accion annual

ACCIONUSA ANNUAL REPORT

2012

2011 ANNUAL REPORT

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ACCION USA

ACCIONUSA ANNUAL REPORT

2012

2011 ANNUAL REPORT

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ACCION USA is a private, nonprofit organization that serves low and moderate income individuals, primarily minorities and women, who are unable to access mainstream financial services. A pioneer and recognized leader in the domestic micro finance field, ACCION USA is dedicated to providing micro entrepreneurs and individuals on the economic margin with the crucial chance to access capital and develop greater financial literacy.

16 YEARS $210 MILLION 20,000 MICRO-ENTREPRENEURS 4

ACCION USA

2011 ANNUAL REPORT LETTER FROM THE PRESIDENT

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HOW MICROFINANCING WORKS

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ABOUT ACCION USA

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LOAN FUND

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FACTORS OF PRODUCTION

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ELLIOT SMITH

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CARMEN LEDESMA

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ANDY WHELAN

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FINANCIAL SUMMARY

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OUR SUPPORTERS

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DONORS

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2011 ANNUAL REPORT

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LETTER FROM THE PRESIDENT

Over the past year, low and moderate income men and women across the United States have had a front-row seat to the challenges of the economic downturn. And in the midst of skyrocketing gas prices, rising food costs and the credit crunch, accion usa’s working with small business owners throughout the nation to overcome these and other obstacles, so that they can achieve their entrepreneurial goals.

Never before has our work been more important. accion usa’s banner products and programs experienced significant growth in 2007. Your Money & You, our financial education program, trained nearly 2,500 hardworking men and women—many of whom are new to the United States—in credit and business basics.

New funding from leading insurance company AIG will ensure the program’s continued success as we roll it out nationally.

Our online lending application, launched in 2006, enabled over 200 men and women in nearly every state to access financing for their enterprises in 2007. Meanwhile, our regional offices in Boston, Atlanta, and Miami continued to expand, reaching more than 1,100 entrepreneurs with the financial tools they need to work their way up the economic ladder. And in December of 2007, accion usa crossed the $25 million mark in funds loaned to U.S. microentrepreneurs—a significant milestone as we expand to reach thousands more deserving men and women excluded from the traditional banking system.

Looking ahead, 2008 and beyond holds great promise for accion usa. With great confidence in the organization’s strong foundation, and excitement for its prospects, Bill Burrus will pass the reins of leadership to accion New York ceo Gina Harman in June 2008. An integral part of the accion family and the industry for 35 years, Bill has worked to lift millions of hardworking men and women out of poverty through microfinance, and he leaves accion usa well-positioned to continue its trajectory of growth and innovation.

Finally, we wish to thank accion usa’s loyal supporters—our bank and community partners, volunteer leadership, and, most of all, our generous donors—who join us in our mission to improve lives through economic opportunity. Please accept our deepest gratitude for your continued commitment to accion usa and to the people we serve.

William W. Burrus President & ceo

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ACCION USA

“We are trying to give people the financial tools they need to work their way out of poverty”

HOW MICROLENDING WORKS

Nonprofit microfinance organizations like accion usa work worldwide to provide opportunity to small entrepreneurs who cannot access bank loans. Microloans are typically much smaller than bank loans, and are generally made to small business owners with fewer than 5 employees.

LOAN APPLICATION

INTERVIEW

FINANCIAL EDUCATION understanding credit money management small business tips taxes and insurance

LOAN PROCEEDS

LAND

LABOR

BUSINESS THRIVES

CAPITAL FAMILIES THRIVE

LOAN REPAID MONEY IS RECYCLED

2011 ANNUAL REPORT

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ABOUT ACCION USA

HEADQUARTERS New York

OFFICES Miami, FL Atlanta, GA Boston, MA New York, NY

NETWORK MEMBERS accion Texas accion New Mexico accion Chicago accion San Diego

The mission of accion usa is to credit a permanent resource to low and moderate income small businesses owners in the United States. By providing small or “micro” loans to men and women who have been shut out of the traditional banking sector, accion usa helps build their businesses. accion usa sees business credit as a resource that can help narrow the income gap and provide economic opportunity, thereby stabilizing and strengthening communities and economies. At the heart of this vision is the recognition that microlending institutions must be financially sustainable, not perennially dependent on donations or government aid. For this reason, accion usa’s microlending programs seek to become financially self-sufficient. accion usa’s lending methodology is character-based. Unlike traditional lenders, we don’t make loans based on credit history or collateral alone. Instead, we focus on a potential borrower’s initiative and desire to succeed, knowledge of his or her business and market, as well as on references from customers.

Borrowers often have no personal or business credit or have credit difficulties prior to receiving an ACCION USA loan

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ACCION USA

BORROWERS OF ACCION USA

51% LOW-INCOME

42% FEMALE

64% HISPANIC 27% AFRICAN AMERICAN

Our loans range from $500 to $50,000 with terms of three to 36 months. We offer loans designed to match the credit needs of each business, the borrower’s character and the business/family income and expenses.

In cities across the United States, accion usa serves women and men who operate everything from part-time, home-based businesses to storefront locations with several employees. Our borrowers are small manufacturers, daycare providers, taxi drivers, restaurant owners, contractors and artisans. They are single mothers on public assistance and storefront owners with small, but wellestablished businesses. They are immigrants and people whose families have lived in this country for generations.

NEW YORK

ATLANTA

BOSTON

MIAMI

SINCE

SINCE

SINCE

SINCE

LENT

LENT

LENT

LENT

MILLION

MILLION

MILLION

MILLION

1991

$84

2000

$13

2000

$16

2003

$6.1 2011 ANNUAL REPORT

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THE ACCION USA LOAN FUND

Socially responsible investments in microfinance can alleviate poverty and change lives The accion usa Loan Fund is a vehicle for socially responsible investors—both individual and institutional—to strengthen small businesses and the communities where they operate. An investment in or loan to the Fund will increase the availability of business credit to hardworking women and men who otherwise have few borrowing options.

The Fund uses loans from investors to – Lend directly to microentrepreneurs via accion usa’s lending offices; – Make direct loans to accion usa’s Associate programs to provide loan

funds for their microlending activities; and – Provide guarantees to local banks in order to secure loan capital for accion usa’s Associate programs.

At present, the Fund is seeking long-term, low-interest loans (minimum $2,000) to capitalize a projected $15 million loan pool.

WHY INVEST IN THE ACCION LOAN FUND?

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ACCION USA

scope: As the only loan fund with a national scope, the ACCION USA Loan Fund enables socially responsible investors to help provide desperately needed business credit to lowand moderate-income individuals working and living in marginalized communities across the United States.

are qualified as low-income and 45 percent are female. As a result of ACCION USA’s loans, microentrepreneurs who have taken out just two consecutive loans show an average of 38 percent increase in monthly take-home income.

impact: Since 1991, the ACCION USA Network has lent over $91 million to over 10,400 U.S. business owners with an average loan size of $5,200. Historically, 86 percent of our borrowers are minorities, 55 percent

security: We put time and care into the administration of the Fund, and it shows. Since its inception in 1994, no investor has ever lost money in the ACCION USA Loan Fund.

FACTORS OF PRODUCTION

What most of our clients need is funds they can use to invest in factors of production. Depending on the nature of their business the amount spent on land, labor and capital varies, but we try to help them build the platform they need. Listed below are some examples of ways in which our clients have used their loans.

LAND

LABOR

CAPITAL

location

receptionist

tools

wood

instructor

computer

water

assistant

machines

air

employee

vehicles

minerals

designer

raw materials

plants

chef

equipment

vegetables

teacher

devices

fruit

accountant

gadgets

2011 ANNUAL REPORT

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WHAT IS LAND?

We help land, labour and capital to satisfy demand and generate a profit In economics, land comprises all naturally occurring resources whose supply is inherently fixed. Examples are any and all particular geographical locations, mineral deposits, and even geostationary orbit locations and portions of the electromagnetic spectrum. Natural resources are fundamental to the production of all goods, including capital goods. Location values must not be confused with values imparted by fixed capital improvements. In classical economics, land is considered one of the three factors of production (along with capital, and labor).

Income derived from ownership or control of natural resources is referred to as rent.

Land was sometimes defined in classical and neoclassical economics as the “original and indestructible powers of the soil.� Geologists hold that this implies a perfectly inelastic supply curve (i.e., zero elasticity), suggesting that a land value tax that recovers the rent of land for public purposes would not affect the opportunity cost of using land, but would instead only decrease the value of owning it. This view is supported by evidence that although land can come on and off the market inventories of land show if anything an inverse relationship to price (i.e., negative elasticity).

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ACCION USA

LAND Land is the entire material universe exclusive of people and product

2011 ANNUAL REPORT

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ELLIOT SMITH Cooking has been Elliott Smith’s passion ever since he was a teenager, when he took his first job at a hotel restaurant in Atlanta. As an adult, he worked part-time as a caterer while holding a full-time job as a sales representative for a telephone company. But last year, as the telecommunications industry began to crumble, Elliott, like many others, found himself out of work.

He recognized that he now had an opportunity to make a living doing what he truly loved: cooking. Coincidentally around the same time, he found out about patches of land that were up for sale in his town for farming. He realized that if he purchased some land to grow vegetables in, he could be in charge of the ingredients going into his cooking. But, his small kitchen wasn’t fully equipped to fill large catering orders – and he lacked the funds to purchase needed land. Luckily, after inquiring at the SBA for a business loan, Elliott was referred to accion usa. After only five days, he was approved for a $2,000 loan. “With accion usa, it wasn’t a long, drawn-out process,” he says. “I wasn’t intimidated like I would be with a bank, where I feel like I’ve been rejected before I’ve even finished the application.”

With the loan, Elliott bought a the farming land and necessary supplies to start growing his vegetables. He hired two assistants; one to help him cook and the other to help him farm. He also purchased a computer for taking orders and a refrigerator-freezer for storing food. Now, several months later, The Farmer’s Kitchen has a steady stream of clients from the metro Atlanta area and across the country.

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ACCION USA

Elliot wanted to start a farming and catering business because he loves to cook and realized the increase in demand for caterers in his town

he was able to invest in

farming land then he received the originally Elliot was a foodrunner in a restaurant part time caterer sales representative

seeds soil

ACCION USA LOAN FUND

$13,000

water farming assistant assistant chef computer refrigerator-freezer

2011 ANNUAL REPORT

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WHAT IS LABOR?

We provide support to institutions that is vital to their long term growth In economics, labour is a measure of the work done by human beings. It is conventionally contrasted with such other factors of production as land and capital. There are theories which have developed a concept called human capital (referring to the skills that workers possess, not necessarily their actual work), although there are also counter posing macro-economic system theories that think human capital is a contradiction in terms.

Labour demand is a derived demand; that is, hiring labour is not desired for its own sake but rather because it aids in producing output, which contributes to an employer’s revenue and hence profits. The demand for an additional amount of labour depends on the Marginal Revenue Product (mrp) and the marginal cost (mc) of the worker. The MRP is calculated by multiplying the price of the end product or service by the Marginal Physical Product of the worker. If the mrp is greater than a firm’s Marginal Cost, then the firm will employ the worker since doing so will increase profit. The firm only employs however up to the point where mrp=mc, and not beyond, in economic theory.

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ACCION USA

LABOR Labor is all the human exertion in the production of goods and services

2011 ANNUAL REPORT

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CARMEN LEDESMA Carmen Ledesma moved to New York City from Paraguay in the 1980s with her family. While she was at the State University of New York in Albany studying anthropology she became interested in the hair and cosmetology industry.

Her school and other nearby schools did not offer courses related to this so she started with a part time job as a receptionist at a local salon in her last year. After working there for two years she had established strong relations with the owner and stylists who were aware of her interests. They gave her free courses and once she was trained they hired her as a stylist.

Within three years she made a name for herself and was bringing a lot of business to the salon. The owner became a good friend and eventually asked Carmen if she wanted to co-own the salon.

They were running the salon successfully and had employed two stylists when the owner had to move cities, leaving Carmen to run the salon alone. Carmen recognized a new business opportunity. Frequently, aestheticians and hairdressers with licenses from their home countries would visit her salon inquiring about how to obtain a license in New York. Being an immigrant herself, Carmen was compelled to help women new to the U.S. find work. So, she decided to start her own aesthetician school, focusing on the Latin community and holding classes in Spanish. This is when she turned to accion usa for help. She needed a loan primarily for paying the staff because she already had all the equipment she needed as well as a rented space.

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ACCION USA

Carmen wanted to start an aesthetician school that would cater to the immigrant Latin community

she was able to invest in

rented facility then she received the

1 doctor

originally Carmen was a receptionist at a salon stylist at a salon owner of a salon

3 hairdressers

ACCION USA LOAN FUND

$11,000

2 aestheticians 2 instructors 1 assistant 2 researchers 2 language teachers website

2011 ANNUAL REPORT

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WHAT IS CAPITAL?

We increase access of low income earners to factors of production Capital or Economic Capital comprises physical goods that assist in the production of other goods and services, e.g. shovels for gravediggers, sewing machines for tailors, or machinery and tooling for factories. Capital in finance and accounting, refers to the funds provided by lenders (and investors) to businesses to purchase real capital equipment for producing goods/services.

It can be used in the production of other goods (this is what makes it a factor of production), it is human-made, in contrast to “land,� which refers to naturally occurring resources such as geographical locations and minerals, it is not used up immediately in the process of production, unlike raw materials or intermediate goods.

Furthermore, financial capital, is any liquid medium or mechanism that represents wealth, or other styles of capital. It is, however, usually purchasing power in the form of money available for the production or purchasing of goods, etc.

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ACCION USA

CAPITAL Capital is wealth used in the process of production, which includes wealth in the course of exchange

2011 ANNUAL REPORT

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ANDY WHELAN Andy moved to New York in 2003 to pursue a career in acting, finding modest success as an improv actor and regular performer on Late Night with Conan O’Brien. As a theatre handyman with a penchant for cleaning, Andy began cleaning his communal artist loft weekly for extra cash. Having grown up in an eco-friendly household with an asthmatic mother, Andy was accustomed to using allergy sensitive and environmentally conscious cleaning products, long before it was trendy to do so. Andy continued to clean his friends’ apartments with “green hands” and eventually acquired a reputation as a highly skilled home cleaner, leading to a surge of new referrals. Andy was now cleaning 7 days a week with no staff or commercial equipment. In order to keep up with the influx of new cleaning requests he stopped acting altogether and cast his attention towards entrepreneurship.

The first step for Andy to expand his cleaning operation was to purchase equipment and build out a team. Andy funneled $6,000 of his own money into the business but needed more capital in order to buy expensive eco-friendly cleaning equipment and products.

Andy approached numerous banks for a small business loan but no commercial bank would help him because he lacked an income statement. He was then referred to accion usa where a loan consultant reviewed Andy’s business proposal and in 2009 was able to administer a business loan in the amount of $12,000.

Since 2009, Andy’s business has evolved into what he calls a “green concierge service”, meaning he will help manage all of his clients green household needs.

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ACCION USA

Andy is the proud owner of an East Village based small business that advocates for greener household choices

he was able to invest in

water then he received the

microfiber towels

originally Andy was a improv actor theatre handyman home cleaner

6 cleaners

ACCION USA LOAN FUND

$12,000

cellulose sponges microfiber mops HEPA vacuum cleaner greenmaker concentrates biodegradable sprays hypoallergenic sprays

2011 ANNUAL REPORT

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FINANCIAL SUMMARY

STATEMENTS OF FINANCIAL POSITION 2011

2010

ASSETS Cash–operations

172,363

695,061

Cash–operations

2,799,917

1,168,905

Grants and contributions receivable

1,798,970

1,337,787

7,133,197

4,925,950

Microloans receivable, net Advances and other receivables

314,963

113,771

Property and equipment, net

70,394

80,507

12,289,804

8,321,981

$ 3,234,460

$ 1,963,759

TOTAL ASSETS

REVENUES Private contributions

1,400,019

833,010

Contracts and fees

303,554

258,83

Other Income

20,031

Investment and fee income–loan fund

4,958,064

3,055,606

234,382

292,760

Notes payable–loan fund

8,071,000

5,053,000

Note payable–ACCION International

1,000,000

-

Other liabilites

500,000

500,000

TOTAL LIABILITES

4,958,06

5,845,760

TOTAL REVENUES

LIABILITIES Accounts payable and accruals

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ACCION USA

STATEMENTS OF ACTIVITIES 2011

2010

Unrestricted

730,899

1,152,403

Temporarily Restricted

1,753,523

1,323,818

2,484,422

2,476,221

592,231

795,005

3,474,518

2,311,538

4,066,749

3,106,543

General and administrative

563,854

542,867

Fundraising

432,594

310,015

TOTAL SUPPORTING SERVICES

996,448

852,882

TOTAL FUNCTIONAL EXPENSES

5,063,197

3,959,425

INCREASE IN NET ASSETS FROM OPERATIONS

(105,133)

(903,819)

ASSET TRANSFER FROM AI

105,000

NET ASSETS TOTAL NET ASSETS

PROGRAM SERVICES Network and new initiatives Lending operations TOTAL PROGRAM SERVICES

SUPPORTING SERVICES

NET UNREALIZED GAIN (LOSS)

8,334

(1,923)

2011 ANNUAL REPORT

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THANKS TO OUR SUPPORTERS ACCION USA BOARD OF DIRECTORS chair

Kimberly Bishop

Maria Otero

Terri Ludwig

Vice Chairman Boardroom Consultants

President & CEO ACCION International

William W. Burrus

Allen Rodriguez

President & CEO ACCION USA

Principal Madera Capital, Inc.

Retired, former President of First

Anna Dodson

Janet Thompson,

Data’s Card Issuing Services

Partner, Business Law Division Goodwin Procter LLP

Community Reinvestment Director (retired) Citibank

treasurer

William J. Fenton

Steven Toeniskoetter

Daniel A. Bennett

SVP & Market Manager Bank of America

Retired, former President & CEO GE Capital Solutions

Thomas Fitzgibbon

Steve Wilson

President MB Financial CDC

President Chartic

Thomas McDermott

Ray Ziler

Managing Vice President Capital One Financial

CFO

President, Merrill Lynch Community Development Company

vice chair

James Schoedinger

Founder & former CEO Sunbelt Housing

CĂŠsar Medina Senior Vice President Banco Popular

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ACCION USA

Business and Financial Resources, LLC

DONORS

$100,000 AND ABOVE

$25,000 TO $99,999

$10,000 TO $24,999

American International Group Bank of America Charitable Foundation John, Amy, Jennifer and James Berylson Community Development Financial Institutions Citi Foundation The Community Foundation of Louisville Deutsche Bank Americas Foundation The New Horizons Fund of Louisville Community JPMorgan Chase Foundation Brian and Debra Knez MetLife Foundation City of Miami Miami-Dade County Charles Stewart Mott Foundation Northwest Area Foundation Richard and Susan Smith Richard and Susan Smith Family Foundation Robert and Dana Smith UPS Foundation

City of Boston Citizens Bank Charitable Foundation Mercantil Commercebank Commonwealth of Massachusetts Annette and Ian Cumming Eagle Group International, LLC Enterprise Community Partners, Inc. Judy and A.J. Johnson The George Link, Jr. Foundation, Inc. Madeleine B. Grant Laird Norton Tyee Trust Co. Richard E. and Nancy P. Marriott Foundation The Vincent Mulford Foundation PNC Wealth Management James and Susan Schoedinger William Simpson Elkin Foundation Charlotte Taylor Revocable Trust The McGurk Foundation The Upstream Foundation The Wachovia Foundation The Western Union Foundation Steven and Denise Wilson

Anonymous The Paul & Edith Babson Foundation Christina Bascom BankUnited Christopher Cappy Crossroads Community Russell and Linda Gee Greenberg Traurig Miami Susan C. Kaplan Terri Ludwig Mercantile Bank Morgan Keegan & Company, Pilot Consulting Corporation The South Financial Group Helen Sperling Steve and Jean Toeniskoetter United Way Special Distribution John H. Weitnauer, Jr. Anonymous (2) Joel Abrams ACCION International Bank of America Richard L. Berman Michael Broad CDFI Fund Citizens Bank

2011 ANNUAL REPORT

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CONTACT US

NEW ENGLAND OFFICE AND HEADQUARTERS 56 Roland Street Suite 300 Boston, MA 02129 (866) 245 0783

GEORGIA OFFICE

Peachtree Center, North Tower 235 Peachtree Street Suite 2000 Atlanta, GA 30303 (404) 521 0594

SAVANNAH OFFICE 4228 Bull Street Suite 202 Savannah, GA 31401 (912) 233 5558

FLORIDA OFFICE 111 SW 5th Avenue Miami, FL 331301 (305) 548 3360

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ACCION USA

2011 ANNUAL REPORT

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ACCION USA 115 East 23rd Street, 7th Floor New York, NY 10010 P: (212) 387-0377 F: (212) 387-0277 www.accionusa.org 30

ACCION USA