and support to promote work-life balance

The above chart shows that 24 staff members strongly agreed or agreed with the above statement (23 in 2011), five neither agreed or disagreed (four in 2011) and no staff disagreed (two in 2011).

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I have a reasonable workload

As you can see 27 staff strongly agreed or agreed with the above statement (compared with 21 in 2011). One staff member neither agreed nor disagreed (six in 2011) and one staff member disagreed or strongly disagreed (compared with two in 2011). The staff team have embraced the flexitime policy introduced in 2010. This enables them to balance their own personal circumstances with the operational needs of Shared Interest. Flexitime is a beneficial policy that improves work-life balance

Twenty-seven staff (28 in 2011) strongly agreed or agreed that flexitime is a beneficial policy that helps to improve work life balance. Two staff (one in 2011) neither agreed nor disagreed. Twenty-four staff members believed that the flexitime policy has had a positive impact on them. One staff member disagreed and four neither agreed nor disagreed. Our TOIL (time off in lieu) policy enables staff to be compensated for some of the additional hours they may be required to work when overseas or attending events at weekends. This year staff were consulted via the Staff Forum in moving the holiday year from April to March to January to December. This was agreed and this change will be implemented from 1 January 2013.

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Activity 3: Aiming to provide job satisfaction, regular reviews and supporting personal development As an organisation, Shared Interest aims to provide staff with job satisfaction by offering interesting and varied work combined with generous and flexible benefits. Although career opportunities are limited due to the size of the organisation, staff are encouraged to participate in one of several cross-functional teams or projects. Opportunities include social accounts, the staff forum, the environmental team, the health and safety committee and the social committee. In addition, staff have participated in several of the teams working on new IT projects such as the Foundation database, the Business Development workflow database, the Volunteer Management System and the Financial Director Online System. Staff are notified of any new vacancies and invited to apply, providing them with the opportunity to take on new roles or move to other areas within the organisation. Staff are also encouraged to pass on details of vacancies to anyone they know who meets the criteria and may be interested in the role.

Results from staff survey Overall, how satisfied are you with your job?

Twenty-seven staff were very satisfied or satisfied with their job (compared with 24 in 2011, while two staff (five in 2011) were very dissatisfied or dissatisfied.

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I find my job fulfilling

Twenty-five staff members strongly agreed or agreed with the above statement that their job is fulfilling compared with 19 in 2011. Three neither agreed nor disagreed (six in 2011) and one disagreed or strongly disagreed (four in 2011). The things staff most liked about working for Shared Interest can be grouped into some of the following categories: 

The mission and impact of the organisation

The type and variety of work they do

The people or team they work with

The sector in which we work

Benefits of the organisation.

Here are some of the responses from staff when asked what they most liked about working for Shared Interest: “The overarching mission and aim of the work that we do and the real impact we have.” “Working in an organisation that has a strong moral and ethical stance and actually makes a difference to people’s lives.” “The impact that we have on our customers, the relationships that I have built with producers and buyers, my colleagues, diversity, location of the office, travel opportunities.” “Knowing we make a difference, (mostly) friendly and relaxed working environment, location, interesting & enjoyable work, opportunities to expand my knowledge through training and learning from others, opportunity to travel.” “The people, the variety, the underlying purpose of all of our work.” “Flexible working hours, central location for commute, pension scheme.” The things staff least like about working for Shared Interest can be grouped into the following categories: 

Poor communication

The office atmosphere/office politics

Decision-making process

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Lack of consistency

Level of salaries.

Here are some of the responses from staff when asked what they least liked about working for Shared Interest: “Communication can always be improved in any organisation.” “I don’t like the lack of communication between the different teams. However, many efforts have been made to improve the situation and the responsibility relies on the individual.” “The occasional office politics.” “Lengthy or numerous meetings and occasional negativity.” “Sometimes problems with communication and consistency, when tasks become monotonous, lack of flexibility or opportunity of working from home or part-time, the level of responsibility vs salary.” “Change is sometimes very slow to happen though and the organisation’s approach can be quite conservative.” I am proud to work for Shared Interest

Twenty-eight staff strongly agreed or agreed with the above statement and one neither agreed nor disagreed.

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The atmosphere in my team is good

Twenty-four staff strongly agreed or agreed with the above statement that the atmosphere in their team was good (21 in 2011) with two disagreeing or strongly disagreeing (three in 2011). Three staff neither agreed nor disagreed.

The office atmosphere is good 20 18 16 14 12 10 8 6 4 2 0

2011 2012

Strongly Agree

Agree

Neither Agree or Disagree

Disagree

Strongly Disagree

When we asked staff if the office atmosphere was good, 21 staff members strongly agreed or agreed that it was compared with 14 in 2011 and 4 strongly disagreed or disagreed compared with 14 in 2011. The results demonstrate that the office atmosphere has improved considerably since the last survey.

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My morale is good

When asked if their own morale was good, 25 agreed or strongly agreed (16 in 2011) while one staff member strongly disagreed or disagreed (7 in 2011) and three neither agreed nor disagreed (six in 2011). In October 2011 we undertook some office refurbishment. More offices were created and the layout of the open plan office was changed. The office was deep cleaned and decorated and new blinds and pictures were fitted.

Last year’s office refurbishment has contributed to a more positive office atmosphere

The results show that 18 staff thought last year’s office refurbishment had contributed to a more positive office atmosphere while two disagreed or strongly disagreed. Nine staff neither agreed nor disagreed. We asked staff to list the top four things that encourage their commitment to Shared Interest and their role. In order they were: 

Interesting work

Sense of achievement

Pay and flexible working hours were equal third.

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Appraisals and training and development There has been positive feedback on the new form with some suggestions which have been included this year. The current round of appraisals were successfully concluded in August/September.

Results from staff survey I feel appraisals are worthwhile

Twenty-three staff strongly agreed or agreed that appraisals were worthwhile (17 in 2011) while two staff strongly disagreed or disagreed (five in 2011) that this was the case. Four staff neither agreed nor disagreed (seven in 2011). I receive constructive feedback on my performance

Twenty-three staff strongly agreed or agreed (21 in 2011) that they received constructive feedback on their performance while two staff strongly disagreed or disagreed (three in 2011). Four staff neither agreed nor disagreed (five in 2011) with this statement. SMART objectives are set every year which tie into the business objectives and in turn feed into each person’s Personal Development Plan (PDP).

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Clear objectives are agreed with my manager

Twenty-five staff strongly agreed or agreed that clear objectives are agreed with their manager (23 in 2011) and no staff members disagreed or strongly disagreed compared with three in 2011. Four staff neither agreed nor disagreed. I have received the training I need to do my job efficiently and effectively

Twenty-six staff strongly agreed or agreed that they have received the training they need to do their job efficiently and effectively (16 in 2011), while two neither agreed nor disagreed (13 in 2011). One staff member disagreed or strongly disagreed with this statement. Twenty-four staff agreed or strongly agreed that they are encouraged to attend training courses, seminars and conferences but four disagreed. One staff member neither agreed nor disagreed. All learning and training is captured throughout the year together with cost of time and actual cost. All staff are asked to complete a training request form before undertaking any training and a training evaluation form post training to ensure that objectives have been met. The training budget is generally 5% of salary costs but in reality the amount spent is much lower.

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Total cost of staff training 2011 and 2012 Description

2011

2012

Training cost (course/trainer fees)

£8,492

£29,285

Staff time cost (whilst on courses)

£12,497

£32,809

Inductions (staff time cost carrying out and attending inductions)

£8,311

£5,772

Management Team away days (staff time, venue and trainer costs)

£5,665

£9,905

£34,965

£77,771

230

370.5

Total Number of training days

The table shows that Shared Interest continues to invest in staff training and development. We continue to support training and development throughout the organisation and the number of training days has significantly increased this year. Total costs have doubled and this can be attributed both to an increase in the training that is taking place and to the method of attributing staff-time cost now being used. This has now changed and we feel it now more accurately reflects the true costs. In addition, although some staff training using external trainers was provided for teams or departments in-house (which tends to be less expensive), there was also an increase in individuals attending external training courses which had an impact on the total costs. There has been a reduction in induction training costs which is due to the reduced labour turnover over the year. Management Team training has increased due to an increase in Business Planning Days which included the Foundation Strategic Review.

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Activity 4: Ensuring effective communication and participation in decisionmaking Our information and communication policy is designed to encourage effective communication within the organisation. Our intranet continues to be used to share information with staff on work-related and fair trade issues as well as being able to update our blog. Meetings (1-2-1s) are held each week between individual staff members and their line manager. These meetings provide an opportunity to agree objectives, provide feedback, support and encouragement and generally improve communication. Team meetings are also held weekly or monthly, enabling an exchange of ideas and updates to the rest of the team. Fortnightly slots have been allocated for staff to use for updates, training and general sharing of information. These slots have been used to update staff on overseas trips, survey results and new policies. The business plan is presented at this time together with quarterly reviews. The Management Team holds a brief meeting at the start of each day to discuss any immediate issues and ensure consistency of decision-making. The Management Team holds a formal management meeting every two weeks and Project Board Meetings are also held once a month. These were introduced earlier this year in order to ensure effective management of all company projects. All-staff briefing sessions are held on the first Monday of each month when the Management Team provides details of activities in the coming month. This includes expected visitors to the office, external meetings, overseas trips and a general update.

Results from staff survey I am satisfied with communication generally 20 18 16 14 12

10

2011

8

2012

6 4 2 0 Strongly Agree

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Agree

Neither Agree or Disagree

Disagree

Strongly Disagree


for the year ended 30 September 2012

Twenty-one staff strongly agreed or agreed (14 in 2011) that they are satisfied with communication generally. However, five staff disagreed or strongly disagreed with this (nine in 2011) and three neither agreed nor disagreed (six in 2011). Twenty-five staff strongly agreed or agreed that their views are listened to. Two staff members disagreed or strongly disagreed and two neither agreed nor disagreed. Twenty-six staff strongly agreed or agreed that 1-2-1s with their line manager are useful and productive (21 in 2011). Three staff members neither agreed nor disagreed. Twenty-five staff strongly agreed or agreed that team meetings are useful and productive (21 in 2011) but one staff member strongly disagreed or disagreed. Three staff members neither agreed nor disagreed. Twenty-seven staff strongly agreed or agreed that they are comfortable raising issues with their line manager (24 in 2011) and one member of staff disagreed or strongly disagreed. One staff member neither agreed nor disagreed. I understand the organisation and what it is trying to achieve

Strongly Agree 9

Agree Neither Agree or Disagree 20

Disagree

Strongly Disagree

As can be seen on above chart 29 staff said they understand the organisation and what it is trying to achieve.

5-Point survey We have continued to develop the work around ground rules in respect of leadership, respect, favouritism and communication. As part of this process an anonymous 5-point survey was sent to staff. They were asked to comment on five statements: 

I am treated with respect

Staff are treated equitably

Communication is good

I am comfortable with my line manager’s leadership style

I am comfortable with the way the organisation is led.

Results from the surveys completed in February 2011 and June 2012 (see Appendix 13) were compared and although the results did not show an increase in positive responses, more staff did participate; 28 staff participated this year compared with 21 staff last year.

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Review of the year Following the staff survey and review of the year sessions that were held November 2011, we decided to hold a further session in January to discuss how we can improve things. As part of this process we decided to review the Ground Rules which focused around four main areas: Leadership, Respect, Favouritism and Communication (see Appendix 14 for further details). Teams were asked to consider the main areas for improvement, the Ground Rules themselves and specific measures or initiatives that could be implemented. Group sessions were set up and completed in January and findings were discussed in a feedback session at the end of January. The staff forum was tasked with trying to get some consensus and determined that they should remain unchanged at this point.

Staff forum A staff forum was developed and implemented last year to provide staff with another means of communication. The forum is made up of volunteers from each department who represent the staff group as a whole and liaise directly with the Management Team. The forum asks staff for their ideas, suggestions and recommendations and puts any relevant ones before the Management Team for consideration. The forum members report the outcomes back to their own teams. The travel ticket purchase scheme introduced this year came about as a result of their work. Their feedback has been sought in a number of areas including the office layout and changes to the holiday year. Their feedback on the appraisal form, introduced in 2011, was used to make amendments to the form in 2012.

Results from staff survey Sixteen members of staff strongly agreed or agreed that the staff forum has helped improve communication, three staff strongly disagreed or disagreed, while ten neither agreed nor disagreed.

Social committee The social committee was set up to promote less formal team-building and as a way to improve communication within the organisation. This year they have organised and celebrated Chinese New Year, International Women’s Day, Office Olympics, a Jubilee Street Party and Peruvian Independence Day. They have also been responsible for arranging the Christmas lunch. The overseas staff visited the UK in September and a full-staff team activity took place. This activity involved staff being split into four groups and following a treasure trail map to find clues. Each group had a different treasure trail to follow and although the sun didn’t shine staff willingly participated in this outdoor event. The social committee also has a notice board in the kitchen with information about events and activities.

Results from staff survey Twenty-two members of staff strongly agreed or agreed that the social committee had been a good way to promote less formal team-building and improve communication within the organisation. Five staff neither agreed nor disagreed and two staff members disagreed or strongly disagreed this was the case.

Environmental team This year we asked staff what they saw as the benefits of the Environmental Team. Some of the responses are below:

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“Making people more conscious of the link between their work and the environment – i.e. encouraging recycling/cycling to work and the benefits of projects we support through carbon-offsetting.” “We do use a considerable amount of paper and electricity in the office, therefore it is good that we at least try to give something back.” “As environmental issues are part of fair trade standards, it is positive that we can look at improving our own.” “Recycling of tea and coffee. We now have plants in the office.” “To raise awareness and actively promote environmentally friendly practices such as recycling, green purchasing etc. amongst the staff team.” “Trying to reduce the CO2 emission and be more greener in general within the office.”

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Progress (on recommendations made in last year’s social accounts) 

‘Conclude current round of appraisal and review feedback’ – Positive feedback has been received on the new form from the staff forum and further amendments implemented as a result of the comments. This year’s appraisals have been completed.

‘Continue team-building activities’ – Several social events were held while some members of the overseas team were here in March. The social committee has organised several events throughout the year most often at lunchtimes, including Chinese New Year, a session on inspirational women and a Jubilee party. Individual teams have held their own team-building days and an all-staff event was undertaken on 25 September.

‘Continue trying to improve communication’ – 121s are held each week with individuals and Line Managers as well as Team Meetings which are usually held once a week/month. Staff briefings are held once a month and these sessions are followed up with minutes. The staff forum has helped generate new ideas and helped resolve some issues such as the Ground Rules.

‘Review the impact of the office changes’ – There is a general feeling that the office changes have had a positive impact on the office atmosphere. Feedback was received via the staff forum and the staff survey included specific questions about this topic.

‘Review the effectiveness of the staff forum and the social committee’ – These committees have both raised their profiles this year and have been involved in several initiatives, organising social events and providing staff feedback and ideas. The staff survey included questions on both.

‘Review the staff survey results identifying areas for improvement and implementing initiatives where practical’ – The office changes were intended to improve the general atmosphere which has been identified in several surveys. Further work via the staff forum has ensured the Ground Rules are up-to-date and relevant to existing staff. New ways of improving communication have been implemented.

Conclusions (from this year’s social accounts) 

The response rate to the staff survey remains high.

The results from the staff survey show that communication has improved this year through staff briefings and the staff forum.

Staff were very positive about our role as an international organisation that promotes different cultures.

The majority of staff believe they have a reasonable workload and that Shared Interest has appropriate policies in place to promote work life balance.

The majority of staff reported that they were satisfied with their current job.

The office atmosphere has improved.

Most staff are proud to work for Shared Interest.

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We continue to promote an understanding of different cultures and a number of staff have had the opportunity to travel overseas which has aided this process.

Shared Interest continues to invest in training and development of staff which is manifested by the number of training days.

Recommendations (progress to be reviewed in next year’s social accounts) 

Continue team-building activities.

Continue trying to find ways to improve communication.

Review the staff survey results identifying areas for improvement and implementing initiatives where practical.

Review the Ground Rules and implement appropriate improvements.

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The Social Audit Panel has examined the draft social accounts submitted to us and discussed them in detail with Andrew Ridley, Elisabeth Wilson, Patricia Alexander, Sally Reith, Tim Morgan, Louise Mounsey, Chris Allcock, Chris Pay and Denise Sumner of Shared Interest at the Social Audit Panel meeting held on 15 November 2012. We have examined the revised social accounts which were prepared following the Social Audit Panel meeting and which have taken into account various points identified in the notes* of the Social Audit Panel Meeting. We also examined a sample of the data and the sources of information on which the social accounts have been based. We believe that the process outlined above has given us sufficient information on which to base our opinion. We are satisfied that, given the scope of the social accounting explained in the revised draft and given the limitations of time available to us, the social accounts are free from material mis-statement and present a fair and balanced view of the performance and impact of Shared Interest as measured against its stated values, social, environmental and economic objectives and the views of the stakeholders who were consulted. In the notes of the Social Audit Panel meeting we identified a number of important issues to be taken into consideration during the next social audit cycle. In particular we would refer to the following: i) Further development of relevant indicators to demonstrate the social impact of lending, especially to producer communities. ii) More explicit statements of the Board’s views about Shared Interest’s performance against its social accounts objectives and the key performance indicators for the coming year. iii) The Panel encourages Shared Interest to explore relevant benchmark indicators in its social reporting, where relevant. The members of the Social Audit Panel were:   

Judith Brown, Co-operatives NE Philip Angier, Angier-Griffin Patrick Boase, Just the Business—Panel Chair

Signed:

Dated: 6 December 2012

Chair of the Social Audit Panel

* the notes of the Social Audit Panel meeting form part of the social accounting and auditing process and may, by arrangement, be inspected along with the full social accounts at the offices of Shared Interest at 2 Cathedral Square, Groat Market, Newcastle upon Tyne NE1 1EH. Members of the Social Audit Panel have acted in an individual capacity.

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We will publish this document as a PDF file that can be downloaded from our website, as in previous years. A summary will be contained within our annual review publication and will be circulated to members and other stakeholders. We will issue a link to this document in electronic form to all our customers. We will present the social accounts along with the financial accounts at our AGM on 15 March 2013. Recommendations will be prioritised and converted into an action plan (with identified people and timescales) which will be reviewed regularly by the Management Team to ensure progress. These will continue to be presented to the Board mid-year. The recommendations will be linked to Management KPIs where appropriate. The social accounting process will continue immediately to ensure all learning from this year’s process is taken on board and as part of our drive to continue to embed social accounting within our normal operations. We will continue to give as many staff members as possible the opportunity to be on the Social Reporting Team as it is felt to be an excellent way to broaden one’s knowledge of the organisation as a whole.

Social accounts form a crucial part of our work and are now quite naturally embedded in our day-to-day activities. To reflect this, we have included a dedicated social accounts section in our new website, launched in June 2012. By bringing social accounts into our over-arching website, we are able to demonstrate how social accounting reflects the key outcomes across all parts of the business. For instance, hyperlinks throughout the website lead the user directly into the social accounts report so they can read further detail on areas of interest and relevance. For the first time the 2012 social accounts will be presented as an interactive e-book. By using specialist page-turning software, users can also dip in and out of the report, clicking on items in the content list to take them directly to the relevant page. We aim to enhance how we present our social accounts year-on-year and for this reason will hold a regular focus group with input from both our social reporting and our communications teams in order to carry some of our ideas forward.

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Shared Interest Society is the world's only 100% fair trade lender. For over 20 years we have been providing bespoke financial services and a vital means of support to some of the most disadvantaged communities across the globe. Our journey started in 1986 when the Christian development agency, Traidcraft Exchange, sponsored research into the role of banking and investment within the fair trade movement. The research found that the main challenge faced by those producing fair trade goods was access to working capital. It was out of this that Shared Interest was created, representing a unique financial service that aimed to do business for mutual service rather than for investor profit. The Society was publicly launched in October 1990 with the financial backing of the Joseph Rowntree Charitable Trust and the Ecumenical Development Co-operative Society (EDCS). By mid-1991, we had attracted £750,000 of share capital and 600 members. While we were based on Christian principles, we have a lot of support both from various faith groups within the UK as well as from those with no religious affiliation. We operate as an ethical investment co-operative our members share our vision of a world where justice is at the heart of trade finance. We form the link between UK social investors and fair trade organisations needing finance to improve their livelihoods. All of our services are geared towards delivering our mission, which is to: “Provide financial services and business support to make livelihoods and living standards better for disadvantaged communities in some of the world's poorest countries. We work with people who share our commitment to fair and just trade. Together we take and share risk because we value the difference that fair and sustainable trade makes. We seek to satisfy the needs of producers as they trade their way out of poverty and to meet the aspirations of our investors and donors to support them in achieving this aim.” We provide loans and credit services to businesses across the globe that are certified by FLO or a member of the WFTO. These businesses range from sole trader handcraft producers to large-scale coffee co-operatives. We offer a variety of lending options that enable our customers to pre-finance orders, build up harvest stocks, purchase essential machinery and infrastructure, make advance payments to farmers and artisans and finance inventory for new shops selling fair trade goods. We have reached this level of performance by inspiring almost 9,000 members in the UK to date to invest share capital of over £28m and to share risk with communities in the developing world. In 2004, Shared Interest established a subsidiary, Shared Interest Foundation. The charity delivers practical support to businesses in the developing world to allow individuals to create sustainable employment in their communities. Some businesses are aiming to become Fairtrade certified; others are looking for more immediate support. In Rwanda, we have already more than doubled the income of 50 handcraft businesses. In 2006 Shared Interest opened overseas offices in Central America and East Africa. The Queen’s Award for Enterprise was awarded to Shared Interest in 2008 in the category of sustainable development.

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We opened a South America office in 2009. By 2011, Shared Interest employed representatives in Nairobi, Kenya and Lima, Peru and continued with a presence in San Jose, Costa Rica. With direct lending to producers growing and the impact of our work expanding via our inregion presence, 2012 saw us open our West Africa office in Accra, Ghana. During 2011/12 our finance reached 400 fair trade organisations globally and we made payments of ÂŁ47.6m to producers and buyers across the world.

Shared Interest is an independent organisation based in the UK. As at 30 September 2012, it employed 29 people in England (27 at its Newcastle upon Tyne office and 2 remotely) and had offices in Nairobi, Kenya; Lima, Peru and Accra, Ghana. There are two local members of staff in Nairobi and Lima and one in Accra. Shared Interest Society is owned and controlled by its membership. It has a democratic structure with annual meetings of members. Each member has an equal voice and vote, regardless of the amount invested. The Board of Directors determines strategy. The Board is currently made up of eight members; two executives and six non-executives. The Board is responsible for setting the strategy for the Society and making sure it is delivered within an appropriate risk framework. Seven of these eight Directors also form the Trustee Board of Shared Interest Foundation. An elected Council of members of the Society monitors the work of the Society’s Board of Directors. The Council has the power to question the Directors and management and, if it sees fit, to address the membership independently. To ensure the Council is a representative body, the majority of members have been randomly selected for nomination, while other members apply for their roles. Membership of Council and Board of Directors 2011/12 Council

Board of Directors

Sue Cotterell

Non-Executive:

Executive:

Mark Hayes (from AGM March 2012)

Pauline Cameron (December 2011) *

Patricia Alexander (Managing Director) *

Gill Dandy * (8-year term completed March 2012)

Tim Morgan (Finance Director)

Ann Hillier (resigned AGM March 2012) Sue James (from AGM March 2012) Trevor Jones (resigned January 2012) Lis Murphy (random nomination elect)

Peter Freeman *

Margaret Newens

Ruth McIntosh * (resigned AGM March 2012)

Malcolm Nunn

David Nussbaum *

Stephen Sanders (Moderator)

Kate Priestley (Chair) *

Jason Watkiss

Keith Sadler (February 2012) *

Claire Wigg

Carol Wills *

* indicates also a trustee of Shared Interest Foundation

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Shared Interest Society is incorporated with limited liability under the Industrial and Provident Societies Acts 1965 to 1978 and is registered in England, Number 27093R. The Society submits annual returns to the Financial Services Authority (Mutuals’ division). Shared Interest Foundation is registered as a company limited by guarantee in England, Number 4833073, and is a registered charity, Number 1102375, and submits annual returns to the Charity Commission and to the Registrar of Companies. The annual returns due in 2012 were submitted as follows: 

Shared Interest Society Limited : February 2012.

Shared Interest Foundation – Charity Commission : February 2012 and Companies House : July 2012.

Shared Interest Society Limited is an exempt person from regulated activity for the purpose of the issue of shares by it pursuant to paragraph 24 of the Financial Services and Market Act 2000 (Exemption) Order 2001. The shares are not a specified investment for the purpose of section 22 of the Financial Services and Markets Act 2000 pursuant to paragraph 76 of the Financial Services and Markets Act (Regulated Activities) Order 2001. The Society’s shares are withdrawable (although the Directors can impose a notice time limit or complete moratorium on withdrawal at any time) and not transferable except on death or bankruptcy.

Part of Shared Interest’s social performance is defined by and monitored through its compliance with statutory and voluntary codes. To support this Shared Interest has a compliance action plan that was agreed in June 2005 (see Appendix 15). This established a regular routine of reviews to be carried out either by an internal team or by external auditors.

Update for 2012 

Money laundering – awareness training is provided for all staff. The procedure of review of applications for membership using a sub-contracted identity and financial check has been successful and will continue. All customers of the Society are subject to checks on a risk-assessed basis.

Bribery Act 2010 – this has been enacted in 2011. Specific training has been provided for all staff and documentation and procedures updated accordingly.

FSA / Treasury regulation – the FSA remains the registrar of Shared Interest Society and is also its supervisor for money laundering purposes. We await information about who will be the Registrar of Industrial & Provident Societies after the FSA is restructured in 2013. We continue to apply best practice in terms of Money Laundering checks and following legal advice around promotion of our activities and raising investment in the Society.

Statutory/financial – audit completed November 2011. No significant compliance issues were raised in the audit report from PwC for either the Foundation or the Society.

Co-operatives UK Code of Corporate Governance (May 2005 revision) – exceptions are reported on in our Financial Statements together with the reasons. These relate to our size and scale of operation.

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Risk review – formal updates to the Board take place twice yearly with the latest at May 2012.

Health and safety – a health and safety policy is in place and available to all staff. We have a Health & Safety Committee, which meets regularly. Work station risk assessments were completed by all staff during the year and points arising have been followed through. Risk assessments continue to be completed by staff working regularly at home.

Data protection – a review of Shared Interest’s data protection register was undertaken in January 2010. Staff awareness is maintained with the introduction of a monthly data protection email bulletin and data protection update sessions for staff.

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The period covered by these social accounts is the year from 1 October 2011 to 30 September 2012. Drafting this report was undertaken by the Social Reporting Team: Andrew Ridley, Credit and Services Manager; Sally Reith, Supporter Relations Officer South East; Chris Pay, Head of Foundation; Louise Mounsey, Customer Service Account Manager; Chris Allcock, Finance Manager (maternity cover); Denise Sumner, Executive Assistant and Elisabeth Wilson, Business Development Manager. We have used many of the methods and measures developed for the previous seven sets of social accounts and where possible we have tried to improve on these. We have reviewed previous recommendations and this year’s data requirements with the aim of further embedding the process within our existing systems. The model used for these social accounts is that recommended by the Social Audit Network UK. For consistency this is a similar model to that used in previous years and is the model generally used by small social economy organisations. The steps of this model are simple and practical:

Step one – What difference do we want to make?    

Clarify vision and mission Identify underpinning values Identify objectives and activities Analyse and engage with organisation’s stakeholders

Step two – How do we know we are making a difference?    

Set up the social bookkeeping systems which collect relevant information (indicators) over a period of time Consult with stakeholders Collect quantitative data and qualitative information Feed into the on-going management of the organisation and contribute to future planning

Step three – What difference are we making?  

Collate and analyse the data Produce a draft version

Step four – How do we prove that we made a difference?  

Have social accounts verified by a Social Audit Panel Report to and inform the organisation’s stakeholders via the Social Report, the Social Audit Statement and our website

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Key stakeholders The following are identified as Shared Interest’s key stakeholders by the Social Reporting Team. We consider a stakeholder to be any party affected by, or with an interest in, the work of Shared Interest Society or Shared Interest Foundation. Number of stakeholders 2011

Number of stakeholders 2012

Fair trade producer groups and buyers that could benefit from becoming customers

80

50

Borrower organisations which enter into a business contract with Shared Interest Society

Producer group customers

71

79

Buyer customers

42

41

Other organisations that receive or make payments via Shared Interest Society

Recipient producers*

335

321

Commercial buyers

39

56

Producers trained

370

194

Producer groups receiving grants

4

2

Other service receivers of the Foundation

Not possible to quantify

Not possible to quantify

8,763

8,790

Stakeholders

Definition

Description

Potential customers

Organisations we strive to or may be able to work with

Customers

Service receivers

Organisations who benefit from the support of Shared Interest Foundation

Members

Shared Interest Society investors

Members

Supporters (new category) **

Individuals/Organisations who contribute financially to the development of Shared Interest Society but not as members

Supporters

N/A

2

Volunteers

Individuals who volunteer their time and expertise to Shared Interest

Ambassadors and volunteers

70

120

Board of Directors

Collectively responsible for the direction and management of the Society,7 of these 8 are also trustees of Shared Interest Foundation

Elected representatives (executive and nonexecutive)

8

8

Council

Body which serves to represent and reflect the views of membership

Appointed/elected Shared Interest Society members

9

9

111

97

Corporate donors

7

6

Churches and other groups

6

6

Sponsored event participants

11

27

Grant-making bodies

13

7

Staff

31

34

Individual donors***

Donors

Employees

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Partners

Those we collaborate with for mutual benefit

People, groups and organisations we work with and umbrella groups of which we are members

36

44

* Recipient producers are those producers who do not have a credit facility with Shared Interest but who receive payments through Shared Interest on behalf of their buyers. ** This new category of stakeholder has been introduced as non-member financial support for Shared Interest is growing. *** The 2011 figure has been restated from last year. This is in order to provide a comparable figure with the current year where we have recognised the need to attribute to individuals those donations made through third parties such as CAF and Just Giving. This does not include individual donations towards sponsored events, which are captured separately at the level of event participant. In addition to the figures quoted, for anonymous donations made through third-parties, we are unable to specify the number of individual donors.

Other stakeholders There are other stakeholders with whom, for reasons of practicality, we have not consulted or measured the impact directly. These include friends and family of staff, the local and wider community including potential members and service providers. Additionally, there are groups that are essential to us to whom we are not essential, such as Government Regulators (Financial Services Authority (FSA) and HM Treasury).

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A large portion of the statistical information we report on in our social accounts is now embedded within our internal transactional databases and collated over the year. In addition to this key data, we report on consultations we hold with our stakeholders as part of the social accounts activity. The table below summarises the consultations that have taken place over the last four years. Consultations with stakeholders over the last four years Stakeholder

Potential customers

Customers

2009 Questionnaire carried out during visit by Regional Development Executives

Online survey to recipient producers (58/287) and commercial buyers (3/14) Online questionnaire to customers (28/101)

Service receivers

Members

2010 Questionnaire carried out during visit by Regional Development Executives Online survey to recipient producers (81/329) and commercial buyers (0/18) Online questionnaire to customers (29/116) Producer impact study (10/22)

2011 Survey sent out to prospective customers by Regional Development Executives and BD Assistant (30/80) Online survey to recipient producers (22/314) and commercial buyers (3/39) Online questionnaire to customers (32/113 – 6 buyers and 26 producers) Evaluation forms completed after each training session and by each grant recipient

Evaluation forms completed after each training session

Evaluation forms completed after each training session

Feedback and reports from key service receivers

Feedback and reports from key service receivers

Interviews with service receivers, site visits, stakeholder meetings, steering groups

Feedback forms at AGM and members meetings (45/72)

Questionnaire sent to all members who are happy to receive mailings (2,506/8,225)

Feedback forms at AGM and members meetings (30/82) Online survey to members (2,344/7,401)

Independent evaluations

2012 Survey sent out to prospective customers by Regional Development Executives and BD Officer (17/50) Online survey to recipient producers (33/862) and commercial buyers (9/126) Telephone survey to customers (9 buyers and 13 producers)

Evaluation forms completed after each training session and by each grant recipient Project reports including interviews with service receivers, site visits and stakeholder meetings

Feedback forms at AGM and members meetings (109)

Volunteer survey (36/91) Volunteers

N/A

N/A

N/A

Board

Consulted as members

Consulted as members

Consulted as members

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Council

Consulted as members

Consulted as members

Consulted as members and separately for their partnerships

Consulted for Foundation strategic review 5 point survey (28/33)*

Employees

Donors

Partners

Group discussion and feedback and questionnaire (28/30)

Donor case study

Questionnaire (15/53)

Group discussion feedback and questionnaire (30/31)

Donor case study

Quotes

Questionnaire (29/32)

Staff Survey (31/33)* Consulted for Foundation strategic review

Quotes plus two large grant donors consulted in partner survey

Questionnaire (16/36)

On-going dialogue with Comic Relief. Regular donors are being consulted as part of the strategic review in Autumn 2012 Questionnaire (16/44) Consulted for Foundation strategic review

* One of our 34-strong staff team at the year-end had not been appointed when these surveys were carried out.

Potential customers The aim of gathering information from potential customers is to find out how they were made aware of Shared Interest, why they might want to become customers and how Shared Interest could do things differently, if at all. The qualitative information was collected from open questionnaires that were sent out to potential customers by email. We contacted 50 organisations across all regions and 17 responded with completed surveys. Data from trip reports and blogs have also been used to illustrate the raising of awareness of Shared Interest among potential customers.

Customers We took a different approach to our consultations with buyer and producer organisations this year. For buyer and producer organisations with Shared Interest accounts we selected a broad range of customers across different countries and product. Of our total 120 customers we held conversations with 9 buyers and 13 producers. Our approach this year with producer recipients was to utilise the online survey software, however we wanted to place more focus on the broader impact of fair trade on them as producer organisations and less on the service being provided by Shared Interest. With this in mind we took the decision to utilise the depth of our database and contact all of the producers we have an email address for and who have at some point received a payment from Shared Interest. We again offered the incentive for completion of entry into a draw to win USD500 towards the producer’s operations. This was won by The Thaicraft Association from Thailand and will be used to pay their WFTO fees. The survey was emailed to 862 valid email addresses and we received a response from 33. We also utilised the same software to contact 126 commercial buyers receiving a response from 9.

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Service receivers Our key service receivers are the producers who have attended the training conducted with the support of Shared Interest Foundation and the training evaluation forms completed at the end of each course remain an important input to the social accounts. With the Swaziland project, these individual evaluations have been supplemented by progress reports from our Swazi partner SWIFT. Service receivers of the Livelihood Security Fund are asked to complete grant review forms a few months after receiving a grant to help us assess the impact. Finally, feedback reports from other service receivers have been reviewed.

Members We did not conduct a member survey this year as this is a biennial survey. Feedback was gathered through ad hoc correspondence to Head Office as well as feedback from the two members’ events we hosted this year, our Annual General Meeting and a Members’ event in Edinburgh.

Volunteers For the first time we conducted a survey specifically for all volunteers, both ambassadors and volunteers. This was introduced to help us understand our volunteers better but also to help us develop this scheme as it grows and expands. The volunteer survey was sent to all 91 of our volunteers in August 2012. Volunteers were informed of the survey through their regular e-newsletter and an overview of results will also appear in a future copy of this following the publication of these social accounts. We intend to carry out volunteer surveys every two years, alternating with member surveys.

Employees An anonymous online staff survey was issued to staff again this year with a mixture of questions from previous surveys for comparison reasons and some more specific questions. Thirty-one out of thirty-three staff members responded.

Donors In addition to on-going reporting and face-to-face meetings with our largest donor, Comic Relief, they have been consulted as part of the partners’ consultation (see Objective 4.2). With the implementation of a donor database now well progressed, we had planned to carry out fuller donor consultation this year. This is currently on-going as an integral part of the strategic review and the data from this consultation will form an important input to next year’s social accounts.

Partners A partner survey was carried out this year which focused on the motivations and outcomes of the partnerships we have from the perspectives of our partners. We also conducted a survey of staff involved in partnerships and how much time they spend on these.

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Based on the recommendations from previous years we strive to improve the scope of our social accounts and this year we have improved reporting in a number of activities across our objectives. We have developed our understanding and application of social capital measurement which was introduced in Objective 4 last year but which we have now used to assess the social capital of the Shared Interest Society and Foundation. We have increased the scope of Objective 2 by introducing a volunteer survey to improve reporting on our volunteer scheme. We have also introduced this More About section for information which is useful within the context of these social accounts but which does not change on an annual basis.

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AGM Annual General Meeting. Members are invited to attend our AGM where reports are given on the progress of the Society and Foundation. They can also engage in the Society through voting on issues, including Board and Council membership (postal ballot only), either in person, by proxy or postal ballot.

Ambassadors and volunteers Shared Interest ambassadors actively promote the organisation to the general public through talks, presentations and general profile-raising activity. Shared Interest volunteers get involved behind the scenes, from helping out at head office to taking photographs at events.

AUD Australian Dollar, one of the currencies we use for lending.

Beneficiaries Now being referred to as service receivers (see below).

Board Shared Interest’s Board is made up of eight members; two executives and the remaining six being non-executives. The Board is responsible for setting the strategy for the Society and Foundation and making sure it is delivered within an appropriate risk framework. (See also Trustees.)

BTC Belgian Technical Cooperation, a Belgian development agency.

Buyer customers Hold a credit account with Shared Interest and are borrowing from us directly.

CAF Charities Aid Foundation, UK charity that provides financial services for charities and their donors.

Co-operative levels In a ‘first level’ co-operative the members are individual farmers, artisans, workers or other people. In a ‘second level’ co-operative the members are usually first level co-operatives. The Board of Directors consists of representatives from each of the first level co-operatives. This two tier co-operative system is common among coffee producers in Latin America.

Council Shared Interest’s Council is made up of nine Shared Interest members whose role is to help make sure the Board sets a strategy that adheres to the mission of the Society and then delivers this strategy to meet the expectations of members.

Donors Please see members, donors and supporters.

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Equivalent Advertising Value A standard measure to indicate a financial value emanating from press coverage. Shared Interest subscribes to a media monitoring company which sends us a monthly summary of all coverage, both online and offline. The monthly summary gives us a value, in GBP, of the coverage we have achieved based on the cost of advertising and the size and positioning of the article within the title carrying the coverage.

EUR Euro, one of the currencies we use for lending.

Fairtrade Africa (FTA, formerly African Fairtrade Network, AFN) The organisation representing all Fairtrade certified producers in Africa. It shares premises with Shared Interest in Accra, Ghana.

Fairtrade Foundation The organisation that licenses the use of the Fairtrade Mark in the UK. It also plays a key role in promoting fair trade in the UK.

Fairtrade International (formerly known as FLO) The organisation that co-ordinates Fairtrade labelling at an international level.

FSA Financial Services Authority, the organisation that (among other responsibilities) maintains the registry of industrial and provident societies (including the Shared Interest Society). The role of the FSA is currently under review.

GBP Pounds Sterling, one of the currencies we use for lending.

Human Development Index (HDI) A comparative measure of life expectancy, literacy, education, standards of living and quality of life for countries worldwide. It is a standard means of measuring wellbeing, especially child welfare.

KEFAT Kenya Federation for Alternative Trade, the national network of fair trade producers in Kenya.

KPIs Key performance indicators, a common management tool used by Shared Interest.

Likert scale A scale commonly used in research questionnaires (eg 1 = strongly agree, 5 = strongly disagree). Named after the psychologist Rensis Likert.

Members, donors and supporters Members are individuals or organisations who invest anything between ÂŁ100 and ÂŁ20,000 into an ordinary share account with Shared Interest. Each member has one vote irrespective

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of the size of their investment. Donors are individuals or organisations who make donations to Shared Interest Foundation. Supporters are individuals or organisations who support Shared Interest Society with finance but who do not hold a share account.

NGOs Non-Governmental Organisations.

Producer customers Hold a credit account with Shared Interest and are borrowing from us directly. Producer customers may be co-operatives, limited companies, associations etc.

PwC PricewaterhouseCoopers, Shared Interest’s accountants.

QR Quarterly Return, the quarterly magazine for Shared Interest members and supporters.

RDE Regional Development Executive, Shared Interest ‘s main contacts based in Kenya, Peru and Ghana.

Recipient producers Producer groups for which Shared Interest facilitates payments on behalf of buyers. Recipient producers do not hold a credit account with Shared Interest and are not borrowing from us directly.

REDO Rural Environment and Development Organisation, based in Rwanda.

RWAFAT The Rwanda Forum for Alternative Trade.

Service receivers Formerly referred to as Beneficiaries. A generic term for those who have benefited from Shared Interest Foundation projects specifically.

SNV An international not-for-profit development organisation.

Supporters Please see members, donors and supporters.

SWIFT Swaziland International Fair Trade Association.

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Trustees See Board. Seven of the eight Directors of the Society are also Trustees of Shared Interest Foundation. The Finance Director of the Society is also Company Secretary for both Society and Foundation.

USD United States Dollar, one of the currencies we use for lending.

Volunteers Please see ambassadors and volunteers.

WFTO World Fair Trade Organization, the global association of fair trade organisations (formerly known as IFAT).

WFTO Africa Formerly known as COFTA (Cooperation for Fair Trade in Africa).

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Social Accounts 2012