2015 ANNUAL REPORT
WOR D S FR O M O UR PR ESI DEN T Dear Serrv Friends, It is a pleasure to present our 2015 Annual Report. Though Serrv is one of the oldest nonprofit fair trade and development organizations, our primary mission to reduce poverty and empower low income artisans and farmers remains unchanged. In this Annual Report you will read about some of the many ways Serrv changed the lives of struggling people around the globe. We partner with 62 nonprofit and community-based groups in 26 developing countries, purchasing their products and providing various forms of developmental support.
Our Core Values Improved Quality of Life Partnership & Collaboration Communication, Transparency, & Trust Sustainable Development Culture, Craft, & Tradition Product & Service Quality Education Volunteerism
Our Mission to eradicate poverty wherever it resides by providing opportunity and support to artisans and farmers worldwide
In 2015 we mailed more than 1.25 million catalogs. More than 3.2 million dollars in purchase orders were issued during the year providing vital income to tens of thousands of artisans and farmers. And these purchases were supplemented by more than $35,000 in direct developmental, training, and emergency disaster support. In spite of a very competitive retail environment, sales topped ten million dollars, though they were down 2% from the previous year, which resulted in a loss of $169,913. We are excited about the prospects for 2016. We will be offering a variety of unique new products led by an expansion of our clothing and kitchen categories. We have committed to a number of exciting development projects which will enhance the ability of our artisan partners to compete successfully in the global marketplace. And I am pleased to say that 2016 is off to a positive start with sales up 9% at the end of the first quarter. All that we do is made possible by the generous support of you, our customers, donors, supporters and volunteers, many of whom serve in churches and fair trade stores around the country. Thank you! Together we are making a difference in many, many lives.
Bob Chase President/CEO
FOUNDING
MEMBER
Serrv International • A nonprofit organization
2015 Annual Report • page 2
2 0 1 5 H IGHLIGHTS Serrv adheres to a consistent focus on poverty alleviation through fair trade relationships, environmental activism, and targeted development funding. In 2015, we worked to strengthen these areas further. Building and maintaining honest, long-term relationships has always been one of our core values. Serrv staff visit artisan partner organizations every year to strengthen our relationships. In 2015 we visited 13 partners in Cambodia, Vietnam, India, and Kenya. During these trips we provide valuable design input, share market trends, gather updates on their social programs, and hear personal stories about how lives are impacted by fair trade. These face-to-face interactions are an opportunity for us to connect directly with the people who craft our products and to bring their stories to you. Another way we create connections is through artisan partner visits to our offices here in the U.S. We hosted nine partner organizations in 2015 and were able to share product feedback, show them competitive market information, and learn more about their organizations.
Serrv’s Product Development and Marketing teams collaborate to make each season’s catalogs successful.
Fair trade conferences are also a wonderful opportunity to connect with others who share our vision and to discuss strategies to strengthen the fair trade movement. In 2015 we attended the Fair Trade Federation conference in California and the World Fair Trade Organization conference in Italy. Caring for the environment is also a key value for Serrv. We realize that climate change is closely linked to poverty, and that to address one is to fight the other. We have always recognized the connections between people and planet, and have reaffirmed our dedication by launching an environmental policy in early 2015. This new “Eco Policy” provides guidelines on how we purchase items, how we travel, and gives full-time employees paid time to volunteer for an environmental cause. Learn more about our new policy on the next page. Though we work hard to offer beautiful, high-quality handcrafts and foods, our overarching mission is a dedication to poverty reduction. Proceeds from sales of our products, combined with donations from our supporters, make our fair trade and development work possible. In addition, these funds provide direct financial assistance for our partner groups when they need it most. In April 2015 a series of disastrous earthquakes struck Nepal and Serrv has donated over $20,000 to rebuild homes and workshops. Bombolulu Workshops in Kenya also experienced sudden tragedy when a fire burned down their newly renovated showroom and Serrv has given funds to help them rebuild. Samuel Masih, founder of Noah’s Ark in India, talked about social programs with our Marketing team. You can watch a video about these programs at youtube.com/serrvtube.
Every one of our achievements translates into opportunity and success for our artisan and farmer partners.
training & education
At Turqle Trading in South Africa, 2.5% of sales from each product benefits the Fair Trade Trust, a fund which pays for personal development courses, HIV/ AIDS awareness and prevention classes, and school fees for employee’s children. Last year, this meant holding 110 group education classes and putting 143 children through school! Learn more at serrv.org/aboutus
We look forward to expanding this impact in 2016!
Serrv International • A nonprofit organization
2015 Annual Report • page 3
SERR V R EAFFI R M S A C O M M I TM E N T TO TH E EN VI R O N M EN T Environmental degradation is linked directly to poverty in much of the world. We recognize that our mission to eradicate poverty cannot succeed without a thriving environment and healthy, sustainable practices. All of our work focuses on improving the lives of our artisan partners. We work closely with them to ensure they use high quality, sustainable, and safe materials. They are dedicated to creating processes and procedures that benefit their local environment and community, and we believe our role is to help them reach these goals. By continually striving to make our products as earth-friendly as possible, they are good for the artisans, good for you, and good for the earth. Serrv’s graphic designer Danielle Alling, left, spent her volunteer time helping to maintain Wisconsin’s Ice Age National Scenic Trail.
At our two locations in Madison, Wisconsin and New Windsor, Maryland, Serrv staff incorporate sustainability into all aspects of our operations. From office practices to shipping and receiving, we aim to conduct our business consistent with high environmental standards. H A NDCR AFTS AND FO O D S
empowering women
We have environmental guidelines for the materials used in the products we purchase and most of our food items are organically grown. As our products are made by hand, minimal electricity is used in production. PA R T NE R S
Our artisan and farmer partner organizations invest in protecting and healing their local environments through projects such as wastewater treatment, tree reforestation, and solar lighting. T R A NSPO R TATI O N
The majority of Serrv products are shipped by sea freight, which is much less polluting than air freight. We also encourage our staff to walk, bike, bus, or carpool to work. P U R CHASI NG
Serrv has purchasing guidelines for our office supplies to ensure our cleaning and paper supplies are environmentally-friendly choices. Women with MarketPlace: Handwork of India are involved in decision-making at many levels of the business. Organized into 11 independent cooperatives, the women work together not only to create beautiful handmade clothing but to plan and manage social programs that benefit their families and communities. Learn more at serrv.org/aboutus
R E DU CE , R E -USE , R E CYCLE
We strive to reduce our waste by reusing packaging materials, encouraging reusable products, and recycling. Recycling is required in both of our locations. We also utilize recycled or remnant materials in many of our products and use recycled-content and/ or FSC-certified paper products as much as possible. E M P L OYE E I NCE NTI V E S
Full-time permanent staff are provided with eight hours of paid time per year to volunteer for an environmental cause. Staff are also rewarded for sharing ideas to make Serrv more green.
Serrv International • A nonprofit organization
2015 Annual Report • page 4
P R ODUCER RELATION SHI PS AN D D E V E LOP M EN T Every handcrafted item we offer is the result of collaborative product development between Serrv and our artisan partners. We help them develop marketable products by providing design guidance and occasionally supporting professional designers. We visit our partners often to work more closely with them and give constructive feedback. Your donations and purchases of fair trade products results in organizations with stronger design, marketing, and business skills. All of Serrv’s partners around the world use these skills as a means to fight poverty and improve lives. Our work is based on mutual respect, trust, and transparency. These are some examples of how we implement these principles: • We use the Fair Wage Guide to confirm the local appropriate price before we purchase a new handcraft–this requirement has helped our partners improve their costing. • Serrv has always offered a 50% interest-free advance payment on orders. • When quality issues arise, we have open discussions with our partners about how to resolve them and how to avoid them in the future. • We are able to visit any artisans who make our products and to request photos and information about their lives. • Some of our partnerships have lasted more than 35 years! Serrv is a respected partner and voice in the global fair trade movement. Our dedication to all 10 fair trade principles for more than 67 years is an esteemed model within the fair trade community.
Serrv is a supportive and energetic partner to the Fair Trade Federation and the wider fair trade movement. The principles and practices of fair trade are evident in everything they do.” –Renee Bowers, Executive Director, Fair Trade Federation
Kerry Evans of Serrv’s Product Development team, center, discusses market trends with staff from Mai Handicrafts in Vietnam. These faceto-face interactions are part of what makes our partnerships so strong.
support in timesofneed
After the devastating earthquakes in Nepal last April, many of our artisan partners lost their homes, workshops were destroyed, and families endured the loss of loved ones. With generous support from our donors, Serrv has contributed over $20,000 to provide emergency funds to help our partners rebuild their lives. Learn more at serrv.org/aboutus
Serrv International • A nonprofit organization
2015 Annual Report • page 5
W HE RE WE WORKED Though we provide a wide variety of assistance to our artisan and farmer partners, our greatest impact is through the purchases we make from them every year. We ordered fair trade handcrafts and food from 62 fair trade partner organizations in 26 countries in 2015. The amounts shown below are the sums of spring and fall purchase orders and are not calendar-year based.
COUNTRY Bangladesh Cambodia Cameroon Ecuador Egypt Ghana/Germany
PURCHASES ($) 196,621 34,568 43,080 67,226 4,572 571,018
COUNTRY Nepal Nicaragua Pakistan
PURCHASES ($) 212,052 4,578 12,627
Peru
151,306
Philippines
107,987
Rwanda
3,440
Haiti
91,170
India
868,740
Sri Lanka
7,130
Indonesia
192,250
Swaziland
38,024
South Africa
82,697
Israel
98,273
Uganda
22,799
Kenya
73,057
USA
87,970
Mali Mexico
896 56,460
Vietnam West Bank
GRAND TOTAL
Serrv International • A nonprofit organization
128,202 56,642
$3,215,978
2015 Annual Report • page 6
FI N A N CIA L SUMMARY I NCOME S TAT E M E NT FO R 2 0 1 5
BAL AN CE SH EET AS OF 12/ 31/ 15
REV E NUE
ASSE TS Sales of fairly traded handcrafts and foods
10,043,927
Cash and cash equivalents
1,280,459
Partial reimbursement of shipping costs
642,054
Accounts receivable
679,099
Contributions
194,571
Allowance for doubtful accounts
(12,330)
Other non-operating income
83,216
Inventories
1,699,156
GROSS REVENUE
10,963,768
Reserve for obsolete inventory
(75,000)
Advances to producers and partners
378,527
Credit card, bank fees, and other cost of sales
208,038
Prepaid supplies and miscellaneous accounts
252,535
Contract services
931,493
Equipment and leasehold improvements
76,325
Payments to producers for goods sold NET REVENUE
TOTAL ASSETS
3,789,067
$4,278,771
$6,035,170 LI ABI LI TI E S
EX PE NS E S
Inventory financing payable
1,953,922
Program salaries and benefits
1,883,235
Accounts payable
199,673
Postage and outbound shipping costs
1,376,430
Accounts payable inventory
0
Payment of international shipping for producers
521,995
Payable to partner organizations
57,702
Promotion
614,548
FASB 106 obligation
13,985
Occupancy including warehouse rent
362,155
Notes payable
1,148,500
Program supplies
286,195
Miscellaneous liabilities
104,281
Consultants to assist producers, other services
59,612
Interest on advances to producers and inventory
119,959
Donations to partner organizations
54,492
Miscellaneous program expenses
62,367
Volunteer expenses
30,292
Telephone
32,994
Travel
28,754
Grants to producers, producer development, and special projects
35,216
PROGRAM EXPENSES SUBTOTAL Administrative and fundraising
TOTAL LIABILIIES
$3,478,063
NET ASSETS
$800,708
TOTAL LIABILITIES AND NET ASSETS
$4,278,771
For a complete copy of our audited financial statements, please contact us at 410.635.8755.
5,468,244 736,839
TOTAL PROGRAM & ADMINISTRATIVE EXPENSES
$6,205,083
CHANGES IN NET ASSETS
($169,913)
Serrv International • A nonprofit organization
2015 Annual Report • page 7
W O RDS OF GRATITUDE Our important work would not be possible without numerous supporters and fair traders around the world. First and foremost, we want to express our gratitude and admiration for the artisans and farmers who strive to succeed in challenging circumstances. They face poverty, civil unrest, weather extremes, inadequate infrastructure, and more, and yet are firmly committed to their fair trade partnerships. We thank our Board of Directors for their unwavering dedication to our mission and our potential; our individual, store, and church customers who grow the fair trade movement in the U.S.; donors who generously share so that others have new opportunities; lenders including individuals, organizations, and Shared Interest UK who make possible interest-free advanced payments to artisans and enable our capacity to grow; volunteers who dedicate time and energy to bringing our handcrafts and foods to the U.S. market; and our friends in the fair trade movement—particularly those in the Fair Trade Federation, World Fair Trade Organization, United Methodist Committee on Relief, and Catholic Relief Services. We also thank MarketPlace: Handwork of India, an exemplary fair trade women’s organization based in Mumbai and Chicago, for whom we provide customer care and warehouse services and share a common vision. Last but not least, we thank all of our staff who devote their careers to the mission of Serrv. Serrv has benefited from staff who range from part-time to full-time, from newcomers to people with us for more than 30 years!
S ERR V IN TERN AT I O N A L BO ARD O F DIR E C T O R S Cathy Dowdell Chair of the Board Tom Greenwood Vice-Chair Darian Griffin Treasurer Matt Greget Secretary Milan Bhattarai Lora LaDew Jacqui MacDonald Tim McElwee Frank Millero Laura Sweitzer Bob Chase, CEO/President Nonvoting member
These global connections with Serrv combine to make the world a better place.
O PERATIO N S C E N T E R 500 Main Street PO Box 365 New Windsor, MD 21776
ADM IN IS TRATIV E O F F I C E 2901 International Lane, Suite 200 Madison, WI 53704
serrv.org 1.800.423.0071
Women from NAWOU in Uganda smile with their children.