NESsT Report 2000-2005 - From small idea to large scale impact

NESsT Report 2000 - 2005

From small idea to large scale impact.

www.nesst.org

NESsT

Table of Contents

2

NESsT Milestones

4

From the Board Chair

5

From the Co-Founders

6

NESsT Initiatives

8

NESsT around the World

10

NESsT Venture Fund

26

NESsT University

32

NESsT Consulting

36

NESsT Marketplace

38

NESsT in the Press

40

NESsT Staff

41

NESsT Board of Directors

42

NESsT Donors

44

NESsT Advisory Network

46

Financial Statements

48

Financial & Operations Summary

Founded in 1997, NESsT is an international, nonprofit organization committed to strengthening the financial sustainability and mission impact of civil society organizations working for social change and development.

NESsT

From small idea . . .

NESsT has worked for nearly a decade to advance a global social enterprise* movement. This report highlights some of our key accomplishments over the past five years to demonstrate a new paradigm of philanthropic investment that strengthens the financial sustainability and mission impact of civil society organizations (CSOs) around the world.

NESsT has leveraged more than US$2.2million

since 2000 from donors and from our own selffinancing activities to achieve our vision. We have provided financing and/or capacity-building to over 800 CSOs from 30 countries, helping enable them to plan for and/or start up social enterprises.

This critical support has allowed them to increase their institutional capacity, diversify their funding base, and increase their social change impact.

NESsT Review 2000 - 2004: NESsT Venture Fund

* NESsT uses the term "social enterprise" to refer to enterprises owned by or operated to benefit CSOs. These enterprises have a dual aim: social impact (e.g. creating employment or other benefits for marginalized individuals or communities); and financial impact (e.g. generating resources to support the CSO mission).

. . . to large-scale impact.

2 “Social enterprises enable us to take greater responsibility and control of our own resources, to further our missions, and to steer part of the market toward the pursuit of social change.�

Profits for Nonprofits (NESsT, 1999)

NESsT Milestones: 1997 - 2004

Profits for Nonprofits: NESsT hosts NGO Venture Forum and releases Profits for Nonprofits book on social enterprise in Central Europe

NESsT founded: NESsT

incorporates as international nonprofit in USA 1997

* *

1998

*

NESsT Europe:

Sustainable NGO Financing Project:

NESsT opens European regional office in Budapest (Hungary)

NESsT launches the SNFP to assess status of social enterprise in Central Europe

Budapest

1999

* *

2000

NESsT Latin America:

NESsT opens regional office in Santiago (Chile)

Santiago

NESsT Report 2000 - 2005: NESsT Milestones

*

NESsT Venture Fund: NESsT launches NESsT Venture Fund and provides first early-stage portfolio investments in Central Europe

*

NESsT portfolio member P-Centrum unveiled the world’s largest wooden dragon, handcarved by youth in its woodworking enterprise.

*

Creating a more responsive capital marketplace

Diversifying nonprofit financing sources

NESsT envisions a global marketplace more responsive to the needs of marginalized communities and people. We are working to create a more diverse social capital market that provides sufficient levels and types of financing and support necessary for CSOs to flourish and grow.

NESsT envisions more effective, high-impact CSOs with diverse, flexible and sustainable sources of financing. We are working to integrate the best practices of entrepreneurship into the nonprofit sector to help CSOs decrease their dependence on shortterm project funding.

International Venture Philanthropy Forum:

NESsT Venture Fund: NESsT pro-

NESsT hosts landmark event in Budapest to promote diverse ‘social capital market’

vides first laterstage portfolio investments in Central Europe

2001

*

2002

*

2003

Increasing mission impact and financial sustainability through social enterprise

NESsT believes that through the development of social enterprises, some CSOs can generate income to supplement charitable donations, increase their long-term financial viability and independence, strengthen organizational capacity, and further their mission impact.

Social Enterprise Toolkit (SET):

International Social Enterprise Exchange (ISEE): NESsT

NESsT releases new books on social enterprise development

launches ISEE in Chile and Central Europe

*

Fondo Nido:

NESsT Consulting:

NESsT hosts Social Enterprise Forum in Chile, launches Fondo Nido in Latin America

NESsT launches NESsT Consulting, offering social enterprise development services worldwide

*

2004

*

Fondo Nido:

NESsT provides first later-stage portfolio investment in Chile

NESsT Report 2000 - 2005: NESsT Milestones

*

*

NESsT receives 2004 Skoll Award for Social Entrepreneurship

From the Chair of the NESsT Board of Directors NESsT is demonstrating how social enterprise can create capacity, generate new sources of income, and further the mission impact of CSOs around the world.

4

Bruce Sievers is Visiting Scholar and Lecturer at the Haas Center for Public Service at Stanford University and is a Senior Fellow at Rockefeller Philanthropy Advisors in San Francisco. He served as executive director of the Walter & Elise Haas Fund from 1983 to 2002.

Civil society organizations (CSOs) the world over face the universal challenge of securing reliable operating support. Whether involved in human rights, services for the disabled, environment, healthcare, culture, or other activities in the social sector, organizations that perform vital missions are hampered by inadequate and sporadic financial support. Many find themselves in a constant struggle for survival.

NESsT is a leader among organizations working in the international arena to address this critical problem. Founded in 1997 with the mission of supporting the development of social enterprises to promote social change, NESsT has done a spectacular job of achieving this aim. It has assisted hundreds of CSOs throughout Central and Eastern Europe and Latin America to create capacity, develop business plans, and generate new sources of income to support their work and further their mission impact. As NESsT has expanded to other

areas and fields, it has helped advance an entire arena of social action, that of international social entrepreneurship.

It is an extraordinary pleasure to serve on the board of an organization that performs such a crucial role in building international civil society.

We are now witnessing an extraordinary worldwide expansion of the voluntary sector and a growing awareness of its importance in addressing the most profound social problems. NESsT will continue to play an important role in this expansion, because its strategy is uniquely suited to the needs of developing CSOs. Through its current and planned initiatives -- providing financial and technical support to social enterprises, consulting, advancement of the field, and building a global marketplace for social enterprise -- NESsT is making a unique and important contribution to grounding CSOs on stable financial footing.

I can’t think of a more

NESsT Report 2000 - 2005: Letter from the Board Chair

dynamic organization that provides such vital assistance to emerging CSOs. If the civil society sector is to achieve its potential for addressing the demanding issues of the next decades, it must grow on a more stable basis. NESsT is demonstrating how social enterprise around the world can help create this stability.

We hope this report will give you a sense of the past accomplishments and future goals of NESsT, and we invite you to join us in this work.

From the NESsT Co-Founders and CEOs The priority at NESsT is shifting from proving our model of social enterprise development to scaling up our model to enable broader impact.

NESsT’s first eight years have been an exciting journey. It’s difficult to believe that an idea in 1997 has evolved into an international movement with a widening global reach and reputation. NESsT is now a sum of incredible parts: an outstanding international staff of determined and talented business and nonprofit professionals; a dedicated and visionary board; committed and generous donors; and an impressive volunteer advisory network of business leaders.

By far, however, the most exciting leg of our journey has been coming to know the creative, entrepreneurial and idealistic portfolio of social enterprise leaders with whom we work. Every day they illustrate to us the great power and potential of social enterprise as a means of promoting social change and development in emerging markets.

NESsT can now point to a solid track record as an enabler, innovator, and ‘thought leader’ in the social enterprise field and can show significant, practi-

cal achievements in furthering the financial and mission goals of our social enterprise portfolio.

We took a tremendous risk in 1997 by entering the largely uncharted territory of supporting the planning, start-up, and development of social enterprises in emerging markets. But both the growing demand for and impact of our work thus far reaffirm our commitment to respond to this unmet need in the nonprofit sector. And we are now well positioned to continue and grow our efforts.

We are particularly proud to point to NESsT itself as a social enterprise success story. We have dedicated tremendous effort over the last years to ‘practice what we preach.’

More than 30 percent of our annual income is now generated through our own social enterprise -NESsT Consulting -- allowing us to dedicate more of our donor funds directly to support and expand our social enterprise portfolio.

As the social enterprise field continues to evolve

around the world, we are redoubling our efforts at NESsT to respond to new challenges and opportunities to foster and sustain social change through social enterprise. We have outlined a new strategic plan, intended to both expand and refine our role as a social enterprise catalyst through our four priority initiatives: the NESsT Venture Fund, NESsT University, NESsT Consulting, and the new NESsT Marketplace.

As we reflect on our accomplishments and challenges of the last five years and look toward new ambitious goals for the future, our priority is shifting from proving our strategy to scaling it. By leveraging what we’ve achieved and created thus far, we’re on a trajectory to create a truly global social capital marketplace, to support a wider number of social enterprises, and to affect positive change in marginalized communities around the world.

NESsT Report 2000 - 2005: Letter from the Co-Founders

5

Nicole Etchart & Lee Davis

NESsT Venture Fund

NESsT University

The NESsT Venture Fund is a philanthropic investment fund providing capacity-building and financing to support the development of high-impact social enterprises among civil society organizations. The Fund currently supports portfolios in Central and Eastern Europe and Latin America.

NESsT University promotes accountability, innovation, leadership and professionalism in the social enterprise field worldwide through forums and workshops, trainings and internships, research, and publishing. NESsT University also serves as an incubator for new ideas and tools applied in our other initiatives.

NESsT Consulting

NESsT Marketplace

NESsT Consulting provides professional social enterprise development solutions to clients worldwide. Through NESsT Consulting, NESsT reaches a wider global audience with our services while also generating additional resources to support the NESsT mission, programs, and operations.

BrownpagesSM is a global, on-line shopping portal designed to help social enterprises reach a wider consumer market for their products and services.

Through the marketplace, NESsT also aims to increase awareness of and support for social enterprise among the general public.

6

NESsT Initiatives

NESsT combines the tools and strategies of business entrepreneurship with the mission and values of nonprofit entrepreneurship to support the development of social enterprises in emerging markets.

“NESsT isn’t about charity. It’s into business plans, management skills, long-term strategy, business ethics and efficiency. It’s into running a tight ship.

The idea is to make the business side of an organization profitable, allowing it to fund its social agenda.”

Dow Jones Newswires

Over the last five years, nearly 800 CSOs have received direct social enterprise training or support from NESsT through one of our four initiatives: Since 2000, the NESsT Venture Fund has provided nearly US$1million in combined financing and capacity-building support to over 400 social enterprises in Central Europe and Latin America. The Fund has reached 270 CSOs in Czech Republic, Hungary, Slovakia and Slovenia; and 145 in Chile with much-needed assistance to test the feasibility of, plan for, start up, or expand social enterprises. Having demonstrated an effective model for increasing the financial and mission impact of CSOs through social enterprise, NESsT is now expanding into Croatia, Romania and Peru.

7 The various projects of NESsT University NESsT Revenue by Initiative have contributed significantly to promoting (2000-2004) NESsT excellence and innovation in the social Venture enterprise field internationally. Since 2000, Fund In-kind NESsT has published four new books, four 50% legal guides, 18 case studies, and the first code of ethics on social enterprise -- all in 3% NESsT multiple languages; hosted the first interna15% capacity & 10% organizational tional forum and established an award to 22% support encourage excellence in venture philanNESsT University thropy; supported more than 40 young * Includes unrestricted leaders through our entrepreneur-indonations and self-financing Unrestricted income, 19% of which residence program; and launched an interwas generated through NESsT Consulting. national social enterprise exchange program in Central Europe and Latin America.

NESsT has raised more Meanwhile, NESsT Consulting has evolved into an effective than US$2.2million social enterprise itself -- exceeding goals to develop solutions through fundraising and for our clients and benefits for our mission and financial self-financing since 2000. sustainability. Since 2000, the NESsT team has completed NESsT Consulting has 38 contracts, provided social enterprise consulting to over played an increasingly 360 CSOs from 30 countries, enabled 20 CSOs to launch important role in generatsocial enterprises, and generated more than US$425,000 in ing ‘unrestricted’ resources unrestricted revenues to support NESsT’s work. to finance our initiatives The NESsT Marketplace, our newest initiative under develand operations. opment, responds to the need of social enterprises to reach a wider consumer market for their products and services.

In 2004, NESsT completed a prototype for BrownpagesSM -the first global online portal for social enterprise. *

NESsT Report 2000 - 2005: NESsT Initiatives

NESsT Offices

NESsT Europe: Budapest (Hungary) NESsT Latin America: Santiago (Chile) NESsT Representative Office: Turlock, California (USA)

NESsT around the World NESsT has enabled hundreds of social enterprises in more than 30 countries:

NESsT Venture Fund

Central Europe: 1 Croatia 2 Czech Republic 3 Hungary 27 Romania 4 Slovakia 5 Slovenia

NESsT Venture Fund countries NESsT Consulting countries NESsT Donor countries

Latin America: 6 Chile 7 Peru NESsT Consulting

8

8 Albania 9 Argentina 10 Australia 11 Azerbaijan 12 Belarus 13 Bosnia & Herzegovina 14 Bulgaria 6 Chile 15 Colombia 1 Croatia 2 Czech Republic 16 Ecuador 17 Georgia 18 Guyana 3 Hungary 19 Kyrgysztan 20 Kazakhstan 21 Latvia 22 Lithuania 23 Macedonia 24 Moldova 25 Mongolia 7 Peru 26 Poland 27 Romania 28 Russia 29 Serbia & Montenegro 4 Slovakia 5 Slovenia 30 South Africa 31 Suriname 32 Tajikistan 33 Ukraine 34 Uzbekistan

*

40

NESsT Representative Office:

Turlock, California (USA)

16 7

NESsT Latin America:

Santiago (Chile) NESsT Donor Countries

35 Belgium 36 Germany 37 The Netherlands 38 Switzerland 39 United Kingdom 40 USA

18

15

9

*6

31

21 28

28

22 12

37

39

26

36

35

2

33

4 38

5 1

*3 13

NESsT Europe:

Budapest (Hungary)

20 11

24 27

29 8

14

23

17

25

34

19 32

10 30

NESsT Report 2000 - 2005: NESsT around the World

10

The NESsT Venture Fund provides financial and capacity-building support to CSOs developing social enterprises, enabling them to achieve greater mission impact and financial sustainability.

NESsT Venture Fund

The NESsT Venture Fund is an emerging market philanthropic investment fund.

Since 2000, NESsT has pioneered a philanthropic investment model to respond to the unique needs of CSOs developing social enterprises. Over the last five years we have reached over 400 CSOs in Central Europe and Latin America with US$820,000 in financial and capacity support for social enterprise development.

Recognizing that social enterprises require different types of support at different stages of development, NESsT tailors support to specific CSO needs:

NESsT support has allowed the Open Garden Foundation in Hungary to expand the Real Food Box, an upscale home delivery service for organic fruits and vegetables.

“Venture philanthropy works very much like for-profit venture investing: NESsT scrutinizes the business plan of the nonprofit they’re considering funding; after they’ve made [it] part of their portfolio, they continue to follow it, helping it raise further funding and fine tune revenuegenerating projects. And the investor realizes a return on investment -but a ‘social return’ rather than a financial one.”

Wall Street Journal Europe

- Early-stage portfolio: NESsT has invested heavily in an early-stage portfolio to help social enterprises prepare for the risks and avoid many common mistakes made during social enterprise start-up.

We have provided over US$350,000 in early-stage capacity investments and venture planning grants, enabling 136 CSOs to complete all or part of a rigorous process to assess their readiness and capacity for social enterprise; test the feasibility of enterprise ideas; and complete a business plan. This early-stage process demonstrates that when empowered with the necessary skills and tools for social enterprise, CSOs can dramatically improve their organizational effectiveness and increase the impact of their work.

- Later-stage portfolio: NESsT has also supported a later-stage portfolio of 10 CSOs with a multi-year package of capital and capacity support to enable them to startup and/or expand social enterprises. Our relationship with our portfolio is highlyengaged. Since 2000, NESsT has provided 16 venture grants totalling US$105,000 and over US$350,000 in capacity investments to our later-stage portfolio. In addition, we have leveraged US$35,000 in co-financing and over 1200 hours of inkind support for our portfolio through our Business Advisory Network.

The NESsT Venture Fund responds to two key obstacles for social enterprises: - insufficient capital (for start-up & expansion); and - insufficient capacity (business skills & systems).

11

NESsT Venture Fund: Capital & Capacity-Building Investments Total Invested (2000-2004): US$817,953

Capacitybuilding investments** US$708,462 87%

13%

Capital investments* US$109,491

The following pages highlight results from our work to increase the impact and capacity of our portfolio.

NESsT Report 2000 - 2005: NESsT Venture Fund

*Includes venture planning grants and venture grants given by NESsT to our portfolio in both Central Europe and Chile; does not include additional co-financing leveraged from other donors. **Includes both early- and later-stage portfolios; does not include in-kind support leveraged from the NESsT Business Advisory Network and others.

NESsT Venture Fund: A rigorous social enterprise development process NESsT tailors support to the specific needs of CSOs at various stages in the social enterprise development process through our two portfolios:

1. Early stage portfolio NESsT believes that early investment in CSO capacity prior to social enterprise start-up can lead to greater long-term financial and mission benefits. NESsT has found that by preparing CSOs with the skills

* Total number of CSOs that completed this stage of the process since 2000 in Central Europe and Latin America.

415* 12

Central Europe: 270 Latin America: 145 Initial Screening Over 400 CSOs were screened for their potential to begin the NESsT Venture Fund early-stage process.

Many of these were among the 1440 CSOs that attended one of the 65 Social Enterprise Workshops (SEWs) conducted by NESsT from 2000-2004. The SEW series is an important part of NESsT’s strategy to identify potential CSOs for our portfolio; to introduce the process to potential applicants; and to provide group trainings on social enterprise development.

“Thanks to the NESsT exercises and process I now see opportunities where I used to see only problems.”

and tools to assess their readiness and plan well for social enterprise, they can avoid many of the most common and risky errors made later in the social enterprise development process.

As CSOs progress through each stage of the process, NESsT’s investment of both capacity-building and financial support increases.

136

Central Europe: 88 Latin America: 48

Assessing Readiness Average Timeframe: 1-2 months The NESsT organizational readiness process helps CSOs to determine whether they are prepared to undertake a social enterprise; to establish financial and mission goals for social enterprise and the criteria for assessing what types of social enterprises might achieve them.

57

Central Europe: 33 Latin America: 24

39

Central Europe: 31 Latin America: 8

Pre-Feasibility Study

Feasibility Study

Average Timeframe: 1-2 months

Average Timeframe: 2-4 months

The NESsT pre-feasibility process helps CSOs assess which potential enterprise ideas are worth the investment of further time or financial resources. NESsT helps CSOs to refine their goals for social enterprise, define the business concept, identify target market and demand, gather information on competitors or similar businesses, and complete some initial financial analysis, primarily break-even.

The NESsT feasibility study process helps CSOs assess the potential of a specific social enterprise idea and their capacity to undertake it. NESsT provides the template, tools and one-on-one consulting needed to complete research and analysis of: proposed product/service; market opportunity; operations and management; financial projections; mission impact; and risk mitigation.

Key Portfolio Selection Criteria NESsT applies rigorous criteria to select portfolio CSOs: - location: in Czech Republic, Hungary, Slovakia, Slovenia (adding Croatia & Romania, 2005); and Chile (adding Peru, 2005); - high impact: realistic but ambitious idea and plan with potential for high impact in priority social change area; - leadership: proven, committed management team; - role model: potential to create replicable role models; - sustainability: potential for full/partial self-sustainability; - values: shared commitment to values of ethical, environmental, and social responsibility; - NESsT fit: opportunity for NESsT to add value, willingness to work with highly-engaged philanthropic investor.

NESsT Report 2000 - 2005: NESsT Venture Fund

2. Later-stage portfolio The average total capacitybuilding investment (i.e. donated consulting days) to an early stage portfolio organization to complete the entire process.

$6,440

CSOs that are invited into the NESsT later-stage portfolio have access to a multi-year package of capacity-building and financing support: Capacity Building Enterprise Development Managers (EDMs)

The NESsT EDMs provide an average of 20 days of direct, one-on-one mentoring to each later-stage portfolio member per year.

Business Advisory Network (BAN)

The BAN is a group of 100+ local/international professionals (see pp 44-45) that collectively provides over 1200 hours of pro bono help each year, assisting our portfolio with accounting, finance, legal, marketing, product development issues, etc.

20

Portfolio Trainings

$1,500 NESsT provides venture planning grants <US$1,500 as an incentive for CSOs to complete a business plan and to offset the costs of doing so.

10

Central Europe: 9 Latin America: 1 Business Planning

Average Timeframe: 2-4 months The NESsT business planning process helps CSOs build on their previous analysis to create a professional document for external fundraising purposes, internal planning and management decision-making.

Upon completing a business plan, each CSO is given an opportunity to present and defend their plan to a committee, including the NESsT enterprise development team, business advisory network members, and other local business or philanthropy leaders.

The business plan defense helps CSOs develop the confidence and skills necessary to articulate the value proposition, financial projections and operational plan outlined in their business plan.

Based upon the committee recommendations, NESsT then either invites the CSO into the later-stage portfolio or requests revisions to the business plan.

1200 4

NESsT convenes CSOs four times/year for peer sharing & trainings on topics of mutual interest.

NESsT works with each portfolio CSO to implement a performance management system to track and report progress (see p14).

Performance Management Financing

16 $109,491

Venture Grants

10

NESsT has provided a total of 16 venture grants totalling US$109,491 and ranging from US$1,000 to $10,000 each, to assist portfolio members with their capital needs. NESsT also leveraged an additional US$35,000 in direct co-financing from other donors to portfolio social enterprises.

2

A total of 10 CSOs (nine in Central Europe and one in Latin America) have entered the NESsT later-stage portfolio.

Start up

Multi-year management & development support

Approximately seven percent (10 out of 136 CSOs) complete the entire early-stage process and enter the later-stage portfolio.

7%

By the time a CSO enters the later-stage portfolio, they will have worked together with NESsT for at least 6-12 months. This engaged relationship is an integral part of NESsTâ&#x20AC;&#x2122;s due diligence as well as an important element of building a long-term partnership based on openness and trust.

6-12 mos.

To date, all of the CSOs completing business plans have ultimately entered the later-stage portfolio, indicating that the rigor of the NESsT process helps to refine CSO ideas into viable business opportunities.

100%

CSOs entering the NESsT later-stage portfolio receive several rounds of financing (as required by their social enterprise business plan) and capacity-building support for a minimum of three years.

3yrs

NESsT has successfully exited two of its ten laterstage portfolio CSOs (see example of CCO, p15).

2

In 2005-06, NESsT will expand the geographic reach of the NESsT Venture Fund to seven countries, adding Croatia, Peru and Romania to the existing five (Chile, Czech Republic, Hungary, Slovakia, and Slovenia).

7

Planning is underway for two new NESsT philanthropic investment funds: the Global Emerging Markets (GEMs) Fund for Social Enterprise, to support social enterprises in key thematic issue areas; and the Social Enterprise Loan Fund (SELF), to provide debt financing to social enterprises.

NESsT Report 2000 - 2005: NESsT Venture Fund

Exit

13

Performance Management NESsT has developed a unique performance management tool that allows us to document and report the multiple benefits generated by the social enterprises in our later-stage portfolio:

The NESsT performance management tool is intended to help NESsT and our portfolio to: - better manage, plan and strategize; - measure and protect the value of our investment; - anticipate risks arising from deviances from business plan projections; - provide accountability and incentives based on real data; - disseminate results and raise awareness/support.

14

NESsT monitors the performance of each social enterprise in our later-

stage portfolio in four general areas (see box below).

These four areas are in keeping with our mission and strategy to strengthen the overall organizational capacity, financial health, and mission impact of the CSOs in our portfolio.

Just as each organization and enterprise in the NESsT portfolio is different, so too are the goals and indicators of each.

Together with each CSO, we establish performance indicators and baseline data -- qualitative and quantitative, financial and non-financial -- from the social enterprise business

plan to be used as a basis for comparison.

Subsequent performance data are then collected and compared against this baseline to illustrate progress toward established goals and targets.

NESsT defines exit strategies with each CSO based on agreed-upon performance indicators.

We consider â&#x20AC;&#x153;exitingâ&#x20AC;? portfolio CSOs when they: - reach agreed-upon goals; and/or - no longer benefit from NESsT support.

Linking Business Plan Projections with Performance Indicators NESsT manages and measures performance of our later-stage portfolio in four areas. We do this by linking baseline data established in the social enterprise business plan with subsequent social enterprise performance data: Business Plan Baseline Categories

Performance Performance Management Performance Management Categories Description

Social Change Potential

Social Change Impact

Social (i.e. mission) gains and risks to the portfolio organization as a result of the social enterprise.

e.g. number of beneficiaries, program quality, policy impact, creation of role models, etc.

Enterprise Feasibility

Enterprise Performance

Performance of the social enterprise and the return on investment for NESsT and our donors.

Benchmarks established in the social enterprise business plan.

Organizational Readiness

Organizational Development

Organizational development gains/losses to the portfolio organization due to the social enterprise.

e.g. increases in organizational capacity; changes in operations, culture, stakeholder relations, etc.

Financial Readiness

Financial Sustainability

Financial sustainability gained by the portfolio organization as a result of the social enterprise.

e.g. changes in resource diversification, asset-building, organizational autonomy, etc.

NESsT Report 2000 - 2005: Performance Management

Management Indicators

Performance Management: Demonstrating Impact

Centre for Community Organising (CCO) www.cpkp.cz

Social Mission CCO is dedicated to enabling public participation in local and regional development planning, environmental assessment, and policymaking.

Social Enterprise CCOâ&#x20AC;&#x2122;s consultancy provides professional public participation information and advisory services to representatives from public administration, nonprofits, and businesses.

The consultancy has two

mission goals: to increase awareness and professionalization of public participation; and to decrease dependency on grants.

NESsT Support CCO joined the NESsT portfolio in 2001 to plan for and start up its consultancy. NESsT financial and capacity-building support helped CCO to complete a feasibility study and business plan for the enterprise; and to develop marketing and human

resource strategies, along with client tracking and management systems.

The enterprise has consistently exceeded financial and mission goals.

Following the first year investment, NESsT continued to provide mentoring and consulting support in 2002 and 2003. In late 2003, CCO exited the portfolio upon agreement that NESsT support was no longer needed to continue the development of the consultancy.

Social Enterprise Performance CCO exceeded its mission goals:

Social Change Impact

- doubled number of projects under management; - professionalized services in eyes of clients & donors; - shifted focus from donor-driven grants to contracts more in line with CCO mission & priorities; - generated interest in replicating CCO work internationally, reaching a wider audience of constituents.

CCO exceeded its enterprise financial projections:

Enterprise Performance

- signed two times as many new consulting contracts as expected (18 rather than projected nine) in 2002; - generated US$85,000 in revenues at a net profit of approximately $14,000 (projected amount was $1,500 for 2002).

CCO organizational capacity increased dramatically: - increased staff capacity with new employees, new Prague office, and time-tracking system;

Organizational Development

- increased financial management capacity: revamped budget process, financial management systems, and analyzed profitability of internal cost centers and individual contracts.

Financial Sustainability

CCO improved its overall financial sustainability: - increased overall organizational budget by 60% in two-year period, 2001-2002; - increased self-generated income through consulting from 15% to 20% of overall organizational annual revenues (albeit lower than the projected 30% due to rapid increase in grant revenues in same two-year period); - diversified other funding sources, reducing dependence on international donors from 70% (2000) to 45% (2002).

NESsT Investment (2001-2003) Capital

US$ 3,696

Capacity-Building

US$ 37,950

Leveraged Capital

US$ 1,048

NESsT Report 2000 - 2005: Performance Management

15

Demonstrating Impact The NESsT Venture Fund process has enabled portfolio members to achieve their social and financial goals:

P-Centrum has demonstrated that social enterprise can be a powerful force in building organizational capacity while also empowering individuals.

Assessing Readiness

Assessing Feasibility

Business Planning

In 2001, P-Centrum came to NESsT seeking support to transform its wood carving shop into a self-sustaining enterprise in order to decrease donor dependence and to provide job training and rehabilitation to more young people.

Initially, NESsT provided consulting support to the P-Centrum team to help assess its capacity to develop and manage the social enterprise.

The strength of P-Centrum’s team and the potential for wide social impact convinced NESsT to provide a second capacity investment to help them complete a full feasibility study for the enterprise.

The final study called for the expanded enterprise to achieve 40 percent cost recovery; improve production processes; build a separate workshop; and increase sales.

A US$1,572 venture planning grant and a third package of NESsT consulting hours enabled P-Centrum to complete a full business plan for the enlarged workshop.

P-Centrum presented and defended its plan to NESsT and others and was invited to enter the later- P-Centrum’s renovated stage portfolio. woodshop building

Early-stage Portfolio Support

Readiness

Feasibility

Planning

16 Business Planning

Assessing Readiness

Vydra has demonstrated how a rural community can make the most of local assets to generate positive impact on both an organization and the community at large.

In 2001, Vydra approached NESsT seeking support for a strategy intended to encourage tourism, create local employment, and sustain Vydra’s operations.

The so-called “tourist camp” included a café/snack bar offering traditional Slovak recipes to tourists, cultural events on an open-air stage, environmental education programs for schools, and recreation areas for tourists.

Initially, NESsT provided consulting support to help Vydra complete a pre-feasibility study to assess its capacity to manage a social enterprise and to evaluate the viability of its various enterprise ideas.

Assessing Feasibility

In 2001, NESsT provided a second capacity investment to help Vydra complete a full feasibility study for the proposed café. NESsT staff and a local business advisory committee assessed Vydra’s plan to construct and equip a café. The committee recommended that Vydra revise its ambitious and potentially risky plan to locate the café at the terminus of Vydra’s historic forestry railway, citing concerns about whether sufficient customers would travel to the location.

Vydra revised its strategy, maintaining its original plan for serving traditional recipes, providing employment to local residents, and increasing the flow of tourists to this economically depressed rural area.

NESsT Report 2000 - 2005: NESsT Venture Fund

In 2002, NESsT provided Vydra with a venture planning grant and further consulting support to develop a full business Vydra’s tourist plan for the hiking trails café. The business plan included detailed descriptions of operational systems for the enterprise; identified a prime location for the café; and called for offering snack foods rather than elaborate meals -- all changes that made the café more accessible and suitable for the target market.

This solid strategy, along with the ambitious social and financial goals for the social enterprise, resulted in Vydra being invited to join the NESsT later-stage portfolio.

s renovated building

P-Centrum: 1. Social Change Impact

- more than doubled number of clients working in enterprise from six (2001) to 14 (2003); - by 2003, 50% of youth in the workshop found permanent employment after leaving; - 85% of shop participants overcame addiction.

Multi-year Later-Stage Portfolio Support

From 2002-03, NESsT provided US$20,000 of financing and $32,200 capacity-building support.

The first support allowed P-Centrum to move into, renovate and equip a larger workshop space; employ a part-time enterprise manager; and revamp its financial system. A second round helped to diversify its product line of wood and wrought-iron products; explore retail and export opportunities; and develop a marketing strategy, new product catalog and website.

NESsT also brokered a relationship with a local venture capitalist, who provided mentoring and US$4,600 in co-financing.

In 2004, NESsT provided a

2. Enterprise Performance

P-Centrum’s expanded product line includes wooden toys and wrought iron products.

- increased cost recovery of workshop from 16% (2001) to 40% (2003); - increased enterprise sales by 15%; - expanded production capacity and product mix.

third round of financing to purchase a welding machine, saws, and to hire a blacksmith. Further NESsT consulting helped P-Centrum to develop a risk management plan; new marketing plan and pricing policy; and information management system.

3. Organizational Development

4. Financial Sustainability NESsT Investment (2001-2004) Capital

US$ 23,000

Capacity-Building

US$ 48,300

Leveraged Capital

US$ 6,172

In 2003, NESsT provided Vydra with a US$10,000 venture grant and consulting support to launch the enterprise and implement the business plan. Vydra invested in the architectural design and construction of the café, needed kitchen equipment, pantry supplies, and staff wages. NESsT helped Vydra develop a sales strategy, a plan for diversifying revenue sources, and financial management systems. Vydra developed several important local partner and vendor relationships for the enterprise, all while staying true to the overall goals of preserving local culture, environment and traditions in the rural micro-region.

- generated required funding for operational expenses and staff capacity; - increased number of donors from 15 to 23; - diversified donor sources to include individuals, municipalities, and corporations.

Increased Impact

Later-stage Portfolio Support

Multi-year Later-Stage Portfolio Support

- revamped financial system, improved financial management, projections and cash flow; - staff gained skills needed to manage enterprise; - recognized as national/regional success story; - increased public awareness and positive image through shop’s sale of quality products, marketing, and improved website.

NESsT provided a second venture grant of US$9,700 and capacity building support to Vydra in 2004. The additional financing allowed Vydra to expand the water pipeline to its valley location so that its café could serve simple hot meals and upgrade facilities for its target visitors, mostly tourists.

NESsT consulting support helped Vydra to implement a promotional strategy and marketing plan; launch a timesheet system that allowed for better human resources management; and develop the systems to more regularly review the finances from both the enterprise and the organization.

NESsT Investment (2001-2004) Capital

US$ 20,700

Capacity-Building

US$ 43,930

Leveraged Capital

US$ 11,572

Vydra: 1. Social Change Impact

- created five new jobs in year one; - supported 15 new local businesses in region; - strengthened/preserved local traditions, serving three times more regional recipes than planned; - recognized nationally/internationally as a role model for rural sustainable development.

2. Enterprise Performance

- doubled revenues from US$31,500 (2001) to US$ 63,000 (2003); - in 2004, Vydra held 50% more events and welcomed 50% more visitors than expected; - incorporated new entity to maximize tax benefits.

3. Organizational Development

- improved financial systems; - improved human resource capacity (increased entrepreneurial spirit and new staff skills); - increased community awareness/recognition of Vydra’s work due to enterprise; - increased board involvement/commitment.

4. Financial Sustainability

- doubled grant support (Vydra seen as more sustainable, serious and trustworthy by other donors due to enterprise effectiveness); - increased overall budget by 23% with a proportional increase in percent of self-financing.

NESsT Report 2000 - 2005: NESsT Venture Fund

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Portfolio Highlights (Central Europe) Members of the NESsT Venture Fund laterstage portfolio in Central Europe include: Later-Stage Portfolio Organization/Mission

Social Enterprise(s)

Location (joined)

Capital + Capacity Investments (US$)

Betlém Home care to adults & children with severe mental & physical disabilities.

Construction, renovation and maintenance business for homes and businesses.

Brno, Czech Republic (2001)

$8,923 capital investment; $34,730 capacity investment; $1,048 leveraged*

Centre for Community Organising (CCO) Development of civil society and participatory democracy.

Consulting services to local governments & companies on implementing public participation programs.

Plzen, Czech Republic (2001)

$3,696 capital investment; $37,950 capacity investment; $1,048 leveraged*

Energy Centre Bratislava Increases public awareness and use of efficient and renewable energy.

Energy advisory services to households and small businesses across Slovakia.

Bratislava, $10,000 capital Slovakia investment; $54,050 (2001) capacity investment; $11,572 leveraged*

BTA Megálló Group Drug rehabilitation services, including self-help, work groups and a drop-in center.

Alcohol- & smoke-free café offering drinks/food & venue for cultural events in Budapest.

Budapest, $3,000 capital Hungary investment; $23,000 (2002) capacity investment

Open Garden Foundation Promotes sustainable, community agricultural production & healthy lifestyles.

Real Food Box, an up-market, door-to-door, home-delivery service of organic fruits & vegetables.

Gödöllo, Hungary (2002)

$15,900 capital investment; $46,000 capacity investment

P-Centrum Provides treatment and aftertreatment to recovering drug addicts and their loved ones.

Woodworking business employing recovering drug addicts, producing handmade products/sculptures.

Olomouc, Czech Republic (2001)

$23,300 capital investment; $48,300 capacity investment; $6,172 leveraged*

Tamizdat Promotes independent, progressive culture to further an open society in post-communist bloc.

Tamizdat RPM, an on-line music record shop offering catalogue of 600+ independent artists.

Prague, Czech Republic (2001)

$11,500 capital investment; $46,000 capacity investment

Transitions Online (TOL) Strengthen professionalism, independence & impact of postcommunist bloc news media.

Paid subscriptions to TOL on-line news archive, syndication and sale of original content.

Prague, Czech Republic (2002)

$1,700 capital investment; $26,910 capacity investment

Vydra Sustainable development of the rural Microregion Cierny Hron in Slovakia.

Tourist camp & café to encourage tourism, create local employment, and sustain Vydra.

Cierny Balog, Slovakia (2001)

$20,700 capital investment; $43,930 capacity investment; $11,572 leveraged*

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* Co-financing leveraged by NESsT from other donors directly to the social enterprise.

NESsT Report 2000 - 2005: NESsT Venture Fund

NESsT Venture Fund: Central Europe Highlights of Later-Stage Portfolio Impact

Open Garden Foundation awarded Sasakawa Peace Prize

Early Stage Support+ Pre-feasibility Feasibility Business BP FS PFS Study

Study

Plan

A NESsT portfolio member since 2002, the Open Garden Foundation was honored in 2003 with a prize from Japan’s Sasakawa Peace Foundation. The prize recognizes Open Garden’s pioneering role in promoting community organic agriculture in Hungary through its social enterprise, the “Real Food Box,” supported by NESsT.

“NESsT’s package works as it says it’s going to work. NESsT provides not just grants, but a whole package of planning and training support to build our capacity.

I am completely convinced that without the strategic support we received from NESsT we would not have achieved the results we have. ” Matthew Hayes, Open Garden

Tamizdat opens new shop in Prague and re-launches website catalogue

NESsT Venture Fund support allowed Tamizdat to relaunch its website in 2004 with a more sophisticated database design and shopping functions, adding MP3 samples of most releases in its 600+ Revolutions Per Minute (RPM) title catalogue of independent artists from Central & Eastern Europe. Tamizdat also opened a new shop in central Prague to attract additional customers.

“NESsT has been a massive help to us in figuring out how to function more effectively. They have been instrumental in supporting and funding the growth of our enterprise.

Working with NESsT is a major commitment, but for an organization that is very committed to professionalizing, they are invaluable.”

Matthew Covey, Tamizdat

Slovak Prime Minister honors Vydra model

Vydra’s “Tourist Camp,” supported by the NESsT Venture Fund since 2001, was honored by a personal Vydra: on the visit and commitment of right track support from the Prime Minister of Slovakia. The Prime “Being a recipient of NESsT Minister held up Vydra’s comprehensive venture funding also acts as a approach to increasing tourism, creatsort of ‘Good Housekeeping ing local employment, and promoting Seal of Approval.’ Being in environmental and cultural preservathe NESsT portfolio was very tion as a model for other rural commugood for Vydra, since other nities. “This is a significant achievement donors know NESsT's tough and vote of confidence in Vydra’s ability expectations -- so a CSO in the NESsT portfolio is seen to demonstrate impact in reviving the as very trustworthy.” community -- and a very worthy investMiška Galvankova, Vydra ment for NESsT,” said Eva Varga. +

Egg indicates that the CSO completed that stage of process.

NESsT Report 2000 - 2005: NESsT Venture Fund

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Portfolio Highlights (Central Europe) continued A selection of social enterprises that have received early stage support from the NESsT Venture Fund in Central Europe:*

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Early-Stage Portfolio Organization/Mission

Social Enterprise(s)

Location

Capacity Investment (US$)

Africa-Asia Forum Promotes awareness & rights of minority groups in Hungary.

Cultural events, rental of costumes & instruments, hostel, and internet café.

Budapest, Hungary

$2,530 capacity investment

Bambino Mother’s Center Offers education & self-help support to mothers.

Courses on child delivery & raising children, consulting to expectant mothers.

Poprad, Slovakia

$5,290 capacity investment

Bliss Foundation Provides support for children & adults with disabilities.

Develop & sell augmentative Budapest, communication aides for Hungary handicapped youth.

$3,220 capacity investment

Chaloupky Center Increase awareness through environmental education.

Eco-conference center, accomodations & catering services; rural tourism.

Okríšky, Czech Republic

$8,510 capacity investment

Charity Zlin Charitable, health & humanitarian activities in Zlin region.

Second-hand shop & internet café for use by the local community.

Zlin, Czech Republic

$4,140 capacity investment

Domov Provides nursing & home assistance to the elderly.

Rug-weaving workshop & selling traditional hand-woven rugs.

Velké Kapušany, Slovakia

$5,290 capacity investment

Kava Educates disadvantaged children about social problems.

Conflict resolution training Budapest, for companies, using theHungary atrical methods/techniques.

$5,290 capacity investment

Majak Offers counseling/reintegration services to former criminals.

For-profit cargo transportation company in Slovakia & European Union countries.

$6,900 capacity investment

Zlate Moravce, Slovakia

Operate the first youth MOST Ljubljana, hostel in Ljubljana in build- Slovenia International understanding through exchange/volunteerism. ing donated by municipality.

$6,440 capacity investment

Selling products from their Bratislava, MOST ceramics workshop; training Slovakia Improves quality of life for people with mental health disorders. courses for disabled clients.

$3,220 capacity investment

Reintegra Employment for people with physical disabilities.

Sell luxury gift-wrapped wooden puzzles produced by disabled employees.

SENT Raises public/political awareness of mental health issues.

Conference/Tourism center Ljubljana, for NGOs at SENT-owned Slovenia Razori Estate.

Somogy PANC Promotes rural development & conservation.

Two potential enterprises: fish farming & rural ecotourism on their property.

Somogyfajsz, $5,290 capacity investment Hungary

SOSNA Engages local community to solve environmental problems.

Operate a market selling organic foods & handmade crafts.

Kosice, Slovakia

* Selection only. A full list can be found on the NESsT website.

NESsT Report 2000 - 2005: NESsT Venture Fund

Krnov, Czech Republic

$6,440 capacity investment $6,900 capacity investment; $2,097 leveraged

$3,220 capacity investment

NESsT Venture Fund: Central Europe Highlights of Early-Stage Portfolio Impact

Early Stage Support+ Pre-feasibility PFS Study

Feasibility FS Study

Business BP Plan

Africa-Asia (AA) Forum works to promote “NESsT awareness and understanding of minority spurred groups in Hungary through cultural interour entrechange. AA Forum organizes anti-discrimina- preneurial spirit.” tion marches and cultural events like the Africa-Asia International Festival in Budapest.

NESsT assisted the AA Forum to explore ways to increase income from renting African costumes and instruments, catering African cuisine, and selling African art.

Chaloupky has renovated an old manor into an eco-conference center offering meeting space, accommodations and catering services. Chaloupky also offers training courses, weekend and holiday programs for families, and special eco-programs for adults and children. NESsT is helping Chaloupky complete financial projections, a market survey, and a marketing and promotion plan for the Center.

Chaloupky “The work eco-conference with NESsT center persuades us to think very precisely about our plans and about the relations of our mission activities and our for-profit activities.”

Somogy Provincial Association for Nature Conservation (PANC) works to protect the

diverse habitat (wetlands, grasslands, forests) and to preserve Hungarian cultural heritage. Somogy PANC purchased Historic Somogy and manages more than 800 hectares of wetlands and maintains several historical buildings in the Somogy region. NESsT support allowed Somogy PANC to assess two potential enterprises to generate income through sustainable farmland management (grazing, traditional fish farming) and eco-tourism on its property.

Bliss Foundation

Bliss received support from NESsT to complete a feasibility study for an enterprise to design, produce and sell augmentative and alternative communication aides for use by young adults with multiple disabilities and severe communication disorders. Bliss considered developing three communication aids: a battery-run device that stores/recalls sentences; a giant keyboard that is easier to see/touch; and a device to allow users to easily control keyboard and mouse actions.

Reintegra works to address the problem of high unemployment among people with disabilities in the Czech Republic. Reintegra operates workshops providing jobs for 23 constituents while transitioning back to full-time employment. NESsT support enabled Reintegra to complete a feasibility study for a new enterprise producing and selling gift-wrapped wooden puzzles.

Reintegra

+

Egg indicates that the CSO completed that stage of process.

NESsT Report 2000 - 2005: NESsT Venture Fund

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Portfolio Highlights (Latin America) A selection of social enterprises that have received support from the NESsT Venture Fund (Fondo Nido) in Chile:* Later-Stage Portfolio Organization/Mission

Social Enterprise(s)

La Morada Overcoming discrimination & improving quality of life for women in Chile.

Cross-subsidized psychological Santiago, treatment center services to Chile low-income women with fees (2002) from higher-income clients.

$10,772 capital investment; $23,460 capacity investment

Centro de Educación y Tecnología para el Desarrollo del Sur (CETSUR) Promotes environmentally/economically sustainable local development.

Technical training center for artisans offering products with local identity (e.g. handcrafts, food, etc.).

Penco, Chile (2002)

$1,380 capacity investment

Fundación Chol Chol Supports self-sustainable rural development & education to benefit indigenous Mapuche women.

Support for development & sale of traditional textiles produced by Mapuche artisans/women.

Temuco, Chile (2002)

$5,290 capacity investment

Comite Nacional Pro Defensa de la Fauna y Flora (CODEFF) Promotes conservation, environment, & sustainable development in Chile.

Development of responsible & sustainable eco-tourism in protected areas.

Santiago, Chile (2002)

$2,070 capacity investment

Comité para la democratizacion de la informática (CDI Chile) Promotes social inclusion/citizens’ rights through use of information technology.

Fee-based volunteer program for students & young professionals with Spanish & technology proficiency.

Santiago, Chile (2002)

$6,900 capacity investment

Communidad Terapeutica Peñalolen Promotes the social rehabilitation & employment of adults with severe psychological illnesses.

Workshops, transitional housing, job placement & therapy services for mentally-disabled.

Santiago, Chile (2002, 2004)

$8,050 capacity investment

Corporación Bresky Creates employment, health & social opportunities for people with psychiatric disabilities.

Production & sale of clay, glass & silver products made by beneficiaries receiving mental health therapy.

Valparaiso, $8,280 capacity Chile investment (2003)

Corporación CIEM Supports local development through microenterprise development, conservation & promotion of natural & cultural heritage.

Cultural center operating a café and artisanal shop, a gallery, and tourist information services.

San Felipe, Chile (2003)

$5,750 capacity investment

Corporación CreArte Promotes youth creativity, self-esteem, & self-expression.

Selling educational toys featuring designs by children.

Santiago, Chile (2004)

$2,070 capacity investment

Location (joined)

Capital + Capacity Investment (US$)

Early-Stage Portfolio

22

* Selection only. A full list can be found on the NESsT website.

NESsT Report 2000 - 2005: NESsT Venture Fund

NESsT Venture Fund (Fondo Nido): Latin America Highlights of Chile Portfolio Impact

La Morada

Early Stage Support+ Pre-feasibility FeasibilityFS Business BP PFS Study

Study

Plan

“Because of the tools and support from NESsT, our view of our activities is more complex and complete ... we feel more on top of the process of running the Center. Working with NESsT as our partner has been very meaningful, as their style is one of respect and trust, something that encourages us to advance.”

NESsT has provided financing and consulting support to Chilean women’s organization La Morada since 2001 to La Morada team extend the services of its Psychological Treatment Center to paying clients across Santiago. The Center offers therapy and support to victims of domestic violence and other pyschological trauma. NESsT assisted with the feasibility study and business plan to allow La Morada to cross-subsidize the services it provides to women from lower income levels with higher fees from paying clients.

During its first year of operations, the Center surpassed its financial goals, with income 16% higher than projected. In 2003, 64% of La Morada’s income came from self-financing, growing to 73% in 2004.

Corporación Bresky

Bresky Foundation works for the rights of people with psychiatric disabilities and to improve their quality of life and access to employment.

NESsT has worked with “Our entire Bresky since 2003, first team is conscious of the to complete a feasibility fact that the work study and then a busiwe’ve done with ness plan for a social NESsT and all of enterprise focused on NESsT’s unconditional the production and support and advice, sale of clay, glasswork has been excellent and silver crafts for giving a sense of designed in the Bresky reality to the manworkshop. The workagement of our shop provides employ- social enterprise.” ment to people with mental disabilities. Bresky hopes to expand the social enterprise to generate sufficient revenues to finance two mental health daycare centers.

Corporación CreArte

+ Egg indicates that the CSO completed that stage of process.

Santiago-based CreArte promotes the development of creativity, self-esteem and selfexpression in young people aged six to 14. NESsT first assisted CreArte to assess the viability of various business opportunities from a long list of ideas. CreArte then received NESsT support to conduct market research for an enterprise selling educational toys featuring designs by children.

23

Workers in Bresky’s ceramics studio (above); examples of studio products (top).

“Through the NESsT process we were able to choose one enterprise idea among several that was most in line with our core competencies and most likely to meet our mission goals."

NESsT Report 2000 - 2005: NESsT Venture Fund

Portfolio Highlights (Latin America) continued*

24

Early-Stage Portfolio (continued) Organization/Mission

Social Enterprise(s)

Domos (Centro de Desarrollo de la Mujer) Promotes gender equity & human rights in Chile.

Location (joined)

Capacity Investment (US$)

Courses on healthy family relationships & child abuse prevention for company employees.

Santiago, Chile (2003)

$6,900 capacity investment

El Trampolín Promotes education & opportunities for communities living in poverty & social inequity.

Psychological counseling service to families & schools for children with learning difficulties.

Santiago, Chile (2003)

$2,645 capacity investment

Flores del Sur Fosters economic & social integration of marginalized women in a low-income region of Chile.

Flower cultivation business employing low-income women.

Cañete, Chile (2002)

$7,130 capacity investment

Forja Encourages the expression & active participation of citizens to attain a higher level of social justice.

Producing & selling legal Santiago, guides & other publications. Chile (2004)

$2,070 capacity investment

Forja Mundos Prevents delinquency & promotes social inclusion of ex-prisoners in their communities.

Employing/training exSantiago, convicts to design/sell recre- Chile ational equipment for parks, (2004) public areas & schools.

$2,300 capacity investment

Fundación Soles Strengthens civic education & action to promote cultural change and a more just society.

Production & sale of collab- Santiago, orative board games develChile oping social skills, teamwork (2003) & self-esteem of children.

$6,670 capacity investment

Líderes sin Fronteras Promotes sustainable development through culture, education, & environment.

Create, produce & distribute Concepción, $3,565 capacity games for teaching about investment Chile sustainable development (2003) in primary schools.

Movimiento de Integración y Liberación Homosexual (Movilh) Advocates for equal rights of sexual minorities in Chile.

Sell monthly newspaper intended to bridge gap between Chilean gay community & general public.

Santiago, Chile (2003)

$2,530 capacity investment

ONG Cordillera Strengthens ability of citizens in crowded urban areas to participate in local government & to develop local leaders.

Development & sale of software designed to support needs of small- & mediumsized municipalities.

Santiago, Chile (2004)

$2,070 capacity investment

Parques para Chile Supports private environmental conservation initiatives & promotes community participation.

Provide design, planning, & management services to owners of private, protected areas of conservation value.

Valdivia, Chile (2004)

$3,450 capacity investment

Senda Darwin Promotes preservation/understanding of biodiversity of forests of southern Chile, through research & education.

Considering three ideas: eco-tourism; eco-education for school children; selling products from local farms.

$2,070 capacity Santiago, investment Valdivia, & Chiloé, Chile (2004)

Fundación Solidaria Trabajo para un Hermano Improves quality of life for laborers by supporing micro-businesses.

Fair-trade distribution company to export & sell goods produced by entrepreneurial women.

Concepción, $2,530 capacity investment Chile (2004)

* Selection only. A full list can be found on the NESsT website.

NESsT Report 2000 - 2005: NESsT Venture Fund

Early Stage Support+ Pre-feasibility PFS Study

Feasibility FS Study

Business BP Plan

NESsT Venture Fund (Fondo Nido): Latin America Highlights of Chile Portfolio Impact

Domos

Domos promotes gender equi- “Thanks to the ty and human rights in Chile. NESsT process, NESsT is working with Domos we feel we’re much on a business plan for offering stronger, more efficient and a more courses on healthy family relationships and child abuse committed team than one year ago.” prevention to public and private institutions. Domos Carolina Peyrín plans to sell their family violence prevention programs to businesses and other institutions as a benefit they can offer to their employees. NESsT support has been focused on market and break-even point analysis and on developing a viable sales strategy.

Parques para Chile

Valdivia-based Parques para Chile supports private environmental conservation initiatives. NESsT has been working with Parques on a feasibility study and business plan to provide design, planning and management services to owners of private, protected areas with conservation value.

NESsT is helping Parques to define legal, market and financial aspects of the enterprise and to refine the target market and distribution channels.

Flores del Sur

Since 2002, NESsT has worked with the team of Flores del Sur to expand its for-profit flower cultivation business intended to create employment and job training opportunities for low-income women of Cañete, a town in a mining district of Chile. Flores del Sur has operated below break-even for “NESsT inspired the past three years. me to act on my NESsT has been long-held hope helping on plans to for organizational strengthen the sustainability capabilities of the and to create the enterprise, increasing Flores del Sur production and enterprise." expanding and diverMarleen Deblieck sifying its client base. + Egg indicates that the CSO completed that stage of process.

NESsT Report 2000 - 2005: NESsT Venture Fund

“The NESsT team not only guided us with the technical aspects of our business plan, but also showed us a sincere commitment to upholding our mission.”

25

NESsT Co-Founder Nicole Etchart presents the work of NESsT in Santiago.

26

International Venture Philanthropy Forum

In October 2001, NESsT hosted the International Venture Philanthropy Forum in Budapest. The Forum focused international attention on the need for a global ‘social capital market’ to provide a more diverse array of financing instruments to support social enterprises in their various stages of development.

The first international event of its kind, NESsT convened a group of over 150 participants -corporate leaders, donors, investors, and policymakers -- from over 15 countries. Forum sessions highlighted the lessons learned

by ‘philanthropic investors’ around the world in an effort to develop new financing instruments to support social enterprises.

The Forum was made possible through the generous support of Advent International, the German Marshall Fund of the United States, the Levi Strauss Foundation, the Rockefeller Foundation, and the Trust for Mutual Understanding.

Full Forum proceedings are available at: http://forum.nesst.org

"I applaud NESsT for its vision in putting together this event ... we are much in need of clear strategies to advance the practice of venture philanthropy in emerging democracies."

Klaus Schwab, Schwab Foundation for Social Entrepreneurship "I want to welcome you all to the NESsT meeting in Budapest ... venture philanthropy has a very important role to play ... there is a need for taking greater risk in helping people."

George Soros, Financier & Philanthropist

NESsT University

NESsT University aims to increase awareness of the benefits and potential of social enterprise and to promote accountability, excellence, innovation and professionalism in the field of social enterprise.

Furthering the field of social enterprise worldwide.

NESsT University serves multiple purposes -- an incubator for developing new ideas, strategies, and tools; a laboratory for applying and testing them; and a forum for critical thought, evaluation, and dissemination of lessons learned.

NESsT University has four primary goals: - to develop and test new strategies and tools to support social enterprise development; - to prepare the next generation of leaders with the unique set of nonprofit and for-profit skills and perspective needed to manage social enterprises effectively; - to promote accountability, ethical behavior, and transparency in the social enterprise field; and - to promote wider support for and excellence in philanthropic investment among donors and philanthropists.

"From its offices in Budapest and Santiago, NESsT has emerged as an international leader in the effort to foster social entrepreneurship and venture philanthropy in developing nations."

Honorable Tom Lantos, US House of Representatives (D-California); Ranking Member, House Foreign Relations Committee.

Since 2000, through the various programs of NESsT University, NESsT has trained over 435 students; distributed over 2,200 copies of our books; convened six major international events; and presented at over 50 major academic, business and philanthropy events, all in an effort to promote excellence in the field of social enterprise.

Each program of NESsT University makes a unique contribution to this goal: the NESsT Entrepreneur-inResidence (NESsTER) and International Social Enterprise Exchange (ISEE) programs extend leadership training opportunities to current and future social enterprise managers. The Social Enterprise Ethics Initiative (SEE INIT) promotes accountability and transparency through distribution of the first-ever code of ethics on social enterprise, produced by NESsT in 10 languages. The Social Enterprise Legal Advocacy Working (LAW) Group fosters a more enabling legal/regulatory environment for social enterprise. NESsT-published research and tools in the Social Enterprise Toolkit (SET) enable best practices and lessons to be replicated and shared; and the Margins Project aims to ensure that through social enterprise development the global financial services industry becomes engaged in the process of empowering marginalized communities.

NESsT Report 2000 - 2005: NESsT University

27

International Social Enterprise Exchange An intensive seminar on social enterprise development in emerging market countries.

28

“It was really special to meet such dedicated practitioners, my fellow ISEE Europe delegates, and the NESsT team who I believe are highly talented enablers.”

Linda Damerell, School for Social Entrepreneurs (UK)

In 2004, NESsT launched the International Social Enterprise Exchange (ISEE), an intensive, week-long training series focusing on the development of social enterprise in emerging economies.

Designed specifically for graduate-level students and mid-career professionals, ISEE combines classroom study and field visits to local social enterprises, along with eco- and adventure tourism experiences.

The program began with ISEE Chile in January 2004, with the theme of ‘Strengthening Human Rights and Social Justice through Social Enterprise.’ ISEE participants learned about the human rights/social justice movement in Chile, and visited/studied four local social enterprises.

Held in May, ISEE Europe 2004 entitled ‘Social Enterprise: Empowering Marginalized Communities in an Expanded Europe,’ allowed participants a

ISEE Chile 2004 participants visit the flower cultivation enterprise of Flores del Sur in Cañete, Chile (above); an indigenous Mapuche girl looks on (left).

unique opportunity to learn about the effect of European Union (EU) accession just three weeks after the Czech Republic Hungary, and Slovakia joined the EU. ISEE participants benefit from the experience of an international faculty of social enterprise thought leaders and practitioners; a firsthand perspective of managing social enterprises by visits to the NESsT portfolio; exchange with peers from around the world; and learning practical skills in social enterprise planning and management.

ISEE participation is based on a competitive

“ISEE Chile was an invaluable complement to my MBA studies. It gave me the opportunity to see social enterprise first hand and helped me to understand the issues.”

Mark McKeag, Duke University (USA)

application process and limited to 15 participants per session. ISEE participants have included students or recent graduates of MBA, public policy, social work, and international affairs programs as well as social enterprise managers, professors, and international development professionals.

Ninety-two percent of the 2004 participants rated ISEE as “excellent.”

Source: ISEE participant evaluations

ISEE participants visit P-Centrum woodshop

Theme

Site Visits

Visiting Faculty

ISEE Chile 2004 (4-10 January 2004)

Strengthening Human Rights and Social Justice through Social Enterprise

Flores del Sur (Cañete), Parques para Chile (Pucón), Fundación Chol Chol (Nueva Imperial), La Morada (Santiago) in Chile.

Kristin Majeska, Founder and President of Common Good Ventures (USA)

ISEE Europe 2004 (23-29 May 2004)

Social Enterprise: Empowering Marginalized Communities in an Expanded Europe

P-Centrum (Olomouc, Czech Republic), Vydra (Cierny Balog, Slovakia), and Open Garden Foundation (Gödöllo, Hungary)

Gerold Schwarz, Director, Social Enterprise Partnership (United Kingdom)

NESsT Report 2000 - 2005: NESsT University

NESsT International Venture Philanthropy Award Promoting excellence and international role models in the field of venture philanthropy.

NESsT established the International Venture Philanthropy Award in 2001. Also known as the NESsT “Golden Egg Award,” the prize recognizes an individual and/or organization that has applied venture philanthropy approaches in a particularly effective or unique way to address a pressing community need.

George Roberts, REDF

The first Golden Egg was presented in October 2001, at the NESsT International Venture Philanthropy Forum in Budapest, Hungary, to George Roberts, cofounder of REDF and founding partner of private investment firm Kohlberg Kravis Roberts (KKR). An early pioneer in venture philanthropy, REDF addresses chronic poverty and homelessness in the San Francisco Bay Area by expanding the organizational capacity of nonprofit social enterprises working to end poverty.

Daniel Lynch, 3TS Capital Partners

NESsT presented its second Golden Egg in November 2004 in London to Daniel Lynch, a senior partner with 3TS Capital Partners in Prague. The Award recognized Mr. Lynch’s leader-

The 2004 Golden Egg award was handmade by English glassblower Dominic Nicholas.

“I must express how particularly proud all of us at REDF feel to be receiving this award from NESsT. NESsT is a true leader in the field of venture philanthropy and a pioneer on an international scale.

REDF and NESsT have had a fruitful relationship sharing research and intellectual resources for several years.”

George Roberts acceptance remarks (Budapest, 2001).

ship as one of the first and most active advisors, donors and volunteers to the NESsT Venture Fund in Central Europe.

NESsT presented the award to Lynch at the 8th Annual CEE Private Equity Forum, an event bringing together private equity and venture capital professionals active in the Central & Eastern European region.

“NESsT has made it easy for me to give back to the community in a personal and engaged way that utilizes my venture capital investing skills.”

Daniel Lynch receives Golden Egg Award from Lee Davis (London, 2004).

NESsT Entrepreneurs-in-Residence (NESsTERS)

The NESsTER program was launched by NESsT to provide practical management training opportunities in social enterprise for students and mid-career professionals by working on distinct projects with NESsT or our portfolio members.

Since 1999, NESsT has hosted 42 NESsTERs for periods ranging from three months to two years -- leveraging more than 160 months of professional support to NESsT and our portfolio -- nearly 70 percent on a voluntary basis.

The NESsTER alumni are an impressive, diverse, international group of individuals, representing more than 10 nationalities from across Asia, Europe, and North and South Americas. Principally students, 70 percent of NESsTERs were enrolled in or recent graduates of business, nonprofit management, or international programs. NESsT has hosted NESsTERs from 15 prominent universities, among them: Columbia, Dartmouth, Georgetown, Harvard, HEC, Notre Dame, Oxford, Stanford, Thunderbird, and The Wharton School.

Approximately one third of NESsTERs came to NESsT as mid-career professionals seeking a ‘mini-sabbatical.’ They came from a diversity of firms and organizations in the fields of consulting, investment, law, philanthropy, or academia, including: Alcatel, Booz Allen, Morgan Stanley, REDF, UBS Warburg, and Venture Law Group.

NESsT Report 2000 - 2005: NESsT University

Preparing new leaders to bridge the nonprofit and business worlds.

"Being a NESsTER gave me a hands-on chance to see everything we had learned in business school put into action.

The application of business school studies towards a nonprofit endeavor was an especially valuable experience."

Celina Yong Oxford University

“My work at NESsT allowed me to apply my experience in venture capital finance to the context of international venture philanthropy.

It was an opportunity to think about how the investment model carries over to the nonprofit world.”

Cy Hersch, formerly with Venture Law Group (VLG)

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The Margins Project

Promoting venture philanthropy among the emerging market investment and financial services industries.

NESsT launched The Margins Project in 2004 to reach out to international, emerging market investment firms and engage them in solutions to problems affecting the communities in which they invest. The Margins Project uses the unique NESsT model of ‘philanthropic investment’ as a means of relating philanthropy to the core business strategy of investment firms.

The goals of the Margins Project for 2004-2006 include: • producing a primer on philanthropic investment specifically tailored to the investment industry;

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“Cooperation between CVCA and NESsT represents a real opportunity for • publishing and dissemi- us to help our nating a NESsT performance members give management report demon- back to the strating impact of the communities NESsT Venture Fund; in which they invest in a philanthropic way • expanding the NESsT that parallels International Venture Philanthropy Award to rec- their professionognize excellence in phil- al investment strategy and anthropic investment; skills.”

Jaroslav Horák, • increasing membership Chairman, CVCA. in the NESsT International

Business Advisory Network; • expanding strategic partnerships with emerging "Investors and fund managers market private equity and venture capital associations. are looking for a strategy to give back to In 2003, NESsT estabthe communities lished strategic partnerin which they ships with the the invest. The Czech Venture Capital HVCA partnerAssociation (CVCA), the ship with NESsT Hungarian Venture will allow us Capital & Private Equity to show our Association (HVCA), and members how the Slovak Venture Capital venture philanAssociation (SLOVCA) thropy can to promote venture achieve this.” philanthropy among Julián Tzvetkov, their members.

President, HVCA.

Social Enterprise Legal Advocacy Working (LAW) Group Promoting a regulatory environment that fosters social enterprise development.

The Social Enterprise LAW Group aims to promote best practices in legal and tax policy to foster social enterprise. The NESsT LAW Group develops tools for social enterprise managers to better understand the current system in their country.

In 2002, NESsT launched a series of countryspecific legal guides to help explain and evaluate the regulatory framework for social enterprise.

NESsT completed the first two guides -- for Chile and Colombia -- in English and Spanish. In 2004, in

“[The NESsT guides] are valuable not only for the CSO sector itself but also for researchers and academics, as well as practitioners and parliamentarians who may be looking at law reform proposals.”

- International Journal of Civil Society Law (Vol 1-1, Jan. 2003)

cooperation with the European Centre for Notfor-profit Law (ECNL) in Budapest, NESsT also completed new legal guidelines for Czech Republic, Hungary, Romania, Slovakia, and Slovenia.

Guides for Croatia and Peru are forthcoming.

Social Enterprise Ethics Initiative (SEE INIT) Promoting accountability and transparency in the social enterprise field.

By entering the for-profit world, CSO leaders have a responsibility to preserve and protect their mission, reputations and values and to do so in a transparent way to ensure integrity and public trust.

In 2000, NESsT published Commitment to Integrity: Guiding Principles for Nonprofits in the Marketplace, the first ‘code of ethics’ designed to help CSO leaders understand the ethical dimensions of entrepreneurship in the nonprofit sector and to recognize and better prepare for these unique ethical challenges in social enterprise development.

NESsT Report 2000 - 2005: NESsT University

“Commitment to Integrity” outlines ethical issues specific to social enterprises in four categories: commitment to mission & values, transparency, accountability, and fairness.

Since 2001, a focus of SEE INIT has been to widen the distribution, discussion and use of Commitment to Integrity among social enterprises worldwide. NESsT has made the code available for free on our website in 10 languages: Czech, French, Hungarian, English, Portuguese, Russian, Slovak, Slovene, Spanish, and Urdu.

Social Enterprise Toolkit (SET) Since 2000, NESsT has published 4 books, 18 case studies, 4 legal guides, and a code of ethics (in 10 languages).

Recent additions to the NESsT publications series include: NESsT Learning Series

Critical analysis and research on social enterprise Risky Business: The Impacts of Merging Mission and Market Risky Business examines the impact -- both financial and non-financial -- of entrepreneurial activities on CSOs. An important contribution to the growing debate on “social return on investment,” Risky Business uses analyses of 45 social enterprise cases from 15 countries to examine impact in terms of financial performance, mission/values, organizational culture, relations with stakeholders, etc. Risky Business challenges many of the assumptions made about performance “measurement” and “metrics,” pointing out the unique challenges of quantifying and qualifying the financial and social impacts of social enterprises.

(2003; 291 pages) Available in printed and electronic formats.

Available in both English and Spanish.

"Risky Business is a welcome addition to the growing body of literature on social enterprise.

In fact, if you only read one book on this increasingly important subject, make it this one."

Review in Alliance Magazine (London: June 2004).

NESsT Practitioners Series

Practical tools for social enterprise managers Get Ready, Get Set: Starting Down the Road to Self-Financing Get Ready, Get Set is designed to help nonprofit staff and board proceed through the ‘pre-planning’ stages of enterprise development. Get Ready, Get Set is a beginnerlevel handbook that helps users decide whether (and how) starting up or expanding a social enterprise can help them reach their financial and mission goals. The book helps users assess their readiness for social enterprise; identify enterprise opportunities that match their core values, mission, competencies and goals; and assess the feasibility of enterprise ideas and their capacity to undertake them. Get Ready, Get Set includes: - a guidebook outlining each step in the process; - a workbook of practical exercises; and - a case study booklet providing a real-life example of how a nonprofit applied each step of the process.

(2004; Includes 80page guidebook, 36-page case study booklet, CD including 40+ worksheets; and a free binder).

Available in both English and Spanish.

"The NESsT materials relating to market and financial analysis provided a valuable opportunity to reflect and assess our own organizations as a precursor to getting into a social enterprise."

NESsT Social Enterprise Workshop participant (November 2004).

NESsT Case Study Series

Practical experiences & lessons in social enterprise development Launched in 2000, the NESsT Case Study Series is the first international case study series to focus on social enterprise development. Cases provide in-depth, practical accounts of social enterprises in emerging market countries. The series is a valuable ‘real-life’ tool for business and nonprofit management faculty/students, nonprofit practioners, and donors to better understand the challenges and lessons of social enterprise. The series currently includes nine full case studies in English and Spanish.

All NESsT cases are available in both English and Spanish and in both printed and electronic format.

Visit “NESsT Publications” at www.nesst.org for a full list of available titles and for ordering information.

NESsT Report 2000 - 2005: NESsT University

31

â&#x20AC;&#x153;My work behavior has changed as a result of the NESsT training . . . I really noticed this when making decisions . . . Our NESsT trainer was very balanced and experienced, and a very keen and strong coach.â&#x20AC;?

Participant in NESsT training in Bishkek, Kyrgysztan for members of the Global Internet Policy Initiative (GIPI).

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NESsT Consulting is a mission-related venture launched by NESsT to stimulate social enterprise development internationally while also generating untied resources to support our mission.

NESsT has taken a proven methodology and set of tools from our work with hundreds of social enterprises through the NESsT Venture Fund and extended those same services to clients worldwide.

NESsT Consulting

NESsT Consulting provides professional services in social enterprise development to clients worldwide.

In 2003, NESsT launched NESsT Consulting in an effort to increase the global impact and reach of our work and respond to the increased international demand for our expertise in social enterprise development. Over the last five years, we have completed 38 contracts for a wide diversity of clients (see chart, p34), particularly international/multi-lateral organizations and donors. Through our consulting, NESsT has trained over 360 organizations from 30 countries and directly assisted 20 of these to develop their social enterprises.

NESsT Consulting offers professional expertise to clients in the following primary areas: - financial sustainability & organizational readiness: helping clients develop strategies for achieving greater financial and organizational sustainability, and assess their readiness for social enterprise;

NESsT Consulting Services: - group trainings & workshops; - one-on-one consultations; - research, evaluation, & strategy development; - speaking engagements & presentations.

- social enterprise planning & development: tailored one-on-one consultations and technical assistance to clients on feasibility study/business plan development, enterprise start-up and management.

NESsT Consulting Revenues (in US$) 235,337

$250,000 200,000 137,732

150,000 100,000 50,000

38,727 11,932

1,491

2000

2001

0

As intended, the growth of NESsT Consulting from 2000 to 2004 (see chart, above right) has brought both financial and mission benefits for NESsT: - financial benefits: Since the completion of its business plan in 2003, NESsT Consulting has grown to represent an increasingly important part of NESsT’s financing mix, amounting to 35 percent of annual revenue in 2004. These “unrestricted” resources are used to help finance our operating expenses and initiatives.

- mission benefits: An important part of NESsT’s mission is to educate donors about the benefits of social enterprise for their grantees/partners. Sixty-five percent of our clients have been international and multi-lateral organizations and donors, increasing our cooperation with these important constituencies. Likewise, consulting has allowed NESsT to reach a wider global audience and explore geographic expansion of our work.

NESsT Report 2000 - 2005: NESsT Consulting

2002

2003

2004

‘Practicing what we preach’: NESsT has significantly increased the percentage of self-generated revenue from 4% in 2000 to 39% in 2004 (annual five-year average of 22%) largely through the expansion of NESsT Consulting which constituted 35% of total revenues in 2004.

33

NESsT Consulting Clients NESsT has completed professional consultancies on social enterprise development for 38 clients -- from foundations to national, international and multi-lateral organizations -- benefiting social enterprises in over 30 countries worldwide.

NESsT Consulting Clients International organizations & multi-lateral institutions

39% 16% Universities

8% 11%

National nonprofit organizations

Nonprofit support & ‘intermediary’ organizations

26% Foundations & trusts

“Thank you to NESsT for its advice, professionalism, patience and support. I am already applying the knowledge gained in the initial trainings. NESsT’s advice is already working and generating income for us.”

Krista Baumane, Providus (Riga, Latvia)

NESsT has consulted with clients in over 30 countries:

34

Albania Argentina Australia Azerbaijan Belarus Bosnia & Herzegovina Bulgaria Chile Colombia Croatia Czech Republic Ecuador Georgia Guyana Hungary Kyrgysztan Kazakhstan Latvia Lithuania Macedonia Moldova Mongolia Peru Poland Romania Russia Serbia & Montenegro Slovakia Slovenia South Africa Suriname Tajikistan Ukraine Uzbekistan

A selection of NESsT Consulting clients:

Ashoka, Citizen Base Initiative (CBI) NESsT developed a series of case studies of innovative CSO self-financing strategies.

Global Internet Policy Initiative (GIPI) NESsT offered a series of social enterprise workshops and one-on-one consulting for GIPI members in eight countries.

AVINA Foundation NESsT provided training to Foundation grantees and staff in Chile on social enterprise strategies.

Handicap International South East Europe (HISEE) NESsT offered a social enterprise workshop in Belgrade for organizations promoting disability rights in SEE.

Civil Society Development Foundation (CSDF) NESsT conducted a workshop on venture philanthropy at the conference ‘Sustainability of the Third Sector in Central and Eastern Europe.’

Institute for Sustainable Communities (ISC) NESsT completed an assessment of the ‘financial viability’ of social enterprises in Ukraine and recommend a strategy to support them.

Community Wealth Ventures (CWV) NESsT provided advisory support for the Alcoa Foundation’s Social Venture/Enterprise Initiative International Forum.

NESsT Report 2000 - 2005: NESsT Consulting

Inter-American Development Bank (IDB) NESsT offered introductory- and advancedlevel training workshops on social enterprise development for local NGOs in cooperation with IDB’s Country Offices in Guyana and Suriname.

International Finance Corporation (IFC) The IFC Latin America SME Facility contracted NESsT to assess the trends and needs of social enterprises in Argentina, Colombia and Ecuador; and to provide individual consulting to the social enterprise of El Taller in Arequipa, Peru.

“NESsT successfully adapted the concept of selffinancing to the different cultural and legal environment we all faced from several different countries.”

Participant in NESsT training for HI-SEE

International Lesbian and Gay Association (ILGA) NESsT offered a training on social enterprise for human rights organizations attending the ILGA Europe annual conference in Budapest.

Mongolian Foundation for Open Society NESsT provided an intensive social enterprise workshop and one-on-one consulting for Mongolian CSOs in Ulaanbaatar.

Open Society Institute (OSI) Information Programme NESsT conducted an evaluation of OSI’s e-rider program and offered social enterprise workshops and consulting for e-rider partners in Bulgaria, Georgia, Poland, South Africa and USA. OSI Mental Health Initiative (MHI) NESsT provided on-going consulting and training on social enterprise development to the MHI network(see side bar).

Providus (politika.lv) NESsT developed a guide for web-based social enterprises and helped Latvian policy institute Providus develop a financial sustainability strategy for its public policy portal.

“Of the 100 or so workshops I have participated in in the last few years this was number one or two. Even several months after the NESsT training I am still finding ways to apply what I have learned to my work.”

Teresa Crawford of AdvocacyNet, a participant in NESsT training in Istanbul.

thropy for universities and foundations in Brisbane, Melbourne, and Sydney.

Schwab Foundation for Social Entrepreneurship NESsT reviewed Foundation award candidates from Poland, Ukraine, and Slovakia.

Synergos Institute NESsT completed three case studies on social enterprise among local grantmaking foundations in Latin America.

United Methodist Committee on Relief NESsT conducted a weeklong training on resource development and social enterprise for Abkhaz and Georgian youth NGOs. VIA Foundation NESsT conducted a threeday workshop on social enterprise development for Czech NGOs.

Prince of Wales International Business Leaders Forum (IBLF) NESsT conducted a workshop on “Enterprise Development and SelfFinancing” for Romanian NGOs.

World Learning NESsT hosted a week-long study tour for 23 Bulgarian NGOs to visit and learn from social enterprises in the NESsT Venture Fund portfolio.

Queensland University, Centre of Philanthropy and Nonprofit Studies NESsT conducted a series of workshops and presentations on venture philan-

To view a full list of our clients, click on the “NESsT Consulting” tab at: www.nesst.org.

NESsT Consulting Client Profile: Open Society Institute (OSI), Mental Health Initiative (MHI)

NESsT began working with OSI’s Mental Health Initiative (MHI) in 2003. MHI promotes the human rights, inclusion, and active participation in society of people with intellectual disabilities and/or mental health problems in 20 Central and Eastern European and former Soviet countries.

NESsT has provided a package of on-going capacity-building support to the MHI network much like the process used to support the NESsT Venture Fund portfolio.

First, in 2003, "Because the 2003 NESsT organized an training events that introductory social NESsT organized for enterprise workshop our grantees were in Budapest for 14 so successful and coordinators of MHI’s well received, MHI “Model Site Program.” decided to continue NESsT then offered a contracting NESsT in series of trainings at 2004. NESsT has each of the model demonstrated a very sites, followed by high standard of intensive workshops professionalism and on organizational enthusiasm throughreadiness and preout. It has been a feasibility study real pleasure to work with them." development for Judith Klein, MHI social enterprise.

Director (Budapest) In 2004, NESsT continued to provide in-depth consultation to two MHI grantees in Romania to help them plan for and develop their social enterprises.

In cooperation with MHI, NESsT has also completed Enterprising Mentality, a guide for mental health organizations starting social enterprises. In December 2004, NESsT offered a specialized training for mental health organizations operating cafés to employ their constituents.

NESsT Report 2000 - 2005: NESsT Consulting

NESsT is working closely with MHI partner Pentru Voi in Timisoara, Romania to complete a business plan to increase the profit potential of its bakery, providing employment for people with intellectual disabilities.

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A global marketplace for social enterprise

Finding and shopping from social enterprises will be made easier by BrownpagesSM: With Brownpages consumers can:

SM

- Shop for the quality products and services they need; - Sustain the causes and nonprofits they care about; and - Support the development of an alternative marketplace.

1. Customers may search or browse BrownpagesSM in four ways: - by organization or social enterprise name - by product/service - by issue (mission) focus - by geography 2. A BrownpagesSM search for â&#x20AC;&#x153;Clothing,â&#x20AC;? for example, results in a list of social enterprises around the world selling clothing, showing their logo, mission, and a link for more information.

3. Once selecting a social enterprise from the search results list, customers can view additional information about the enterprise (e.g. contact information, how to buy products or services, etc.).

4. Customers then link directly to the social enterprise website or on-line store.

NESsT Marketplace

Brownpages is the first global marketplace for social enterprise.

SM

BrownpagesSM will make it simple for consumers to find and buy the quality products and services they need and want from social enterprises supporting causes they care about.

The Brownpages prototype can be viewed at: www.brownpages.org.

SM

The Brownpages prototype was developed by NESsT with the pro bono support of Budapest-based technology firm Keystone, Inc. (designers of the NESsT website): www.keystone.hu.

SM

BrownpagesSM is an ambitious new initiative currently under development at NESsT. BrownpagesSM is the first, global marketplace for social enterprise – an on-line shopping portal for social enterprise products and services – intended to increase the access of social enterprises to a wider consumer base.

All of the unique products and services found in BrownpagesSM generate “profits for nonprofits.” Every purchase directly supports CSOs in diverse fields -- from the arts to the environment, education to human rights, children and youth to international aid.

The field of social enterprise is growing rapidly worldwide. Beyond philanthropic giving, approximately 53 percent of annual revenue of nonprofits (in 32 countries surveyed) is generated from selling products and services of some form.* This amounts to a global social enterprise market equal to more than US$7.0 billion a year in revenue. Yet this marketplace has not reached its true global potential as CSOs generally lack the resources to market their social enterprises and consumers lack awareness and access to information to identify and buy from social enterprises around the world (or even from those in their own communities).

BrownpagesSM is designed to respond to this growing need and serves multiple purposes:

CSOs generally lack the resources to market their social enterprises and consumers lack access to information about them.

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- provides an efficient way for social enterprises to increase their earned income, to jointly market their products and services, to develop on-line shopping capability, and to share experiences with peers worldwide; - offers an alternative shopping experience for consumers, making it simpler to find the quality products/services they need while supporting nonprofit causes they care about; and - increases awareness of social enterprise among a global audience of potential consumers, donors, and investors.

NESsT has completed the prototype of BrownpagesSM and will launch the portal in 2006.

NESsT Report 2000 - 2005: NESsT Marketplace

* Source: Johns Hopkins Comparative Nonprofit Sector Project: www.jhu.edu/~cnp.

NESsT in the Press Highlights of articles by/about NESsT in the press from 2000 through 2004: "If we push organizations to grow, the balance can be thrown off ... sometimes small really is beautiful."

Chronicle of Philanthropy

Lee Davis in “Supporters Say Venture Philanthropy Still Thrives, Even if Reach Is Limited,” by Ben Gose in The Chronicle of Philanthropy (Washington, DC: Oct. 14, 2004).

"Why can't nonprofits also capture part of the market, to build assets and become players for social ends?"

Nicole Etchart in “Going Better on Good Causes,”

by Maria O’Brien, LatinFinance No. 160 (Sept. 2004), pp 57-59.

38

Nicole Etchart, “Unique and Universal: Adapting the NESsT Venture Fund Model,” in Alliance Magazine (London: Allavida, Sept. 2004), p 21.

"Some of the most innovative and entrepreneurial cases of social enterprise can be found among CSOs operating in the most dire circumstances."

Lee Davis & Nicole Etchart

Lee Davis and Nicole Etchart, “Supporting Nonprofit Enterprise in Emerging Markets,” in Generating and Sustaining Nonprofit Earned Income: A Guide to Successful Enterprise Strategies (San Francisco: Jossey-Bass, April 2004), pp 181-203.

“NESsT: Incubating Social Enterprise,” Business at Oxford (Oxford University, Said Business School, Issue 5; Summer 2004).

"NESsT is one of the most energetic and innovative organisations operating in the field known as 'venture philanthropy', whereby philanthropists 'invest' in nonprofits almost as if they were start-up enterprises."

Business at Oxford

Peto András of Hungarian Radio / Radio Petofi interviews Eva Varga of NESsT (Budapest: Hungarian Radio/Radio Petofi, Dec. 1, 2003).

“We are trying to inject some for-profit thinking and experience into the nonprofit sector.

Nonprofit does not mean that organizations can't have money. It means that the money they make will be used to carry out their mission.”

David Yanovich, “The Best of Both Worlds.” Revista Poder (Miami: Zoom Media, Oct. 2002), pp 46-48.

Lee Davis & Nicole Etchart, “Venture Philanthropy: Panacea or Snake Oil?” Micro-Enterprise Americas (Washington, DC: InterAmerican Development Bank, 2002), pp 59-61.

Rebecca Turner, “Values for Money,” BOSS, Vol. 3 (Sydney: Australian Financial Review, Aug. 2002).

Eva Varga on Radio Petofi (Budapest).

“Venture Philanthropy Embraces Key Strategies of Venture Capitalists,” Knowledge@Wharton (The Wharton School, UPenn, May 2003).

Koranyi, Balazs, “Central Europe’s Non-Profits Cope With Funding Vacuum,” Dow Jones Newswires (Feb. 13, 2003).

“[Venture philanthropy] is a way for us to engage people who haven’t found their place in the charitable sector ... they think more like an investor – they want to see that their money is used in an accountable way, that they can see results ... but also being engaged and using their skills in a way that venture capitalists would.

It’s not just about them giving money.”

BOSS Magazine

NESsT Report 2000 - 2005: NESsT in the Press

Julie McCrossin, “Venture Philanthropy: An interview with Lee Davis of NESsT,” on “Life Matters” (Sydney: ABC Radio National, July 18, 2002).

Lee Davis & Nicole Etchart, “From Dot-com to Dot-org: Seattle Venture Capital Lawyers Shift to Venture Philanthropy in Latin America,” in Social Entrepreneurs Magazine (Seattle: Social Entrepreneurs of Washington, June 2002).

Lee Davis & Nicole Etchart, guest editors: “Venture philanthropy - the future of philanthropy or misguided hubris?” Special feature on venture philanthropy in Alliance Magazine, Vol. 7, No. 2 (London: Allavida, June 2002).

“Venture Philanthropy Brings ‘Social Returns’,” Kristi Essick in The Wall Street Journal Europe (Paris: Dec. 28, 2001).

“I’m attracted to NESsT because it’s an area where I can use my background.”

Géza Tátrallyay in Wall Street Journal Europe.

“Financing Civil Society in Central Europe; NESsT: Applying a Venture Philanthropy Approach,” Business Hungary, Vol. XV/03 (Budapest: Sept 2001).

"By investing in the entrepreneurial activities of nonprofit organizations, we can complement the generosity of philanthropic donors ... help nonprofits to diversify their financing and generate new, more sustainable resources."

Budapest Sun

“A Venture for Those Who Want Their Money to do a Good Turn,” The Budapest Sun (Budapest: Sept 20-26, 2001), p7.

“The Rise of New Philanthropy in the Old World: Venture Philanthropy in Europe,” Philanthropy in Europe, No. 6 (Paris: April 2001) pp 10-11.

“Foundation Nudges Local Non-Profits to be More Business-Like,” Budapest Business Journal (Budapest: BBJ, Oct 2329, 2000).

To view the articles listed here, click on “NESsT in the Press” at: www.nesst.org.

PODER

Nicole Etchart, Lee Davis & Elvira

The October 2002 issue of leading Latin American business magazine Revista Poder includes an article by editor David Yanovich entitled “The Best of Both Worlds” featuring the work of NESsT in South America. “The concept of venture philanthropy is proving to be one of the most efficient means of financing nonprofit organizations,” argues Yanovich, going on to describe the history of NESsT and the philanthropic investment strategy of the NESsT Venture Fund. The article also quotes NESsT Co-Founders Lee Davis and Nicole Etchart who “What NESsT explain the context of offers the NESsT’s work: “In the nonprofits is business world there are the opportunity capital markets offering to exercise thousands of different greater control financing options, some- over their own destinies.” thing utterly lacking among nonprofit organizations. The problem is that available financing has not reflected the needs of nonprofit organizations. Nonetheless, they need to grow as true organizations, not merely as pet projects that donors like to finance. The factor that really distinguishes ‘venture philanthropy’ is that it is all about philanthropy with commitment, which is destined to change the dynamics of the relationship between donors and beneficiaries.”

Poder also quotes Serena Cosgrove of the AVINA Foundation, a NESsT donor in Chile, as saying: “What NESsT offers the nonprofits is the opportunity to exercise greater control over their own destinies.”

NESsT Report 2000 - 2005: NESsT in the Press

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NESsT Staff

The NESsT staff is a committed and diverse team with a unique combination of professional expertise in nonprofit and business development and management. Together we share a dedication to furthering social change through social enterprise.

Lee Davis Co-Founder & CEO

Loïc Comolli Enterprise Development Manager, NESsT Consulting

Nicole Etchart Co-Founder & CEO

Jayne Morgan Director of Finance & Operations

40 Eva Varga Enterprise Development Manager, Central & Eastern Europe

Gonzalo San Martín Enterprise Development Manager, Latin America

Peter Varga Enterprise Development Associate, Central & Eastern Europe

Anna Raksany Development & Communications Associate

Ildikó Szolga Administrative Associate (Budapest)

Joanna Messing Enterprise Development Director, NESsT Consulting* * April 2000 - April 2005

Juan Jose Barrera Administrative Associate (Santiago)

Juan Pablo Iribarne Enterprise Development Associate, Latin America** ** March 2002 - April 2004

NESsT Report 2000 - 2005: NESsT Staff

NESsT Board of Directors

NESsT International NESsT is a nonprofit, IRS 501c3 organization incorporated in 1997 in the State of Maryland (USA). Current members of the NESsT Board of Directors include:

“The NESsT approach to philanthropy is the best I have seen. Their emphasis on self-reliance and sustainability of projects is the basis for a high social yield on the funds provided.”

Jorge Mariscal

Bruce Sievers (Chair) Visiting Scholar/Lecturer, Haas Center for Public Service, Stanford University; and Senior Fellow, Rockefeller Philanthropy Advisors (San Francisco, CA) Philip Collyer Director, Strategic Enterprises, National Assembly of Health & Human Service Organizations (Washington, DC) Richard Cook Director of Community Outreach, University of Maryland (Baltimore, MD)

Lee Davis Co-Founder & CEO, NESsT

Virginia Raff (Treasurer) Independent Consultant (Madison, CT)

Nicole Etchart Co-Founder & CEO, NESsT

Steve Smith (Secretary) Media for Development International (Glenwood Springs, CO)

Rachel Golden President, Rachel E. Golden Foundation (Chicago, IL) Robert Line Managing Director, Keystone, Inc. (Budapest, Hungary) Jorge Mariscal Partner, The Rohatyn Group (New York, NY)

Jean Waggett Attorney (West Hartford, CT)

41 Former Members: Paula Antezanna Arias Foundation for Peace and Human Progress (San Jose, Costa Rica)

NESsT Europe NESsT Europe is a nonprofit, public service corporation (kht) registered in the Republic of Hungary. Current members of the NESsT Europe Supervisory Board include: Zoltán Tóth (Chair) Founder, Navigo Partners (Budapest, Hungary)

Brian Wardrop Partner, DBG Eastern Europe (Budapest, Hungary)

Robert Heinczinger Tax Partner, Ernst & Young (Budapest, Hungary)

Former Members: István Kosztolányi Concordia Ltd. (Budapest, Hungary)

Judit Mihályi Partner, Europe Ltd. (Budapest, Hungary)

Géza Tátrallyay Vertis Finance (Vienna, Austria)

“I joined the NESsT Europe Board because of NESsT’s innovative way of supporting good causes, because it fosters an efficient use of donor’s money in the organizations it supports, and because I have a high regard for the NESsT team.”

Zoltán Tóth

NESsT Report 2000 - 2005: NESsT Board of Directors

NESsT Donors NESsT wishes to thank the following individuals and institutions for their generous support of our work: "NESsT funding and business support steers portfolio members toward greater selfsufficiency so that funds can then be targeted elsewhere for good use."

Daniel Lynch, 3TS Capital Partners (Prague, Czech Republic)

42

"NESsT is helping the nascent central European charitable sector to start with the best practices of sustainability and build a strong foundation for the future. I see NESsT playing an important role in helping charity in the region to start on the right foot by ensuring that the right mix of commerciality gets in early to the sector’s development."

William Watson Baring Corilius Private Equity (London, United Kingdom)

Institutional Donors 3i Advent International American Express Foundation

David and Lucile Packard Foundation Regional Environmental Center for Central & Eastern Europe (REC)

Aspen Institute Nonprofit Sector Research Fund

Rockefeller Brothers Fund

Atlantic Philanthropies

Rockefeller Foundation

AVINA Foundation

Skoll Foundation

Baring Corilius Private Equity Partners

Staples Trust (Sainsbury Family Charitable Trusts)

Charles Stewart Mott Foundation

Sunrise Foundation

Charity Know How

Tinker Foundation

Democracy Commission of the Embassy of the United States of America, Budapest (Hungary)

Trust for Mutual Understanding

Deutsche Bank Americas Foundation

“The NESsT team is succeeding in instilling long-term, sustainable and entrepreneurial growth strategies within the social enterprises in its portfolio. I’m fortunate to have the opportunity to support such an important initiative.”

Brian Wardrop DBG Eastern Europe (Budapest, Hungary)

Open Society Institute Mental Health Initiative

Embassy of the United States of America, Santiago (Chile)

US Agency for International Development (USAID) US Department of State (Office of Citizen Exchanges) Individual Donors

German Marshall Fund of the United States JPMorgan Chase Foundation

Anonymous Philip & Rosemary Collyer Collyer Family

Levi Strauss Foundation Karen & Richard Cook Open Society Institute Information Program

NESsT Report 2000 - 2005: NESsT Donors

Lee Davis

Barbara DutcherCampbell

Flores del Sur

NESsT selected as recipient of prestigious Skoll Award for Social Entrepreneurship

FUNDES Rachel E. Golden Foundation

Jan Heifner, CPA

Daniel Lynch

Cy Hersch

Jorge Mariscal

Keystone, Inc.

Nicole Etchart & Alejandro Mendoza

LatinFinance Jon Martinson

Judit & Peter Mihályi Alejandro Mendoza Morgan Family Sofía Michelakis Anna Raff Brian Milder Raff Family Fund The Mosser Hotel Bruce Sievers Catherine O’Dea Sally & Steve Smith Anna Raff Laurie Spengler REDF

The Skoll Foundation selected NESsT as a 2004 recipient for the Skoll Award for Social Entrepreneurship, providing a 20-month grant to help build NESsT financial and organizational capacity. The Skoll Award is designed to support “scale-up for organizations led by social entrepreneurs who are advancing innovative approaches to addressing social issues.”

Investing in, Support from Skoll is connecting and being used to expand celebrating social NESsT’s board; upgrade entrepreneurs. technology capacity; develop a marketing strategy; and increase fund development capacity to leverage more corporate and individual donors.

Created by Jeff Skoll, the first president of eBay, the Foundation works to “advance systemic change to benefit communities around the world by investing in, connecting and celebrating social entrepreneurs.”

Zoltán Tóth The Riverside Company Marie Trexler salesforce.com Jean & Jack Waggett The Skirball Foundation Brian Wardrop XenoMusic In-Kind Donors

Yrarrázaval, Ruiz-Tagle, Lagos & Silva

Dr. Daniel Afonso, Jr. Zoom Media Group Agrosantiago Brown Rudnick Berlack Israels LLP

Pro Bono Legal Counsel

Budapest Wine Society

Crowell & Moring LLP (Washington, DC, USA)

Central European Advisory Group

Hogan & Hartson LLP (Budapest, Hungary)

P. Wardham Collyer

María de la Luz Melo (Santiago, Chile)

Copy General Embassy of the Republic of Hungary in Chile

Squire, Sanders & Dempsey LLP (London, UK)

To learn how you can support NESsT, click on the “Donate Now” button at: www.nesst.org.

USAID review of NESsT Venture Fund cites ‘professionalism and variety’

In April 2003, Dr. Kristine Herrmann-De Luca of USAID traveled to Europe “NESsT’s to visit three of the social requirements enterprises in the NESsT are so strict Venture Fund portfolio as other funders know they can part of a project review of trust the CSO a USAID grant awarded to with more NESsT in 2001. In her funds.” report, De Luca notes that the social enterprises in the NESsT Venture Fund portfolio “stand out for their professonalism and variety” and she concludes that “the rigor of NESsT’s process forced [CSOs] to think more clearly about their organization, goals, and enterprises.”

Nicole Etchart selected as AVINA Leader

In 2002, the AVINA Foundation selected NESsT Co-Founder Nicole Etchart as an “AVINA Leader” and provided support over two years to enable NESsT to expand its assistance to social enterprises across Chile.

Founded by Swiss entrepreneur Stephan Schmidheiny, AVINA supports civil society leaders throughout Latin America.

NESsT Report 2000 - 2005: NESsT Donors

43

NESsT Business Advisory Network International Business Advisory Network (IBAN) The NESsT IBAN is a group of individuals -- many with personal and/or professional ties to the regions in which NESsT operates -- that provides pro bono advice and assistance to NESsT on a strategic level: "NESsT’s important work with social enterprises is helping develop the people and organizations required for social impact in Chile and beyond."

Emmanuel Schweikert

44 "NESsT’s focus on business skills and financial discipline results in the sustainability of CSOs as well as the cultivation of greater support and awareness within the business community."

Laurie Spengler

“NESsT makes a profound contribution to Latin America by empowering social entrepreneurs in a sustainable manner through sound business practices.”

Andrew Cummins

Stuart Baxter The Riverside Company

Julian Garel-Jones Polunin Capital Partners

Christopher Rose Squire Sanders & Demsey

Marie Burak European Bank for Reconstruction & Development (EBRD)

Brian Gendreau ING Investment Management-Americas

Mary Ross JPMorgan Chase

Matthew Cole North Bay Equity Partners Jakub Crhonek LGT Capital Partners Ltd. Andrew Cummins Explorador Capital Marissa Dineen GE Equity

Grace Goodell Johns Hopkins University, School of Advanced International Studies (SAIS) Malcolm Hayday The Charity Bank David Heard American International Group (AIG)

Gerold Schwarz Social Enterprise Partnership (SEP) Richard Seewald Alpha Associates Laurie Spengler Central European Advisory Group (CEAG) Marie Trexler Intel Capital

Christian Hunt Arjun DiVech Grantham, Mayo, Van Otterloo (GMO) Javier Echarri European Venture Capital Association (EVCA) Moises Eilemberg Pacific Onset Capital LLC Stephen István Fehér Sustainable Community Development Institute (SCDI)

Rosemary Macedo Bailard, Biehl & Kaiser Felipe Medina Goldman Sachs Hillary Mendelsohn thepurplebook Joanna Messing REDF Kristina Perkin Davison iEurope Capital

Michael Gallagher International Business Awards

NESsT Report 2000 - 2005: NESsT Advisory Network

Frank van Beuningen PYMWYMIC Marco Vangelista Grantham, Mayo, Van Otterloo (GMO) William Watson Baring Corilius Private Equity David Yanovich Investment Banker

Business Advisory Network (BAN) The NESsT Business Advisory Network (BAN) is a group of leaders within the countries where NESsT works that provides pro bono advice and assistance to NESsT and our portfolio of social enterprises: Central Europe

András Geszti Euroventures

Croatia Jonathan Cooper Ascendant Capital Partners

Robert Heinczinger Ernst & Young

Jere Dumanic Hrvatski Telekom

Nicholas Kabcenell Darby Overseas Investments

Boris Savoric Savoric & Partners

Phillip Lee European Internet Networks

Czech Republic Robert Cohen Benson Oak Stefan Cordiner Myall Consulting Jaroslav Horak DBG Eastern Europe Georg Hotar Central European Capital Petra Kursova Czech Venture Capital Association (CVCA) Daniel Lynch 3TS Capital Partners

Judit Mihályi Europe Ltd. István Miholek Office Depot Katalin Nádasi Budapest Univ. of Economics Kornélia Nagy-Koppány Hogan & Hartson LLP Attila Schillinger Avantgarde Group Ltd. Anikó Soltész SEED Foundation Zoltán Szeni Ernst & Young

Peter Ridder Ali Tanweer Organization for Aid to Refugees Géza Tátrallyay Vertis Finance Hungary Nilda Bullain European Center for Not-for-Profit Law (ECNL) Andy Cohen ING Group Fred Eberlein Heather Elms Central European University (CEU) Business School

Zoltán Tóth Navigo Partners Brian Wardrop DBG Eastern Europe László Zolnai Business Ethics Centre, Budapest Univ. of Economics Slovakia Magdalena Faltanova Citigroup Iveta Griacová Genesis Capital

Martina Roskova Slovak American Enterprise Fund (SEAF) Andrew Sandor Squire Sanders & Demsey

Cynthia Robert FUNDES Martín Rodríguez Feedback

Igor Sulik Amrop Jenewein Group

Emmanuel Schweikert Falcon Management Partners

Latin America

Todd Temkin Fundación Valparaíso

Chile Andrés Beroggi Microsoft Chile S.A.

Hugo Vergara Travel Andes

Christopher Brown Intergenesis

Peru Cayetana Alijovín Procapitales

María de la Luz Melo Cerda y Cía

Rafael Arbulú JPMorgan Chase

Gonzalo de la Maza Innovación y Ciudadanía

Carmen Marina Cuba Baiocchi Caminando Juntos

María Elena Ducci Universidad Católica Consuelo Gazmuri Fundación Chile

Aldo Defilippi La Cámara de Comercio Americana del Peru (AmCham Peru)

Pablo Loayza Ministerio de Educación

Carlos García Interinvest

Sharon Matthews JPMorgan Chase

José García Herz SEAF Peru SAFI

Nicole Minsk El Huerto

Jorge S. Pérez Ernst & Young

Guillermo Morales Morales, Noguera, Valdivieso y Baeza

Manuel Sotomayor Sotomayor, S.A.

45

Richard Stoddart Anthony Parkes Explorador Capital Emilio Pellegrini Masisa S.A.

Jozef Rizman Dexia Bank NESsT Report 2000 - 2005: NESsT Advisory Network

To learn how you can volunteer with NESsT, write us at: nesst@nesst.org.

NESsT Financial Statements*

NESsT Statement of Financial Position December 31, 2004 (See Report of Independent Accountants)

ASSETS

(US$)

Current Assets $224,698 150,527 52,891 264 27,059 3,164 1,518

Cash Grants Receivable Accounts Receivable Employee Advances Publications Inventory Investments Prepaid Expenses

46 Total Current Assets Fixed Assets, less accumulated depreciation of $17,063 Organizational Costs, less accumulated amortization of $2,881 Security Deposit Total Assets

460,121 14,407 3,683 1,050 $479,261

LIABILITIES AND NET ASSETS Current Liabilities $001,208 15,562 17,115

Accounts Payable Accrued Expenses Unearned Revenue Total Current Liabilities Net Assets Total Unrestricted Total Temporary Restricted

33,885

244,385 200,991 Total Net Assets

445,376

Total Liabilities and Net Assets

$479,261

NESsT Report 2000 - 2005: Financial Statements

NESsT Statement of Activities and Changes in Net Assets Year ended December 31, 2004 (See Report of Independent Accountants)

CHANGES IN NET ASSETS

(US$)

Support and Revenue Private Contributions and Grants Government Grants Contracts and Publications and Program Revenue Expense Reimbursements Currency Exchange Gain Interest Total Support and Revenue Expenses Program Management Fundraising

$296,274 112,933 233,015 32,472 1,793 972 677,459 402,424 76,138 40,281

Total Expenses

518,843

Increase in Net Assets - current operations

158,616

Changes in Unrestricted Net Assets

71,973

Changes in Temporarily Restricted Net Assets Increase in temporarily restricted net assets - grants

86,643

Increase in Net Assets Net assets, beginning Net assets, end

158,616 286,760 $445,376

* NESsT Commitment to Transparency: NESsTâ&#x20AC;&#x2122;s financial statements have been independently audited and received an unqualified audit opinion as to their fair presentation in conformity with U.S. generally accepted accounting principles. A complete set of FY2004 audited financial statements and copies of NESsTâ&#x20AC;&#x2122;s IRS 990 form are available upon request.

NESsT Report 2000 - 2005: Financial Statements

47

Financial & Operations Summary The last five years have been ones of steady growth for NESsT. Some highlights of our efforts to increase our financial and organizational capacity to achieve our ambitious goals:

Support & Revenue 2000-2004 Total: US$2,235,045 Government $347,041 Foundations & trusts $1,124,481 16%

Corporations $133,555 2% Individuals $40,589

6%

3% In-kind $70,075

48 50% 19%

Consulting fees & reimbursements $425,219

4%

Other self-financing* $94,085

*

Includes interest income, program fees, and publication sales.

Expenditures 2000-2004 Total: US$2,018,664 Program $1,564,256

78%

16% 6% Management $324,812 Fundraising $129,596

1 View the Better Business Bureau (BBB) Wise Giving Alliance â&#x20AC;&#x153;Standards for Charity Accountabilityâ&#x20AC;? at: http://www.give.org/standards/newcbbbstds.asp

Financial Highlights Since 2000, NESsT has raised over US$2.2 million through fundraising and self-financing to support our work. We have made steady progress in diversifying our financing among various sources and types of donors with increased attention to corporate and individual donors.

We have also increased annual self-generated revenue from 4% to 39% of total income over the last five years, principally driven by growth in NESsT Consulting. This increase allows us to: cover more of our indirect costs; dedicate more donor funds directly to programs; and finance program priorities lacking sufficient dedicated donor funds. Our strategic plan calls for self-financing to provide 30% of annual revenue through 2008 while simultaneously increasing our overall budget.

NESsT overhead costs remain consistently low.

Fundraising and management expenses (8% and 14%, respectively, in 2004) are far below industry standards1 and have decreased steadily for the past three years as we have consolidated our operations.

Our Director of Finance & Operations, a CPA from PricewaterhouseCoopers who joined us in 2002, has also upgraded our budgeting, financial management, and fund-accounting systems, resulting in unqualified audit opinions for the last three years.

NESsT Report 2000 - 2005: Financial & Operations Summary

Operations Highlights NESsT is comprised of three legal entities: NESsT Europe, a public service corporation established in Hungary in 2002; NESsT Latin America, a nonprofit foundation established in Chile in early 2004; and NESsT International, a US IRS 501(c)(3) nonprofit organization incorporated in 1997. Since 2000, NESsT has grown from a staff of three to an impressive, international team of ten full-time employees between our three offices in Chile, Hungary, and the USA. Staff growth has been coupled with improvements in operational systems: human resource policy has been formalized in an employee handbook; a time tracking system has been put in place to assist with project management; and an on-line information management system now links our offices allowing staff to share calendars, databases, documents, and to better track communication with stakeholders.

NESsT International has also developed a Board of Directors to include nine volunteer members with academic, corporate, foundation, and nonprofit expertise. The NESsT Europe Supervisory Board includes four members from the European business community. NESsT Latin America operates under the supervision of the NESsT International Board.

Acknowledgements NESsT would like to thank the following donors whose generous support made this publication possible:

Investing in, connecting and celebrating social entrepreneurs. www.skollfoundation.org

3i is a world leader in private equity and venture capital. www.3i.com

Baring Corilius Private Equity is a private equity fund manager focused on central Europe. www.bcpe.com

Credits Editorial team: Lee Davis, Nicole Etchart, Jayne Morgan, Anna Raksany Graphic design: Lee Davis and Anna Raff Printing: Parks Printing Nest photo: Bernardo Martinez NESsT would also like to thank our many colleagues and friends for the artwork and photos included in this report.

Printed on recycled paper.

www.nesst.org

Copyright Š 2005 NESsT. All rights reserved.

How you can help NESsT

NESsT invites you to join a growing list of forwardthinking, entrepreneurial donors and investors who are helping to make a vision of social enterprise a reality in emerging markets worldwide.

If you are looking for a philanthropic investment that shares your commitment to finding lasting solutions to society’s most serious problems, building strong civil society organizations, and generating new resources for the nonprofit sector, we encourage you to support NESsT. Make a donation or gift NESsT International has public charity, IRS 501c3 nonprofit status in the USA (tax ID number: 52-2018791).

NESsT Europe (NESsT Európa Esélyegyenloség Kht.) is a nonprofit, public service corporation registered in the Republic of Hungary (tax number: 21420733-2-42).

NESsT Europe Kálvin tér 2. I/2 H-1053 Budapest HUNGARY Tel: +(36 1) 267 0231 Fax: +(36 1) 266 0206

Charitable contributions to NESsT are fully tax deductible as permitted by tax laws in the USA and Hungary.

To make a tax deductible contribution: - using your credit card, click the ‘Donate Now’ button on the NESsT website (www.nesst.org) and you will be directed to our secure on-line donation service.

- via check or money order payable to ‘NESsT’ and send to: NESsT 563 Garden Gate Way, Turlock, CA 95382 USA - via bank wire/transfer, Email us for our bank details: nesst@nesst.org.

- using the matching gift option at your workplace. If you don’t have this option, encourage your employer to support NESsT. - in-kind donations of your professional skills or new computers.

- organize a private event for your colleagues and friends to learn more about NESsT. Volunteer NESsT relies heavily on the pro bono advice and assistance of professionals like you to assist us and our portfolio of social enterprises. Write to us to find out more about how you can volunteer with NESsT: nesst@nesst.org.

- donating stock: Email us for our brokerage account details: nesst@nesst.org.

Stay informed Subscribe to our quarterly newsletter by clicking on the “NESsTNews” box at www.nesst.org.

NESsT Latin America José Arrieta 89 Providencia, Santiago CHILE Tel: +(56 2) 222 5190 Fax: +(56 2) 634 2599

NESsT International 563 Garden Gate Way Turlock, CA 95382 USA Tel: +(1 209) 988 9604 Fax: +(1 209) 632 7763 nesst@nesst.org www.nesst.org