ar 2007_single page by Food for the Hungry

03 president’s message 04 God brings the increase 07 ”God knows” new life center, northern uganda 08 five cents can save a child health and nutrition, peru 11 discovering life’s potential child development program, the philippines 12 relief responding to calamities 15 nuturing key relationships 16 cultivating change in 2007 23 independent auditor’s report 34 ministry overview

contributing photographer: Kristn Kawa Brooks

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praise God for the privilege of walking alongside the poor and participating in His work of ending physical and spiritual hungers around the world. It is a Godgiven vision of immeasurable value, and my heart brims with gratitude for how you have responded to God’s invitation to partner with Food for the Hungry in unveiling His heart for the poor. 2007 presented us with many amazing opportunities to plant and cultivate seeds of God’s care in hard and fallow places. Places where women and children endure unimaginable abuse; where families struggle simply to survive; where people hardly have access to food, water, education and health care; and where communities fall prey to belief systems that cripple their potential for growth and progress. This year’s annual report contains stories from the field that speak of God’s abundant grace. These are stories of real people who battled real adversities – and prevailed! One of them is Betty, who was abducted by members of the Lord’s Resistance Army and forced to commit brutal acts. But today she is embracing God’s love and healing at Food for the Hungry’s New Life Center. Rosa, on the other hand, is a health advocate who discovered that God has equipped her with skills and talents to be a productive member of

her community. And Irma is a 6-yearold child who received a new lease on life as a result of a simple deworming treatment. On the home front, 2007 saw us walking the halls of government in Washington and embassies around the world, helping decision makers reach informed and compassionate solutions to issues such as poverty, armed conflict and HIV/AIDS. We engaged with senators and members of Congress regarding funding for the poorest of the poor. We served on commissions and task forces. We spoke on behalf of those whose voices would otherwise not be heard. Your generous and faithful support in 2007 made it possible for many people in need to know and experience the tangible love of God. Thank you for helping us labor in fields that God opens. Because you care, new life can bloom amid harsh conditions. In all of this, we give the glory to God, who is our true champion. We plant and we water, but as the apostle Paul reminds us in 1 Cor. 3:6, “God made it grow.” Laboring with you in the hard places,

Benjamin K. Homan President and Chief Executive Officer Food for the Hungry

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hen Jesus asked, “What is the kingdom of God like? What shall I compare it to? It is like a mustard seed, which a man took and planted in his garden. It grew and became a tree, and the birds of the air perched in its branches.”(Luke 13:18-19) A great work doesn’t usually begin with a bang. Instead, it often starts small and unimpressive, but over time, it grows to become large and expansive, able to sustain others around it. At Food for the Hungry, we witness this principle at work every day. Just as a farmer sees the potential of a field and works day and night to cultivate the soil and prepare it for harvest, so does Food for the Hungry recognize that each community possesses untapped God-given resources that families can use to build a better future. With God’s help, Food for the Hungry toils alongside churches, leaders and families – helping one child, one family and one community at a time. With each small step, we encourage them to identify barriers to their development and help them create corresponding solutions. We plant seeds of truth and hope, and water them with care and compassion. Then in due time, God brings about real transformation. New life blooms. Families begin to help each other. Communities rally to solve their own problems. And churches reach out to people in their communities and beyond.

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n just a minute, Betty went from a giggly seventh grader enjoying lunch with her friends to a confused captive of Uganda’s brutal Lord’s Resistance Army (LRA). “They took two of us from my school that time,” said Betty. “The boy couldn’t make the walk to Sudan, so they left him to die. They forced me to kill another boy with an ax, and then they gave me to one of the commanders as his wife. I had two children by him.” Betty and her children were among a small group who escaped her LRA unit, only to live as outcasts in one of northern Uganda’s crowded, unsanitary and largely forgotten Internally Displaced Persons (IDP) camps. Betty lived in a small mud hut as the wife of another escaped LRA soldier. With no education, vocational skills or land to farm, life in the camp was harsh. Her new husband spent his days drinking with other men, while Betty desperately searched for food, water and firewood – putting herself at risk of another abduction by leaving the relative safety of the camp for several hours each day. When she conceived her new husband’s child, he demanded Betty kill the other children, or he would kill all of them. Food for the Hungry discovered Betty as she contemplated the demand – clearly hoping death would finally end

their misery. This shocking story is so common in northern Uganda, where the LRA has been operating for the past 20 years. Food for the Hungry founded the New Life Center in 2007 to provide a safe place for former abductees to rebuild their shattered lives. By the end of 2007, two groups had completed a 12-week on-site program to learn a trade, how to read and write, and basic life and parenting skills. In addition, participants receive intensive biblical counseling and have daily worship and devotionals. Counselors and teachers trained by Food for the Hungry continue to follow-up on all New Life graduates after finishing the program. Amid the darkness faced by these women and children, God’s light breaks through at the New Life Center. Many come to embrace God’s love and forgiveness, and they realize that they have great worth in God’s eyes. Forgiveness is a difficult concept to grasp for many former abductees, but Betty’s testimony shows that God’s love can penetrate man’s deepest sorrow. Betty’s recovery is reflected in the name she gave her third child, which means “God knows.” Betty and many other women at the New Life Center now know the hope and joy that comes through a new life in Christ.

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hen you see children with bloated bellies, it doesn’t necessarily mean they’re full – especially those who live in impoverished countries. Often, a swollen belly is an indication that a child has intestinal parasites. It’s a widespread problem. In fact, approximately one-third of the world’s population – or two billion people – suffer from diseases and developmental issues caused by intestinal parasites. Doctors estimate that parasites consume about 22 percent to 50 percent of the food their host ingests. Since many families in developing countries eat only once a day, parasites rob the children of what could be their only nutrition! This significantly reduces their ability to learn, stunts their physical growth, and limits – if not totally hinders – their potential to contribute to their community. But a simple deworming medicine can turn things around for many children. That’s what it did for Irma Luz Tapullima, a 6-year-old girl in Peru. Within just a few days of receiving her first dose, Irma – who was a sickly, lethargic child – was transformed into a healthy, energetic child eager to learn

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and grow. Food for the Hungry in Peru came up with an innovative way to address the problem of intestinal parasites by setting up a community information center called Parasite Museum. Here, children like Irma can discover with their own eyes what makes them sick. By using ultraviolet light, children can see microbes on their hands. Food for the Hungry staff members then explain how behavioral changes like washing hands and wearing shoes can keep parasitic worms from entering their bodies. They also explain to the children that just as they need to take care of their physical health, they also need to be spiritually right before God. Partnerships with donors like you help Food for the Hungry educate communities on ways to prevent and treat diseases. So that children can have easy access to deworming treatment, we negotiated with global manufacturers to lower procurement costs for deworming medication – for as little as five cents for a full year’s supply for one child. And your financial support helps us ship the deworming tablets to developing communities around the world.

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osa Marie Posa never thought that she could make a positive impact on her community. But when her 12-year-old daughter, Marie Christine, became a sponsored child in the Philippines, Rosa’s world opened up to new possibilities. Through Food for the Hungry’s child development program, Marie Christine enjoyed field trips, fellowships, sporting events, Bible studies, and Sunday school. She grew spiritually, became stronger physically, improved in school, and blossomed into the kind of daughter Rosa always hoped she would. Likewise, the program gave Rosa opportunities to discover her potential. She eagerly learned all she could about keeping her family healthy. Soon, she became a health advocate in her community. With new skills and understanding acquired from various training, she now helps other families

stay healthy by sharing with them her knowledge of first aid, nutrition, food safety, herbal remedies, and soap making. Rosa enthusiastically participates in her community’s livelihood program – a cooperative effort to provide financial stability to participating families. They save money in a cooperative bank account to realize more return on their investment. A new industry sprouted from their co-op, which buys large quantities of rice at discounted prices and sells them to others in the community. Rosa honed her accounting skills to become the cooperative’s treasurer. She thanks God for her blessings and for all she has learned through Food for the Hungry. Rosa is an example of how child sponsorship not only transforms the life of a child, but their family and community as well.

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iscal year 2007 witnessed many disasters. Few captured the attention of the media, but far from the cameras and lights, Food for the Hungry field staff worked hard to bring relief and hope to many families in the affected areas. Following are some of the disasters to which Food for the Hungry responded in 2007.

Mozambique Flooding

Army helicopters roared overhead while boats sliced through floodwaters in heroic efforts to save families chased to higher ground by hurricane Favio. Water engulfed homes and farmland; killed hundreds of people and animals; displaced thousands; destroyed roads, bridges, wells, latrines, and food sources; and threatened already vulnerable children and families with malaria, malnutrition and water-borne diseases. Your partnership helped Food for the Hungry provide more than 45 tons of emergency food and other supplies such as shelter and mosquito nets. We partnered with local organizations and communities in the rebuilding process. New and rebuilt latrines – along with

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hygiene kits and training – helped prevent the spread of sanitation-related diseases. New and repaired wells offered sustainable sources of clean drinking water and helped prevent outbreaks of water-borne diseases.

Peru Earthquake

Shortly after Peruvian President Alan Garcia’s helicopter touched down in the area most damaged by an 8.0-magnitude earthquake the evening of August 15, he was shocked to see youngsters wandering aimlessly. He exclaimed, “Oh, my God, who do these little children belong to?” The quake’s epicenter was about 90 miles south of the capital city of Lima. The tremor killed more than 500 people; injured about 1,000; leveled or severely damaged homes, churches, schools and hospitals; and destroyed roads and bridges. Your partnership helped Food for the Hungry to immediately provide temporary shelters and serve three meals a day to 2,000 displaced people. We also supplied communities with tools for clean-up and reconstruction, and helped churches and hospitals restore their operations.

Bangladesh Under Water

Bangladesh is a flood-prone country. When the rivers swell with monsoon rains and melting snow from the Himalaya Mountains, much of the country is under water. In August 2007, the flooding was particularly widespread, displacing nearly millions of people. One Food for the Hungry worker supplied an eyewitness account: “I was in the northern region of Bogra just as the flooding was becoming severe. In the village of Shariakandi, floodwater was everywhere. People used boats to salvage whatever they could from their homes. Beds, wardrobes, trunks and chairs were stacked along the side of the road. I’m not sure where the people slept. Even the snakes came to the side of the road to sleep at night because there were no other dry places. The next day the newspapers confirmed that as many as nine flood victims died from snakebites.” Your support allowed Food for the Hungry to distribute food, water and health supplies to many people hardhit by the flooding. And your continued partnership enables Food for the Hungry to help them rebuild their lives.

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HELP Commission

In 2005, Congress established the HELP Commission (Helping to Enhance the Livelihood of People Around the Globe), and members were tasked to study U.S. development and humanitarian assistance programs. Food for the Hungry President and Chief Executive Officer Benjamin K. Homan was among those whom President Bush appointed to the Commission. The members formally presented their report in December 2007, articulating bold recommendations that called for vast and significant change in U.S. foreign assistance.

ACFVA

Food for the Hungry President and Chief Executive Officer Benjamin K. Homan completed his two-year term as chairman of the Advisory Committee on Voluntary Foreign Aid (ACVFA) in December 2006. ACVFA was established by presidential directive after World War II to serve as a link between the U.S. government and private voluntary organizations (PVOs) like Food for the Hungry.

AERDO

In 2007, Food for the Hungry President and Chief Executive Officer Benjamin K. Homan, completed his three-year term as elected president of AERDO (Association of Evangelical Relief and Development Organizations) executive committee. Founded in 1978, AERDO members represent more than 50 of

the major evangelical Christian relief and development agencies across North America. The mission is to promote excellence in professional practice; to foster networking, collaboration and information exchange; and to enable AERDO member organizations to effectively support the Church in serving the poor and needy.

Rising to Help

It will be hard to forget the 2004 Indian Ocean earthquake that triggered a series of tsunamis that wiped out communities and killed hundreds of thousands of people, prompting widespread humanitarian response from countries all over the world. Shortly after assessing the need and determining the necessary response, Food for the Hungry, in partnership with the city government of Phoenix, launched an unprecedented 10-year initiative, Rising to Help, to help rebuild Meulaboh, one of the hardest-hit areas in Indonesia. The work in Meulaboh is long and hard, but God is faithful to bring real change. Women in the community have learned new livelihood skills that help augment the family income; children are learning English, and farmers have adopted a new farming method that resulted in increased crop production. Food for the Hungry and the City of Phoenix hold an annual fundraising luncheon to keep the amazing work in Meulaboh moving forward.

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Child Sponsorship

Food for the Hungry helps individuals and families sponsor a child from a developing country. As a sponsor, you have the opportunity to provide a child with your care and friendship and help meet a child’s need for God’s love as well as basic necessities such as: education, health care, clean water and nutritious food. In 2007, a total of 18,841 children were sponsored through Food for the Hungry.

Advocates Ministry

The Advocates Ministry provides opportunities to people in America to reflect the heart of God for the poor and needy around the world. Advocates speak on behalf of the poor and the oppressed and compel others to take positive action to alleviate their suffering. Food for the Hungry helps advocates reach out to those in need by providing them with tools and

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resources that will help them encourage family and friends, businesses, schools, churches and communities to join them in making a difference in the lives of others. In 2007, there were 134 Food for the Hungry advocates across the United States who took up the cause of Christ for the sake of the poor, hungry, social outcasts and exploited children.

Artist Program

The Artist Program provides a platform for Christian musicians and artists to rally music fans to help change the life of a child and his or her family through sponsorship. In concerts and festivals, you’ll hear musicians and Food for the Hungry staff members talk about the privilege of bringing hope to impoverished children around the world. In 2007, hundreds of thousands of music lovers heard God’s call to help children in need, and they responded by sponsoring more than 1,000 children.

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City Initiatives

The City Initiatives ministry of Food for the Hungry targets business leaders, government leaders, church leaders, and educational institutions in Phoenix to address pressing global issues such as extreme poverty and hunger, injustice, war, HIV/AIDS, and environmental sustainability. We believe that when these four sectors of society collaborate in humility, grace and truth, their efforts will have tremendous global impact. The City Initiatives ministry of Food for the Hungry is a commitment to be active in our hometown and be a blessing where God has placed us. We seek to be missional, educational and motivational in our work as we connect, collaborate and equip people to overcome all forms of human poverty.

Academic Programs

To engage the young generation and develop them to become able responders to Godâ&#x20AC;&#x2122;s call of ending physical and spiritual poverty worldwide, Food for the Hungry established the Go ED. and Internship programs. The internship program provides a supervised work experience for college students and gives them a perspective on how God works around the world through Food for the Hungry. On the other hand, the study-abroad program provided through Go ED., allows college students the opportunity to engage in another culture while earning college credit. In 2007, 31 students completed

the study-abroad program in Africa, and 33 interns served in local and international offices of Food for the Hungry.

Short-Term Team Ministry

The Short-Term Team Ministry of Food for the Hungry provides opportunities for individuals to form or join a group and serve on a 10- to 14-day mission trip in an impoverished community. Participants work with Food for the Hungry long-term missionaries and national staff to meet any pressing needs in the community. Some of the projects that can be undertaken during the trip include: building latrines or water systems, building or renovating a church, setting up a Vacation Bible School for children, teaching health and nutrition to mothers, conducting workshops for the youth, and many other community projects. In 2007, 509 short-term team members served in developing communities around the world through Food for the Hungry.

Hunger Corps

A Hunger Corps is a long-term missionary with Food for the Hungry, usually serving on a mission field for three years or more. This program is a great opportunity for people who have a heart for the poor to make a commitment to share the love of God and help communities overcome physical and spiritual poverty. In 2007, 78 Hunger Corps responded to Godâ&#x20AC;&#x2122;s call to walk alongside the poor and reflect His love and grace.

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Gifts-in-Kind (GIK)

The GIK ministry transports non-cash donations such as medicine, medical supplies, seeds and clothing to needy communities in countries where Food for the Hungry works. Cash gifts from individual donors make possible the shipment of these goods to those who desperately need them. In 2007, more than $30 million worth of goods and supplies were shipped to developing countries around the world.

Relief Unit & Government Grants

Food for the Hungry provides emergency relief to victims of natural or man-made disasters. Often, our relief operations transition into long-term community development as we help families and communities restore their lives and acquire the capacity to build a sustainable future. To help the poor overcome barriers to their development and reach their God-given potential, we seek the support of private donors, businesses, foundations and government agencies. We partner with the Department of Agriculture, Department of State, and the Agency for International Development. Food for the Hungry manages 19 grants in 11 countries in excess of $20 million annually, with the main program areas being HIV/AIDS, agriculture and food production, disaster and emergency relief, education, child survival, health and nutrition, water and sanitation, and microenterprise.

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Board of Directors Food for the Hungry, Inc. and Food for the Hungry Foundation, Inc. Phoenix, Arizona We have audited the accompanying consolidated statements of financial position of Food for the Hungry, Inc. and Food for the Hungry Foundation, Inc. as of September 30, 2007, and 2006, and the related consolidated statements of activities, functional expenses, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the organizationâ&#x20AC;&#x2122;s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with U.S. generally accepted auditing standards and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes consideration of internal controls over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the organizationâ&#x20AC;&#x2122;s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Food for the Hungry, Inc. and Food for the Hungry Foundation, Inc. as of September 30, 2007, and 2006, and the results of its consolidated activities, functional expenses, and cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

Atlanta, Georgia February 1, 2008

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Food for the Hungry, Inc. and Food for the Hungry Foundation, Inc.

Consolidated Statement of Financial Position

Year Ended September 30, Assets Current Assets: Cash and cash equivalents $ Investments Grants receivable Loan receivable Gifts-in-kind inventory Inventory of commodities awaiting monetization Prepaid expenses and other assets

1,507,339 $ 1,647,836 116,318 2,320,146 3,350,459 4,579,476 100,000 500,000 - 2,155,410 2,030,121 1,126,217 780,873 658,175 7,885,110 12,987,260

Investments Held for Charitable Trusts Gift Annuity Reinsurance Asset Land, buildings, and equipment, at costâ&#x20AC;&#x201C;net Child Vocational Scholarship Fund

566,157 397,006 2,254,985 1,358,078

Total Assets

2007

$ 12,461,336

2006

155,172 429,981 2,219,197 1,174,769

$ 16,966,379

Liabilities and Net Assets Current Liabilities: Accounts payable $ Accrued expenses Grants payable Gifts-in-kind payable Amounts due other ministries from pending commodity sales Long-term debt - current portion

862,497 $ 157,578 3,150,993 - 2,030,121 12,163 6,213,352

3,306,214 148,993 1,588,014 2,155,410 1,126,217 251,651 8,576,499

Trusts and Annuities Long-Term debt - net of current portion Total Liabilities

669,830 9,598 6,892,780

514,306 29,133 9,119,938

(994,088) 160,000 2,233,224 1,399,136

(149,077) 160,000 2,158,166 2,169,089

3,829,420 340,000 5,568,556

5,337,352 340,000 7,846,441

Net Assets: Unrestricted: Undesignated Board designated - Child Vocational Scholarship Fund Net investment in land, buildings, and equipment Temporarily restricted Permanently restricted - Child Vocational Scholarship Fund Total net assets Total Liabilities and Net Assets

See notes to consolidated financial statements.

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$ 12,461,336

$ 16,966,379

Food for the Hungry, Inc. and Food for the Hungry Foundation, Inc.

Consolidated Statement of Activities

Unrestricted

Year Ended September 30, 2007 Temporarily Permanently Restricted Restricted

SUPPORT, REVENUE, AND RECLASSIFICATIONS: Contributions $ 5,053,350 $ 15,629,744 $ Government grants 23,941,715 - Government donated commodities 11,994,962 - Private gifts-in-kind 31,826,277 - Investment income 175,431 243,592 Change in value of trusts and annuities ( 20,283) 28,924 Other income 228,598 - Net assets released from restrictions: Administrative allocations 5,449,699 (5,449,699) Child sponsorship 3,795,762 (3,795,762) International Hunger Corps staff support 2,691,435 (2,691,435) Child Vocational Scholarships granted 73,946 (73,946) Relief efforts and other projects 5,399,350 (5,399,350)

Total

Unrestricted

Year Ended September 30, 2006 Temporarily Permanently Restricted Restricted

Total

- $ 20,683,094 $ 4,310,152 $ 15,599,603 $ - 23,941,715 21,825,870 - - 11,994,962 12,070,823 - - 31,826,277 18,943,217 - - 419,023 218,086 77,631 - 8,641 (11,772) 12,348 - 228,598 163,599 -

- $ 19,909,755 - 21,825,870 - 12,070,823 - 18,943,217 - 295,717 - 576 - 163,599

- - - - -

5,363,234 3,403,265 2,713,326 74,720 4,412,101

(5,363,234) (3,403,265) (2,713,326) (74,720) (4,412,101)

- 89,102,310 73,486,621

(277,064)

- 73,209,557

- - - - -

- 48,746,655 39,042,258 - 24,688,777 18,593,569 - 9,333,356 8,598,291 - 544,924 596,200 - 83,313,712 66,830,318

- - - - -

- 39,042,258 - 18,593,569 - 8,598,291 - 596,200 - 66,830,318

- - -

4,719,322 3,158,015 7,877,337

- - -

- 91,380,195 74,707,655

- 74,707,655

Change in Net Assets

(769,953) (1,507,932)

- (2,277,885) (1,221,034)

(277,064)

- (1,498,098)

Net Assets, Beginning of Year

2,169,089

Total Support, Revenue, and Reclassifications 90,610,242 (1,507,932) EXPENSES Program ministries: Grants to Food for the Hungry International 48,746,655 Gifts-in-kind to other organizations 24,688,777 Other programs 9,333,356 Information and education 544,924 83,313,712 Supporting services: Fundraising 4,564,540 General and administrative 3,501,943 8,066,483 Total Expenses 91,380,195

5,337,352

Net Assets, End of Year 1,399,136 3,829,420

340,000

- - - - -

4,564,540 3,501,943 8,066,483

7,846,441

3,390,123

4,719,322 3,158,015 7,877,337

5,614,416

340,000

9,344,539

340,000 5,568,556 2,169,089 5,337,352

340,000

7,846,441

See notes to consolidated financial statements.

ANNUAL REPORT 2008 25

Food for the Hungry, Inc. and Food for the Hungry Foundation, Inc.

Consolidated Statement of Functional Expenses

Program Ministries

Years Ended September 30, 2007 2006

Support Services

Direct Program Distributions

Information and Education Fundraising

Grants to Food for the Hungry Association

$ 48,746,655

In-Kind Grants to Other Organizations

24,688,777

18,593,569

1,678,272

1,862,929

Grants to Other Organizations

General and Administrative Total Total

$ 48,746,655

$ 39,042,258

FHUS Direct Overseas Programs

95,908

â&#x20AC;&#x201C;

Salaries and Benefits

5,448,015

339,478

984,535

2,025,767

8,797,795

7,683,251

Professional Services

281,028

4,982

165,534

218,358

669,902

853,572

Travel

898,814

24,437

385,548

231,016

1,539,815

1,220,403

Office Expense

288,210

18,958

127,499

237,979

672,646

557,950

Occupancy

233,937

34,403

67,279

335,619

324,471

Postage

113,711

1 ,239

32,419

23,560

170,929

159,897

Interest

14,070

41,518

Depreciation

33,976

8,338

8,046

210,454

260,814

273,183

General Information, Education and Promotion

90,930

95,484

2,758,753

842

2,946,009

3,024,522

Other Expenses

170,555

17,605

34,927

539,897

762,984

1,070,132

Total Expenses 2007

$ 82,768,788

544,924

4,564,540

3,501,943

$ 91,380,195

Total Expenses 2006

$ 66,234,118

596,200

4,719,322

3,158,015

$ 74,707,655

See notes to consolidated financial statements.

Use of Resources

Public Support

91%

Programs

66%

Businesses

Fund Raising

Foundations

Administrative

33%

Individuals

Commodities Distributed 96%

Medical Supplies

Clothing

Seeds/Food/Other

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At Food for the Hungry, we are accountable before God and before you to use your gifts in the best way possible to help hungry people. Weâ&#x20AC;&#x2122;re a charter member of the Evangelical Council for Financial Accountability (ECFA) and abide by all of its strict reporting standards.

Food for the Hungry, Inc. and Food for the Hungry Foundation, Inc.

Consolidated Statement of Cash Flows

Years Ended September 30, Cash Flows from Operating Activities: Reconciliation of change in net assets to net cash used provided by operating activities: Change in net assets $ Depreciation Non-cash stock gifts Net realized and unrealized gain on investments Net loss on sale of fixed assets Net change in grant receivable and payable Net change in prepaids and other assets Net change in accounts payable Net change in accrued expenses Net Cash Provided by Operating Activities

2007

2006

(2,277,885) $ (1,498,098) 260,814 273,183 (248,860) (238,027) (232,024) (77,845) 2,407 3,774 2,791,996 (2,032,687) (122,698) (161,741) (2,443,717) 2,282,195 8,585 47,665 (2,261,382) (1,401,581)

Cash Flows from Investing Activities: Fixed asset purchases Proceeds from sale of fixed assets Issuance of loan receivable Payments received on loans receivable Investment purchases Proceeds from sale of investments Net Cash Provided by Investing Activities

(308,629) - - 400,000 (632,549) 2,733,953 2,192,775

(196,482) 993 (500,000) (123,371) 1,041,616 222,756

Cash Flows from Financing Activities: Payments on long-term debt Change in trusts and annuities Net Cash Used by Financing Activities

(249,403) 177,513 (71,890)

(341,497) (575) (342,072)

Net Change in Cash and Cash Equivalents Cash and Cash Equivalents, Beginning of Year Cash and Cash Equivalents, End of Year $

(140,497) (1,520,897) 1,647,836 3,168,733 1,507,339 $ 1,647,836

Supplemental Disclosures: Cash paid for interest - net of capitalized interest Non-cash transactions: Gifts-in-kind and donated commodities received and distributed Gifts-in-kind received and held for distribution Capital lease renegotiated to operating leases

11,754

$ 43,821,239 $ (2,155,410) $ 9,620

40,891

$ $ $

31,014,040 2,155,410 -

See notes to consolidated financial statements.

ANNUAL REPORT 2008 27

Food for the Hungry, Inc. and Food for the Hungry Foundation, Inc.

Notes to Consolidated Financial Statements September 30, 2007 and 2006

1. NATURE OF ORGANIZATION: Food for the Hungry, Inc. (FHUS) is a Christian international relief and development organization, incorporated in the United States in 1971, and dedicated to helping people in the poorest areas of the world by advocating for them and providing relief, rehabilitation, and development programs. Our mission statement is to walk with churches, leaders, and families in overcoming all forms of human poverty by living in healthy relationship with God and His Creation. Food for the Hungry Foundation, Inc. (FHF) was incorporated in the United States in 2003. FHF is organized and operated under the control and for the benefit of FHUS. Food for the Hungry International, incorporated in Geneva, Switzerland was restructured on December 31, 2006, and Food for the Hungry Association was formed out of a number of the existing Food for the Hungry International members as of January 1, 2007, hereinafter referred to as FHA. FHA works in 21 countries through the help of donors who support its 7 national organizations (N.O.s),–one of those being Food for the Hungry, Inc. These N.O.s, located around the world, raise funds, supply human resources, and help design and evaluate relief and development programs implemented in communities across South and Central America, Asia, Africa, Europe, and the Middle East. The 7 N.O.s are: Costa Rica, Canada, Sweden, Switzerland, United Kingdom, United States, and United States-Korea. . The 21 countries wherein Food for the Hungry, Inc. has an ongoing presence as a relief and development or exploratory fields, or supported by FHA are: Burundi, Bangladesh, Bolivia, Democratic Republic of Congo, Dominican Republic, Ethiopia, Guatemala, Haiti, Indonesia, Kenya, Mozambique, Nicaragua, Peru, Philippines, Rwanda, Sudan, and Uganda plus five sensitive countries. Food for the Hungry’s activities include: Child Sponsorship $28 a month helps provide a child with access to nutritious food, clothing, medical care, and spiritual nourishment through community development programs. Because the programs are family and community based, gifts help the entire family and community. Hunger Corps Opportunities to serve through Food for the Hungry, Inc.’s short-term teams and longer-term assignments are available with our unique Hunger Corps program. Hunger Corps staff work with indigenous organizations to help them better serve the needs of people in their own communities. General Relief and Development Food for the Hungry, Inc. provides emergency relief and rehabilitation, clean-water projects, health education and intervention, agriculture development, income generation, life-skills training, and education. Micah Initiatives College students can receive first-hand experience and training through several programs offered through Micah Initiatives. Go-ED is an accredited overseas learning experience where college students spend a semester abroad. Other programs for college students include the College Campus Ministry and the Internship Program. Gifts-in-Kind Food for the Hungry, Inc. procures donations for food, seeds, clothing, medical supplies, and other commodities for use in relief, rehabilitation, and development programs. These donations are then matched with the needs of Food for the Hungry International and other agencies. Information and Education By providing information and implementing educational programs, Food for the Hungry, Inc. serves as an advocate for some of the poorest people in the world. Summary Food for the Hungry, Inc. and Food for the Hungry Foundation, Inc. are not-forprofit corporations exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code and are also exempt from state income taxes. Each of the entities has been classified as a publicly supported organizations, which are not private foundations, under section 509(a) of the Code. Contributions by the public are deductible for income tax purposes. During the years ending September 30, 2007, and 2006, contributions approximated 23% and 27% of total support and revenue, respectively. In the same years, gifts-in-kind and government donated commodities approximated 49% and 42% of total support and revenue, and cash government grants approximated 27% and 30% of total support and revenue. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The consolidated financial statements of Food for the Hungry, Inc. have been prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles. A summary of significant accounting policies followed are

28 ANNUAL REPORT 2008

described below to enhance the usefulness of the consolidated financial statements to the reader. Principles of Consolidation The consolidated financial statements include the operations of Food For the Hungry, Inc. and Food for the Hungry Foundation, Inc., collectively referred to as the Food for the Hungry, Inc. All significant intercompany balances and transactions have been eliminated. For the years ended September 30, 2007, and 2006, Food for the Hungry Foundation, Inc. had total assets of $608,431 and $1,856,572 and total liabilities of $191,418 and $1,726,269, respectively. Affiliated Organizations Food for the Hungry, Inc. and FHA have separate and distinct Boards of Directors. Therefore, the financial statements have not been consolidated with those of FHA. The primary purpose of Food for the Hungry, Inc. is to provide support for the programs of FHA. Accordingly, grants to FHA for the years ended September 30, 2007, and 2006 totaled $48,514,686 and $39,042,258 as follows: September 30, Cash Grants Government donated commodities monetized or awaiting monetization overseas Government donated commodities distributed overseas Private gifts-in-kind distributed overseas Reimbursements for costs of shipping gifts-in-kind and donated government commoditites

2007 2006 $ 21,180,738 $ 17,352,040 4,739,424 5,428,861 7,255,539 6,641,962 7,137,500 349,649 8,433,454 9,269,746 $ 48,746,655 $ 39,042,258

Grants payable to FHA are related to government grants for which valid expenditures had been incurred at year end. Grants payable as of September 30, 2007, and 2006 were $3,150,993 and $952,824, respectively. Other grants payable as of September 30, 2007, were $368,724. Also as of September 30, 2007, receivables from FHA included $375,000 of NICRA on monetized commodities and $92,954 of expenses paid on behalf of FHA by Food for the Hungry, Inc. Cash and Cash Equivalents Cash and cash equivalents consist primarily of cash on hand and cash on deposit. These accounts may, at times, exceed federally insured limits. Food for the Hungry, Inc. has not experienced any losses in such accounts. Management believes it is not exposed to any significant credit risk on cash and cash equivalents. Investments Money market mutual funds, certificates of deposit, and cash in investment brokerage accounts held in trust for the Child Vocational Scholarship Fund and to fund trusts and annuities are included in investments. Investments are carried at market value. Donated securities are recorded at market value on the date of the gift and thereafter carried in accordance with the above provisions. Investments are held for the Child Vocational Scholarship Fund and to fund trusts and annuities for which Food for the Hungry, Inc. is trustee. Gifts-In-Kind Inventory Gifts-in-kind inventory consists of private donated commodities that are held by a third-party in an off-site storage facility. Food for the Hungry, Inc. receives the donations of commodities at these off-site storage facilities, which are then shipped to another nonprofit organization. Inventory of Commodities Food for the Hungry, Inc. receives donations of commodities for monetization from the United States Agency for International Development (USAID). Proceeds from monetized commodities are used to fund program activities. These commodities are valued at the estimated future proceeds from monetization. Land, Buildings, and Equipment Expenditures greater than $2,500 for land, buildings, and equipment are capitalized at cost. Donated items are recorded at fair market value on the date of the gift. Depreciation is computed on the straight line method over the estimated useful lives of the assets, ranging from 2 years for software to 30 years for buildings. Trusts and Annuities Food for the Hungry, Inc. has established a gift annuity plan that allows donors to contribute assets to the Organization in exchange for the right to receive a fixed dollar annual return during their lifetimes. A portion of the transfer is considered a charitable contribution for income tax purposes.

Food for the Hungry, Inc. and Food for the Hungry Foundation, Inc.

Notes to Consolidated Financial Statements September 30, 2007 and 2006

As trustee, Food for the Hungry, Inc. administers irrevocable charitable remainder unitrusts. These trusts provide for the payment of lifetime distributions to the grantor or other designated beneficiaries. At the death of the lifetime beneficiaries, the trusts provide for the distribution of assets to Food for the Hungry, Inc. The difference between the amount contributed for gift annuities and irrevocable agreements and the liability for future payments, determined on an actuarial basis, is recognized as income at the date of the gift and is included on the consolidated statements of activities in contributions. The difference between assets in trust and liabilities is reported on the consolidated statements of financial position as net assets. The present value of the expected payments to the trustors and annuitants over their life expectancy is included on the consolidated statements of financial position as a liability under the caption trusts and annuities. The liability is revalued annually based upon actuarially computed present values. The change in the present value, net of investment income, payments to annuitants, and terminations, is included on the consolidated statements of activities as change in value of trusts and annuities. The present value of expected payments to annuitants over their life expectancy is $588,424 and $429,981, respectively, as of September 30, 2007, and 2006. The present value of expected payments to trustors over their life expectancy is $81,406 and $84,325, respectively, as of September 30, 2007, and 2006. In March 2002, Food for the Hungry, Inc. purchased a Nonparticipating Terminal Funding Group Annuity from an insurance company. The purpose of this policy is to reinsure the gift annuity obligations of Food for the Hungry, Inc. The insurance company has assumed all mortality and investment risk associated with the gift annuities. However, Food for the Hungry, Inc. remains liable for fulfilling the requirements of the gift annuity agreements. The value of this policy has been determined to equal the outstanding annuity obligations of Food for the Hungry, Inc. and is included on the consolidated statements of financial position as gift annuity reinsurance asset. As a result of the reinsurance of the mortality and investment risk associated with gift annuities, changes in the present value of expected payments to annuitants over their life expectancies from the date of the policy forward represent changes in the associated gift annuity reinsurance asset and not income to Food for the Hungry, Inc. Net Assets The consolidated financial statements report amounts by classification of net assets as follows: •Unrestricted amounts are those currently available at the discretion of the board for use in the Food for the Hungry, Inc.’s or the Organization’s operations, those for specific purposes as designated by the board, and those resources invested in land, buildings, and equipment. •Temporarily restricted amounts are those which are stipulated by donors for specific operating purposes, for capital projects, and for time restrictions (see Note 7 for a summary of temporarily restricted net assets). •Permanently restricted amounts are those which represent permanent endowments where it is stipulated by donors that the principal remain in perpetuity and only the income is available as unrestricted or temporarily restricted, as specified in endowment agreements. Permanently restricted net assets consist of the Child Vocational Scholarship Fund. Each year, all or part of the investment income from the Child Vocational Scholarship Fund is available for award to graduates of the child sponsorship program for additional vocational training. The investment income can also be used by Food for the Hungry International staff toward funding of courses that would enable them to better serve the country in which they minister. All contributions are considered available for unrestricted use unless specifically restricted by the donor or subject to legal restrictions. Contributions are recorded as temporarily restricted if they are received with donor stipulations that limit their use through purpose and/or time restrictions. When donor restrictions expire, that is, when the purpose restriction is fulfilled or the time restriction expires, the net assets are reclassified from temporarily restricted to unrestricted net assets and reported in the consolidated statements of activities as net assets released from restrictions. Food for the Hungry, Inc.’s policy is to record temporarily restricted contributions received and expended in the same accounting period as temporarily restricted contributions and net assets released from restrictions. Temporarily restricted contributions are subject to assessments ranging from 10% to 60%, which is used for general and administrative expenses. Assessments are classified as unrestricted contributions at the time the contributions are received. For contributions restricted by donors for the acquisition of property or other longlived assets, the restriction is considered to be met when the property or other long-lived asset is placed in service.

Public Support, Revenue and Expenses Contributions are recorded when cash or unconditional promises-to-give have been received or ownership of donated assets is transferred to Food for the Hungry, Inc. Conditional promises-to-give are recognized when the conditions on which they depend are substantially met. Food for the Hungry, Inc. receives noncash gifts which are recorded as support at the estimated fair market value on the date of the gift. Goods given to Food for the Hungry, Inc. that do not have an objective basis for valuation are not recorded. Revenue is recorded when earned. Expenses are recorded when incurred in accordance with the accrual basis of accounting. Contributed Services Statement of Financial Accounting Standards No. 116, Accounting for Contributions Received and Contributions Made, requires recording the value of donated services that create or enhance nonfinancial assets or require specialized skills. Many volunteers have contributed significant amounts of their time to activities of Food for the Hungry, Inc. However, since the above requirements were not met, the value of the contributed services is not recorded in the consolidated financial statements. Functional Allocation of Expenses The costs of providing the various program services and supporting activities have been summarized on a functional basis. Accordingly, certain costs, such as depreciation and payroll, have been allocated among the program and supporting activities benefited. Allocation of Joint Costs Food for the Hungry, Inc. has implemented the American Institute of Certified Public Accountants’ Statement of Position 98-2, Accounting for Costs of Not-for-Profit Organizations and State and Local Governmental Entities that Include Fundraising. Food for the Hungry, Inc.’s policy is to allocate all costs of activities which have a fundraising component as 100% fundraising. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. 3. INVESTMENTS: Investments consist of the following: September 30, 2007 2006 Money market funds $ 118,617 $ 1,756,034 Certificate of deposit 99,764 Treasury notes 164,986 575,117 Common stock 1,506,111 953,624 Corporate bonds 125,862 109,559 Mutual funds 25,213 255,753 2,040,553 3,650,087 Less long-term investments: Investments held for charitable trusts and annuities (566,157) (155,172) Investments held for Child Vocational Scholarship Fund (1,358,074) (1,174,769) Current Investments $ 116,322 $ 2,320,146 Investment income consists of: Interest and dividends $ Realized and unrealized gain on investments Investment fees Less investment income included in change in value of trusts and annuities Net investment income $

212,794

$ 238,942

248,625 83,219 (13,472) (14,096) 447,947 308,065 (28,924) (12,348) 419,023 $ 295,717

4. LAND, BUILDINGS AND EQUIPMENT: Land, buildings and equipment consist of the following: September 30, 2007 2006 Land $ 168,851 $ 168,851 Buildings and improvements 1,826,347 1,777,468 Furniture and fixtures 344,280 283,359 Office equipment 355,402 274,103 Computer equipment 620,014 604,607 Vehicles 41,540 41,540 3,356,434 3,149,928 ANNUAL REPORT 2008 29

Food for the Hungry, Inc. and Food for the Hungry Foundation, Inc.

Notes to Consolidated Financial Statements September 30, 2007 and 2006

Less accumulated depreciation (1,101,449) (930,731) Land, buildings and equipmentâ&#x20AC;&#x201C;net 2,254,985 2,219,197 Less debt secured by land, buildings and equipment (21,761) (61,031) Net investment in land, buildings and equipment $ 2,233,224 $ 2,158,166 Depreciation expense $ 260,814 $ 273,183 5. GRANTS PAYABLE: Food for the Hungry, Inc. receives government grants for use in relief and development programs. Food for the Hungry, Inc. expends a portion of these funds and sub-receipts the remaining portions to FHA and similar not-forprofit organizations. The amounts payable to these sub-recipients are as follows: September 30, 2007 2006 FHA $ 3,150,993 $ 952,824 Other agencies - 635,190 $ 3,150,993 $ 1,588,014 6. LONG-TERM DEBT: Long-term debt consists of the following: September 30, Food for the Hungry, Inc. leases various equipment from unaffiliated entities under capital lease agreements with total monthly payments of $1,248 due from August 2008 to December 2010. At September 30, 2007, the gross amount of equipment and related accumulated amortization recorded under the capital leases was $281,216 and $280,359, respectively.

Food for the Hungry, Inc, had a secured line of credit from a bank with a limit of $500,000, due on demand, which matured July 2007. Less current portion $ Interest expense $

2007

21,761

2006

61,031

- 219,753 21,761 280,784 (12,163) (251,651) 9,598 $ 29,133 14,070 $ 41,518

The future minimum payments are as follows: 30, Capital Leases Line of Credit Year Ending September 2008 $ 14,064 $ 2009 4,032 2010 4,032 2011 1,008 2012 - $ 23,136 $ Less amount representing interest (1,375) Present value of net minimum capital lease payment $ 21,761 7. TEMPORARILY RESTRICTED NET ASSETS: Temporarily restricted net assets consist of the following: September 30, 2007 2006 Program restrictions: Relief efforts and international projects $ 1,638,042 $ 3,252,031 International Hunger Corps staff support 1,108,176 1,207,017 Child sponsorship 76,281 85,837 Child Vocational Scholarship Fund 858,075 674,769 Future interest in irrevocable trusts 72,435 70,848 Other 76,411 46,850 $ 3,829,420 $ 5,337,352

30 ANNUAL REPORT 2008

8. GIFTS-IN-KIND Food for the Hungry, Inc. receives donations of food, clothing, medical supplies, and other commodities for use in relief and development programs. Food for the Hungry, Inc. transfers all such gifts-in-kind to FHA and similar not-for-profit organizations for ultimate distribution to the poor and hungry throughout the world. Gifts-in-kind for the years ended September 30, 2007, and 2006, include $11,994,962 and $12,073,780, respectively, of commodities received through the United States Agency for International Development (USAID), of which $7,255,538 and $6,641,962, respectively, were distributed to foreign programs. The remainder was monetized overseas and the proceeds used in foreign programs. Such goods were valued at wholesale value using guidelines published by the United States Department of Agriculture and USAID. The remaining $31,826,277 and $18,943,217 for the years ended September 30, 2007, and 2006, respectively, relates to gifts-in-kind received through private donations, which were recorded at estimated fair value on the date of the gift. Gifts-in-kind and government donated commodities were distributed as follows: September 30, 2007 2006 FHA $ 19,132,462 $ 12,420,471 Other agencies 24,688,777 18,593,569 $ 43,821,239 $ 31,014,040 In accordance with Interagency Standards established by the Association of Evangelical Relief and Development Organizations (AERDO), Food for the Hungry, Inc. only records the value of gifts-in-kind for which they were either the original recipient of the gift, were involved in partnership with another organization for distribution internationally, or granted the gift for use in a FHA program. 9. LEASES Food for the Hungry, Inc. leases office space in Washington D.C. under a month to month operating lease agreement with monthly payments of $6,048. In addition, Food for the Hungry, Inc. has office space in Chengdu China under a lease maturing July 2010 with semi annual payments of $2,482. Food for the Hungry, Inc. also leases office equipment with total monthly payments of $2,861, maturing from May 2008 to March 2012. Total lease expense was $129,271 and $109,350 for the years ended September 30, 2007, and 2006, respectively. The future minimum payments are as follows: Year Ending September 30, 2008 $ 40,181 2009 27,888 2010 20,656 2011 14,823 2012 3,057 $ 106,605 10. RETIREMENT PLAN Food for the Hungry, Inc. has a defined contribution pension plan covering substantially all employees over 18 years of age who have completed one year of service. Food for the Hungry, Inc. makes contributions based on a percentage of salary, and employees may make additional contributions. Vesting in Food for the Hungry, Inc. contributions is based on years of continuous service, which reaches 100% after the fifth year of service. Retirement expense was $226,511 and $198,440 for the years ended September 30, 2007, and 2006, respectively. 11. RELATED PARTY During the year ended September 30, 2006, Food for the Hungry, Inc. loaned $500,000 to Canadian Food for the Hungry, Inc. to be repaid in full within one year with no interest. As of September 30, 2007, the outstanding balance for this loan was $100,000. During the year ended September 30, 2006, the CFO for Food for the Hungry, Inc. also assumed CFO responsibility for FHA and has continued to peform the officer roles for both organizations. All salary and benefits have been paid by Food for the Hungry, Inc.

ANNUAL REPORT 2008 31

who we are

Since 1971, Food for the Hungry has boldly served and spoken out for the poor, sending courageous men and women to help communities transform themselves. Food for the Hungry is more than a relief and development organization. We are a tested, trusted and innovative partner who respectfully walks with the poor while intentionally reflecting the love of Jesus.

what is our vision

God called and we responded until physical and spiritual hungers ended worldwide.

what is our mission

Food for the Hungry embraces an intensely personal and biblical response to God’s call to end physical and spiritual hungers worldwide. We humbly walk with churches, leaders and families in helping them overcome all forms of human poverty by living in healthy relationship with God and His creation.

achieving our mission

Motivated by Christ’s love, we achieve our mission through a threedimensional approach: • Speaking out to all people and nations about God’s call to end physical and spiritual hungers. • Sending people to share Christ’s love. • Serving the transformation of communities

who do we serve

Food for the Hungry goes to the hard places – places darkened by poverty, war and injustice – to shine the light of Jesus and bring hope and help to children, families and communities in the most impoverished countries around the world.

why we serve

The love of Christ compels us to reach out to the least of our neighbors and advance God’s Kingdom on earth. Micah 6:8, our Scriptural basis, undergirds our work: “What does the Lord require of you but to do justice, love mercy, and to walk humbly with your God.”

AFRICA Burundi Chad DR Congo Ethiopia Kenya Mozambique Nigeria Rwanda Sudan Uganda

ASIA Bangladesh Cambodia China India Indonesia Mongolia Myanmar Philippines

LATIN AMERICA Bolivia Brazil Dominican Republic Guatemala Haiti Nicaragua Peru

NATIONAL ORGANIZATIONS Canada Norway Sweden Switzerland United Kingdom United States

who we are

what is our vision

God called and we responded until physical and spiritual hungers ended worldwide.

what is our mission

achieving our mission

who do we serve

why we serve

AFRICA Burundi Chad DR Congo Ethiopia Kenya Mozambique Nigeria Rwanda Sudan Uganda

ASIA Bangladesh Cambodia China India Indonesia Mongolia Myanmar Philippines

LATIN AMERICA Bolivia Brazil Dominican Republic Guatemala Haiti Nicaragua Peru

NATIONAL ORGANIZATIONS Canada Norway Sweden Switzerland United Kingdom United States