Strømme Foundation Annual Report 2008 by Strømmestiftelsen

STRØMME FOUNDATION ANNUAL REPORT 2008

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Contents

Introduction International Section - Highlights 2008 Regions, Countries and Outreach in different sectors West Africa Highlights 2008 East Africa - highlights 2008 South America - highlights 2008 Asia - highlights 2008 Strømme Foundation Project Area Communication and Fundraising Quality Assurance Report from the Strømme Foundation Board for 2008 Strømme Foundation Activity Account Strømme Foundation Balance Sheet 31.12 Strømme Foundation Cashflow (The indirect method) Accounting Principles Notes Auditor´s Report for 2008

2008 Annual Report – Introduction

3 4 5 6 8 10 12 14 16 18 20 23 24 26 27 28-37 39

The year 2008 had been an exceptionally productive year by way of preparing the ground for planning for the future. The organisational review of Strømme Foundation (SF) by Norad provided specific recommendations. The report further confirmed the direction in which Strømme Foundation had already planned to focus its efforts on the next five years. Following a consultative process, Strømme Foundation’s fiveyear master plan was prepared during the year. In addition, an application to Norad with a five-year strategic plan was submitted for core funding. The four regions continued to succeed in enabling people to climb out of poverty, focusing on microfinance and education for development. All development interventions were aimed at promoting life with dignity among the poor and marginalised. This was possible because Strømme Foundation and its partner organisations kept a focus on creating an environment in which the people themselves become promoters of their own change of life. SF and the partners recognise that only a well informed and organised community is able to reach levels of selfdevelopment. During the year more than 900 000 people directly benefited from SF’s interventions. As in the past, particular focus was on girls and women. In microfinance alone approximately 600 000 people had access to SF’s microfinance services. Indirectly, at five members per family, nearly 3 million people benefited. Another important event of the year was SF’s efforts in successfully developing and submitting an application to Operation Day’s Work (Operasjon Dagsverk) which focused on adolescent girls in Bangladesh. With funds from OD, in the next five years, over 100 000 adolescent girls will benefit. The Board approved establishment of Strømme Microfinance Limited from January 2009.

based partnerships with its constituent members and stakeholders both in the South and North. As a result, thousands of out-of-school boys and girls were able to get back into the formal schooling system in West Africa after attending a nine-month accelerated learning programme (Speed Schools). Thousands of women were able to form self-help groups to save and lend money to each other in West Africa, Uganda and South Sudan. Adolescent mothers in Peru who had undergone traumatic experiences were able to regain self-confidence and take control of their lives and move forward. Early marriage among young girls in Bangladesh is declining. Women with microfinance interventions were not only able to earn an income, but were also able to improve their status in the family and community. Access to girls education in particular, and opportunities for women’s gainful occupation had been one of many areas of intervention during the year. For the first time in 2008 Strømme Foundation presents consolidated accounts including all the microfinance operations, the full details of how and why this has been done are given in the Board report and the accounting principles. The inclusion of the full microfinance portfolio of loans significantly increases the value of the equity, but also the risk of currency fluctuations as the loans are denominated in foreign currency. In 2009, there are plans to transfer all of the assets into a fully owned subsidiary; Strømme Microfinance AS, in order to improve the management of microfinance and reduce the risk to Strømme Foundation.

Strømme Foundation looks at the world-wide economic downturn with concern and hopes it does not affect its plan to reach the many poor people. Once again they are the most vulnerable and may be affected harder by the «credit crunch» than any!

Øyvind Aadland Secretary General

Geir Magnus Nyborg Chairman of the Board

Strømme Foundation acknowledges that it would not have been possible to successfully complete another year of meaningful journey with the people in need without value

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International Section – Highlights 2008

Regions, Countries and Outreach in different sectors

Region Country

Microfinance F M

East Africa Uganda Tanzania Sudan Kenya Rwanda

The Programme Department and Microfinance Department which constitute the International Section of Strømme Foundation have had quite a few successful milestones during the year. The first quarter witnessed an Organisational Review of Strømme Foundation (SF) by Norad. The purpose of the review was to establish a platform for further dialogue between Norad and SF before assessing a renewed long-term agreement from 2009 onwards. The report stated that the results of SF’s activities and interventions are both in accordance with the Norwegian policy priorities and also relevant to partner organisations and the target groups’ needs. The assessment of SF’s support activities confirmed the organisation’s professional, financial and administrative capacity to carry out programmes under the long-term agreement period with Norad. During the year, the International Section prepared and submitted to Norad SF’s Five-Year Strategic Plan (2009-2013) for Core Funding. The major shift in terms of long-term planning, when compared to the earlier one, was to focus on a long-term strategic plan instead of an activity plan. Furthermore, for the planning period 2009-2013, the number of countries was reduced from 17 to 12 besides focusing on a few thematic goals and intervention lines. The two sectors – Education and Microfinance ¬continued to play a crucial role, each one complementing and reinforcing the other in the task of eradicating poverty. During the year, in the Education Sector, all the four regions promoted education as a community concern. Together with

its partner organisations, SF played a catalytic role in improving access, retention and completion of basic education – particularly of girls. Interventions in the education sector also promoted the process of empowerment, particularly of women, emphasising the equitable access to and control over resources as well as basic services, in the household and the community. The Microfinance Sector operates in close relationship with the market and civil society. SF’s partners are continuing to develop as they grow and respond to the evolving market. More people are getting access to a safe place for their savings while finding access to credit. The money earned after repayment is invested among other things in developing their businesses, being able to send their children to school and saving as insurance for the future. The financial crisis has hit the commercial sector hard, whereas the Microfinance sector has escaped a similar crisis. However, the eventual victims of the financial crisis are the poor.

Education F M

254 895 112 351 153 772 57 907 80 033 43 629 2 703 921 12 662 8 570 5 725 1 324

46 144 7 462 4 736 12 215 6 640 15 091

58 266 6 764 4 621 14 822 17 989 14 070

Grand Total

301 039 170 617 161 234 64 671 84 769 48 250 14 918 15 743 19 302 26 559 20 816 15 394

471 656 225 905 133 019 30 661 45 861 36 210

63,8% 36,2% 71,4% 28,6% 63,7% 36,3% 48,7% 51,3% 42,1% 57,9% 57,5% 42,5%

107 535 244 96 361 8 186 2 744

48 111 39 881 5 172 3 058

155 646 244 136 242 13 358 5 802

69,1% 30,9% 100,0% 0,0% 70,7% 29,3% 61,3% 38,7% 47,3% 52,7%

230 001 36 606 165 313 17 263 46 436 9 594 4 062 4 262 14 190 5 487

266 607 182 576 56 030 8 324 19 677

86,3% 90,5% 82,9% 48,8% 72,1%

13,7% 9,5% 17,1% 51,2% 27,9% 40,1% 37,1% 45,9%

50 886 244 48 138 2 504 -

150 150 -

27 167 18 741 5 682 2 744

26 247 18 017 5 172 3 058

Asia Bangladesh Sri Lanka East Timor Burma

178 925 133 644 36 091 9 190

6 742 1 186 5 069 487

44 284 31 669 10 345 2 270 -

23 114 16 077 4 525 2 512 -

6792 1 792 -

6750 1 750 -

South America 1 269 Peru 1 269 Bolivia -

92 92 -

17 564 11 771 5 793

12 518 7 599 4 919

18 833 13 040 5 793

12 610 7 691 4 919

31 443 20 731 10 712

59,9% 62,9% 54,1%

17 17

7 7

1 127 1 110 17

6 121 6 114 7

7 248 7 224 24

15,5% 84,5% 15,4% 84,6% 70,8% 29,2%

658 535 274 065

932 600

70,6% 29,4% , ,

Global CHRISC ACT NOW Total

485 975 119 335

135 176 120 152

29482 21 714 18 126 11 214 -

Total M F

West Africa Mauritania Mali Burkina Faso Niger

During the year, more than 900,000 people, 70.6% of whom were female, benefited with SF’s interventions. This was possible by partnering with 131 local partners who implemented 157 projects to reach out to the poor and marginalised people. Strømme Foundation’s Development Policy pinpoints three crosscutting issues, i.e., gender equality, environmental sustainability and cultural freedom. Strømme Foundation also considers these issues as premises to secure long-term and sustainable change in accomplishing its main goal; to eradicate poverty. During the strategic planning period 2009-2013, the cross-cutting issues will be implemented. As a first step towards this direction, an assessment tool has been developed for field testing.

Intergrated & others M F

37 384 34 578

125000

250000

375000

500000

South America

West Africa East Africa

Asia

Microfinance Education Others

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West Africa – Highlights 2008

Speed School and Community Managed Microfinance (CMMF) (Self-Help Women’s Savings Groups) has been the main focus during 2008 in this region. While the Speed School programme was implemented in Mali, Burkina Faso and Niger, the CMMF was implemented in Mali and Burkina Faso. Speed School is an accelerated learning programme aimed at targeting out-of-school boys and girls in the age group of 8-12, with a view to bring them back into the formal education system. One of the highlights of the year was the signing of an agreement with the governments of Niger and Burkina Faso for the Speed School programme as a link to the formal schooling system. The agreement with Niger government was signed in February 2008. The agreement will last for four years at the end of which the government will evaluate the curriculum for possible official recognition of Speed Schools. In Burkina Faso, the agreement was signed in November 2008 for a three-year period. In Mali, the government carried out a study of the Speed School programme in May 2008 and analysed the relevance of Speed Schools to primary education. The report of the study recommended extending the period of the Speed School course from 8 to 9 months. In addition, the government asked the regional governments to facilitate transfer of Speed School children to formal schools. During the year, 8,241 children were transferred to formal schools. The Speed School programme is growing rapidly as its popularity spreads in the region. In some of the villages in Mali, all formal primary schools serve as potential host schools for speed school graduates. In other cases, the potential host schools are known and identified in advance. In Burkina Faso, 64 formal host schools

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are targeted by the 72 speed schools, whereas in Niger 44 formal schools are targeted by 44 speed schools. In January 2009, the three ministers of Education from Mali, Burkina Faso and Niger visited the Norwegian Government and Strømme Foundation (SF) in Norway, and demonstrated their continued support of this initiative through formal and informal meetings at all levels. Community Managed Microfinance continued to grow in Mali and Burkina Faso. A total of 2,262 new groups with 49,190 women were formed in the two countries. These groups were motivated to save and lend in addition to strengthening their knowledge base on malaria transmission, prevention and treatment. Community based and mobilised funds have allowed community Managed Microfinance(SMMF) to set repayment rates that they can afford to comply with. This demonstrates an understanding of the lessons being taught by the facilitators as these groups have been able to grow their funds through savings and collecting repayments with interest from group members. SMMF enable women to access funds for household needs including covering some of the education costs of their children. By implementing the SMMF in the same communities as Speed Schools, SF has ensured a better impact on the family unit through the women’s groups’ activities that include sensitising group members on better health practices, participation in community affairs and the importance of literacy including educating their children. This approach encourages more women to be involved and participate because they witness results in their lives and those of their children.

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East Africa – Highlights 2008

During the year, Strømme Foundation (SF) was able to reach out to more than 470,000 people in Uganda, Tanzania, Rwanda, Sudan and Kenya by working with 43 partners, implementing 46 projects. SF’s work in South Sudan is expanding. In 2008, the region successfully secured a bid from the Sudan Recovery Fund managed by UNDP. As a consequence, in 2009, SF will expand its work in Jonglei state; one of the most marginalised states of Southern Sudan. Interventions will be in both Education and Community Managed Microfinance (CMMF). Strømme Microfinance East Africa Ltd continued another year of good performance. Financial and administrative efficiency were improved as well as operational self sufficiency. For the second year running, the company has broken even. The portfolio grew by 18% and at the same time had a high quality portfolio that was cost effectively maintained. Through the Microfinance interventions, SF had enabled poor people (the majority of whom were women) to have access to financial services. The access to financial services for poor people resulted in people being able to save, borrow and also start new business enterprises and/or expand and diversify their small businesses. Discussions with the poor people revealed that there had been improvement in the standard of living. For example, the people reported an increase in household incomes which had led to better and improved nutrition, ability to access medical assistance when family members were sick, able to support children in school. Some of them were able to acquire assets like land and build small permanent houses. Among the Microfinance partners, seven were Community Managed Microfinance partners using a Self Help Group approach. Through this approach about 9,730 (79% women) poor people, whom it was thought was not able

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to save and run businesses had proved that the very poor could save and bring a difference to their lives. By the end of the year they had saved about USD 305,554 which they were using for on-lending among themselves. Interventions in the education sector were also successfully implemented. SF partners in the region contributed to increased access to basic quality education in the poor/hard to reach communities of Eastern Africa. A net increase in enrolment of about 15% was achieved in the communities. In terms of quality education, in Rwanda for example, prior to SF’s interventions through the partner organisations, only 2.9% passed the 1st grade. However, after three years of intervention, 89.4% were able to successfully complete the primary education cycle in Grade 1. The learning environment in the schools supported by SF partners had also improved. This had contributed to an increase in enrolment and retention of pupils. Teacher training in Rwanda and also in South Sudan was successfully undertaken. SF had significantly contributed to the training of teachers in English, when earlier in Rwanda, French was the medium and Arabic in the Sudan. Training of teachers contributed to improve quality of education in both Rwanda and Sudan. In Northern Upper Nile, where SF has been part of a consortium of partners funded by the European Commission, SF’s contribution was publicly recognised by the State. A net increase in enrolment of 40% was attained in this region, where basic education had for many years been largely non-existent. With systematic sensitisation of the communities, people have begun to value education, particularly of girls’ education. With the collective efforts of all the stakeholders it has been possible to create access and opportunities for economic empowerment and children’s education.

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South America – Highlights 2008

SF in South America continued to focus its interventions on the most vulnerable people, with emphasis on children at risk, adolescent girls and women.

The region continued to make efforts to focus on results-based management. In this process, suitable tools for monitoring the planned interventions were developed during the year.

During the year, 18 projects were implemented by 11 Peruvian and 3 Bolivian partners benefiting 31,443 people of whom 60% were female.

Under the Act Now youth exchange program, three youths were in Norway, whereas nine from Norway were in Bolivia and Peru.

In Peru, a pilot project implemented by FOVIDA focusing on teenage mothers, and another project implemented by Communications Studies Institute (IEC) building capacities of community leaders were successfully concluded. Similarly, a pilot project focusing on indigenous Bolivian children by System of Choirs & Orchestras (SICOR) was completed. A long-term plan aiming at empowering marginalised children and young people in remote villages through the formation and development of musical schools was prepared. In the Andean mountains of Peru, SF is working in Anchonga, one the poorest areas of the country. The target groups include the most vulnerable and excluded indigenous and internally displaced people. During the year, with focus on early childhood care and development, mothers learnt how to care for their children, teachers were trained in local language, and communities were mobilized through for instance cultural activities among youths and children. As in the previous years, SF continued to focus on building capacity of partner organizations, thus enabling the partners to improve qualitatively in terms of planning, implementation and documentation of results.

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In Bolivia, many street children who were taken into Alalay homes, made a personal decision to enter the therapeutic program. As a result, they were able to re-enter the mainstream by integrating into the society. Similarly, promotion of music by SICOR among adolescents and young people had not only provided them skills but most importantly brought changes in their day-to-day life. The communities also made conscious efforts in reducing domestic violence, and thereby promoting societal improvement. The parents undertook an ongoing follow-up of their children’s performance in schools, helped them with their homework and visited schools regularly to interact with the teachers. In Peru, interventions targeting adolescent boys and girls with various activities such as sports and games, had significantly contributed to development of leadership skills, self-esteem and reduction in violence. Local governments in Peru and Bolivia have also been very cooperative, since the interventions targeting street children and adolescent girls/mothers were closely linked to their own priorities such as education, violence and social risk to adolescents.

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Asia – Highlights 2008

During 2008, Strømme Foundation (SF) in Asia was able to reach out to more than 266,000 people in Bangladesh, Sri Lanka, East Timor and Myanmar by working with 45 partners, implementing 56 projects. The partner organisations continued to focus on strengthening the civil society by empowering thousands of socially and economically excluded communities with their active participation. SF’s focus was also on building capacity among the partner organisations. In Bangladesh 182,576 people benefited from SF’s interventions in Education and Microfinance sectors. Cyclone SIDR hit Bangladesh late 2007, and flood victims were assisted with immediate relief assistance in addition to rehabilitating the victims. In education there was a significant reduction in school dropouts (5%). Retention of children in schools was estimated at 93%. Shonglap, the community based adolescent education programme received greater attention, acceptance and cooperation of the communities. It demonstrated a remarkable change in knowledge, perception, awareness and analytical ability of the adolescents. 80% of the girls who had earlier discontinued schooling, decided to continue formal education. This change was possible because the girls became familiar with life-skills in learned in the Shonglap programme. In Microfinance, at least 52% of women had improved their housing condition and household assets, and 78% of them had increased their income. In Sri Lanka 56,030 people benefited with interventions in Education and Microfinance sectors. The focus in Sri Lanka was in strengthening the civil society through economic and social

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empowerment as well as capacity building of partner organisations. Provision of financial services focusing on women’s groups was a key feature during the year. As a result, 60% of women were engaged in self-employment with increased earning capacity. Their capacity to provide reasonable healthcare for their children and other facilities necessary for their education also improved. Extension of educational opportunities through strong parent teacher associations, formation of children’s clubs and training of partner organisations benefited 60% of children at risk with proper education. In the DREAM project (Development and Rehabilitation of the Economy of the poor through Alternative Means), in Sri Lanka a large number of vulnerable poor, with access to financial services, improved the family income. SF’s interventions in East Timor focused on facilitating informal groups to become sustainable community based organisations (CBOs). The CBOs were assisted in undertaking various activities such as provision of water and sanitation facilities, construction and renovation of schools, coffee seedling production, etc. More than 8,000 people were benefited. In Myanmar, according to the evaluation findings the impact on 9,677 microfinance clients had been positive; “.. They have increased income to reduce food insecurity, increased expenditure for health, education and sanitation; participants have formed assets in the form of houses, land, business capital, household durables, and cash. Some participants are increasingly borrowing larger loans and diversifying to trading and other non-farm businesses.” Similarly 10,000 people, who had access to foot pumps for irrigation were able to effectively use the pump due to its design and easy to handle.

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Strømme Foundation project areas

Global

CHRISC ACT NOW Project Support: 5 911 893 Number of partners: 2 Number of projects: 2

West Africa

Mauritania Mali Burkina Faso Niger Project Support: NOK 18 889 438 Number of partners: 28 Number of projects: 36

Asia

East Africa

Uganda Tanzania Sudan Kenya Rwanda Project Support: NOK 30 492 058 Number of partners: 46 Number of projects: 50

Bangladesh Sri Lanka East-Timor Myanmar (Burma) Project Support: NOK 31 270 048 Number of partners: 45 Number of projects: 56

South America

Peru Bolivia Project Support: NOK 9 344 546 Number of partners: 14 Number of projects: 18

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Communication and fundraising

8% 4%

Much of what Strømme Foundation is able to achieve is due to the generous support of our donors and partners, who provide financial resources for our programs around the world. Despite the emerging global recession private income in 2008 reached 59, 8 million NOK, only 2 % decline from our 2007 “all time high”. We are very pleased with this and we would like to thank all our donors, partners and staff for making this possible. The biggest achievement for the Communication Department in 2008 was being appointed as the 2008 Operation Days Workorganisation. Operation Days Work is the largest solidarity campaign among pupils in Norway. On October 31st, almost 180.000 pupils all over Norway worked for one day, resulting in a 30 million NOK grant to Strømme Foundation’s project “Shonglap”. The result will enable us to empower 100.000 adolescent girls in Bangladesh. The amount will be allocated during the period of 2009-2013.

Fixed-term donors: 16832 - Friend at Heart: 12576 - Brobygger: 3650 - Fattigdomsbekjemper: 324 Total number of dono donors: 23006

Strømme Foundation believes in networking to develop the value chain in resource mobilization for development issues. Operation Days work, as well as a new collaboration agreement with KRIK (Christian Sports Contact), gave us a unique opportunity to position ourselves as a powerful development organization among youth in Norway. Outreach Norwegian children/youths: 18.323

(SBP) generated two new partners in 2008. At the same time SBP didn’t lose any existing partners despite the global recession. SBP launched a new area of commitment – a focus towards Major Donors. We believe this program ties together the network between companies and their investors and stakeholders, and strengthens Strømme Foundation’s position towards the corporate sector.

Information/Media

Fundraising activities within the Culture Initiative are targeting institutional partners. We would like to use the opportunity to express our gratitude to Cultiva - Kristiansand kommunes Energiverksstiftelse, Vest-Agder County and the Norwegian Ministry of Foreign Affairs for their financial support. It is also a pleasure for us to announce that Vest-Agder County accepted our invitation to take part in the establishment of an independent entity dealing solely with culture and development issues. This organisation - Centre for international culture cooperation - will be in operation from June 2009 - as a joint venture by Vest-Agder Fylkeskommune and Strømme Foundation.

Kindergartens Flatefjell Solkollen Læringsverkstedet Sagatun Primary schools Jordet

THANK YOU! Institutional funds Norwegian Ministry of Foreign Affairs (UD) Norwegian Agency for Development Cooperation (NORAD) Geneva Global (US foundation) Fredskorpset Norway (The Norwegian Peace Corps) Vest-Agder Fylkeskommune Aust-Agder Fylkeskommune Cultiva

Strømme Foundation works with the media to focus on development issues and to raise attention on our intervention lines. We are focused on how we can promote our work and development issues in general trough the media. We also promote information to a broad audience trough our own magazine “Help for Self-help” and our website – www. strommestiftelsen.no In 2008 the webshopp www.levebrod.no was launched.

Main Partners:

Partners: Mosvold & Co Ventelo Lauvland Øyeoptikk Hotel Norge Scantrade Formuesforvaltning TeamWorks Valero Dale+Bang Baker Hughes Avigo

Additional grants: Taran Management AS Skandinaviska Enskilda Banken AB (SEB) Nordea Finans Norge AS Sparebanken Vest Stål-Consult Color Line Handelsbanken Tor Sandal Revisjonsfirma AS Boomerang Media SAS Royal Hotel AS Radisson SAS Hotel Ålesund Bandak AS Absolutt: KRS Electrolux Home Prod Norway AS Pioneer Norge AS Fonn Kontorservice AS Kanal 24 Norge Wold Invest AS Lykkebo Hotell Drift AS Axxe Logistics AS Invivo AS Grønn Strek AS

37 361 visitors to our website, viewing in total 116 738 pages. In 2008 SF has been profiled in different news-media, web, magazines, newspapers etc. in total 493 times in 2008.

Follese Ytre Torridal Sjøstrand Lindås Knarvik Kyvig Borkedalen Skåredalen

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Havåsen Austrheim Lillesund Saltveit Solvang Vettre Rjukan

Secondary schools Lillesand Oasen Haumyrheia Fiskå Tokke Brummunddal Moland

Private funds 16.832 individuals giving on a fixed-term basis 6.174 individuals giving one or several single donations 36 schools contributing with fundraising campaigns 1263 youth engaged in SKRIK campaigns See list of partners below. *

Coorporate Sector / Strømme Business Partner

Number of business partners: 35 Outreach SBP employees: 20.322 Number of Micro Shares: 27

Culture

30%

Strømme Business Partner

Network Group

Individual donors are the backbone in our fundraising. And we would like to express our thanks and gratitude to all of you. In March we successfully re-launched our regular donor program Friend at Heart through a national marketing campaign. However, there is an ongoing challenge to attract new donors to our program. At the same time, our one-time donations increased during 2008.

42%

Figures in millions of Norwegian kroner 2008 Public Sector Grants: 54.5 MNOK Individual Donations: 10.4 MNOK Fixed Term Donations: 38.3 MNOK Events Schools and artists: 4.7 MNOK Contributions from other organizations: 10.2 MNOK Corporate Sector: 6.4 MNOK Financial Income: 5.2 MNOK

Strømme Foundation takes no income from lotteries, slot machines or from telephone sales. We want and believe in supporters with engagement and personal involvement in the work of eradicating poverty. We thank all donors and contributors for the commitment and support in 2008. Without your help, none of the work Strømme Foundation does could be done.

Communication and Fundraising work in 2008:

Individual Donors

Tingsaker Moltemyr Collages Drømtorp Koppervik Lyngdal Ringsaker

Ålesund Sirdal Framnes Øvrebø Folk High Schools Ringerrike Sagavoll

Borgund Birkeland Nordhordland Bildøy Viken Molde Lundheim Fredtun

Ringebu Høgtun Universities Universitetet i Agder Ansgar

Mikroaksjonær (Micro Share): Preventor Troll Active Stormberg Omnes Valero Datakameratene as Beckmann Andås begravelsesbyrå Kruse Smith Mosvold & Co Profitbase Stepchange Aspelund Eiendom Inventas produktdesign Jens Knutsen Mek. Verksted Øyvind Reinhardsen Arne Sørlie Frank Abrahamsen Vegard Hansson Grete S. Risvold

Festivals/sport clubs Arena Skjærgårds M&M Barn er bra Verden er vår Øygard IL Brumunddal IL Søgne IL

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Quality Assurance Focusing change Strømme Foundation is focusing on, and emphasising the importance of, establishing measurable goals and report more on outcome results – significant change – for our target groups. In the fairytale “Alice in Wonderland” it is said that if you don’t know where you are going, any road will get you there! We think that establishing clear, measurable goals for all our interventions are crucial and important success criteria’s for Strømme Foundation. This will also secure more predictability for partners and our work in the regions. From what we have done to what we have achieved The term “results” can be divided into three different levels: Output and outreach is about what kind of activities or services we, together with our partners, have delivered to the poor. This can be workshops, capacity building, financial support or any other kind of services to our target groups. Outreach is number of people reached. Outcome is the next level of results (see illustration), and maybe the most important one to report positive change for our target groups. As a professional development organisation, we are focusing on long term sustainable change for civil societies and individuals, compared with charity and service delivery. We must be able to measure the change, the outcome, if we shall be able to manage it. (Fig. 1) Why do we want a result-focus? Strømme Foundation wants to improve and we think that a result focus will help us to do so. By showing results, we also legitimise all individual and institu-

tional donors’ interventions, and we are able to show efficient stewardship of resources. Results must be defined in close collaboration with both target groups and other stakeholders. Different techniques and methods SF believes that we need to contextualise tools and methods at grass root level in order to measure change or outcome results in a good way. We think that both quantitative and qualitative approaches are necessarily adapted for different purposes. In West Africa we have started discussions with a team from Berkeley University in California to evaluate our Speed School Interventions. They will use a so called “randomized approach” which is a quantitative method not very much used in development collaborations within development education. The idea is to compare children from villages with Speed Schools with children from villages without Speed Schools, and look at the possible differences during a period of time. A comprehensive approach In Strømme Foundation, Quality Assurance is also about a comprehensive approach to the entire organisation where Leadership, Processes, Continuous Learning, Innovation and Improvement, Stakeholder relationships, and People Development and Involvement are among the important aspects. Strømme Foundation is a channel connecting people who want to help, with people who need a just chance. It is our obligation to make sure that this channel is as professional and effective as possible in order to achieve our mission: To eradicate poverty. (Fig.2)

Fig. 1

Fig. 2

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Report from the Strømme Foundation Board for 2008 Strømme Foundation (SF) is committed to empowering people to overcome the root causes of poverty. SF’s identity is based on Christian values, emanating from the life and teachings of Jesus Christ. SF plays a catalytic role in empowering the marginalised sections of society to have access to basic needs, resources, and decision-making bodies and thus aim at promoting a just society. The Board’s work The Board has had 6 meetings in 2008 and dealt with 51 issues. The following Board members were re-elected; Liv Næss and Geir Magnus Nyborg (Chairman). In addition one new board member, Svein Ove Faksvåg, who was elected to replace Solfrid Lind. The Board’s work has concentrated on a five year “Master Plan” for SF that will provide the strategic direction for the organisation in the period 2009 to 2013. The Master Plan SF has undergone a planning process lasting more than six months and involving head office staff, regional office staff and our partners in the countries in which we operate. The resulting “Master plan” is a global plan that sets the scope for Strømme Foundation’s total activities, its development work internationally, plus information and fundraising work in Norway. It is also a strategic plan that sets out the main strategic choices that Strømme Foundation is making in our approach to development, the priorities on which our work will focus, and how the organisation will need to change in order to adapt to the overall direction. Choice of Countries SF attaches great importance to its decentralised profile and believes this feature will facilitate closer interaction with local civil society organisations. The location of the regional offices has historical explanations. Each office is responsible for programmes in more than one country and there has been a certain dynamism since the offices were established with regard to the countries where SF is active. The Foundation has withdrawn from some countries and has added others. SF has established the following principles for selecting a new programme country. These are based on the realisation that SF programmes are situated in larger contexts that to a large extent will determine how well SF will reach its goals. National development and national policies are important preconditions for the outcome and impact of SF activities. Countries will therefore be selected on the basis of: • The Human Development Index (HDI), created by the UN, which includes multi-dimensional measures of poverty. • People living below the poverty line. • Literacy rate. • Socio-political situation within the country. • The degree of interventions by the national government and other actors. • Regional coherence, allowing inter-country fertilisation of ideas and projects. • Opportunities to reach as many people as possible and generate maximum impact. • National and international funding opportunities. • The history of Strømme Foundation’s infrastructure and branding.

In the next five years, SF will work in four regions; East Africa, West Africa, Asia and South America. The countries of operation within the five-year plan are shown in the table below: Regions and Countries REGION West Africa

COUNTRIES Mali, Burkina Faso, Niger

East Africa

Uganda, Sudan, Tanzania and Kenya

OFFICES Regional Office in Bamako, Mali. There is a possibility that SF will need a satellite office in Ouagadogo, Burkina Faso.

Regional Office in Kampala, Uganda, and satellite office(s) in Sudan. Asia Sri Lanka Bangladesh, Nepal and Myanmar(Burma) Regional Office in Colombo, Sri Lanka, and satellite office in Dhaka, Bangladesh. South America Peru and Bolivia Regional Office in Lima, Peru.

Thematic Goals and Intervention Lines

SF has decided to organise its activities within each programme country on the basis of six intervention lines, which, in various combinations, are assumed to achieve a limited set of thematic goals. The intervention lines are basically bundles of activities assembled on the basis of the skills, capacity, competence and experience of our staff and may be thought of as a menu that programme managers can choose from to assemble a country programme. For planning and capacity purposes, SF has limited programming to a maximum of four thematic goals per region. The intervention lines on which SF will concentrate its efforts are: • Provision of holistic pro-poor financial and non-financial services. This refers to the operation of microfinance projects, including preparation and follow-up to ensure proper management of microfinance funds at all levels. • Provision of community-managed microfinance (CMMF). This refers to a model for the management of microfinance resources that involves community groups and group organisation in the management of financial resources. • Strengthening basic education (formal and non-formal). This refers to the whole range of SF’s involvement in strength ening formal basic education as well as concern for children and adults who for various reasons do not fit into the models of formal education. SF has developed alternative models for marginal groups (e.g., street children, young girls) in several countries. • Culture for life skills, leadership and value development. • Empowering adolescents on their rights. • Community empowerment for democratisation.

The Norad review

In January and February 2008 an independent team appointed by Norad undertook an organisational review to coincide with the end of a five year “framework funding agreement” between SF

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and Norad. The review team concluded that there were many positive aspects to SF’s work and some specific challenges related to organisational structure and clearer definition within the education sector. They also commented specifically that SFs financial control was impressive. The team recommended that Norad enter a new five year funding agreement with SF and this has now been signed with a small increase in funding over the previous agreement. The recommendations from the review team have been taken fully into account in the Master Plan.

Consolidation of SFs Microfinance operations

During 2008 Norad confirmed that they will not require any repayment of their grants that have been used in SFs microfinance as recirculating loan capital. This means that for the first time the microfinance operations have been consolidated into SF’s accounts in 2008 using the equity method. During the year the Board approved a revitalisation of Stromme Microfinance AS (SMFAS) through a transfer of all activities and assets in the Microfinance Department over to the shareholding company as 01.01.09 with the following assumptions: • The SF Board is both the General Assembly and the Board of SMF AS. • The CEO of the company will be the General Secretary of SF. • The appointed CEO of SMF AS shall delegate the management of SMF AS including the head office responsibility for all SF’s microfinance activities to the Director of Microfinance. The consolidation of the microfinance operations in 2008 has made a significant impact on the figures, which have also been re-presented for 2007, there is no longer a recirculating “credit component” in the income but the total result for microfinance is included on one line in the activity account and the net assets included on the balance sheet. The fact that the a substantial part of the MF portfolio is with SF means that this microfinance net result and the net assets are included both in SF and in the consolidated figures. The consolidated figures include Strømme Microfinance Asia (Guarantee) Ltd, which operates in Sri Lanka, and Strømme Microfinance East Africa Ltd, operating in East Africa.

Financial Headlines Consolidated Accounts There was a consolidated surplus of 46 million in 2008 compared to 8.4 million in 2007. The dramatic increase is due largely to exchange rate gains as the microfinance portfolio is denominated in foreign currency and the value appreciated significantly against the Norwegian kroner during 2008. Total equity increased by 42.6 million kroner and totals 173.9 million at the year end. The cash flow from operational activities is satisfactory; total liquid funds at the yearend were 24.1 million

kroner and there is satisfactory liquidity in the new year. Strømme Foundation The total income in 2008 was 129.9 million kroner compared to 127.1 million kroner in 2007. Public Sector income decreased from 56.3 million kroner in 2007 to 54.5 million kroner in 2008 the difference being variations in MFA grants for disaster relief . Private Donations have remained stable; 53.5m in 2007 and 53.4m in 2008 and income from the Corporate Sector has decreased from 7.5m in 2007 to 6.4m in 2008 Financial support to projects in 2008 totaled 103.9 million compared to 95.4 million in 2007. The result for the year after change in earmarked capital was a surplus of 8.6 million kroner compared to a 0.9 million kroner surplus in 2007 before microfinance operations are included, including the result from microfinance the result for the year was 37.7 million kroner compared to 1.7 million in 2007. The key figures for SF as a percentage of total costs in 2008 are; Administration 7.1% (7.7 in 2007), Fundraising 11.6% (10.5) and Purpose 81.3 % (81.8). There was an increase in fundraising costs in 2008 due to additional expenditure related to the re-launch of “Friends at Heart”, SFs main product for individual giving. An explanation of how SF has allocated expenditure between administration, fundraising and purpose costs is shown in the Accounting Principles. The Board and Secretary General feel it is correct to present the annual report under the going concern assumption. The organisation is in a good economic and financial position with its footing in the Norwegian fundraising market and its good relations with NORAD and the Ministry of Foreign Affairs.

Working environment and Staff

The working environment in SF is considered to be good. The cooperation with the employees’ unions has been constructive and has contributed positively to the development work. Absence due to illness at the head office was approximately 5 % (2.7 % in 2007) of the total working time including sickness related to maternity. The organization has a company doctor agreement. There were no serious accidents at work resulting in material damages or personal injuries during the year. In 2008 there were 4 (4) women and 3 (3) men in the Board. Among the employees at the head office at the end of the year there were 13 (14) women and 22 (21) men, and 26 (23) women and 51 (46) men worked in the regions (including all microfinance and projects). SF strives for a balance of gender at all levels and is conscious about this when employing new staff. The organisation’s contamination of the external environment will mostly be of an indirect nature. The Board considers this to have minimal contamination effect on the external environment. The organization has no order from the public authorities that has not been complied with.

Financial Risk

The Board continue to monitor SF’s financial risk, which is first

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Strømme Foundation Activity Account and foremost tied up in currency variations. SF’s expenditure is largely in currencies linked to the US dollar or the Euro and with most income in Norwegian kroner exchange rates play a large part in what SF is able to deliver to partners in the South. However, given the nature of SF’s agreements with these partners it is not SF that takes the financial risk but the partners themselves. During 2008 SF entered into fixed exchange rate contracts in order to secure the 2008 and 2009 budgets at the favourable exchange rate between the Norwegian kroner and the US dollar. The organisation has no external borrowing, so there will be no serious consequence for the organisation if the interest rates should increase considerably. The credit risk is tied up to the microfinance business and the decision has been taken during 2008 to transfer the assets of the microfinance operations into SMF AS, a fully owned subsidiary of SF.

Future Perspective – Finance Crisis?

SF has successfully renegotiated a five year framework funding agreement with Norad and the future perspectives are considered to be good for public funding. The board expects the private income to be impacted by the global finance crisis and SF has taken steps to diversify sources of private funding by starting a new partnership with Geneva Global, a US based fund for philanthropists interested in international development work. Having

worked with Geneva Global for the last two years and received significant funding; SF is now entering into a joint venture to seek funds directly from the US and UK. Using Geneva Global’s respected brand name and networks wealthy individuals, trusts and foundations will be targeted at relatively little cost and the early indications are encouraging. Matching US dollar income to expenditure will also reduce currency risk.

Conclusion

The Board would like to thank the leadership team and all the employees for the results in 2008. Collaboration with local partners has been extremely good and through continual competence building at all levels of the organization we have reason to believe that even more people have been given the chance they deserve to come out of poverty.

Note

1 2 3 6

Allocation of the result

• SFs surplus of NOK 8 592 145 is allocated to unrestricted retained earnings. • The surplus of NOK 37 460 797 generated within the Microfinance operation is allocated to restricted Mirofinance Equity within SF.

14a 14b 14c

Kristiansand, 14 May 2009

Svein Ove Faksvåg

Geir Magnus Nyborg Chairman of the Board

Egil Gjesteland 8

Strømme Foundation 2008

Strømme Foundation 2007

Consolidated 2008

Consolidated 2007

54 546 112 53 379 785 6 434 959 10 232 784 129 979 5 157 431 129 881 050

56 315 374 53 477 990 7 484 389 8 772 326 295 667 798 529 127 144 275

Acquisition of funds Public Sector grants Private Donations Corporate Sector Contributions from other organisations Other Income Financial Income Total Acquisition of funds

54 546 112 53 379 785 6 434 959 10 232 784 129 979 4 979 883 129 703 502

56 315 374 53 477 990 7 484 389 8 772 326 295 667 663 769 127 009 515

-14 990 381

-12 212 048

Cost of funds acquisition

-14 990 381

-12 212 048

114 890 669

114 932 227

Gross Available funds

114 713 121

114 797 467

-9 201 816

-9 042 335

Administration costs

-9 289 195

-9 124 445

105 688 853

105 889 892

Available for purpose activities

105 423 926

105 673 022

-69 291 850 -25 009 533 -9 582 197 -103 883 580

-63 842 662 -22 029 649 -9 574 043 -95 446 354

Purpose Activities Project Support - Education Project Support - Microfinance Information work in Norway Total purpose activities

-69 291 850 -6 481 070 -9 582 197 -85 355 117

-63 842 662 -8 849 445 -9 574 043 -82 266 150

1 805 273

10 443 537

Result before change in restricted equity

20 068 809

23 406 871

6 786 872

-9 554 184

Change in Restricted Equity

6 786 872

-9 554 184

8 592 145

889 353

Result after Change in Restricted Equity

26 855 681

13 852 687

29 107 131

797 808

Result Micro Finance

19 197 261

-5 564 851

37 699 276

1 687 161

Result

46 052 942

8 287 836

8 592 145 29 107 131 37 699 276

889 353 797 808 1 687 161

Allocations Transferred to unrestricted reserves Transferred to restricted MF reserve Total Allocations

8 592 145 37 460 797 46 052 942

889 353 7 398 483 8 287 836

Gunvor K. Andresen

Joanna Ilbouudo Kabore

Liv Næss

Olaf Gundersen

Øyvind Aadland Secretary General

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Strømme Foundation Balance Sheet 31.12 Note

9 15 9 10

Strømme Foundation 2008

Strømme Foundation 2007

ASSETS

Strømme Foundation Balance Sheet 31.12 Consolidated 2008

Consolidated 2007

9 303 018 337 999 9 641 017

Long term assets Fixed Assets Property Office furniture and equipment Total fixed assets

12 152 687 597 944 12 750 631

12 282 435 337 999 12 620 434

900 000 120 879 789 3 000 000 1 071 737 125 851 526

700 000 92 057 971 3 000 000 1 514 751 97 272 722

Financial assets Investment in subsidiaries Investment in microfinance Loan to subsidiaries Pension scheme (overfinanced) Total financial assets

220 400 141 473 819 1 071 737 142 765 956

220 400 101 087 652 1 514 751 102 822 803

135 653 455

106 913 739

Total long term assets

155 516 587

115 443 237

2 994 852

2 992 624

Property development

2 994 852

2 992 664

3 823 318 234 500 805 041 941 253 588 362 6 392 474

1 836 164 234 500 824 861 840 614 463 663 4 199 802

Receivables Trade debtors Prepaid expenditure Public duties Intercompany receivables Other receivables Total receivables

2 002 000

1 936 400

23 828 498

23 271 471

35 217 824

32 400 297

Total current assets

170 871 279

139 314 066

TOTAL ASSETS

9 203 985 597 944 9 801 929

Note

Strømme Foundation 2008

Strømme Foundation 2007

3 326 092 3 326 092

EQUITY AND LIABILITY EQUITY

Consolidated 2008

Consolidated 2007

3 326 092 3 326 092

Restricted equity (SF projects) Restricted Equity (MF) Unrestricted retained earnings Result for the year (unrestricted) Result for the year microfinance Currency differences & Donated Equity

14 757 627 101 618 434 6 611 291 8 592 145 37 460 797 2 330 713

21 544 499 97 679 162 6 073 776 889 353 7 398 483 (3 811 049)

171 371 007

129 774 224

174 697 099

133 100 316

2 023 484 150 000 1 475 507 279 744 3 928 735

2 406 080 150 000 762 917 350 000 3 668 997

3 972 605 2 839 000 1 002 448 1 711 708

Founding Capital

Acquired equity 8 15 8

14 757 627 92 454 707 7 179 969 8 592 145 29 107 131 (78 651)

21 544 499 91 676 308 6 290 646 889 353 797 808 (19 409)

152 012 928

121 179 205

Total Acquired equity

155 339 020

124 505 297

TOTAL EQUITY LIABILITY

7 12

3 823 318 234 500 805 041 588 362 5 451 221

1 836 164 234 500 824 861 811 432 3 706 957

Investments in shares and bonds

2 002 000

1 936 400

Bank and cash

24 065 501

23 295 070

34 513 574

31 931 091

190 030 164

147 374 289

2 023 484 150 000 1 475 507 279 744 3 928 735

2 406 080 150 000 762 917 350 000 3 668 997

Long Term Debt Pension obligations Legacy obligations Staff Gratuities in Regional Offices Other Long term debt Total long term debt

3 972 605 2 839 000 1 002 448 1 711 708 211 196 1 866 567 11 603 524

2 877 355 3 419 584 912 550 1 817 838 1 067 688 1 044 757 11 139 772

Short term debt Creditors Unused public grants Unpaid Project transfers Employees tax, social security Intercompany debt Other accounts payable Total current liability

1 878 567 11 404 329

2 877 355 3 419 584 912 550 1 817 838 1 577 648 10 604 975

15 532 259

14 808 769

TOTAL LIABILITY

15 333 064

14 273 972

170 871 279

139 314 066

TOTAL EQUITY AND LIABILITY

190 030 164

147 374 289

Kristiansand, 14 May 2009

Svein Ove Faksvåg

Geir Magnus Nyborg Chairman of the Board

Joanna Ilbouudo Kabore

Olaf Gundersen

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Egil Gjesteland

Gunvor K. Andresen

Øyvind Aadland Secretary General

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Liv Næss

Strømme Foundation Cashflow (The indirect method)

Accounting Principles The financial statements of the Strømme Foundation (SF) are prepared in accordance with the Norwegian Accounting Act and generally accepted accounting principles. The financial statements have also been prepared in accordance with the “Accounting Standard for Notfor-Profit organisations”, produced by The Norwegian Accounting Standards Board. This means that, in place of a traditional Profit and Loss Account, there is an Activity Account which should give the reader a better understanding of how Strømme Foundation has used the resources at its disposal in 2008.

Note Result Profit/Loss from sale of securities Ordinary depreciation Adjustment in the value of securities Change in long term debt Changes in accounts payable Difference between pension costs and payments Non cash income Changes in restricted equity Changes in other current assets and liabilities Net cashflow from operational activity Acquisition of fixed assets Property Development Lillesand Proceeds from sale of property Proceeds from the sale of securities Acquisition of shares in subsidiary Net cashflow from investment activities

5 7

10 7

5 11

Cashflow from financing activities Opening balance of cash and cash equivalents Net change in cash and cash equivalents Closing balance of cash and cash equivalents

2008 8 592 145 586 300 -35 600 642 334 670 411 60 417 -30 000 -6 786 872 -2 192 672 1 506 463 -757 106 -2 228 9 895

2007 889 323 -316 103 477 994 -37 600 538 319 352 304 -99 919 9 554 184 1 877 599 13 236 101 -93 278 3 095 1 591 223

Change in Accounting Principles - Consolidation SF’s microfinance operations have been included in the accounts for the first time in 2008 having previously been dealt with in a note. The reason for this change in accounting policy is that the majority of the capital at work in the system was generated through the recycling of grants given to SF by Norad which was lent to microfinance institutions (MFIs). Until 2008 no written confirmation had been given that the resulting equity belonged to SF but this has now been clarified; Norad will not require any repayment of their grants that have been used in SF’s microfinance as recirculating loan capital. The microfinance operations are partly within SF and partly within daughter companies in East Africa (Strømme Microfinance East Africa Ltd (SMEA Ltd)) and Sri Lanka (Strømme Microfinance Asia (Guarantee) Ltd (SMAGL)). Those elements of the operations that are within SF comprise the Strømme Microfinance Department (SMF Dept), which has a co-ordination function for all microfinance within SF and provides loans to microfinance partners in West Africa, South America and Bangladesh. As the nature of microfinance is from an accounting viewpoint fundamentally different from the rest of SF, the decision has been taken to consolidate the microfinance operations using the equity method. This means that the results from microfinance are presented net in the activity accounts as income and as restricted equity in the balance sheet. These figures appear both in SF’s accounts and in the consolidated accounts because the microfinance operations within SF have not previously been included for the reasons given above, whereas the consolidated accounts include SMEA Ltd and SMAGL.

-200 000 -949 439

1 501 040

23 271 471 557 024 23 828 495

8 534 330 14 737 141 23 271 471

Principles of allocating costs to Purpose Activites Fundraising and Information

Transactions in Foreign currency Costs in the regions are recorded at the exchange rate relating to the most recent transfer from head office, all regional office accounts are recorded at head office using these rates. During 2008 SF entered into forward exchange rate contracts for the US Dollar, more details are shown in note 6. Foreign currency income is recorded at the spot rate on the day of receipt.

Unused overdraft facility

1 000 000

All expenditure directly connected to personnel employed as fundraisers and to solely fundraising activity is classified 100% as a fundraising cost. This includes all direct marketing costs and all costs associated with our main fundraising products “Friends at Heart” and “Bridge Builders”. All expenditure on personnel and activity whose prime purpose is connected to information provision is allocated to purpose activity.

Cash per balance sheet

23 828 495

23 271 471

The Regional Offices

The balance consists of bank deposits and cash holdings

Consolidated Cash in SMF AS Cash in Senter for Cultural Development Cash per Consolidated Balance Sheet

25 006

23 599

212 000

24 065 501

23 295 070

Strømme Foundation has four regional offices in West Africa (Mali); East Africa (Uganda); South America (Peru) and Asia (Sri Lanka) plus two satellite offices in Sudan and Bangladesh. SF works very closely with partner organisations through these regional offices so that the vast majority of our partner-facing work is conducted by staff in these offices and they are therefore considered primarily purpose costs. This includes salaries for all programme staff and the majority of salaries for the regional directors and the accountants who spend most of their time building the capacity and competence of partner organisations and performing audit work to ensure that the money is properly utilised. We have allocated 12.5% of the regional office costs to administration to allow for the costs of administration and accounts for the office itself.

Support for program work from head office Education and microfinance specialists are employed to build capacity and competence at the regional office level and ensure quality, they are 100% purpose. Other head office program department activity is related to report writing and applications with a smaller capacity building role, this is 25% purpose, 75% administration. There is also a monitoring role that is split 50:50.

Other support functions at head office The basis of allocation starts with salaries, which are allocated according to an estimate of the amount of time spent on different activities. Other costs are allocated on the same percentage basis as the salaries within each department. IT costs are allocated on the same basis as the overall salaries allocation, since the primary driver of IT costs is personnel; quality assurance is split 50:50 in line with salaries allocation in the department. The general secretariat is allocated 40% to purpose based on the overall split of the time spent working with the regional directors, partners and advocacy with government in Norway and the countries in which SF operates, compared to administration related to the leadership team and the board and council. Expenses relating to the board meetings and travel for board members are 100% admin costs. We allocate a small percentage of admin and finance salaries to purpose in proportion to time spent with regional staff in financial and administrative competence so that they can pass this knowledge on to the partners. Admin and finance staff that do not travel from the head office are 100% admin.

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Income Income is entered in the accounts according to the gross method. Costs are entered as they accrue, and income when it is realised. Bequests or donations are recorded as income when there is indisputable confirmation of receipt. SF follows strict guidelines concerning earmarked funds, which ensures that these funds cannot be used for activities other than those for which they were donated without specific authority. The Board has set regulations for the handling of earmarked funds when a project is closed. Unused earmarked funds are shown as restricted capital in the balance sheet.

Classification and Valuation of Balance Sheet Items Current assets and short-term liabilities contain items due for payment within one year after purchase. Other items are classified as fixed/ financial assets or long-term liabilities. Current assets are valued at the lowest of procurement cost and actual value. Other accounts receivable are included in the balance sheet at face value after deduction of provision for expected loss. Items in foreign currency are valued at year end exchange rates. Short-term liabilities are recorded at the nominal amount at the time of accrual. Fixed/financial assets are valued at procurement cost, but are depreciated to actual value if the fall in value is not expected to be temporary. Long-term debt is entered at the nominal amount at the time of establishment.

2008 NOK

Individual donations Fixed-term donations Events, schools and artists Testamentary donations Disaster Relief & Rehabilitation Total

9 449 896 38 337 225 4 671 391 714 598 206 675 53 379 785

2007 NOK 9 434 276 39 156 275 3 513 664 1 271 695 102 080 53 477 990

Friend at Heart-sponsorship, registered under fixed-term donations, represents the largest source of income with MNOK 31.2 in 2008 compared to MNOK 32.0 in 2007.

Note 3 – Contributions from Other Organisations Institution

Purpose

Short-term Investments

Geneva Global, USA Geneva Global, USA Geneva Global, USA Läkarmissionen, Sweden Oak Tree, Australia Disaster Response RLF, Sri Lanka HALD international Centre

Speed Schools and Women’s Savings Groups, West Africa Primary Education and Vocational skills, Bangladesh Education and Empowering adolescents, Peru Business Development Services, East Africa School construction & restoration, East Timor Restoration and Recovery - Sri Lanka ACT NOW partner admin support

Short-term investments (shares and share units considered to be current assets) are valued at the lowest of average procurement cost and actual value in the balance-sheet. Received interest and dividend from the companies are entered as other financial income.

Total

Furniture and Equipment These fixed assets are entered in the balance sheet and depreciated over their life span if the life span is more than 3 years and the cost is higher than NOK 50 000. Maintenance of fixed assets is charged to operating costs, while renovation or upgrading is added to the cost value and is depreciated along with the asset.

Shares in Subsidiary Companies and Affiliated Companies Shares in subsidiary companies and affiliated companies are recorded at historic cost.

Pensions Pension costs and the pension obligations are calculated according to the principle of linear earning based on estimated factors for the discount rate; future regulation of salary, pensions and contributions from Social Security, future earnings on the pension fund as well as the actuarial conditions concerning death rate, voluntary resignations, etc. The pension fund is valued according to actual value and is deducted from the net pension obligations in the Balance Sheet. Changes in the obligation due to changes in the pension plans are allocated over the expected remaining contribution period. The same applies to estimate deviations to the extent they exceed 10% of the greater of the gross pension obligations and the pension funds. Arrangements with net obligation are shown as liability and arrangement with net over-financing is shown as financial asset.

Note 1 – Public Sector Grants Donor

Purpose

Norwegian Agency for Dvlpm. Coop. (NORAD) Norwegian Agency for Dvlpm. Coop. (NORAD) Norwegian Ministry of Foreign Affairs (MFA) Norwegian Ministry of Foreign Affairs (MFA) Norwegian Ministry of Foreign Affairs (MFA) Norwegian Ministry of Foreign Affairs (MFA) Norwegian Ministry of Foreign Affairs (MFA) Norwegian Ministry of Foreign Affairs (MFA) Norwegian Ministry of Foreign Affairs (MFA) United Nations Development Program (UNDP) Swiss Agency for Develop. & Co-oper. (SDC) Fredskorpset - Young Fredskorpset - Norway Fredskorpset – Norway Regional Governments, Agder Cultiva, Kristiansand Total

Framework Agreement - Development Programs Framework Agreement - Information Activities Education Programs - Sudan Improvement of Livelihood - Myanmar (Burma) Restoration and Recovery - Sri Lanka (tsunami) Flood and cyclone rehabilitation - Bangladesh Flood Rehabilitation - Myanmar (Burma) Disaster Relief for Victims of Ethnic Riots, Kenya Infrastructure projects, African Cultural Sector Education Intervention - Sudan Speed School Program - Mali Act Now Exchange Program - Hald International Centre South/South Exchange Program - East Africa South/South Exchange Program - Asia Lighthouse at Ilha de Goa, Mozambique Cultural Initiative Strømme Foundation

2008 NOK

2007 NOK

36 620 000 1 045 000 3 200 000 -64 143 5 000 000

35 300 000 962 500 4 699 777 2 000 000 4 900 000 3 334 875 495 300

2 000 000 500 000 1 187 629 366 885 2 341 827 1 073 834 810 080 165 000 300 000 54 546 112

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2008 NOK

2007 NOK

4 726 130 2 406 030 429 648 1 513 002 504 294 616 180 37 500

4 760 493 2 423 524 432 772 1 113 061 34 500

10 232 284

8 772 326

Note 4 – Salaries and Personnel Expenses /other allowances Salaries Norway Social Insurance Payment Pension Costs Other Costs Norway Salaries and allowances Regional Offices. Total

14 424 283 2 246 403 895 543 815 580 5 515 615 23 896 424

12 746 236 1 990 007 1 498 116 747 330 4 934 457 21 916 146

The average number of employees at the head office was 35 (34). This amounts to 32 man-labour years in 2008, compared to 30 in 2007. In the Regional offices the average number was 54, equivalent to 52 man-labour years, compared to 46 in 2007. In addition there were 11(10) employees in microfinance in the South, their salaries are shown in Note 15, and 11 (8) employees in total in Sudan and Myanmar, the cost of whom is allocated directly to the program. The total salary cost for the Secretary General in 2008 was NOK 591 977 plus life insurance of NOK 3 620 and pension contributions of NOK 83 890. The Board members have received no remuneration other than travelling costs. Audit Fees: The cost of the annual statutory audit was NOK 160 000. Fees for certification services primarily connected to NORAD and MFA financed projects were NOK 107 700. Other non-audit services primarily connected to restructuring were NOK 57 300. All amounts are excluding VAT.

2 200 000 1 377 210 946 712

Note 5 – Fixed Assets

100 000 56 315 374

Cost price 01//01/08 Acquisitions/Disposals 2008 Cost price 31/12/08 Accumulated depreciation 31/12/08 Book value 31/12/08 The year’s ordinary depreciation Depreciation rate

These grants are earmarked to specific projects and are shown gross including the administrative support element. Settlement with the donor is made in arrears once a year. Unused capital must be returned. The current framework agreement with NORAD (2003/2008) requires a minimum contribution of 10 % from Strømme Foundation, and allows up to 8% administration support on the project cost. For MFA funded programmes, the self-contribution requirement varies from 0 to 30% and the administration support varies from 0 to 8%.

Note 2 - Private Donations

All figures in NOK

Property Business Premises 413 810 -9 895 403 915 -25 325 378 590 0 0%

14 336 016 58 277 14 394 293 -5 568 899 8 825 395 292 551 2 -10%

Furniture and equipment 651 434 698 829 1 350 263 -752 319 597 944 293 749 20-30 %

Total 15 401 260 747 211 16 148 471 -6 346 543 9 801 929 586 300

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Strømme Micro Finance AS is titleholder for the building site and part of the business premises. Since Strømme Foundation operates with an accounting principle to expense all equipment under NOK 50 000, the majority of the inventory is not included under fixed assets in the balance sheet. For the same reason fully depreciated assets do not appear here. All equipment in the Regional Offices is shown as project cost. Consolidated Fixed Assets There is additional Property in the consolidated accounts with a cost price of 3 076 690 NOK, and a book value of 2 948 702NOK.

Note 6 – Other Financial income/expenditure Financial Income Other Interest income Net Financial Income in the South Other financial income Sale of forward exchange rate contracts Net curr gains/loss in purpose costs Currency Exchange Gains Currency exchange losses Net gains shown in purpose costs

2008 534,920 175,344

2007 385,355 97,071 316,103

4,447,167 5,157,431

798,529

1,428,909 -46,484 1,382,425

476,427 -274,764 201,663

Consolidated Financial income/expenditure. The net financial income is reduced within the consolidated accounts by small losses in SMF AS to 4 797 883 in 2008 and 663 769 NOKin 2007.

Note 7 – Investments in Shares and Bonds All figures in NOK Market based shares Market based bonds Total

0 1 936 400 1 936 400

Net changes 2008 30 000 0 30 000

Change Accumulated revaluation write-downs 2008 31/12/08 0 63 600 63 600

0 -28 000 -28 000

Strømme Foundation Founding Capital Unrestricted equity as of 31/12/2007 3,326,092 Prior year adjustment Revised balance as of 31/12/2007 3,326,092 Result of the year ex MF Unrestricted equity as of 31/12/2008 3,326,092 Restricted Equity MF Donated Equity MF Result for the year Currency fluctuations TOTAL EQUITY

Retained Earnings 7,699,724 -519,755 7,179,969 8,592,145 15,772,114 92,454,707

Total 11,025,816 -519,755 10,506,061 8,592,145 19,098,206 14,757,627 92,454,707 29,107,131 (78,651) 155,339,020

Consolidated Accounts

During the year SF made the decision to purchase forward exchange rate contracts for the US dollar in order to secure the budget for the end of 2008, all of 2009 and the start of 2010. Towards the end of the year, as the global finance crisis started to have a significant impact on the value of the Norwegian kroner against the US dollar and at the same time there were some uncertainties about income from private sources SF sold the 2010 contracts. All of the 2009 contracts remained in place in order to secure the whole of the 2009 budget but the view was taken that it was more prudent to take the gain and liquidity from the sale of 2010 contracts.

Book value 31/12/07

Note 8 Changes in Equity

Book value 31/12/08 30 000 1 972 000 2 002 000

Market value 31/12/08 30 000 2 069 000 2 099 000

Investments are only made with a view to getting a better return on unused funds, and are all placed in such a way that they can be easily realised if necessary. Strømme Foundation takes a very cautious approach with regard to risk in such investments. The bond holdings and the other market based financial instruments are guaranteed minimum repayment of invested amount at the date of expiry.

Founding Capital Unrestricted equity as of 31/12/2007 3,326,092 Prior year adjustment Revised balance as of 31/12/2007 3,326,092 Result for SMF AS Result of the year ex MF Unrestricted equity as of 31/12/2008 3,326,092 Restricted Equity MF Donated Equity MF Result for the year Donated Equity and currency fluctuations TOTAL EQUITY

Retained Earnings 7,699,724 -519,755 7,179,969 -568,678 8,592,145 15,772,114 101,618,434

Total 11,025,816 -519,755 10,506,061 -568,678 8,592,145 18,529,528 14,757,627 101,618,434 37,460,797 2,330,713 174,697,099

A substantial part of fund-raised capital is linked directly to projects. Many of these are also financed through public sector grants. After the allocation of public sector grants according to the terms of the cooperation agreements, the fund-raised capital is used to cover Strømme Foundation’s own share. From year to year the usage of fundraised capital for this purpose will vary. Balance of closed projects will be reallocated to other projects according to agreed guidelines. After covering the project costs for 2008, the capital earmarked for projects decreased by MNOK 6.79. Change in capital earmarked for projects Region 2008 2007 Asia 4,792,135 8,812,424 East Africa 7,384,969 7,493,539 West Africa 84,530 South America 2,495,993 5,238,536 Total 14,757,627 21,544,499

Change 2008/2007 -4,020,289 -108,570 84,530 -2,742,543 -6,786,872

Note 9 a – Investments in Subsidiary Companies All figures in NOK Name Number Strømme Micro Finance AS 500 Centre for International Cultural Co-operation AS 40

Nominal value 1 000 5 000

Book value 500 000 200 000

Result 2007 -264 927 0

Equity 31/12/08 -333 605 200 000

Strømme Micro Finance AS (SMF) with its main office in Kristiansand is a wholly-owned subsidiary company of Strømme Foundation. A long-term loan without a specific instalment plan of 3.0 MNOK as been given to SMF. This has been utilized for purchase of office premises in Skippergata 3 – 5, Kristiansand, Norway. At the year end there is MNOK 3.0 outstanding. The Centre for International Cultural Co-operation AS was established in 2008 and as of the 31st December is a wholly owned subsidiary but has not started trading. The intention is for the local government in Kristiansand to take a 35% stake and for the company to start trading during 2009. Connected Parties With the exception of salaries and travel claims, there are no financial transactions with employees or connected persons in Strømme Foundation Norway. Outstanding loans to employees in the Regional Offices totalled NOK 328 663 at the year end compared to NOK 275 811 at the end of 2008. These are included in other assets in the balance.

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Note 9 b – Investments in Associated Companies

Note 12 – Liquidity and Restricted Assets

All figures in NOK Name Hald International Centre BA

Employees tax deducted account Restricted projects and public grant accounts Memorial Fund Restricted funds at the Regional Offices Total Restricted bank balance Free funds available in Norway Free funds available at Regional Offices Free available funds Total liquidity * See also note 7 for specification of investments in shares and bonds.

Number 200

Nominal value 1 000

Book Value 200 000

Result 2008 -242 060

Equity 31/12/2008 2 467 149

Hald International Centre (HIS) was in 2004 officially registered as a company with limited liability with its Head Office in Mandal. Strømme Foundation’s share in ownership and votes is 1/3. The objective of HIS is giving courses and training for work within missionary organisations, for evangelism and development work, as well as for exchange-programs in different parts of the world. HIS is a Not-for-Profit organisation and cannot give dividends to the owners. Strømme Foundation had accounts receivable of NOK 96 688 from HIS as of 31/12/2008. Consolidated Accounts Investments in subsidiaries in the consolidated accounts comprise HALD International Centre BA, 200 000 NoK and Kolibri Capital 20 400NOK.

Note 10 – Pension Obligations Strømme Foundation has a pension scheme that is comparable to the State pension fund. For 2008, the scheme covers 35 (35) people. The Foundation has also signed an agreement for an AFP-plan. This agreement applies for 34 (34) people and is included in the list below. Actuarial calculations have been applied for calculating the obligations and costs in connection with the payment plans. The following assumptions have been used for the calculations:

Discount rate Expected dividend Salary adjustments / year Yearly G-regulation / inflation Expected pension escalation Withdrawal probability AFP

2008 5.80 % 5.80 % 4.00 % 3.75 % 3.75 % 25.0 %

Gross pension obligations at 31.12 calculated at - Value of pension funds at 31.12 calculated at + Deferred obligation in case of (loss) / profit = Calculated net pension obligations at 31.12 + Social Insurance contributions = Pension obligation as at 31.12 Net over-financing Net contractual obligation

Un-secured system 2008

Un-secured system 2007

15 905 506 -11 986 151 -4 858 651 -939 296 -132 441 -1 071 737

11 102 560 -12 681 576 64 266 -1 514 750

1 326 260 0 447 168 1 773 428 250 054 2 023 482

1 789 030 0 318 917 2 108 747 297 333 2 406 080

1 071 737

1 514 750 2 023 482

2 406 080

72 005 85 235 0 0 0 157 240 22 171 0 179 411

172 628 80 868 -13 778 0 0 239 718 33 800 0 273 518

1 514 750

1 413 988 528 601 0 38 910 -641 940 1 339 559 177 769 0 1 517 328

Note 11 – Property under development In 2002 Strømme Foundation took over a property in Lillesand which had been left to us as a legacy gift. The property was valued and entered into our accounts at MNOK 2.5 in 2004. Strømme Foundation has chosen to retain the property and seek to regulate it for residential use. In 2005 a portion of land was sold, reducing the book value by MNOK 0.2. Up to this point the cost of the planning work has been MNOK 0.71.

2008 25 006 212 000 24,065 495

2007 23 599 23,295 061

Note 13 – Collateral Security Part of the business premises and the building site are collateral for the overdraft facilities (limit MNOK 1.0). Book value as of 31/12/08 is MNOK 5.4.

14a Support to education projects

Secured system 2007

The year’s pension accrual 1 169 768 + interest cost 599 971 + amortisation 0 + administration cost 40 000 - Return on capital -731 346 = Net pension cost 1 078 393 + Social Insurance 152 054 - Employees pension deductions 0 = Total pension cost 1 230 447 The amount is included in Salaries and personnel expenses in the accounts

2007 576 273 5 291 466 185 884 4 474 024 10 527 647 5 717 988 7 025 827 12 744 815 23 271 462

Note 14 Purpose Costs

2007 5.50 % 5,75 % 4,50 % 4,25 % 2.00 % 30,0 %

Secured system 2008

All figures in NOK

Consolidated Liquidity SMF AS Centre for International Cultural Cooperation AS Total Consolidated Liquidity

2008 645 604 616 800 196 968 3 810 848 5 270 220 8 347 717 10 210 561 18 558 278 23 828 489

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Madagascar Uganda Tanzania Sudan Kenya Rwanda East Africa

2008 0 3,571,991 1,305,324 9,313,925 5,424,653 1,558,772 21,174,666

2007 261,294 3,466,837 1,304,275 6,046,775 4,689,602 1,447,407 17,216,190

Mauritania Mali Burkina Faso Niger West Africa

513,298 14,237,982 2,692,610 1,037,217 18,481,106

778,961 15,307,379 1,755,942 437,385 18,279,667

India Bangladesh Sri Lanka Sri Lanka - Tsunami Rehab. East Timor Myanmar (Burma) Asia

169,359 9,369,744 4,054,785 981,226 1,815,048 689,377 17,079,539

196,049 7,463,723 1,776,178 2,129,017 1,090,525 1,159,142 13,814,634

Peru Bolivia South America

4,750,263 3,513,537 8,263,800

5,695,782 3,883,921 9,579,704

Global programs

5,911,893

5,154,131

Net reallocation to admin

-236,729

Net Currency gains in ROs

-1,382,425

-201,663

Total

69,291,850

63,842,662

Support to partners for Community Managed Microfinance, also called Self Help womens savings groups, are included under education.

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14b Support to microfinance projects Uganda Tanzania Sudan Kenya Rwanda East Africa Mali Burkina Faso West Africa Bangladesh Sri Lanka Sri Lanka - Tsunami Rehab. Myanmar (Burma) Asia

2008 2,083,003 1,811,916 639,114 3,874,422 908,938 9,317,392

2007 2,513,764 1,592,128 306,537 3,223,749 577,837 8,214,016

340,432 67,900 408,332

888,398 0 888,398

6,786,156 6,208,517 0 1,195,837 14,190,509

7,413,322 2,215,942 2,338,825 771,381 12,739,470

1,180,746 1,180,746

187,764 187,764

Note 15 – Microfinance Activities 15a Microfinance in Strømme Foundation BALANCE SHEET: ASSETS: Current Assets: Deposits in financial institutions Gross Loan Portfolio (Loan loss reserve) Net loan portfolio external loans Other short term assets Total current assets:

2008 NOK

2007 NOK

16,861,586 110,340,507 -10,605,851 99,734,655 781,143 117,377,384

14,740,407 83,884,023 -3,918,144 79,965,879 75,836 94,782,122

Total non-current assets: TOTAL ASSETS

8,544,955 125,922,339

7,498,400 102,280,522

575,947

737,752

Total non-current liabilities:

4,466,603

9,475,798

TOTAL LIABILITIES

5,042,549

10,213,550

EQUITY: Donated equity

92,732,932

91,676,308

29,107,131 -356,878 121,483,185 126,525,734

-8,894,489 -19,409 82,762,410 92,975,960

6,403,111

4,800,261

LIABILITIES AND EQUITY Total current liabilities:

Peru South America Net reallocation to admin

-87,447

Total

25,009,533

22,029,649

Consolidated Accounts Microfinance grants given for on-lending to MFIs are not accounted for as costs in the consolidated accounts because they become part of the loan portfolio. 2008 2007 This reduces costs by -18,528,463 -13,180,204 Total Consolidated

6,481,070

Retained surplus (deficit) Current year Retained surplus(deficit) TOTAL EQUITY TOTAL LIABILITIES AND EQUITY

8,849,445 INCOME AND EXPENSES STATEMENT

14c Information work in Norway

Total operating income

SF information work in Norway is a part of our purpose, specifically to engage the Norwegian public and business community in contributing to development work in the South, whether through financial or other means and through whatever channels are appropriate. This includes 100% of our schools and youth work and 50% of the work of Strømme Business Partner, where information relating pro-poor ethical working practices and the promotion of these are a key element. It also includes all the costs for producing information on both the website and the HTS magazine and 100% of the cultural initiative which in 2009 will be included in a separate company as described in note 9.

Total financing expenses Gross financial margin Provision for loan losses+Write-offs Net financial margin

1,460,513 4,942,598 6,744,481 -1,801,883

1,115,655 3,684,406 1,749,913 1,934,493

Total operating expenses Net income from operations

3,761,859 -5,563,742

3,098,764 -1,164,271

Net income from operations after taxes

-5,563,742

-1,164,271

Net income (deficit) from non financial services

19,604,032

-10,050,150

Total grants received

15,066,841

12,012,029

29,107,131

797,608

Net income after grants for the period

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15b Microfinance in consolidated accounts BALANCE SHEET:

2008 NOK

2007 NOK

ASSETS: Current Assets: Deposits in financial institutions Gross Loan Portfolio (Loan loss reserve) Net loan portfolio external loans Other short term assets Total current assets:

33,197,067 123,407,408 -9,800,000 113,607,408 969,278 147,773,752

19,111,933 89,829,050 -6,044,557 83,784,493 806,944 103,703,370

Total non-current assets: TOTAL ASSETS

3,758,894 151,532,647

3,293,909 106,997,279

LIABILITIES AND EQUITY Total current liabilities:

782,499

1,249,962

Total non-current liabilities:

7,600,256

3,209,165

TOTAL LIABILITIES

8,382,754

4,459,127

EQUITY: Minority shareholder Capital from shareholders Donated equity

543,611 108,256,125

477,098 97,918,492

Retained surplus (deficit) Current year Prior years Retained surplus(deficit)

19,121,271 -2,840,994 -356,878

-5,350,949 1,896,202 -5,188,723

124,723,136 133,105,890

89,752,120 94,211,247

Intercompany eliminations*

18,426,757

12,786,030

Balance to reconcile

151,532,647

106,997,277

INCOME AND EXPENSES STATEMENT Income Interest income from loans (Except to SMF-dept) Interest income from SMF Dept components) Income from investments/deposits Other operating income

9,667,213 175,810 1,143,565 233,576

6,972,213

Total operating income

11,220,163

7,874,213

Total financing expenses Gross financial margin Provision for loan losses+Write-offs Net financial margin

251,316 10,968,847 5,145,833 5,823,014

335,456 7,538,758 3,090,564 4,448,194

Operating expenses Personnel expenses Other operating costs Total operating expenses

3,591,019 3,628,669 7,219,688

2,438,573 3,339,067 5,777,640

Net income from operations Income tax Net income from operations after taxes

-1,396,674 202,982 -1,599,656

-1,329,446 28,407 -1,357,853

Income from non-financial sources Expenses from non-financial services Net income (deficit) from non financial services

21,714,806 2,096,518 19,618,288

961,341 11,070,876 -10,109,535

1,201,987

6,116,439

19,220,619

-5,350,949

Strømme Foundation NOK 91,676,308

Consolidated NOK 97,679,162

MF result

797,808

7,398,483

Donated equity and currency difference

(19,409)

(3,811,049)

Total grants received Net income after grants for the period

TOTAL EQUITY TOTAL LIABILITIES AND EQUITY

790,482 111,518

15c Microfinance Equity reconciliation Change 2007 / 2008 Opening Balance 2007

*SF grants for loans, intercompany loan loss provision, small trading balances Add back Loss in SMF AS Opening Balance 2008

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351,838 92,454,707

101,618,434

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Strømme Foundation Board and Council Members Board Members pr 31. desember 2008 Geir Magnus Nyborg - Chairman Gunvor K. Andresen Solfrid Lind Egil Gjesteland – ny i 2008 Joanna Ilboudo Kabore - ny i 2008 Liv Næss Olaf Gundersen

Council Members pr 31. desember 2008 Kurt Mosvold Vidar Blakseth Dagrun Eriksen Ansgar Gabrielsen Hanne-Grete Brommeland Larsen Rannveig Rivedal Nilsen Grethe Raddum Gunnleik Seierstad – new in 2008 Svein Ove Faksvåg - new in 2008 Finn Arild Stie Hilde Strømme - new in 2008 Per Sævik Gunnar Thelin Knut Vollebæk - new in 2008 Hege Wallevik Arne Olav Øyhus

Strømme Foundation is member of the Norwegian Control Committee for Fundraising Strømme Foundation is a signatory to the Code of Conduct for the International Red Cross and Red Crescent Movement and NGO’s in Disaster Relief. Editor: Egil Mongstad, Strømme Foundation Lay-out and graphic design: Oddvar Paulsen, Strømme Foundation All photos: Strømme Foundation + Per Fronth.

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Skippergaten 3 • Box 414 • N-4664 Kristiansand Norway Tel +47 38 12 75 00 • Fax +47 38 02 57 10 • Org. no 952 002 139 E-mail: post@stromme.org • www.stromme.org www.strommestiftelsen.no