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Case Study : Mercy Charitable Foundation
第四組:鍾佳蓉、蔡青潣、宋政桓、陳昭錡、王琮仁
指導教授:王俊程
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Agenda
Introduction of Mercy Charitable Foundation
Conflict between Benefit and Ethic The Counterpart Alliance for
Partnership (CAP) Challenges Social Impact and Business Results Q&A
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Introduction of Mercy Charitable Foundation
Christian faith-based NGO, founded in 1997
Zhytomyr in Ukraine the problems result from the high unemp
loyment rate(60%) the incident of Chernobyl nuclear power
plant
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Activities
For homeless children
Provide meals
Offer educational, social activities, legal aid and
counseling programs
For elderly and substance abuse
Provide meals
Offer educational, social activities, legal aid and
counseling programs
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Finance
Mercy Charitable Foundation
Local NGOs business partners
international donors
Local agricultural producers
and business
local government
Prior Financial Support
Worsened country economic situation
Decide to initiate income-generating activities
to sustain the organization and its operation.
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New Activity
To start a café Hunan resource
Mercy youth club members served as volunteer labor to build physical facilities.
Venture team, experienced in the restaurant industry.
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Conflict between Benefit and Ethic
Sell alcohol and cigarettes or not ? Benefit twice Prior activity is to help young people to qu
it smoking and avoid drugs and alcohol. It is estimated over 50% of the population
in Ukraine smokes Some business advisors predict that the C
afé would go bankrupt in case of not selling alcohol and cigarettes.
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Decision to Start Kovcheg Café
Smoke- and alcohol-free restaurant Low price strategy and emphasis on qua
lity Kovcheg Café provides different service f
rom other café in Zhytomyr.
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The Investment in Farm
Provide vocational training and rehabilitation for drug addicts and alcoholics Reduce the incidents of relapse Give drug addicts and alcoholics in
recovery new possibilities to earn an income
Provide agricultural products to the café and Mercy’s free meals program.
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The Counterpart Alliance for Partnership (CAP)
CAP was one of Mercy’s most important partners. CAP is a founded program of Counterpart International,
Inc., a US NPO with more than 35-year record in improving environmental, economic and social conditions for human development in over 60 countries.
Their mission is to promote civil society through NGO capacity building and enhanced civil participation, especially in the following specific vulnerable populations: children &youth, disabled, the elderly, and drug& alcohol addicts.
CAP provides support and services, including: consulting and technical assistance, Funds for small-scale projects, NGO exchanges with partners in neighboring countries.
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What did CAP do for Mercy?(1/3)
Helping Mercy select a business idea.
Supporting the market research and analysis.
Helping Mercy develop its human resource plan for the café.
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What did CAP do for Mercy?(2/3)
The most important assistance was Marketing. At first, Mercy’s marketing approaches were rand
om: advertisements in the newspaper; flyers sent to businesses, community centers, churches and the university,etc…
Can’t target specific customers, or build a steady client for the café.
Mercy should prepare a marketing plan focused on developing the café’s brand and image.
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What did CAP do for Mercy?(3/3)
Develop a niche market — The café serves a small, well-targeted market with a clearly defin
ed concept: “healthy place.” Faith-based/Christian ethic — Mercy leveraged NGO relationships, networks and reputation as
marketing channels. Low price penetration strategy High quality product is the first priority Responsive to customer demand — Developing products and services according to customer prefere
nces.
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Challenges- Financial Mercy lacked funds to invest in full-scale renovati
on and upgrades for the café. The kitchen needs a better ventilation system, a
major expense. The café could serve more customers by buildi
ng additional dining space. Mercy received a $1,000 loan from the CAP Pro
gram, but could not secure a bank loan. Utility prices have skyrocketed in 2000 & 2001.
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Challenges- Legal
There were many legal barriers to nonprofits opening businesses.
Under Ukrainian law, in order for Mercy to operate a for-profit without losing nonprofit status, managers must incorporate the café under a“private entrepreneur” who will act as the fiduciary agent and business manager.
Mercy managers chose one of their members with whom they signed a memorandum of understanding (MOU) stating that this individual is responsible for running all of the NGO’s commercial activities.
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Challenges- Human resources At fist, the Mercy team struggled with human re
source and management issues: Professional manager or someone who
understands Mercy’s mission? The number one criteria is character assessme
nt—people who understand and are committed to the mission, so they picked a former Mercy client to be the café manager.
Employing student interns doing practicum work to reduce the cost of labor.
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Challenges- Bureaucracy Meeting licensing requirements and dealing
with legal authorities very trying. Several of the neighboring cafés bribe the
health department, but Kovcheg’s management has refused.
The consequence for Kovcheg’s refusal has been harsh scrutiny and the necessity to comply strictly with numerous requirements.
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Challenges- Political Zhytomyr had a corrupt mayor who was veheme
ntly trying to block the initiative, and the mayor colluded with local authorities that tried to impede them by withholding building permits & continually changing licensing requirements.
Through this experience Prokhorenko learned the value of political involvement and decided to play a role.
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Social Impact and Business Results(1/4) The organization’s entire annual
operating budget is covered by income earned from its entire activities 94%($9,350) from the three thrift shops in
2001 6%($597) from the café
the café played an invaluable role in raising political and public awareness regarding healthful lifestyle
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Social Impact and Business Results (2/4)
Two of mercy’s youth soccer team comprised of low-income and street children made it to the European finals in Sweden The 11- to 13-year-olds took third
place The 14- to 17-year-olds took fifth
place
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Social Impact and Business Results (3/4)
Increased job creation in Zhytomyr City Achieved sustainability of Mercy Charitable
Foundation by creating a permanent funding source through its social enterprises and independence from donor support
Generate income Launched three new social enterprise thrift
shops that contributed $9,350 or approximately 94 percent of Mercy’s budget
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Social Impact and Business Results (4/4)
Provided 60 free meals a day in 2001; over 100 projected for 2002; 150 projected for 2003
Changed public opinion and social consciousness about healthy lifestyle choices
Influenced public policy and legislation for future social enterprises
Increased cross-sector cooperation between NGOs, business and government
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Key Success Factors of Kovcheg Café Common mission Team is very important Niche creation Counterpart alliance for partnership CAP program Self-confidence and determination Marketing
Develop a niche market High quality product is the first priority Low prices Faith-based/Christian ethic Responsive to customer demand
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Advice Don’t be afraid Get a good lawyer and learn the law Put together a good team Use personal contacts and work with
those people that you already know Operate transparently and abide by
the law Get involved in the community and
local politics
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Q&A
How to improve the financial state of Mercy? Short term
Increase the price of meal Lower the cost of operation Higher class meal for business men
Long term Extend operation time Provide additional services
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Q&A(2)
Bribe the health department? Bribe: get higher profit and serve
more clients No bribe: no money and no clients
No money