Empowering Communities Annual Report 2011-12

ANNUAL REPORT

2011/12

empowering mothers to break the cycle of poverty

EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2011/12 Page 1 of 44

Empowering Communities Inc

Annual Report 2011/12

published: October 2012 by Empowering Communities Inc

last edited: 27/11/2012

content contributors:

Kylie Hansen Dick Hoffmann

Kun Kimsreang Richard Khoo

Rowan Klaassen Anna Jolly

David Bacon

edited by:

Kylie Hansen

design and layout by:

Kevin Chan

cover photo by:

George Nickels

© Copyright Empowering Communities Inc 2012

Page 2 of 44 EMPOWERING COMMUNITIES | CARPETSFORCOMMUNITIES.ORG | 2011/12

CONTENTS Major accomplishments of CfC in 2010-2011 3

From the Chairperson of the Board... 3

Strategic Direction of the Program 4

Brief History of CfC 5

Structure of the organisation 6

Our Volunteers and Members 11

Sales and Marketing 17

External Relations and Media 20

Production and Logistics 22

Cambodian Operations 26

Making it Personal 33

Statistical data 35

Financial Information 36

Future Plans 43


Fro

m t

he B

oard

…

Key accomplishments in 2011/12 All of our families were transitioned into their micro-enterprises;

First female Cambodian Country Manager entered leadership team;

Signed our first large US contract with retailer Gaiam;

Applied for and was successful in becoming a Fair Trader of Australia with the Fair Trade Association of Australia and New Zealand (FTAANZ)

Received a $30,000 grant to expand our Development operations from Australian Ethical Investments

A social enterprise in many ways is one big experiment and with a vision like ours that's

exactly what it is. An early question for us was ―Can we get a group of passionate people

together and make a difference in other people‗s lives through the effective use of market

mechanisms?‖ The answer to that has been a resounding yes. But we‘re not doing this to

help a few women and kids in a few villages in the corner of Cambodia. We do it because

we believe we can create a solution that millions of people around the world will benefit

from.

We haven't solved the problem yet, but this year we got closer.

More than 7 years down the track and we are becoming an increasingly well established

and sustainable organisation while at the same time we have retained our entrepreneurial

fire and dynamism. Many organisations find it difficult to share a truly honest account of

where things are at and the challenges they have faced but we feel that if we are to reach

our mission then learning from our mistakes and failing fast is the only way we will.

In this annual report we share our wins and our losses; our success and our learning. I

believe one of our greatest strengths as an organisation is that no topic is off limits. We

don‗t have all the answers and are always open to learn and grow and especially hear from

those who could help us on this journey.

We hope you find this annual report an honest account of where we currently are. For us,

our confidence that we are on the right path is what allows us to share out failings openly

and our commitment to finding the ultimate model that solves poverty is what keeps us

going.

Richard Khoo

Chairperson of the Board


Our organisation is Empowering Communities Inc, an

Incorporated Association in South Australia, Australia.

Empowering Communities Inc is an umbrella for our social

enterprise, ‗Carpets for Communities‘; and our related

development-focussed activities.

Our Purpose The founding purpose for Empowering Communities is to create the ultimate

social enterprise model that empowers children, families and communities to lift

themselves out of poverty and create true freedom for their futures.

Our Mission Our core work is to offer immediate intervention to give at risk children an

education through empowering their mothers to produce eco fair-trade products,

which sell globally.

Our Values

Education

Through continued education, people and communities can continually better

themselves. It enables people from all backgrounds to have a more enriched life.

Innovation

We take actions in a way that dynamically increases our impact.

Respect

We provide all individuals with the opportunity to express their views and

contribute their skills in any given area.

Sustainability

Social, economic and environmental sustainability guides our actions and

strategies to developing long-run solutions to wider issues.

Equality

We take actions that lead towards equal opportunities for all individuals.

Integrity

Our actions back up our words, with full honesty and sincerity.

Passion

We love what we do, and this comes out in all our work with everything coming

through with energy and drive.

Ab

ou

t U

s


Carpets for Communities Brief History of Founded in 2005 as a joint effort between some Australian

Volunteers, a Thai Factory, A Thai Foundation and a local

Cambodian Foundation, CfC grew slowly for the first 2 years.

It primarily made wool and silk carpets for the Thai carpet

factory eventually reaching 18 women and 58 children. In

2007 we lost funding for the project manager and were no

longer able to produce the technically difficult wool and silk

rugs.

We started focusing on a product that we had developed

that we could market ourselves - the cotton off cuts rugs that

are now seen in our stalls. This effectively cut out the

middleman and made the project more fair-trade, generating

more income for the women for the same amount of work

done. While the transition meant a reduction in productivity,

this also led to the start of a period of strong growth for the

organisation from 2008-2010.

In 2008 we registered as an independent organisation in

Australia and later in Cambodia. In this year we also started

setting up volunteer run market stalls in Adelaide and in

Sydney. In 2009 we expanded around the country until we had

volunteer groups running market stalls in Adelaide, Sydney,

Melbourne, Alice Springs, Brisbane and Perth. This allowed us

to expand the number of families at the end of 2009 to 40

families and 180 children.

The financial year 2009-2010 was a year of rapid growth and

expansion for Carpets for Communities, as we recorded our

highest ever sales figures. Much of this growth happened

organically however, and so 2010-2011 was a year of

consolidating that growth.

In 2011 for the first time ever, a dedicated executive team was

set up in Cambodia to manage the project full time. This led to

better information, higher quality management of the

organisation, and the following major strategic decisions –

The theoretical splitting out of our social enterprise Carpets for Communities from our development activities (to be followed later by a practical and legal split under the Empowering Communities Inc umbrella);

The development of a transitionary model for our families, whereby women are empowered and supported to create sustainable livelihoods beyond carpet making.

The financial year 2011-2012 has been coming to terms

with and implementing these changes for the organisation.


Our Structure

No changes were made to the Regional Management Structure of our organisation

in each state. This remained as follows:

Regional Chapter President

Volunteer Coordinator

Retail Coordinator

Event Coordinator

Casual market stall and events volunteers

Ou

r Team

Str

uct

ure

Logistics Coordinator (VIC ONLY)

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

Board of Directors

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

Chief Executive Officer

Kylie Hansen

Finance and Production Manager

Dick Hoffmann Sales and Marketing Manager

Rob Pfeiffer

Human Resources Manager

Marko Ivkovic

Cambodian Country Manager

Kimsreang Kun

Poipet Office Manager

Bunchhuon Morn

Field Worker

Emda Field Worker

Vanny

Field Worker Hokseng (Seng)

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

Cambodian operations Australian operations

Executive Team


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

Board of Directors

Richard Khoo, David Bacon, Kylie Hansen, Dick Hoffmann

Chief Executive Officer Lindsey Ritchie (resigned July

2012)

Finance and Logistics Manager

David Fischler (resigned July 2012) Sales and Marketing Manager

Rowan Klaassen

Volunteer Engagement Manager

Anna Jolly

Cambodian Country Manager

Kimsreang Kun

Poipet Office Manager

Bunchhuon Morn

Field Worker

Emda Field Worker

Vanny

Cambodian operations Australian operations

Executive Team


Our Board of Directors

David Bacon (Founding Director) David currently works with the

Red Cross as a Case Manager, after spending time working in Cambodia to

assist CfC in furthering its development activities on the ground. David was

the recipient of the 2009 AIESEC Young Alumni Contribution Award. David‘s

goals are to create innovative self funded organisations by catalysing

corporate sector investment in ‗pro poor‘ social development globally.

Richard Khoo (Chairperson) Richard holds his CPA, and has over 10 years

experience with organisational change and systems development in the financial

services and non-profit sectors. Richard is both a qualified Finance Professional

(CPA, CFP, B.Com, DipFP, AMC) and a socially minded change agent. Richie is now

an independent IT consultant.

Kevin Chan (Treasurer) Kevin is currently a successful independent

Software Developer. Kevin has a background in financial management and

has a degree in International Business with a major in International

Management. Kevin is heavily involved in developing modern intentional

communities and is currently the Treasurer of the Aldinga Arts Eco-Village.

Lucy Chan (Secretary) With a degree in Eco-tourism, Lucy has a focus on

environmental education, hoping to inspire the next generation to care for their

world. Now a full time mother of two young children, she volunteers with

Carpets for Communities and is an active member in the eco village where her

family lives.

Melissa Willoughby Melissa studied a Bachelor of International

Business with a major International Marketing, and has worked primarily

within the Human Resources area. Recently, Melissa has coordinated

major fundraising initiatives and other campaigns such as a National

Short Film Festival in 2010, and the container deposit scheme campaign

in 2011.


Changes on the Board of Directors In the 2011-2012 financial year, Kevin, Lucy and Melissa decide not to stand for re-election to

the Board. This represents a significant milestone for the organisation, as this group of five

individuals made up the founding Board of Directors for the organisation.

We could not have asked for a better founding Board. Their passion and dedication to the

project is what developed Carpets for Communities from a South Australian grass roots

initiative to the national organisation that it is today.

Empowering Communities would like to recognise them for their years of commitment and

hard work to make Carpets for Communities the organisation that it is today.

Kevin, Lucy and Melissa remain good friends of the organisation, and involved in its activity.

We welcomed two new Directors –

Kylie Hansen (Secretary) Kylie has extensive experience managing

programs and projects, both paid and voluntary, throughout the

corporate, government and not for profit sectors. She holds tertiary

qualifications in project management, community development, political

science and international relations, and commerce.

Kylie set up the WA Chapter of Carpets for Communities in 2009 before

becoming the first Carpets for Communities CEO based in Cambodia in

2011. Kylie has now returned to Perth and works full time at the Western

Australian Council of Social Services (WACOSS) as a Program Manager.

Kylie is interested social enterprise, and more broadly how business, community and

government intersect and collaborate to create the best possible outcomes for communities.

She is also a keen animal rights advocate and vegetarian.

Dick Hoffmann (Treasurer) Dick is the only non-Australian on the

Carpets for Communities Board and is based in Amsterdam, the

Netherlands. Dick graduated from the University of Amsterdam with a

Master of Business Economics, and was part of the first team that was

based in Cambodia in 2011 as the Finance and Logistics Manager. Dick

was invited to join the Board upon his return to the Netherlands, and

now works as a merchandising controller for the second largest DIY

company in the Netherlands.

During his studies Dick was involved in a student organization that supported education

projects in the Balkans for local youth. Dick believes that education is one of the best ways

for youth to develop themselves and to increase their chances for a better future.


Our Volunteers and Members

―When I commenced with CfC at the end of March, I was introduced to a

base of quite disengaged volunteers. In a similar situation to last

financial year, there was a significant gap between the previous HR

Manager finishing with CfC and me commencing. The lessened support

during this period undoubtedly affected the motivation of volunteers. I

faced quite a challenge in re-establishing a supportive, engaging

atmosphere whilst also trying to push the chapters to conduct more

sales events following consecutive months of low sales.‖

2010-2011 and 2011-2012 compared

2010-2011 saw active volunteers in Perth, Adelaide, Sydney, Melbourne and Alice Springs.

2011-2012 has been a period of rapid growth: we have retained the above chapters as well

as extended our presence to Hobart, Canberra, Geelong, Newcastle, the Gold Coast, and

Brisbane. Activity is still most consistent in longer running chapters; however of the newer

chapters, Canberra in particular, has generated consistent sales. Major fundraiser events

early in the 2012-2013 financial year are expected to generate recruitment momentum and

kick start regular sales activities in establishing chapters. Unfortunately, we are currently in

the process of closing our Alice Springs chapter.

A further development compared to last financial year is that each chapter now has a clear structure to provide greater accountability allowing for smoother operations. Each chapter consists of a Chapter President, Volunteer Coordinator, Retail Coordinator and Event Coordinator, plus a variety of general volunteers.

Engagement

Whilst recruitment of volunteers has presented few hurdles, activating volunteers within the

chapters, and then retaining their interest and keeping them active and engaged continues

to present challenges.

There are several factors contributing to this:

1) With markets generating low sales, especially over the winter months in the colder

chapters, volunteers continue to lose interest in this key sales activity.

2) New volunteers are sometimes not well integrated into a chapter.

3) The nature of sales activities within a chapter are somewhat disconnected, meaning

at times, there may be minimal contact between volunteers within a chapter. This

presents difficulties in developing team morale.

4) Being a geographically segregated team presents issues on how to maintain a

positive, engaging atmosphere in a digital environment.

From Anna Jolly Volunteer Engagement Manager


Key focuses for 2012-2013

1) Continue to drive Yammer (our internal ‗Facebook‘). This tool has proven very

effective in connecting volunteers to the project and to each other, with both of these

factors improving engagement levels.

2) Diversification of recruitment channels, with a greater focus on developing

partnerships with Universities. These partnerships have proved an effective

recruitment channel in 2011-2012, and university students‘ keenness for professional

development and their flexible schedules have also proved advantageous.

3) Recruit multiple Retail Coordinators for larger chapters. Retailers generate steady

sales with minimal time required by volunteers.

4) Standardise and institutionalise volunteer induction processes, including sales and

OHS training.

5) Development of a leadership pipeline to promote internal succession.

6) Development of a formal, strategic intern program.

7) Develop formal reward and recognition processes. This continues to prove difficult in

an organisational context of scare resources, but is critical for volunteer retention.

Statistics on volunteers and members

Statistic 2009-2010 2010-2011 2011-2012

Registered volunteers 80 125 70*

Average hours spent

volunteering

3-10 hours per

month

10 hours per

month

10 hours per

month

# of CfC Chapters 5 7 10

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


Western Australia … from Brooke

Jones

The Western Australian chapter made steady

progress over the 2011-2012 financial year. In

December, the chapter organised a screening of

‗Spinning Dreams‘. The event was held in

Fremantle and was a great success. Following this

event‘s success, the team in WA organised a

volunteer gathering which doubled as a banquet

dinner in recognition of Khmer New Year in April. This event was a

similar success raising just under $600.

Special once-off events and carpet parties also proved strong

sales channels this financial year, with the Mosman Park Ecofair

generating $750 worth of sales in May, and carpet parties

generating $400 on average.

The WA chapter has expanded its volunteer base this year,

welcoming a dynamic new Retail Coordinator and Volunteer

Coordinator, along with several other general

volunteers. The focus has now shifted to retention

and engagement strategies.

The broader focusses for the 2012-2013 financial

year will be on expanding retail presence, and

making pricing more transparent to customers.

South Australia … from Jessica Fabian

The 2011-2012 financial year started extremely well in

South Australia with the most successful CfC movie night

fundraiser to date! The event attracted over 320 guests and

raised approximately $4000 for CfC.

In December 2011 Adelaide took part in the exciting

global screening of Spinning Dreams, which was

simultaneously screened in 7 cities across the globe.

Timing was a major contributor to poor attendance

rates in Adelaide, though it was still amazing being part

of a fundraiser which saw volunteers from across

Australia working with volunteers from Gone Cyclin' in

Singapore, Ho Chi Minh and our Executive team in Siem

Reap.

Ou

r C

hap

ters

Aro

un

d A

ust

ralia


From the second half of the financial year, the SA chapter started experiencing a loss of

several long term, active volunteers, leading to the slowest level of activity in this chapter to

date. Without strong leadership, the few volunteers that were retained were not successful

in improving the activity level of the SA chapter.

Early 2012 saw several key management roles filled which was promising for the SA chapter.

A highly motivated Chapter President was recruited in June and 2012 / 2013 looks extremely

positive with these new developments.

Victoria …from Amy Tung and Rachael Chan

The Victorian chapter was consistently active throughout the

financial year, with a very tight knit team remaining relatively

stable and growing with a few new promising volunteers.

Two key fundraisers were held, a banquet dinner in

September, where over half of revenue was generated from

games and raffle tickets, and a Spinning Dreams event in

December with strong attendance, a great reception to the

movie and lots of interest and carpet sales.

Victoria have tested a variety of market s including the

Ivanhoe Market and the People‘s Market, and the North Melbourne

market was established as a key regular market, consistently generating

good sales.

Victoria has introduced a key new management role this financial

year, that of Logistics Coordinator. The role has proved very useful

and has ensured smoother and timely domestic logistics. Victoria is

hoping to significantly expand its volunteer base in 2012-2013,

seeking a Finance Coordinator, Event Coordinator, Market

Coordinator, carpet party volunteers and more market stall

volunteers.

New South Wales … from Yana

Polyanskaya

The Sydney chapter started the 2011-2012 financial year with

a consistent management team. However, due to other

commitments this faltered, and by the end of the financial year,

we were seeking a whole new management team! Long term market

volunteers also took a step back, and a few new volunteers were introduced. High volunteer

turnover and lack of volunteers continue to be the main challenges in Sydney.

A key win for the Sydney chapter this financial year has been the acquisition of a free storage

unit at Storage King. This is sure to allow for much smoother logistics.


Paddington markets continue as the regular market every Saturday, with average sales of 1 to

5 carpets a week. We also trialled additional markets this financial year with mixed results –

Manly Fair Trade, North Sydney and Dural. The Autumn and Winter months in particular saw

quite low sales. With markets not being consistently profitable and requiring a lot of

volunteers and planning effort to run each week, Sydney will switch focus to retailers and

events in the coming financial year. With the recruitment of a new Retail Coordinator and

new Event Team (planning a Spinning Dreams for early in the 2012-2013 financial year) we

hope to see strong growth in both areas and generation of sustainable sales!

Australian Capital Territory … from Amanda Palmer

The ACT Chapter of Carpets for Communities was

established in late 2011 and its small volunteer base has

been exploring a range of markets and opportunities for

sales throughout their first six months of operations.

Volunteer recruitment is ongoing, with several new

volunteers coming on board in the first half of 2012

although resources available are still quite low.

The chapter is currently focused on market stalls as a key

means of generating regular revenue, with mixed results

at various markets in the Capital Region (ACT and

surrounding regional NSW). These regular markets have

included Bungendore Markets, Captains Flat Markets, Bredbo Community Markets. Irregular

markets and fundraiser events have also proven successful.

Significant achievements during the year have included attendance at the Canberra

Environment Centre's Eco Christmas Market in December 2011 which saw almost $1000 in

sales; and a screening of the Spinning Dreams documentary at Canberra Girls Grammar in

June 2012, which attracted approximately 40 people and took in almost $1000 in ticket sales,

donations and carpet sales.

Tasmania

The 2011-2012 financial year saw significant

progress in the Hobart chapter. A chapter

president was officially recruited, along with

another 5 volunteers. The chapter held a stall

at the Fair Trade Fiesta with a local non profit

organisation advocating about Fair Trade, in

April. The very first market stalls for Tasmania

were held late in the financial year. Team

Tasmania confirmed their very first retailer

and is in negotiations with several others as

this report is published! The chapter also

managed to establish a partnership with

Troona High School, received some media

coverage in local newspapers, and is

organising a trivia fundraiser event for early

in the 2012-2013 financial year.


Queensland

Brisbane has been very resilient this financial year whilst being very light on the ground. With

other commitments keeping their few volunteers busy, Steph Bacon made a massive solo

effort to keep the chapter alive. Queensland ran a Spinning Dreams fundraiser in March, and

has had several stalls at special events or once-off markets. We are currently seeking a

management team to really get Brisbane off the ground.

Alice Springs

Unfortunately, following the loss of our key volunteers and subsequent several months of

poor sales, our Alice Springs was officially closed down at the end of the 2011-2012 financial

year.

Gold Coast, Newcastle and Geelong

The Gold Coast, Newcastle and Geelong chapters, a.k.a. our ―piggyback‖ chapters, have made

some great progress thus far! We have several enthusiastic, committed new volunteers on

board in each region, and each chapter has markets, stalls at special events and a fundraiser

event confirmed for early in the 2012-2013 financial year.


Sales and Marketing

―I entered my role in January 2012, after CfC had just run a successful round of

fundraisers. This financial buffer gave us the space needed to focus on

implementing the strategic strategies developed at the beginning of 11/12.

We decided not to push for market stalls but instead focus on developing an

online store and retail catalogue. One of the first things we did was to bring

our carpets to 5 star hotels in Siem Reap and get them photographed in an

exclusive boutique environment. We were especially excited to photograph

them in the Heritage Suites, a hotel in which our carpets looked absolutely

gorgeous.

Some of the most exciting sales developments that happened in 11/12 include the

shipment of carpets to Singapore, where they are now being sold through a personal

network. We also signed our first large bulk order from America. Exploring new

markets through external distributors and producing stock according to large orders

are two options which we will continue to explore and where we hope the most

sustainable sales avenues can be created.‖ ―I entered my role in January 2012,

after CfC had just run a successful round of fundraisers. This financial buffer gave us

the space needed to focus on implementing the strategic strategies developed at the

beginning of 11/12. We decided not to push for market stalls but instead focus on

developing an online store and retail catalogue. One of the first things we did was to

bring our carpets to 5 star hotels in Siem Reap and get them photographed in an

exclusive boutique environment. We were especially excited to photograph them in

the Heritage Suites, a hotel in which our carpets looked absolutely gorgeous.

Some of the most exciting sales developments that happened in 11/12 include the

shipment of carpets to Singapore, where they are now being sold through a personal

network. We also signed our first large bulk order from America. Exploring new

markets through external distributors and producing stock according to large orders

are two options which we will continue to explore and where we hope the most

sustainable sales avenues can be created.‖

2010-2011 and 2011-2012 compared

During 2010-2011 we started with implementing new sales strategies to diversify our

revenue stream. The new strategies focussed mainly on:

Retail partnerships – both wholesale and consignment where necessary

Carpet parties – similar to Tupperware parties, held in the customer‘s home. As we entered the new financial year, these strategies had been proven successful as

we had pushed back our market stall share of our total sales revenue back from 83%

to 69%.

While we continued in 2011 - 2012 to expand our retail presence in Australia and

promote Carpet parties beyond customer‘s homes and into the corporate and Sale

s an

d M

ark

eti

ng

From Rowan Klaassen Sales and Marketing Manager


community environments (think work lunch time carpet parties, and Rotary clubs), we

also focussed on two new sales avenues:

Events – Selling carpets at fundraising events, as seen in our successful Spinning Dreams fundraising rounds.

Online Store – Increasing sales by making our carpets easily available online.

By focussing on events as a sales avenue, we managed to increase this avenues‘ sales

revenue share from 1% to 14%. While the opportunity of selling at events relies heavily on

the availability of human resources, it has proven to be effective.

In our most successful month in this financial year, December ($10,711), over 65% of our

sales were made at events.

Our continued promotion of carpet parties in combination with the launch of our online

store and entering the Singaporean market through personal networks, led us to further

reduce our dependability on market stalls. A comparison of sales by avenue between 2010-

2011 and 2011-2012 can be seen in the graph below:

Statistics on sales and marketing

Statistic 2009-2010 2010-2011 2011-2012

Average monthly sales $7,920 $8,726 $5,832

Average number of market

stalls per week 4.7 3.98 2.5

Average sales per event $393 $316 $264


Our most successful sales events included:

Name Date State Amount

Gone Cyclin‘ Singapore 9 December 2011 Singapore $5,980

WOMADelaide 9 March 2011 South Australia $1,451

Hulbert St Sustainability

Fiesta

25 September 2011 Western Australia $1,400

Intercontinental Christmas

Fair

27 November 2011 Cambodia $1,090

Rugged Up – Movie Night 19 Augustus 2011 South Australia $1,014

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

Focuses for 2012-2013 1. Further develop our markets and products.

2. Actively focus on developing new products and entering new markets.


External Relations and Media

External Relations and Media strategies have suffered from not having dedicated resources to drive this area; however we have still hit a number of important milestones and goals throughout this financial year. Some achievements made during 2011 – 2012 include:

Production of new brochures and business cards;

Regular video updates from Cambodia;

Professional photo materials of our products;

New professional photo material from our project in Poipet

Product shots featured in G Magazine and Sanctuary;

The awarding of Fair Trader status from the Fair Trade Association of Australia and New Zealand. This acknowledges our status as an organisation paying fair wages to our participants, and positions us very favourably within the market.

One of the highlights in 2011 – 2012 was the publicity generated through Spinning Dreams.

This documentary premiered in 5 cities and successfully raised over $60,000 SGD for Carpets

for Communities. There have subsequently been a number of successful fundraisers based

around the screening of Spinning Dreams.

The premiere of the documentary screened in –

Singapore, Singapore

Adelaide, SA

Perth, WA

Alice Springs, NT

Melbourne, Victoria

Some of the published articles about Spinning Dreams included:

Humanity – Making a difference one pedal at the time – August 2011

Phnom Penh Post – Spinning Dreams Movie Premiere – April 4th 2012

Canberra City News – Inspiring Journey – June 2012

ABC Canberra Radio – Interview with Ashwin – June 2012

Published product shots of CfC carpets in 2011-2012

G Magazine – Spotlight On... – June 2012

Sanctuary – Carpets for Communities Hand-Hooked Cotton Rugs – June 2012


Other Media spotlights

Easter Courier – Cambodian compassion sparks film fundraiser – August 2011

Connect Magazine – A Journey of Learning – Nov 2011 – February 2012

TV – The Project – May 11, 2012

The Herald Sun – Shop Front – May 10, 2012

My Business My Business was a fundraising campaign that began in May 2011 to fund our mothers‘ foray

into micro-enterprises. My Business, or Fund an Entrepreneur, was primarily conducted via

Facebook and online social mediums. By the end of December 2011, CfC had raised the total

amount required - $14,800 ($400* 37 families) to enter all of our families into micro-

enterprises and other sustainable livelihoods.

My Education My Education was, similarly, conducted via social media. It aimed to raise funds for Tout

Kimchhean, Hing Prempey and Hourt Pesith to attend university in Phnom Penh. As at

December 2011, CfC had raised enough for all three scholarship recipients to attend their first

year at university. Now we have changed our scholarship program to not rely on fundraisers

but on sponsors. We are currently looking for individual sponsors for each of our scholarship

students.


Production and Logistics

From Rowan Klaassen Sales and Marketing Manager

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

2010-2011 and 2011-2012 compared

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

Statistics on production and logistics Statistic 2009-2010 2010-2011 2011-2012

Australian stockpile 350 sqm 1104 sqm 1002 sqm

Cambodian stockpile 380 sqm 1040 sqm 1228 sqm

Total stockpile 730 sqm 2144 sqm 2230 sqm

Total stockpile/average monthly

sales 10.7 months 26.3 months 19.6 months

Rate of production : average

monthly sales 1.92 : 1 3.4 : 1 1 : 2.3

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

Focuses for 2012-2013

The focuses in 2012-2013 will be to develop new products and train new families to produce these. This is integral to ensure we have other products to complement our current line of carpets, and strengthen our brand.

The possibility of buying new cotton at higher prices will be investigated, to sustain our supply chain.

Finally, another key focus for 2012-2013 will be in improving our stock management system. The infrastructure is sound, however some of the processes require some improvement.


Other Australian Programs

Schools Partnerships

Trinity Grammar School in Melbourne is still our only school partnership. The partnership has

continued quite successfully in this financial year.

CfC has been working with Trinity for over a year now in a partnership to fundraise for our

programs and to educate Trinity students about Cambodia and the work we do in

empowering women.

In August 2011, the school raised over $2400 from two events: a sausage sizzle at the school

athletics day and 'Cover for Cambodia' which was a hugely successful talent show. The

money raised from these events funded two entrepreneurs, Seng Sean and Seng Eng, to start

their micro-enterprises and also went towards supporting our scholarship students.

In September 2011, previous CEO, Kylie Hansen spoke at the Sutton House Breakfast where

another $1100 was raised for scholarship students.

The 2012-2013 financial year also promises to be an exciting year for the partnership

with a number of events planned for the latter half of 2012.

More generally, we are looking at new and collaborative ways to partner with schools

like Trinity, which in addition to the above ideas might include:

o ways in which we could assist students to achieve their Duke of Edinburgh

awards,

o a role that we can play in educating students about fair trade and poverty,

perhaps via S&E classes,

o connecting schools to our schools in Poipet for cross cultural communication;

o education and fundraising events ran through the school, which serve

multiple purposes:

involving students and educating them in events management

selling carpets

raising money for various initiatives (for CfC and the school)

o study tours we could provide in Cambodia for students to visit our families

and see our joint impact

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Cambodian Operations

From Kimsreang Kun Cambodian Country Manager

Our Cambodian team holds the critical role of managing the

production process whilst engaging and working with our

participants.

Our previous country Manager Heng left in October 2011. Kimsreang was our social

worker at the time, and has been promoted to be the National Program Manager. As

an organisation valuing gender empowerment, we are very happy to be able to

welcome our first female Cambodian country manager.

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CfC Social Enterprise (Income Generation)

In this financial year we have worked with 34 families, in production and in micro-

enterprise development and support. In December 2011, production was brought to

a halt temporarily, as we transitioned families into their own businesses and worked

on decreasing our large existing carpet stockpile.

Between January – June 2012, we have still met custom orders, expanded the

production of new products (ie cushion covers and necklaces) and begun retail

custom orders for a specific US contract.

On average, Carpets for Communities has supported 34 families, at an average

income of $101.50 per month.In this financial year we have worked with 34 families,

in production and in micro-enterprise development and support. In December 2011,

production was brought to a halt temporarily, as we transitioned families into their

own businesses and worked on decreasing our large existing carpet stockpile.

Between January – June 2012, we have still met custom orders, expanded the

production of new products (ie cushion covers and necklaces) and begun retail

custom orders for a specific US contract.

On average, Carpets for Communities has supported 34 families, at an average

income of $101.50 per month.

Lessons Learned Many children will get involved with their parents work after school, and it is very

difficult to stop this. We have questioned whether we must stop it, considering that

it is a cultural norm for children to help their families more than in Western

societies. Generally we are monitoring families to ensure that children are not

exploited, and continually searching for answers to these kinds of questions.

Cam

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Micro-enterprise Program (Income Generation)

As at June 2011, approximately 10 of our families had started micro businesses and most are

doing quite well. The rest of the families will start their micro businesses between June and

December and will finish producing carpets at the end of December.

We ran a fundraising campaign to raise the funds for this initial transition. The total raised

was approximately $13,000 for 37 families. Approximately $1,850 ($50 per family) was used

to hire, and to continue to hire, a Khmer consultant to assist in developing the program and

administering training, and to contribute to the social worker‘s wages. We provided the first

round of loans at 70% grant, 30% loan and the second round at 50% grant and 50% loan.

The idea is that this will make it easier for them to take the risk and also give them some

feeling of pride when they repay it.

However, one grant is not going to solve all their income issues so we will help them build

multiple streams of income and also build on current streams by expanding businesses

where appropriate through further programs which are currently being developed for 2012

such as; vocational training for other household members, loans for livelihood activities,

loans for second businesses and more.

Type of business % of families

Mushroom farming 3

Sewing 40

Moto driver 15

Recycle merchants 6

Pig farming 9

Fruit selling 18

Grocery selling 9

Level of success % of families

Very well (ie are making a profit from business that is

enough to support their family)

24

Well (ie breaking even, maybe a small profit but needing

to diversify their income)

21

Not well (ie not quite breaking even, are requiring more

intensive support)

24

First business failed, but second business is successful (ie

they are making a profit enough to support their family)

12

Business has failed, and family has given up on that

particular business idea

20

Very well (ie are making a profit from business that is

enough to support their family)

24

Well (ie breaking even, maybe a small profit but needing

to diversify their income)

21

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


Lessons Learned

The key lessons we have learnt from the development of micro-enterprises have been –

1. Families often did not contribute any of their own income, which makes them feel like

the business is ‗CfC funded‘. They take less ownership over their success in this way.

2. Our internal staff does not have training with financial management. Whilst we

developed their business skills to provide assistance to the families, there are still

more skills that we need to assist them to develop to provide the best level of support

to families.

3. More intensive financial training needs to be undertaken with families prior to setting

up their businesses.

4. There is a difference between the skill required to get businesses to a level of success,

and the skill level of our families. This is a difficult barrier to tackle.

Cost Item Cost

Capital $300

Training (ie financial literacy, etc) $40

Overheads (ie staff time, costs related to fundraising

campaign)

$10

Total $350

Weekly School Attendance Monitoring

Our weekly school attendance monitoring occurs across 11 schools. As we no longer have a

dedicated social worker, the field workers have taken on this responsibility and so far this is

working well. Our field workers spend approximately 20% of their time monitoring and

checking school attendance.

This program also includes:

Follow up coaching with the mothers when children's attendance drops.

On average, field workers follows up 3 families per day

This equates to approximately 15% of field worker time

Average cost per family per month

Statistic 2010-2011

Fielder Worker Time $2.11

Scholarships Program

The scholarships program was implemented to further the education of impoverished

children in the Poipet commune. Although carpet production and microbusinesses ensure a

stable income for our families, with an average of six children per family, and university fees

and living expenses at around $2000 per year, university study is still a stretch from what they

can afford.


Our scholarship program provides recipients with $1,600 over the course of a year.This

amount include tuition fees, basic living costs and study expenditure. Despite the increase in

welfare our families have attained through our income generation programs, this amount

annually remains out of their reach.

Breakdown of scholarship costs

Tuition Fee $400 p.a.

Bicycle $30 (once off)

Rent and Utilities $30 p.m.

Living Costs $55 p.m.

Study Costs $12.50 p.m.

Total $1600 p.a.

Our three scholarship students, Kimchhean, Pesith and Premprey, commenced university

studying electrical engineering, IT and laboratory studies respectively. All three have

achieved some excellent results, both at university and within a variety of community service

programs.

Kimchhean When CfC found out about one of Kimchhean‘s

inventions when he was still attending high school, it

was clear that Kimchhean would be one of the first

scholarship students, and no surprise that he would

be studying engineering. While his mother was

involved in carpet production, she was spending a

significant amount of time hand rolling t-shirts off

cuts into the rolled cotton that the carpets are made

from. From scrap wood, a recycled paint roller, an old talcum powder bottle, and an old tin

can, Kimchhean created a machine which rolls the cotton with significant ease. This piece of

equipment saved his mother a considerable amount of time and enabled her to create more

carpets, thereby generating more income. Genius!

You can visit our website to see Kimchhean‘s amazing semester 1 results.

Premprey Premprey volunteers from Monday to Wednesday as a Health

Coordinator at ACE, the student centre where he lives. As a

Health Coordinator, Premprey organises and conducts health

and hygiene trainings to the youth and children of various

ACE centres in Phnom Penh. ACE told us that their kids and

youth are healthy mainly because of Prempreys hard work!

In addition to volunteering at ACE, Premprey joins English

class from Monday to Wednesday every week. On Thursday,

he attends Leadership classes and on Friday he joins the

Rotary Club of Phnom Penh Metro meeting. This club consists of 20 members who come

together and discuss how they can help their own community through social services. As


Premprey comes from a poor rural background, he is very motivated to work with other

Cambodian youth who are living in poor conditions and help them to improve their

situation.

Pesith Pesith volunteers at ACE, the student centre where he lives, from

Monday to Wednesday as the Administrative Officer and as part of

a training team. He hopes that this work gives him work

experience and enables him to find a good job after his study. Like

Premprey, he also joins English classes every Monday to

Wednesday, a Leadership class every Thursday and the Rotary Club

of Phnom Penh Metro every Friday.

In the 2012-2013, we will welcome one more scholarship student

to the program, Hing Vuthy - Premprey‘s younger brother! We

hope to welcome many more students in the coming years. To achieve this, the 2012-2013

financial year will see us focus on promoting the program to both parents and students alike.

Our quarterly community meeting planned for early September 2012 will see the three

current scholarship students return to Poipet to speak to the community about their

experiences, and encourage students to apply for the next academic year.

Education Program – Poipet commune

It is very common for us to hear from our families that they are very unhappy with the quality

of education in Poipet. Often children need to pay ‗extra‘ for ‗private tutoring‘ when in fact

they require extra assistance just to meet their minimum graduation requirements.

As this is a significant community issue that affects more than just our families, we have

started creating the infrastructure within Poipet for an education initiative. This has been

made possible through the financial support of Australian Ethical Investments (AEI).

We have developed a relationship with the Puthi Kumar Organisation (PKO), an organisation

established in 2005 to build the capacity and development of intellectual, well-being and

economic for children and their community. This is a Khmer run organization, and an expert

in implementing the development approach of Participatory Learning in Action (PLA). For this

reason, CfC is very excited to work with them.

The initial groundwork undertaken to date has been to for PKO/CfC to conduct discussion

sessions with the four directors of the schools we have identified.

These discussion sessions identified the four main areas of need -

A need to strengthen and establish the management system for the director of the

schools;

A need in building the capacity of the teachers, education authorities and the

relevant stakeholders;

A need in establishing the environment to support learning. This must include work

on gates, fences, latrines, gardens, etc and

A need of participation of parents and communities.


Having identified these needs, PKO and CfC will work together to find effective community

sourced and led solutions. This work will begin in the 2012-2013 financial year.

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

families:

Second micro-loans Some families have required a second loan, either because their first business was not

successful, or because they required a little extra capital to expand their enterprise. In 9

circumstances we have provided a second loan to families. Three of these families have

already paid back their first loan.

Average cost per family

Average loan per beneficiary $156

Average loan repayment per month $37

General purpose micro-loans General purpose micro-loans provide assistance in circumstances where families can be

financially vulnerable (ie health concerns and hospital visits, sons and daughters weddings,

etc). This is currently only provided during the stage that they are producing carpets and is

essentially an advance lump sum payment aga inst labour.

Average loan per beneficiary: $115

Financial training We conducted some basic financial training for families, to help them gain a basic

understanding of income and expenditure, and the importance of record keeping. This was

conducted over a week by our Country Manager and field workers. More than just business

financial management, we also provided some advice and guidance on managing household

finances.

Average cost per beneficiary: $2.57

Sewing Skill workshop Many families who wanted to start a sewing business only had a very basic level of skill in

sewing. As many of these families were located in the An Dong Thma Mes village, we

provided a basic sewing skills workshop for 2 days a week over a 2-3 week period.

Average cost per beneficiary: $3.46


Making it Personal...

Koul Pow joined the project in 2009. She has seven children—two under the age of six,

and five between six and 15. Before entering the project, some of Koul Pow‘s children were

not enrolled at all in school, and the rest, while enrolled, did not attend regularly because

they had to beg or work as cart-pushers to support the family. Since their mother joined CfC,

all of the children have the chance to study full-time at the local school.

When Koul Pow was involved in carpet making, she could earn $115 on average each month.

Even so, she had to purchase commodities on credit at times, because she also supports her

elderly mother. Her son, who works in Thailand, also sends the family money and now they

manage.

Koul Pow was excited to start her own business and requested a $350 loan from CfC in

October. She used this loan to buy a motor for her husband so that he could work as a

motor taxi driver. This business gives her family the average wage of $2.50 per day, which is

just enough for food and for their children to go to school. While her husband worked as a

motor driver, she decided to sell jewellery on the Thai market, as she has noticed that many

Thai people really like jewellery.

Koul Pow invested 1000btha ($300) in jewellery and started by carrying jewellery around in a

big basket to sell around the Thai market. With this business, she could earn $3 per day. This

money allowed her to repay her monthly repayments to CFC and her monthly repayment

interest to a moneylender.


Koul Pow then requested a second $300 loan to increase her capital to buy more jewellery.

Given her success to date, we supported this decision, and this has increased her average

daily profit to $6/day. This allows her to repay all her old debt, rent a store for her business in

the Thai Market, and expand her house to be bigger and more comfortable.

Lay Leang and her family joined the project in August of 2010. She is a single mother and

currently has five children. Previously, one of her daughters (age: 10) did not attend school

and the oldest child only attended sporadically to stay home and do the housework. Now, all

the children attend school regularly, and during their holidays, they sometimes help her

make carpets.

Lay Leang was excited to start her own business in August 2011 and requested a $270 loan

from CfC to start a fruit selling business. She bought a cart and fruits and walks around the

community to sell her wares. She works hard in her fruits selling business and comes back

home late in the evening after a full day‘s work. This business works well during every season

as other fruit sellers sometimes don‘t make it to the village during rainy season. Lay Leang is

now the regular supplier.

Lay Leang is flexible, and this has enabled her to be successful in her business. She would like

to buy more things like vegetable, fish, fruits and other foods which she thinks would sell. As

she pushes her cart with inventory through the community, she stops in the main road and

carries some foods directly to her customers‘ houses. As people can‘t get out of their house

during rainy season, she can sell door-to-door for some extra profit.

Lay Leang now has an average wage of around 300bath ($10)/day. This wage supports her to

buy daily foods and to get her kids to go to school. Additionally, she has been able to save,

and buy a new land and house in a good location in Poi Pet city. This costed her $5000, for

which she made a $1200 deposit and now has to pay a monthly reduction of $181.


Statistical Data – Key Performance Indicators (KPIs)

Development KPI’s 94% were attending school regularly, up from 75.2% in 2010-2011

Average family income was USD$101.50, down from USD$121.82 in 2010-2011

(As discussed, due to our impending cash flow concerns.)

10.3% of our children are still working for money, down from 18% in 2010-2011

2 of our children are in years 11 and 12 (a rarity in Poipet) 3 University scholarship applications received and approved in 2010-2011

1 scholarship approved in 2011-2012, for a total of 4 supported students at University

This is due to the fact that we had less target children in the program due

to a change in our organisational structure

Production KPI’s

• Our current stockpile of carpets is 1228m2 in Cambodia and 1002m2 in Australia.

Sales KPI’s Our average monthly sales (AMS) were AUD$5832 down from all previous years

We have 19.6 months of rug stocks (based on our stockpile / avg. monthly sales rate)

AUD$264 is made on average at each sales event (eg; a market stall),

down from AUD$315 in 2010-2011

HR KPI’s

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

106 target children

were in the program

compared to 125 children in 2011-

2012.

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Finance From Dick Hoffmann Director - Treasurer

―More than 1.5 year ago I arrived as the first person ever to fill

the financial management role full time at CfC. I now sit on

the Board of Directors as Treasurer, and as a result, I‘ve had

the liberty to set up some of the main monitoring instruments. In 2011, it became clear that

with the unexpected drop in sales and the high production rate, cash flow management

would be one of my top priorities. This focus has been maintained over the last financial year

to ensure the organization‘s sustainability.‖

2010-2011 and 2011-2012 compared

The financial year 2011-2012 was the first where CfC had a Financial Management role full

time for the entire year. This turned out to be crucial in the beginning of this financial year

when CfC made use of an overdraft facility to weather the storm.

This overdraft provided us the time required to re-organize the organization to become

more sustainable for the future. Over this financial year we have made a significant profit,

which will all be reinvested in our normal operations and our development programs.

Focuses for 2012-2013

A major focus for 2012-2013 will be to see whether the activities of the Finance

Manger can be split and managed by the current staff in Cambodia, or whether we

need this position to be filled in permanently. This is the current arrangement given

our circumstances; however we also acknowledge the importance of maintaining a

constant analytical and critical eye on our financial reporting. Financial reporting will

therefore be a focus as we ensure the standard of our financial information does not

slip with our lessened experience on the ground.

Secondly, we will need to conduct an external audit for our next financial year. The

high costs involved are a significant barrier for us, however in order to move forward to

the next level of organizational professionalization this is a step that needs to be taken.

Fin

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Financial Year Report 2011-2012

The following table shows CfC‘s profit and loss statement for the last 3 financial years. The

following part will give further explanation on many of these figures. All amounts are in

Australian Dollars except when mentioned otherwise.

Revenue

2011-12 2010-11 2009-10 Donations 9,014 4,439 2,240 Events 1,922 813 2,634 Fundraising 46,344 32,645 17,771 Grants 35,000 40,320 1,058 Sales

- Market Stalls 34,011 82,025 75,630 - Retail Sales 15,825 10,167 15,675 - Carpet Party Sales 6,922 - - - Other Sales 13,253 21,607 5,140

Other Income - 5,305 5,010 Total Income $162,290 $197,321 $122,524

Expenditure

2011-12 2010-11 2009-10 Cambodian Expenses

- Development Expenses 15,783 11,265 - - Executive Team (Wheeler) 11,011 18,989 - - Production 61,135 112,640 68,293

Event Expenses 6,744 4,722 1,414 Financial Expenses 1,431 660 462 Fundraising Expenses 1,891 2,758 247 Market Stall Expenses 3,263 6,377 4,745 Other Expenses

- Insurance 3,936 3,225 3,344 - Marketing / Sales / Promo - 93 446 - CEO Tour of Duty 3,186 - - - T-Shirt Printing - 20 1,380 - Storage Expenses 3,032 - - - Other Expenses 2,422 3,283 1,536

Staff 488 9,788 12,830 Transport Fees

- Australian Domestic 4,387 3,451 2,865 - International 9,498 9,708 15,437

Total Expenses $128,208 $186,940 $112,735

Net Surplus $37,118 $10,381 $9,789


Income Notes

Donations: include the donations we have received at our market stalls and donations

from externally organized fundraisers held for CfC.

Events: to the fees paid by volunteers who attended our AGM in October in NSW and

our Conference in Victoria in February

Fundraising: includes all the funds received from specific fundraisers organized by CfC.

Examples are the fundraisers organized for Gone Cyclin‘ and for our scholarships

and Micro- enterprise campaign.

Grants: In the last financial year CfC received one grant of $35,000 from Australian

Ethical Investments.

Market-stall sales: CfC‘s biggest source of income, totalling $34,010.

Other sales: include our online sales and revenue from custom orders, carpet parties

and personal sales.

This year CfC start to focus more on Carpet parties, which has become an significant

part of CfC‘s sales number.

Other income: includes volunteer membership fees, delivery charged for sending rugs

to retailers, etc.

Expenses Notes

Cambodian expenses: the Cambodian expenses consist of three forms of costs.

Expenses incurred for the production of the carpets, expenses made for

developing the Poi Pet community and the expenses that were incurred to install

and support the executive team in Cambodia. The latter expenses are covered by

a grant from Planet Wheeler.

Development Expenses: Development Expenses include the expenses to set up a

development fund. In 2010 CfC started with a development fund after successful

fundraising events in Australia. From this fund we have hired a social worker for

the biggest part of this financial year.

The development fund also provides interest free loans. This financial year

specifically to fund our participant‘s Micro Businesses. An amount of $ 9711 USD

has been provided as loans.

CfC also started with a scholarship program in this financial year, an amount of

$5061 USD was spend to cover our students tuition fee, rent and other living

expenses


Planet Wheeler Expenses: As mentioned earlier, the Planet Wheeler Foundation funds

the costs for installing and supporting the executive team for one year in Siem

Reap. Table 1 gives a summary of the costs for the first executive team before

they left in January 2012. These figures are in USD as the expenses are made in

Cambodia.

Due to the differences in currencies the costs mentioned in our financial

statement differ from the total amount mentioned in Table 1 and Table 2.

Table 1 (in USD)

Planet Wheeler Expenses December 2010 - July 2011 Total Expenses

Office Costs $5,561

Team Costs $7,479

Other Costs $248

Total $13,288

Team costs: are the salary for the team, food allowance for lunch and dinner, food

staples (such as bread, milk and eggs) and drinking water.

Other costs: are the rent of the office, utilities and a cleaner.

Production Costs: table 2 shows the Cambodian operational costs by category in USD.

Development expenses and costs made by the executive team are excluded.

Table 1 (in USD)

Cambodian Operational Expenses (in USD) Total Expenses

Carpet Labour Charge $ 12,294

Carpet Raw Materials $ 2,369

Other Direct Costs (inc packing and equip) $ 2,308

Total Direct Costs $ 16,971

Staff $ 21,263

Office / Admin Costs $ 16,464

Logistics $ 3,774

Sales and Marketing $ 1,755

Total $114,429

As can be seen, a large part of the costs are directly related to the production of

the carpets. Our participants together received an amount of $ 12,294 USD in

wages.

The other two big sources for costs are the staff‘s salary expenses and

office/administration expenses which are incurred in order to make the

production of our carpets possible. Office and administration expenses include

the office rent, utilities, office equipment and stationary for our current office and

warehouse in Poi Pet and Siem Reap

Logistics includes the transport of raw materials to the warehouse and finished

products to Phnom Penh. The sales and marketing consists mainly of

promotional material (banners, business cards and flyers).


Due to the differences in currencies the costs mentioned in our financial

statement differ from the total amount mentioned in Table 2

Financial Expenses: includes the fees charged on our bank account, fees for the

international transfers to Cambodia plus fees Pay Pal charge for every transaction

on our account.

Market Stall Expenses: which consist mainly of the fees to hire a stall, but also include

reimbursements of expenses volunteers incur to attend the market such as petrol

and toll. These expenses totaled $ 3,263 last year.

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

Breakdown of Income Income

The following figure shows the different types of income for CfC in this financial year and

their relative contribution.


Comparison with previous years

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

Income In the last year CfC‘s gross income has decreased with almost 40% because of a drop in sales

from$ 197,321 to $165,325. Compared to the 2009 – 2010 income last years income is still

$40,000 higher.

However, in the last financial year the funds acquired through grants, fundraising and

donations have increased. Compared to 2009-2010 these sources of income have increased

dramatically to $ 69,829 (329%). This is due to the fact that we received very few grants in

the 2009-2010 financial year. Compared to 2010-2011, this amount grew by $ 12,954 (17%),

due to successful fundraising campaigns for the Micro Businesses and scholarships, Gone

Cyclin‘ and a grant from Australian Ethical Investments.

Expenses

Last year showed a decrease of $58,659 (31%) in expenses. Our expenses in this period are

almost completely related to the decrease in the production of carpets. As a result the total

costs of the organization have moved much closer to the costs of 2009-2010, when the total

costs were $110,909

The only two groups where costs increased are the development expenses and the other

costs. The development expenses are up 40%, to $15,783 compared to last year. This can be

explained by the Micro Credit loans that have been provided to our families as well as the

expenses for the scholarship program.

The other costs increased because this Financial year for two major reasons –

CfC purchased a container on behalf of a supporter, who provided CfC with the funds for this purchase

Costs were incurred in order to send our CEO on a 3 month tour through different states within Australia.

Net Income In the last three financial years, CfC‘s net income has been positive. All these profits have

been or will be reinvested in our production and development programs.


Future Plans

Last year, we identified that our organisation needed to split clearly into two bodies. At the

time, we had planned for this to be a dual split –

The social enterprise Carpets for Communities o Encompassing carpet production and sales

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

As previously explained, the reason for this demarcation was that in the past, production has

consumed any funds put aside for other development purposes. Therefore, the social

programs we run currently are limited, due to not having had the resources to develop

programs and apply for funding for them. If we resource the NGO/programs side of what

we do independently, it can focus on getting funding for and implementing complimentary

social programs instead of waiting for the enterprise side to be profitable enough to fund

programs.

Subsequent further planning for this split continued throughout 2011-2012, resulting in what

is in fact a three-way division.

Empowering Communities remains the umbrella organisation. Sitting underneath

Empowering Communities is our social enterprise, Carpets for Communities and our

development activities, loosely termed Developing Communities at this point in time.

It is anticipated that in the future, Carpets for Communities and Developing Communities

would produce separate annual reports or at the very least have two very clear, demarcated

sections within a broader Empowering Communities annual report.

The strategic planning process for this structural change involved the development of a

purpose, core work and a five year goal for each element. We are pleased to unveil these

here.


Empowering Communities Purpose

The founding purpose of Empowering Communities is to create the ultimate

model that empowers children, families and communities to lift themselves out

of poverty and create true freedom for their futures.

Core Work We innovate, test and develop scalable models for addressing poverty and share

them globally.

Carpets for Communities Purpose

To create the ultimate social enterprise which offers immediate intervention to

give at-risk children a education.

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

Five year goal We prove the model and can show we are profitable and self sustaining,

producing positive outcomes for 500+ new kids pa with over 80% school

attendance.

Developing Communities Purpose

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

resilient and thriving.

Core Work We deliver participatory programs which address the root causes of poverty and

are continually learning and improving our approach.

Five year goal To have developed our approach and it has proven to be so effective that other

people are coming and asking for it.

The second major change that was outlined in our 2010-2011 annual report was the

development of a transitionary model for our families. Our new model is to be a cycle where

we work with women initially for a period of 12-18 months, and assist them through four

stages – Intervention, Stabilisation, Empowerment and Transition to Sustainable Livelihoods.

To date, we have not fully integrated this new model into our operations. This has been for a

number of reasons, however the predominant reason is that, once all families had been

transitioned into their new sustainable livelihoods, we made a strategic decision to pause

production of carpets given the significant stockpile we currently possess.

We anticipate that we will be piloting our new transitionary model for the first time in

November-December 2012 with products other than carpets.


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Documents

Empowering Communities Annual Report 2011-12