mercycorps.org/phoenixfund Solving Poverty With Pineapples? THE PHOENIX FUND STORY People don t throw bombs on their way to work. Jobs, Not Guns In today s world, the headlines are all about war, conflict and poverty. Disaster and chaos keep an international aid and development organization like Mercy Corps very busy. The larger question is: where and how does it all end? We know from our own experience that creating economic opportunity is the most effective way to stop violence and poverty. And that is why the Phoenix Fund exists: to help impoverished people find sustainable ways to end poverty. Read this story, and you ll see why the Phoenix Fund is such a powerful indeed, game-changing idea. Guatemala - David Evans/Mercy Corps Guatemala - David Evans/Mercy Corps A Handout Is Not Enough In 2004, long-time aid worker and Mercy Corps country director Borys Chinchilla took a deep look at poverty in Guatemala. He saw children with no shoes and no education, sleeping on a dirt floor. As an experienced professional with non-governmental organizations (NGOs), Borys was concerned that merely handing out saplings to plant, books to read, or shoes to wear, while helpful in an immediate way, did little to solve the country s root causes of poverty, which disproportionately affected its indigenous people. So Borys conducted a detailed field assessment. He discovered that land conflict was the core problem for people of Indian descent and yet no one was addressing it, perhaps because it was a complex problem that would not respond to a relatively straightforward solution such as providing handouts. Borys had the idea that a program centered on resolving land conflicts would go a long way toward addressing poverty in Guatemala. Not one to sit on a great idea, he took his inspiration to USAID, the U.S. Government organization that provides most non-military foreign aid. So convinced was USAID that Borys was headed in the right direction, the agency agreed to fund his 12-month pilot project, which aimed to show how conflict mediation can work to address poverty. In just one year, Borys project helped resolve 40 land conflicts.
The Right to Farm The first conflict Borys project took on involved a group of 80 subsistence farmers who had been squatting on wealthy landowners land for generations. The landowners were literally ready to kill these farmers, who they felt were stealing their land. Borys successfully brought both parties to the table and negotiated land leases for the farmers. This victory, however, inadvertently caused a new problem: How would the farmers pay their debt? These were subsistence farmers who in their lifetimes had only grown corn and beans for their families survival. They didn t sell what they grew for cash and had no idea what a market was, much less what selling to a market implies. Who would help these farmers raise the money they needed to pay for their land leases? Something more was required. But because traditional humanitarian aid doesn t fund unproven concepts, Borys feared that the farmers he had begun to help would end up back in the cycle of poverty and escalating conflict over land rights. Guatemala - Nathan Golon/Mercy Corps Enter the Phoenix Fund Then Borys heard about a new initiative at Mercy Corps. An internal angel fund called The Phoenix Fund had recently been capitalized by private donors who wanted their investments to lead to successful projects that in turn would attract further investments, thereby multiplying the positive effect of their investments and the number of people they are able to help. Borys applied for and received a Phoenix Fund grant of $100,000 to help the farmers learn to grow quality produce and sell it for a profit. His idea: to help them grow pineapples, which were in short supply in Guatemalan markets. WE ENCOURAGE OUR DONORS TO GET ENGAGED. THERE ARE A NUMBER OF WAYS TO DO SO: Advisory Committee: comprised of long-term, engaged donors, successful business leaders who advise the Phoenix Fund on its overall direction, future growth and strategies for marketing and operations. Grant Committee: comprised of long-term, engaged donors, successful business leaders who have experience building and managing corporations. Together with Mercy Corps program experts, this team evaluates proposals and determines which ventures are funded. Project Sponsorship: individuals donors are invited to sponsor projects that map to their personal or business interests. Venture Advising: individuals donors with expertise in specific areas are encouraged to provide advice, help Mercy Corps field staff write proposals on relevant topics and, once funded, to work with our field team on a quarterly basis to provide ongoing advice during the course of the project. Marketing: individual donors may assist the Phoenix Fund team in shaping marketing strategies and implementing creative ideas to bring new faces on board. Visit Programs: twice a year, donors are invited to visit a Phoenix Fund program in progress. 2 THE PHOENIX FUND STORY
Soon Borys became even more afraid. What if a storm wiped out the fruit? What if, by the time the crop reached the markets, there wasn t sufficient demand? And, how would the farmers generate enough income to pay down their debt, given the low price the identified buyer had agreed to, and the lack of a firm commitment to purchase the harvest? In light of these variables, how could Borys prove to Phoenix Fund donors that growing pineapples was a way out of poverty? Crossing the River Despite so many unknowns, the pieces fell into place. The weather held. And the farmers showed plenty of grit in the face of obstacles. When the pineapples were ready at last for transport to the buyer, the plucky growers carried the fruit on their backs. After walking for 30 minutes they came to a river. There was no bridge, and the rushing water was too strong to wade through. So the farmers built a makeshift contraption with poles, canvas and rope to move the pineapples across. On the other side, where the buyer waited with his truck, he declared the pineapples the best he d ever tasted. The word spread. A leading local newspaper profiled the good work Mercy Corps was doing with conflict negotiation, mentioning the delicious pineapples. Another buyer read the story and contacted Borys. And so people learned about the excellent produce the farmers were growing. Paying Off Their Debt At the end of their first growing season in the Phoenix Fund pilot, the 80 participating farmers had earned an average income of $1400. Compare this sum to their cash earnings before the project: essentially, zero. One group of pineapple farmers was able to pay off 20 percent of their debt. Already the farmers were on their way to self-sufficiency and, on the way, they also were creating a community of like-minded hardworking entrepreneurs. Today, the original group of 80 farmers has expanded their local school with additional classrooms, increased their access to healthcare, and improved their living conditions at home. Many families now sleep on concrete, rather than dirt, for the first time in their lives. As the community builds latrines and water tanks, the incidence of health problems is decreasing. And, as women s names have been added to the land titles, the community is enjoying a new sense of wholeness and equity. PHOENIX FUND SUCCESS STORY Ethiopia Ethiopia ranks near the bottom 169th out of 177 countries of the UN s most recent Human Development Index. The Index measures indicators beyond GDP alone, looking at life expectancy, education, and standard of living. The numbers are shocking; for instance, Ethiopia s unemployment is estimated at 40 percent. The Phoenix Fund granted $50,000 to establish five women-run businesses that develop cooking fuel briquettes from organic waste. Since the program began, the women participating have doubled their monthly income. Ethiopia - Geoff Bugbee for Mercy Corps THE NEXT STEP: A Large-Scale Solution While we cheer for the success of these 80 farmers, the question remains: how can a few fields of pineapples solve Guatemala s poverty on a large scale? Borys considered that too. He amassed the results of the Phoenix Fund project and presented them as proof-of-concept to raise an additional $2.2 million, largely from Wal-Mart and USAID. He then connected the farmers, now considered qualified suppliers, with Wal-Mart s extensive Guatemala supermarket chain. This is where Mercy Corps training in quality growing, harvesting, and packing THE PHOENIX FUND STORY 3
PHOENIX FUND SUCCESS STORY Nepal Farmers in Eastern Nepal have long grown cardamom on small plots of marginal lands. But they didn t earn much for their efforts. Their inferior drying methods did not allow them to command good prices from exporters. Too, the farmers were disorganized, socially excluded, and did not know how to market the crop all factors that kept them from achieving success. Through a $65,000 Phoenix Fund grant, 100 farmers have improved the quality of their cardamom and begun selling it at higher prices. The project has leveraged almost $1 million in additional grants to extend it to 500 additional farmers and provide capital loans for the equipment they need. Nepal - Joni Kabana for Mercy Corps techniques paid off their produce met the rigorous standards of a leading food marketer. As they moved up the food chain producing luxury fruit that can be sold for a higher price than mere subsistence corn and beans the farmers demonstrate how this Phoenix Fund project can achieve both self-sustainability and scalability, the potential to be replicated on a large scale in other places. The newly funded second phase of the pineapple project is helping 600 additional farmers, using the pineapple model but this time adding even more business smarts. The new participants are further diversifying their crops and moving up the agriculture value chain. They re linking to microcredit resources to purchase produce washing and storing equipment. They re learning to bypass the middlemen and directly contact owners in the marketplace. Best of all for broad impact, this program is now being evaluated for introduction in several other countries where Mercy Corps works. Today, the lives of the pineapple farmers and their relationship with the landowners have been utterly transformed. The farmers have gainful employment and greater self-esteem. The wealthy landowners respect what the farmers have accomplished and how they ve paid off their debt. Farmer-landowner violence has ceased and poverty in Guatemala reduced. This is the Phoenix Fund model: seed an innovative, unproven concept that if successful could lead to large-scale implementation. All with an eye on solving poverty in some of the hardest-hit places in the world. WHY THE PHOENIX FUND IS SUCCESSFUL There are many approaches to reducing world poverty. How is the Phoenix Fund different, and why does it work? Rich knowledge bank. It takes advantage of the expertise of Mercy Corps skilled program team, the broad network of men and women who live and work in the countries where we have a presence and know the issues and players firsthand. Entrepreneurial, open-minded, and steeped in the agency s listen first culture, these professionals are deeply versed in local challenges and unmet economic opportunities. Consider just two of the key players in our Guatemala initiative: Amy English, a specialist with degrees in both agriculture and business, and Borys Chinchilla, an entrepreneur with a successful track record of business development for NGOs in Guatemala. These two dedicated professionals figured out both how to finance the project and how to evolve it into a profitable, selfsustaining business model. Mercy Corps rich human knowledge bank, exemplified by Amy and Boris, gives the Phoenix Fund a tremendous advantage over other well-meaning, but less-well-informed, approaches. All value goes directly to the people we help. Our entirely nonprofit model directs maximum benefit to the beneficiaries whose lives we are helping to improve. We establish economic success metrics and measurement methodologies for each project, then rigorously measure all relevant parameters from start to finish. Applying these sound business principles, we clearly see which projects are succeeding. In addition, our data provides the necessary proof points to attract second-level funding 4 THE PHOENIX FUND STORY
to those projects whose success merits replication elsewhere. Projects aim to reach millions of people. We seek pilot projects that can become self-sustaining and, even more importantly, can leverage a second round of funding from other sources, then be scaled up to benefit millions of people. We connect participants with microfinance resources. In the past decade, microfinance has become a vital tool in the war on poverty. While the Phoenix Fund does not make direct microloans, our staff is knowledgeable about available resources and helps our beneficiaries connect to the institutions that often can provide the second-round funding their projects require. Fund donors can get up close and personal. The Phoenix Fund was designed to allow donors to get involved, if they wish. Please see page 2 for details. HOW THE PHOENIX FUND WORKS Mercy Corps Country Directors manage comprehensive programs in more than 40 countries. With their professional skills and on-the-ground experience, they are in the best possible position to notice opportunities to improve the lives of the people we serve. Our Country Directors come up with ideas, shape them into proposals, and submit them to the Phoenix Fund. The proposals are evaluated by Mercy Corps staff and advisors who possess extensive experience in business and economic development. Based on their recommendations, promising grants are approved. Because the needs are glaring and opportunities do not last long, we quickly fund all approved proposals. Our goal is to put great ideas to work as fast as possible. Once a proposal is approved, our Country Directors and their teams implement and manage the project, typically in partnership with local organizations and communities. Successful Phoenix Fund proposals outline how funds will meet critical needs and achieve enduring change. We look for proposals that include: Livelihood creation: creation of a significant number of new jobs. Income increase: higher earnings by a significant number of people in the community. Social contribution: positive impact on conflict resolution, health, education, or community development. Proof of concept: development of clear metrics to secure follow-on funding. Scalability: project can serve as a model for additional funding and in other countries. Measurable outcomes: proposal provides for tracking and reporting of economic and non-economic outputs. PHOENIX FUND SUCCESS STORY Liberia Once an area rich in providing the world with cocoa, the civil war has destroyed the land and the knowledge to farm cocoa. For $50,000, 25 farmers have been trained in how to grow cocoa and are beginning to sell the seeds for an increased profit of 25-75 percent. USDA has granted Mercy Corps Liberia team $2.3 million to expand this program to train up to 9,000 new farmers in four regions of the country. Liberia - Cassandra Nelson/Mercy Corps The annual budgets of most Phoenix Fund proposals range from $25,000 to $75,000 a small investment in U.S. terms, but a substantial sum in developing countries. If a project is selected for funding, Mercy Corps ensures sufficient resources for it to achieve measurable results in 12 to 18 months. THE PHOENIX FUND STORY 5
You Can Make A Difference in the War on Poverty If you want to make a difference in alleviating poverty in the developing world by using entrepreneurial practices to create self-sustaining small businesses, the Mercy Corps Phoenix Fund is tailored to your smart philanthropy. If you want to leverage the expertise of 3,700 Mercy Corps employees in 40developing countries, a strong agency and our foundation and corporate partnerships, to create scalable impact, consider joining the Phoenix Fund team. And if you value the opportunity to tailor your involvement in program consultation and fund marketing, your fellow successful business entrepreneurs will value your participation. Please join us in the war on poverty by making a contribution to Phoenix Fund. We request a minimum charitable donation of $10,000 to build sufficient capital for rapid response and minimum bureaucracy. The Phoenix Fund invites businesses, foundations, entrepreneurs and others to join a new class of strategic philanthropists. For a strong social return, please consider becoming a donor to the Phoenix Fund. A contribution to the Phoenix Fund is a charitable donation and is tax-deductible. Mercy Corps, a 501c3 charitable organization, will provide a receipt for tax purposes. mercycorps.org/phoenixfund United States 3015 SW First Avenue Portland, OR 97201 503.796.6800 tel 503.796.6844 fax mercycorps.org Europe 17 Claremont Crescent Edinburgh EH7 4HX 44.131.558.8244 tel 44.131.558.8288 fax mercycorps.org.uk 0409