fssi annual report 2009

8/2/2019 FSSI Annual Report 2009

1/72

1FSSI ANNUAL REPORT 2009


2/72

2 Resiliency Amidst Challenges


3/72


56789

101216

20

323436404244

AcronymsO r core a esWho we areO r ogoChairpersons message

How we o itStatistica high ightsO r conte tO r e e opment effecti eness

Managing a hea thy ba ance between e e opmenta impactan profitabi ity

B i ing opport nities for eco-enterprise mo e b i ing an rep icationStrengthening trip ebottom ine on the sectors an s b-sectorsIncreasing patronage for eco-enterprise pro cts an ser ices

Poo ing reso rces to enab e eco-enterprisesA ancing a ocacies as a socia organi ationO r go ernanceO r peop eA itors reportFinancia statements

CONTENTS


4/72



5/72


triple bottomline

ASEAN Free Trade Agreements -

Common E ective Pre erential Treatment

Alliance o Philippine Partners

in Enterprise Development

Advocate o Philippine Fair Trade Inc.

available- or-sale

Board o Trustees

Coco-Coir Business Integration and Development

civil society organizationseco-enterprise

Eco-Enterprise Appraisal Rating

Eco-Enterprise Development Programming

Eco-Enterprise Development Services

Eco-Enterprise Indexing

Environmental Management Accounting

Environmental Management System

Foundation or Philippine Environment

Federation o Peoples Sustainable

Development Cooperative

Fund or Sustainable Civil Society

Foundation or a Sustainable Society

air value through proft or loss

Gender Planning Workshop

Gubat Saint Anthony Cooperative

human resource

Integrated Cooperative Towards Unifed Services

Inter ace Development Interventions

Industrial Technology and Development Institute -

Department o Science and Technology

Jaime V. Ongpin Foundation, Inc.

KFI Center or Community Development Foundation

La Trinidad Organic Practitioners Multi-Purpose Cooperative

local government unit

Mindanao Alliance o Sel -Help Societies-Southern Philippines

Educational Cooperative Center

minimum corporate income tax

Millennium Development Goals

Microfnance or Eco-Enterprises Program

microfnance institution

micro, small, and medium enterprises

Mindanao Coalition or Development

Medium Term Development Plan 2004-2010

Maximo T. Kalaw Institute or Sustainable Development Nagkakaisang Mamamayan sa Kanlurang

Batangas Multi Purpose Cooperative

non-government organization

Netherlands Organization or International Development Cooperation

National Timber Forest Products

Organic Certifcation Council o the Philippines

optional standard deduction

Philippine-Australia Community Assistance Program

Philippine Accounting Standards

Pantukan Chess Club Cooperative

Peace and Equity Foundation

Philippine Assistance Development Program

Philippine Financial Reporting Standards

Philippine Business in Development

peoples organization

Philippine Tropical Forest Conservation Fund

regular corporate income tax

Soriano Multi-Purpose Fiber Corporation

Samahan ng Mamamayan-Zone One Tondo

Sustainable Partnerships or Eco-Enterprise Development

Sustainable Waste Management Eco-Enterprise Program

UN Civil Society Advisory Committee

Womens Action Network or Development

World Trade Organization

MASS-SPECC

MCIT

MDG

MEEP

MFI

SME

MINCODE

MTDP

MTKISDNAGKASAMAOMPC

NGO

NOVIB

NTFP

OCCP

OSD

PACAP

PAS

PCCC

PEF

PDAP

PFRS

PhilBiD

PO

PTFCF

RCIT

SMPFC

SM-ZOTO

SPEED

SWEEP

UNCSAC

WAND

WTO

3BL

AFTA CEPT

APPEND

APFTI

AFS

BOT

COCOBIND

CSOEE

EEAR

EEDP

EEDS

EEI

EMA

EMS

FPE

FPSDC

FSCS

FSSI

FVPL

GPW

GSAC

HR

ICTUS

IDIS

ITDI-DOST

JVOFI

KCCDFI

LaTOP

LGU

ACRONYMS



6/72


SOCIAl JuSTICE The Foundation or a Sustainable Society recognizes the needto address the long-standing issues o poverty, the disregardor basic human rights, and environmental degradation. Thus,FSSI believes that social justice or the poor is best achievedthrough participation and empowerment, anchored on theprinciple o equality and airness or all. That the promotiono social entrepreneurship, demonstrated through economicdemocratization and environmental justice, is best servedby adopting an integrated business approach that includesaccess to capital by the poor, economic viability, genderequality, sound environmental practice, and the applicationo the bene ts o enterprise or the common good. Social

justice through social entrepreneurship ensures that morepeople participate and bene t in economic productivity.

STEWARdSHIP The FSSIs endowment is a public trust. FSSI is a stewardo this public trust. This is achieved through transparent,prudent and diligent management o nancial resources andits optimum use. FSSI seeks to apply innovative und usagethat will maximize both social and nancial returns throughvaluable entrepreneurship, at the same time ensuringcontinuing growth or the institution, equitable developmentand environmental sustainability in all its initiatives. FSSIcommits to put its resources into best use and enjoins itspartners to ollow suit.

GENdER EquAlITYFSSI believes that development must bene t both womenand men. Being aware that the present social structureshave not ully recognized women as agents o development,FSSI takes an a rmative action in maximizing womensproductive, reproductive and community participation andcontribution to society. FSSI believes that a healthy socialrelation can be harnessed by providing equal treatment andopportunities among women and men in their access to

and control over resources, decision-making, bene ts andrewards o development.

ENvIRONMENTAl SuSTAINABIlITY FSSI believes that sustainable development will only berealized i people and communities will use and manageresources at present in a manner that will not compromisethe needs o uture generations. FSSI seeks to applyinnovative solutions and technologies that will promotebiodiversity conservation and protection o the environment.

GOOd GOvERNANCE FSSI is a staunch advocate in upholding the principleso shared and trans ormative leadership and respect orbasic human rights. It seeks to demonstrate participatoryand democratic processes in policy and decision-making.FSSI demands, in its dealings, the practice o transparency,integrity and accountability rom all.

CulTuRE OF ExCEllENCE FSSI ensures continuing relevance, e iciency ande ectiveness in the per ormance o its work. FSSI willcontinue to seek and advocate or best practices in makinga di erence in the lives o the communities it serves.

OuR CORE vAluES



7/72


WHO WE ARE

O r ision Sustainable economicdevelopment o poorcommunities in the Philippines

O r mission To be the leading eco-enterpriseresource institution or theempowerment o poorcommunities in the Philippines

Development requires debt relie . This is the proposi-tion that the Foundation or a Sustainable Societywas brought to its conception in August 1995 a tera long, arduous, cross-sectoral and multi-level debtcampaign by Philippine and Swiss non-government

and peoples organizations.

As a result o the close coordination and e ective par-ticipation o NGOs and POs, the Governments o thePhilippines and Switzerland nally signed a n agree-ment on the reduction o Philippines external debt.Under this accord, 50% o the Philippine Governmentsoutstanding export credit debt to Switzerland, amount-ing to 42 million Swiss Francs or approximately US$34

million at that time, was cancelled. The remainder wasconverted into Philippine pesos equivalent to US$17million and treasury securities.

These were then provided by the Philippine Treasury

as an endowment to a development acility tasked withusing income to support initiatives o local NGOs, POs,cooperatives and other community-based groups particularly in the area o sustainable economic pro-duction e orts. This development acility, now knownas the Foundation or a Sustainable Society (FSSI) istaking the lead in supporting community- oriented,ecologically-sound, and nancially-viable businessventures known as eco-enterprises.



8/72


OuR lOGO

As FSSI mo es forwar to achie e its ison

an mission, we came p with a bran i entity that wi represent how we approach o r workon enterprise e e opment for a s stainab e anempowere comm nities.

Part of this e e opment is gi ing birth to anew ogo that wi represent what we seek to oan how we o it.

The tra emark resemb es synergy, co aboration

an n rt rance of FSSI to its broa rangeof partnerships.

The three peta s in oke FSSIs trip ebottom ines of gaining en ironmenta , socia an financia ret rns from its socia in estmentsamong enterprises. The co ors brown, green, b ean orange are fo n in the nat ra en ironmentan ho s the a ities of being epen ab e,eco ogica , stab e an ibrant.


9/72


Martin TanchulingChairperson

CHAIRPERSONS MESSAGEResiliency is the ability to bounce back and success ully adapt to adversity.

As we look back, we ound out that 2009 is a story o resiliency our collective experience o ability to gatherourselves in times o di culty and revive success ully toadapt to challenges.

At the beginning o the year, the e ect o the globalnancial crisis that shook many economies has persistedto a ect the viability o our partners with trading partnersabroad. As i the economic doldrums have not beenenough, a twin-typhoon struck many o our partnersin Luzon and a ew in Metro Manila destroying crops,

production plants, supplies and machines. Many o ourmicro nance partners were caught unexpected on howto support many o their microclients whose unstablecash fows and sources o livelihood were destroyedrom the disasters.

But we have met these challenges in a manner consistentwith our commitment to reach more poor communitiesand be one with them in rising above these crises.

The Foundation or a Sustainable Society moved quicklyto provide some breathing space or our partners to

recover given the economic and environmental threatsthat we all ace. We extended additional inancingas necessary to rebuild enterprises; we have raisedunds and leveraged our organizational resources todirectly support in building the resiliency o our partner-communities so they can build on new opportunities outo a seemingly hopeless environment. This we did so toprotect the gains that weve already had in developingenterprises that are owned or are bene tting the poor andmarginalized sectors o society who are most unable tocope up a ter a crisis.

The impacts o the nancial and economic meltdown, thelooming challenge o high and volatile prices o uel and

ood, and the ever increasing threat o climate change areroadblocks that we see will continue to a ect the way wedo business. Much needs to be done at these di culttimes to help build capacities o our partners managerisks and uncertainties; trans orm these challenges toopportunities or human development and to advanceenvironmental protection. We need to integrate disasterrisk reduction measures to build our resiliency duringtrying times. We got to remain fexible and adaptive inour policies and operations so we can truly support thechanging needs and requirements o communities incon ronting the negative impacts o these crises.

With these lessons, FSSI moves orward into 2010 wellplaced to support our partners serve as many poorcommunities to which we are committed to do. Weshall embark or an even stronger partnerships andmobilization or development. Indeed, it is in the neediesto times that the Foundation has proven that narrow,disinterested and set-in-stone strategies need to adaptto unexpected challenges that the poor are acing today.

We acknowledge the strong support o our membership,networks, enterprise-partners o our Foundation in 2009,and we are looking orward to your strong support tohelp us to achieve a better 2010 and beyond. We thankall sta and management or your dedicated service andcommitment and hope that 2010 will yield better result.We look orward to continue working with you as we

journey on the long and rough road o development toachieve a better uture.


10/72


MEDIUM TERM OBJECTIVES

.

.

.

.

.

Programs

Increasing support or triple bottomlineas the standard or entrepreneurship

Expanding the number o poorparticipating as bene ciaries andshareholders o eco-enterprises

Improving patronage oreco-enterprise products and services

Coco-Coir Business Integration and Development [COCOBIND]Program The COCOBIND Program intends to contribute in the development o the coco-coir sector and pro-vide employment opportunities or coconut armers by incorporating in its operation the componentso business integration model development, nancing, resource mobilization, product developmentand networking. It o ers support to NGOs, POs and private entrepreneurs who are interested in thecoco-coir business.

Fund or a Sustainable Civil Society [FSCS] Program This program provides grants to enable CSOs to engage in sustainable livelihood and eco-enterprisedevelopment that are managed or will bene t the poor and marginalized sectors. It also intends tobuild the capacities o the poor in decision-making on policies regarding asset re orms, developmentnancing, environment and gender equity.

Microfnance or Eco-Enterprises Program [MEEP] This program provides grants mainly to enable CSOs to engage in sustainable livelihood and eco-enterprise development that are managed or will bene t the poor and marginalized sectors. It alsointends to build the capacities o the poor in decision-making on policies regarding asset re orms,development nancing, environment and gender equity.

Sustainable Partnership or Eco-Enterprise Development [SPEED]ProgramSPEED intends to harness the entrepreneurial capacities o the marginalized sector through direct ande ective delivery o appropriate nancial and enterprise development services to emerging businessesthat promote 3BL approaches.

Sustainable Waste Management Eco-Enterprise Program [SWEEP]SWEEP intends to provide technical and business development support and nancial services tostimulate and accelerate the development o viable and ecologically-sound entrepreneurial activities

in the waste management sector. Such enterprises may be providing new technologies, services orcommodities.

HOW WE dO IT

Developing champions o eco-enterprisedevelopment acilitators sharing anorganizational culture o excellence Honing a stable resource base supportinga healthy social investments port olio


11/72


WHERE WE WORK

PANGASINAN

BATANGAS

ISABELA

NUEVA VIZCAYA

LAGUNA

ANTIPOLO

ALBAY

SORSOGON

EASTERN SAMAR

CAGAYANDE ORO

NEGROSOCCIDENTAL

ZAMBOANGA CITY

ZAMBOANGA DEL SUR

CEBU

GUIMARAS

DAVAOORIENTAL

DAVAODEL SUR

PALAWAN

SURIGAODEL NORTE

MISAMISORIENTAL

SURIGAODEL SUR

NUEVA ECIJA

CAGAYAN VALLEY

OCCIDENTALMINDORO

BENGUET

LUZON

VISAYAS

MINDANAO

COCOBIND Program

FSCS Program

MEEP Program

SPEED Program

SWEEP Program


12/72


THE YEAR 2009 AT A GlANCE

Forty six o the 68project proposalshave been approved ordisbursement worthPhP 327.03 million o social investments. Thesocial investment targetwas nearly met in 2009.

Amount And number of sociAl investments Approved

Amount of sociAl investments Approved by progrAm

Amount of sociAl investments by type of pArtnership

Amount approved inmillion pesos

Number of projects

Majority o socialinvestments went tomicroclients hoping to

build or scale up theirsmall scale bussineses,ollowed by support ex-tended to projects in theemerging agriculturaland sustainable wastemanagement sector.

Majority o socialinvestments weredevoted to existingpartners indicating arenewal o commitmentin the development o their eco-enterprises.On the other hand,the Foundation alsosupported new andadditional eco-entreprises.


13/72


Amount of sociAl investmentsby type of ownership

Fi ty-two percent (PhP177.39 million) o total social investments went to supportpartners with democratized ownershipssuch as primary cooperatives, coopederations and banks. Thirty percent(PhP 103 million) were extended to privateMSMEs, while only 7% o the supportwere extended to NGOs and POs.

Amount of sociAl investments per type of progrAm

Excluding grants, the value o socialinvestments is devoted to micro nanceprogram then ollowed by the COCOBIND,SPEED and SWEEP programs.


14/72


Social investments were largely (49%) shared in Luzon areas. MEEP and SPEEDprogram generally maintains projects and partners in the three island groups.

geogrAphicAl distribution of sociAl investmentsby progrAm (IN MILLION PESOS )

geogrAphicAl distribution of sociAl investments


15/72


Microclients (110,000) borrowing money rom MFIs have bene tted the most rom social invest-ments. By type o participation, microentrepreneur-owners (88.9%), workers (10%), suppliers(0.8%) and sub-contractors have derived bene ts rom social investments (0.3%).

Amount of sociAl investmentsby type of instrument

number of poor directly benefitting from projectsby progrAm

number of poor

deriving benefits

Nearly hal o total social investmentsare in the orm o loans while thirtypercent are development deposits.Social investments through grants(10%), represents the cumulativesupport since 2004 or start-uplivelihood initiatives.


16/72


OuR CONTExT


17/72


Harnessing the entrepreneurialfre alive amidst the winds oadversity

The ailing global economy has been recovering since2009, largely due to stimulus packages put together bydeveloped and developing countries since late 2008.But growth will be uneven and sluggish all over theworld in 2010, with low employment prospects.

This cautionary assessment is contained in theExecutive Summary o the World Economic Situationand Prospects 2010, a report released by the UnitedNations early in the year.

As the UN report points out, developing countriesand economies in transition are highly dependent onmovements in international trade, commodity prices,and capital fows - conditions whose improvement, inturn, depend on the strength o recovery o developedcountries.

Philippine exporters, as experienced by some o FSSI partners, along with their counterparts inIndonesia, Taiwan, and even Japan, were among thehardest hit by the global recession because o higherspecialization in manu actures and dependence toexport markets.

The Philippine government dra ted an EconomicResiliency Plan (ERP) to o set the e ects o the crisis,the bulk o which was earmarked or in rastructure

and social projects. These interventions, however,have not been su cient to protect the sectors most inneed o resiliency measures. It is as i the story o ourcountry has repeating chapters o problems withouta resolution or pro-poor development.

Although our banks have minimal exposure to theLehman Brothers collapse, but the US is a largeeconomy to which the Philippines is dependent ororeign investments (33%), OFW remittances, andmanu acturing inputs. Philippines is largely dependenton the US economy or export trading, oreign directinvestments, remittances, tourism receipts andmanu acturing inputs.

Weathering the crisis despite a long-


18/72


19/72


As many see opportunities in the cautious optimismor global economic recovery, FSSI gathers someimportant lessons underscored by the crisis that areimportant reminders to build resiliency o enterprises.

Prudence is advisable in any enterprise, with long- term sustainabilitypre erable to short-term pro tability.

Identi y and develop best practice strategies. Understand thebusiness and know exactly potential risks areas and what areneeded to survive. Plan ahead. Develop capacity or contingency and continuityplanning. Integrate disaster risk reduction measures in the businessoperation.

Increase stakeholder engagements. Transparency with stakeholdersduring di cult times develops trust and builds on goodwill a deepersense o ownership and accountability.

Integration o social and environmental concerns is an essentialaspect that cannot be ignored in business. Some o the avoidableproblems in business could have been mitigated i social andenvironmental aspects were considered and addressed in thebusiness operation.

Building resiliency is not an option; it is a must. Resiliency isanticipating and managing uncertainties. It is not a measureo not being a ected by predicaments but the capacityto mitigate negative e ects and recover relentlessly. It issomething that we all should live not just during a one-time

crisis, but orever.


20/72


OuRdEvElOPMENT EFFECTIvENESS


21/72


Accor ing to S stainAbi ity, the British organi ationaccre ite with coining the term an the ision of the trip ebottom ine o er a eca e ago, The trip e bottom ine (3Bl)foc ses corporations not j st on the economic a e they a ,b t a so on the en ironmenta an socia a e they a

an estroy.

Risks are sources or instability or enterprises andthey are inherent in the environment. This year, how-ever, the climate or entrepreneurship has been ex-tremely exposed to economic and environmentalevents that are un oreseen and unplanned even tothe most calculating entrepreneur.

The Foundation and its partners have not walkedthrough 2009 without receiving its own blows o storms, in the literal and the gurative sense o theword.

The bene ciaries o micro nance are the micro entre-preneurs involved in retail and agricultural business-es, and home-based industries. Aside rom in ormallenders, micro nance is the only answer or the some1.78 million entrepreneurial poor in the Philippines, o

which the Foundation seeks to help in working withMFIs.

Microentrepreneurs are considered to be inherentlyrisky, largely due to their extreme susceptibility todeclining economic conditions and lack o in orma-tion on their creditworthiness. During economic un-certainties, MFIs ace not only the risk o rising de-linquencies, but also the risk o de ault to nancialinstitutions that have become sources o nancing tomany o these MFIs.

Some have looked at the crisis as an opportune timeto push or re orms and new avenues or engage-

ments. Micro nance institutions see market growthpotential rom increasing overseas Filipinos withamilies begining to engage in various entrepreneur-ial activities, both as potential MSME clients and assources or productive investments or local econom-ic development.

Aside rom quickly recomposing itsel in the light o the global nancial crisis, there are those who havestarted to refect on the e ects o climate change.With the recent climatic changes, MFIs especiallythose in the rural areas whose majority o port oliois in agricultural production have begun to ponderon how their nancial products become responsiveto the vulnerabilities o their microclients to climatechange.

Despite these scenario, the Foundation remain com-mitted in helping in as many entrepreneurial poor andseeing opportunity even in the bleakest o times.


22/72


SIARGAO BANK:Reaping back the harvest in trying times

A massive run that ollowed on Siargao Bank last-ed until the rst quarter o 2009, with withdrawalstotaling PhP10 million. It caused the loan port olioo the Bank to decrease as it was adversely a ect-ed by increase in delinquent accounts.

Managing the Banks liquidity was only a ractiono the challenge. This clipped its ability to servicethe demand or new loans and even renewals, par-ticularly or micro nance borrowers, which in re-cent years have accounted or about 10% o itsport olio. The Bank used its loan collections toservice the withdrawals.

The Bank has to weather several harrowing monthso uncertainty. It launched a campaign to win backdepositors and assure the public that it had no in-

vestment at all in the Legacy Group. At the samethe time, the Bank secured rom its stockholdersand creditors, additional unds to boost its operat-ing capital.

By the end o 2009, the Bank endured the roughsailing and operations return to normalcy. In act,its nancial position had become even strongerthan it had been be ore the bank run. FSSI notedduring its assessment o the renewal applicationo the bank, the marked increase in deposits, loanport olio, and net income, while delinquency ratedecreased during the same period.

The Banks e orts in making Surigao del Norte aprogressive province by helping out in the devel-opment o marginalized amilies has paved or theregained trust and con dence o the community.The implementation o social programs that ben-e tted its borrowers and the communities where itoperates was a solid testament to a positive com-munity relations built through time.

Catherine Epis, wi e o an employee rom the Bu-reau o Fisheries and Aquatic Resource, was ableto start a seaweeds arming business in 2008with a PhP20,000 loan to nance rom the mi-cro nance program o Siargao Bank. From thatrst three lines, Catherine plowed back the earn-ings into the business and grew it to currently 32lines. She now employs a caretaker and threeother workers, who each get PhP1,000 a monthplus ree meals and a 50% share o the pro ts.

Another bank client, Ma. Theresa Sandio, amother with a child, got a loan o PhP50,000 in2007 that she used as additional working capitalor her trading business that she started in 2005.She buys octupi rom sher olks which she sellsto public markets and restaurants in Surigao

City. With the help o 34 buying agents who pur-chases products directly rom sher olks, There-sa was able to double her daily volume throughan additional loan o PhP150,000 rom the bank.She now employs two packagers, each gettingPhP4,500 monthly with social security bene ts,several delivery workers and a part-time book-keeper. Not only was she able to buy a houseand secure the education o her child, but alsoable to put up an internet ca e business that herhusband manages.

These are a ew o the success stories that Siar-gao Bank has achieved in making a di erence inthe lives o its micro nance clients.

However, the Legacy Group scandal which brokeout in the last quarter o 2008 severely a ectedthe rural banking sector, and put to test SiargaoBanks reputation in the community. While notits own doings, Siargao Bank has to regain thetrust and con dence o the public, which arecritical actors that can make or break banking

operations.

STORY OF RESIlIENCE



23/72


FSSI continues to support Siargo Banks micro -nance program to sustain its growth. The bank incor-porated the 3BL principles not only in its corporatecommitments but in actual nancing operation. Itre uses to entertain prospective borrowers engagedin environmentally destructive activities and has pro-actively implemented a nancing program to supportthe E-Trike or Electric Tricycle, a better alternativeto gas- ed tricycles. E-Trykes do not depend on gasand do not add up to noise and air pollution. TheBank, in partnership with ISDA Foundation, holdsseminars on environmental protection and preserva-tion or prospective borrowers to create awarenessand education.

The Bank may not have put into place the most so-phisticated contingency plan. It simply understands

its business and knows what it requires to bounceback. It was able to harness support both rom inter-nal and external stakeholders and work out measuresthat will allow the Bank to survive. It rendered pru-dence to work on its side.

Siargao Bank did not only mani est determination andresiliency to recoup rom di cult and trying times.The clarity o their mission and role as a communitynancing institution in Surigao del Norte enabled theBank to leap rog and weather the test o public trust.The Bank at its best o times took an extra mile tomake meaning ul contributions in the community be-yond its expected role o extending nancing.

Indeed, doing good and doing right has its pay-o s.What better way to reap such harvest during tryingtimes.



24/72


Development port olio growth rom 2008 to 2009 in-creased by 2% which is ar below the average growthrate o 26%. The overall collection rate has alsodropped by 2.14% rom 66.15% in 2008 to 64.01%in 2009. These are mainly due to the slowdown insome o the planned business expansion o partnersand impairments undertaken in some ventures.

Despite the setbacks, the Foundation has continuedto enter into ventures as an opportunity or eco-en-terprise model-building and replication.

From a total o 87 proposals received in 2009, 46have success ully passed varying levels o approvalsworth o PhP327 million social investments or eco-enterprises. O these approvals, 17% were devotedto new enterprises and micro nance institutions.However, only hal o its targets had been accom-plished in terms o actual disbursements due to di -culty rom among partners to immediately complywith documentation requirements, or adequate li-quidity rom community savings without much de-mand or new or expansion in local businesses.

While the Foundation was able to meet its targets interms o number o projects to be supported, thereare areas that need improvement such as: 1) devel-oping projects rom among grassroots organizationsthat are wanting to build enterprises; 2) project moni-toring and remedial management measures; 3)im-proving e ciencies and quality o project appraisal;4) harnessing institutional knowledge assets, and; 5)extending proactive delivery o EEDS particularly in

sub-sector programs and enterprises.

Without doubt, FSSI has been unrelenting in demon-strating its capacity in mobilizing resources or socialinvestments in ventures that will model 3BL princi-ples. However, the challenge remains in sustainingnancial viability o enterprises primarily during eco-nomic downturns. This not only impacts on the ca-pacity o enterprises to carry on improvements in itssocial and environmental aspects in doing business.It also poses a challenge to FSSIs port olio quality

and e ectiveness to manage risks, which should beintegrated in key management processes o the insti-tution, rom project appraisal to monitoring.

MANAGING A HEALTHY BALANCE BETWEENDEVELOPMENT IMPACT AND PROFITABILITY

Table 1 2009 Project Approval Per ormance

Programs Amount in PhP No. o

projectsapproved FSCS 3,515,748 6

SPEED 17,500,000 8

COCOBIND 3,500,000 1

MEEP 294,350,000 29

SWEEP 8,162,000 2

Total 327,027,748 46


25/72


al processes and systems, and to make a di er-ence in the lives o more than 900 amilies, pushedSMPFC to move orward. The un ailing belie in thesub-sectors immense potential to contribute toenvironmental protection, generate employmentin the countryside, develop local economies, andsupport sustainable agriculture, provides the bot-tomless pool o strength or the SMPFCs workersand management to get the company back on its

eet again and again and yet again.

Business resiliency has been the ticket o SMPFCto undertake a proactive approach in responding toall the challenges and ensure operational continu-ity. It has started to look at more e cient ways odoing things: putting in place appropriate policiesand systems to ensure control and mitigate risks;institute necessary standards and protocols; investin market and product development; and improveproduction processes, equipment and technology.It has begun to look at each o its plants as a sel -contained unit with its respective revenue streamsand operations. And it is preparing itsel to becomethe market consolidator that FSSI had always envi-sioned it to be.

Transparency and stakeholder engagement is uti-lized as a primary strategy to bridge concerns andexpectations o the companys buyers, workers,suppliers and contractors, with the companys ac-tual capabilities. Despite its nancial constraints,SMPFC managed to extend some orm o support

to its workers during the period o stop-operationsas a result o the August 2009 re. The companyis ully aware that consistent quality, prompt de-livery and open communications with its buyerspromotes goodwill and continued trust in the com-panys products.

I it is o any consolation, the declining trend inlosses over the past years is testament to suchresilience o SMPFC. Prompted by its mission todeliver 3BL per ormance and become a model eco-enterprise, SMPFC carries on to stay afoat and toexplore new opportunities in the coming years.

In June 2006, FSSI decided to increase its stake inthe coco coir sub-sector by acquiring the SorianoMulti-Purpose Fiber Corporation (SMPFC) as a ullyowned subsidiary. The Foundation envisioned the30-year old company, with its extensive productionoperations in Laguna, Quezon and Bicol, diversi edproduct lines, and established markets both hereand abroad, would be strengthened by the acquisi-tion and subsequently develop the sub-sector as

one o its major players.

The SMPFC was expected to become a marketconsolidator or the coir partners o FSSI in South-ern Luzon and Eastern Visayas. However, the com-pany has yet to assume this role.

In the three years since FSSIs purchase o SMPFC,natural disasters, event-driven risks and man-madechallenges have beset the company. A bad transi-tion rom the previous owner to the newly appoint-ed management characterized the rst year o theacquisition, resulting in tightness in working capital,a management shake-up involving several manag-ers among others. Adding to the transition woeswere two super typhoons (Milenyo and Reming)that brought havoc to the production plants in Bicoland Quezon in the latter part o 2006 -- traditionallythe peak period o the companys operations.

As the company was beginning to pick itsel up itsexport markets were hit by the global nancial crisiso rom 2007 to 2008. Then as new markets were

emerging or the companys stitched products ( orgreen architecture, natural ber padding, geotech-nical engineering), the company had to endure tworeturned containers in 2009 due to costly errors be-cause o weak quality control measures. As i thesewere not enough, a re in August 2009 completelydestroyed the companys production unit in Lagu-na -- again at a time when export orders and localbedmakers orders were expected to peak.

For the company to survive all these is unthinkable.But it has. Despite the tsunamis o di culties, thecompanys unrelenting spirit to move orward, tolearn rom costly mistakes and weak institution-

SORIANO MULTI-PURPOSE FIBER CORPORATION:Unimagineable challenges, indomitable spirit

STORY OF RESIlIENCE



26/72


Achieving a balance among the three bottomlines re-mains to be a daunting challenge to the Foundationand there is no xed ormula or development recipeor each enterprise is a ected by its speci c subsec-tor conditions and local situations on how to con-tribute to a better environment and equitable socialrelations.

As a way o ensuring that its enterprise-partnersintegrate environmental and social bottomlines intheir business plans, FSSI conducts eco-enterprisedevelopment programming (EEDP), eco-enterprisedevelopment services (EEDS) and eco-enterpriseindex updating (EEI). These tools and interventionsare sources or knowledge-sharing and programdevelopment but are met with challenges related toparameters, uses and identi cation o relevant data.

The Foundation continuously learns to improve thesetools to bolster its capacity to build and communi-cate models o eco-enterprises.

To e ectively assist enterprise-partners in meeting itsthree bottomlines, an EEDS policy was dra ted andapproved. This e ectively guided the Foundation inproactively delivering technical and business devel-opment support in various orms depending on theneed o each enterprise.

For its partners in the micro nance sector, FSSIsintervention ocused in the continuation o its men-toring program the Greening the Micro nance Sec-tor. This program, aimed at opening green nancialproducts and investments in micro eco-enterpriseventures. Through a series o education and men-toring activities undertaken with partners, it resultedto di ering levels o appreciation and implementationamong its MFI partners.

By the end o 2009, 13 MFI partners have under-taken the internal EMS installation and started imple-menting their respective EM programs and projects.

These MFIs are Agdao, ASKI, Bansalan, Gata Daku,GSAC, ICTUS, KCCDFI, MASS-SPECC, PCCC,USPD, CBMO, FICOBank and NATCCO. Furthermentoring on EMS has been conducted to ve MFIpartners. Four have already completed more than50% o the documentation requirements.

Other EEDS rendered to partners are in the orm o grants and zero-interest loans or building manage-ment competencies, product development, market-ing, technical support and developing subsectorsynergies. These interventions were either requestedor proactively o ered to partner-enterprises.

Despite the tremendous need o enterprise-partners

BUILDING OPPORTUNITIES FORECO-ENTERPRISE MODEL AND REPLICATION



27/72


or EEDS, the Foundation delivered PhP300,000 orbusiness development needs. An important lessonlearned in delivering services or enterprises is thegrowing imperative to invite various expertise and in-stitutional collaborations in addressing the enterpriseand subsectors needs in an increasing challenges inthe market.

Another insight is the necessity to calibrate the EEIindicators used in evaluating the level o 3BL prog-ress among start-up eco-enterprises in order or theFoundation to see how it has ared in working withpromising but challenged enterprises.

Social entrepreneurshipSocial entrepreneurship has been in the country orthe past decade. The concept o it being a viablemodel or sustainable local economies gured promi-nently in the development practice. Two major na-tional con erences o social entrepreneurs took placein 2009 o which the Foundation has been a nancialand knowledge contributor.

The Ateneo de Manila Development Studies Programand PhilSEN-led social entrepreneurship con erenceenabled the sector to examine various existing busi-ness models and discuss parameters rom which

social entrepreneurs can gauge they social, envi-ronmental and nancial per ormance. The con er-ence, entitled Negosyo Para Sa Iba, NegosyongKakaiba, Negosyo Ka Nga Ba? was attended bymore than 200 participants rom a wide range o sectors including government, representativesrom multilateral development institutions, variousnon-government organizations, members o theacademe, students, media, representatives romvarious companies and corporate oundations, andindividuals interested in establishing their own so-cial enterprises.

FSSI also provided support and guidance on is-

sues acing the air trade sector during the Na-tional Stakeholders Meeting o APFTI and PFTF. The national orum dubbed as Working Together

or a Stronger Fair Trade Voice was instrumentalin cra ting a strategy and a policy agenda o airtrade practitioners and campaigners. In that orum,FSSI was instrumental in resonating environmentalsustainability in the air trade agenda along the ob-

jective o penetrating markets.

In 2009, FSSI also served as knowledge contribu-tors in capacity-building initiatives o networksseeking to improve their social enterprise worksuch as the FPOP and APPEND.

Projects Delivered EEDS-Support Fund

KAAKBAY PhP100,000 und or Management CompetencyBuilding or the competency o its supervisors

Tumandok PhP100,000 und approved but 75K drawn to developmarketing strategy and collaterals

DLC Handicra t PhP30,000 und or participation in National Trade Fair

Bote Central PhP20,740 or co ee stakeholders meeting on BoteCentrals Business Development Model and ormulationo synergy plan

1M Agro uel Development Corp. PhP67,000 or e cacy testing o liquid waste rombuko wastes charcoaling process

Coconut Business Integration andDevelopment Irosin

PhP10,000 or Orcullo Bicol Trade Fair

SMPFC PhP10,000 Social Development Trade Fair


28/72


STRENGTHENING TRIPLE BOTTOMLINEON THE SECTORS AND SUB-SECTORS

Microfnance Sector FSSI embarked in updat-ing and completing the second o ve moduleso the Greening the Micro nance Program. Thismodule called Greening Organizational Commit-ment on Environmental Management consists o basic EMS and EMA. FSSI continued its mentoring

process among MFI partners participating in theprogram Post-project evaluation or RBLibon andNWTF were also conducted by FSSI to draw les-sons in eco-enterprise development.

Waste Sector The Foundation also deepened itscontribution in the waste subsector through re-search and in engaging stakeholders towards 3BLentrepreneurship. A business operation and tech-nology guide or organic production was presentedto its enterprise-partners and other players in theorganic agriculture which then encouraged to orman association o organic ertilizer producers. FSSIalso contributed to the second phase o the ISSUEin the development o a sanitation system that iseconomically viable, socially acceptable, and tech-nically and institutionally appropriate.

Cococoir Sector An update coco-coir subsectorresearch was commissioned by FSSI and and dis-seminated to various coco-coir stakeholders in acon erence. The study identi ed emerging markettrends and sub-sector challenges opportunities ordevelopment. The insights presented to public and

private players rom that research were appreciatedby the PCA and DOST that resulted to their com-mitment to integrate key ndings in the cococoirdevelopment roadmap o the government.

A learning session on the application o cocopeatas a viable production input or organic ertilizerwas also held in a partners con erence last year.FSSI also acilitate in partnership with SMPFC thepublication o a bio-engineering guidebook whichwill serve as promotional and educational materialor interest groups in both the government and theprivate sector, that seeks to put in practice envi-ronmentally enhancing technologies in engineeringand construction work. The guidebook was dis-tributed and presented in the international environ-mental air which was held at SMX on March 2009.


29/72


FSSI also assisted COCOBIND-Irosin in establish-ing a PACAP-assisted coir project in Northern Sa-mar in line with the programs direction o expand-ing its coco-cluster networks.

Other subsectors A co ee business modelroundtable workshop was held in October 2009with Bote Central, an eco-enterprise partner, as themain organizer wherein a synergy plan among oth-er players in the subsector was ormulated. Thise ort hoped to create an orchestrated e ort amonglow-income armers, roasters and business sup-port entities to enhance the value o home-grownco ee beans.

The NAGKASAMA MPC has also received assis-tance in the conduct o a Sugar Industry Stakehold-ers Forum on 2010 Tari Reduction in collaborationwith PhilDHRRA, NATCCO, PDAP, and CARRD.

The project involves a commodity-approach to or-ganizing, capacity-building and enterprise devel-opment o about 300 sugar armers. The over-allobjective o the project is to increase the capacitieso sugar armers to enable them to e ectively en-gage the mainstream market thru trading o sugaramidst the threat o cheaper infux o commoditiesas a result o implementing zero to ve percent (0-5%) tari on products and commodities under the

AFTA-CEPT Sensitive List.

FSSI also supported a policy con erence o ruralelectri cation cooperatives convened by FDC. Par-

ticipants resolved to reclaim electricity as a publicgood, to de end the community-owned coopera-tive model o national electri cation against corpo-rate takeover and to repeal the EPIRA law whichapparently made it di cult or rural cooperatives tobecome sustainable. Among the resolutions is orthe sector to move towards community-based andrenewable sources o energy.

FSSI also supported the cra ting o a uni ed policyagenda o marginalized cooperatives in war-strick-en Mindanao . The 1st Mindanao CooperativePeace Forum organized by Cooperative Develop-ment Council o Cagayan de Oro City, Inc and at-tended by leaders o cooperatives owned by IPsand armers on Oct 29, 2009 resulted to improveddialogue towards better access to resources, oodsecurity and human resource development in thecooperative sector in the region. It is hoped thatthe orum would have opened opportunities ornew sub-sector development adopting sustainableagriculture and promotion o halal oods.

A guidelines or selecting sub-sectors was withinFSSI was developed or urther discussion romwhich the 3BL can best be derived.

While being instrumental in orti ying subsectors,capturing the 3BL impact o individual projects still

remains to be seen especially among micro nancepartners.


30/72


years. Hence, just months a ter the typhoon, TWHwas back on its eet. Assistance rom many well-meaning individuals and organizations were wellregarded but what probably contributed put TWHback on track is the unwavering perseverance oits leaders and personnel to prove its worthinessin pursuing its mission.

Despite the storm, it was a eat or TWH to be ableto increase its production in 2009. It has createdadditional 78 jobs and has increased its sales by40% rom PhP28 million to PhP42 million. TWHactually improved its productivity per person by19% in 2009. Their story shows that enterprise re-siliency is also achieved by continuing innovationto propel the growth o its business ventures aspart o its bigger mission or the PWDs.

TWH was ounded in 1973 by Sister Ma. Paula Valeriana Baerts, a Belgian nun, in response tothe need to help PWDs re-integrate in society.It is now one o the largest organizations o thedisabled in the country with 24 a liate homes. Amajor program aside rom advocacy is livelihoodsupport or PWDs. The TWH compound in Caintaoperates our workshops that give livelihood sup-port and training to PWDs, while also providingthem with actual employment and income.

The partnership with FSSI started in April 2009through a credit line which helped TWH increaseits production capacity. A grant assistance wasalso extended to TWH in December 2009 to helpspeed up its business rehabilitation a ter being a -ected by Typhoon Ondoy.

Thirty seven years ago, an organization was bornto rehabilitate and train persons with disabilitiesto be productive and sel -reliant members o thesociety.

Tahanang Walang Hagdanan, more amous or itsliving quiarters or the di erently-abled, has devel-

oped its cra ts to metal, woodcra t, needlecra t,packaging and handmade paper making. Throughthe years, TWH has success ully penetrated themarket due to the quality o its products and goodbusiness planning.

Like any enterprise, it has travel on the roughroads o entrepreneurship and Typhoon Ondoyhas proven to be one o the trying times the enter-prise has ever aced.

This caused a staggering PhP5.4 million o lossesin inventory o nished, in-process, and raw ma-terials or TWH in 2009. It was by ar one o thetoughest tests endured by the organization asit was the rst time that its compound was everfooded.

Waist-deep waters submerged most o the o ceequipment and workshop machines which alsoorced many o the persons with disabilities living(PWDs) and working in the workshops scamper-ing towards the only building with a second foorlocated at the arther end o the complex.

The calamity le t emotional dent among thePWDs, and also orced TWHs workshops to astandstill or many weeks. But resiliency is whathelped ound and kept TWH running all these

TAHANANG WALANG HAGDAN:Steering the wheels o change

STORY OF RESIlIENCE



31/72


INCREASING PATRONAGE FORECO-ENTERPRISE PRODUCTS

AND SERVICES

The ultimate support or eco-enterprises to four-ish is to ensure that their products and services areconsumed. For what is there or the Foundation tosustain i eco-enterprises cannot even have a airshare o the market?

Market share o eco-enterprises is indicator o sales

and o pro tability. But there is more. In a marketdominated by advertisements justi ying relentlessbuying, a market share o eco-enterprises indicatesa shi t in consumers pre erences or a sustainableworld.

For this reason, the Foundation participates in socialmarketing activities to increase the awareness o consumers on the need or ethical buying and what3BL products and services are available in the mar-ket. With unding support rom FSSI, the PFTF and

APFTI led simultaneous regional activities includingtwo educational ora and trade airs in Manila andCagayan de Oro.

The Foundation also acilitated the participation o Soriano Eco-Fiber to the 2009 Eco-Products Inter-national Fair (EPIF) organized by the Asian Produc-tivity Organization were it was able to meet its targetclients such as engineers, gardeners and industryleaders. It was also in that event that the bio-engi-neering manual or coconets was presented.

The FSSI also acilitated the entry o our o its part-ners namely: Tahanang Walang Hagdan, KaakbayEntre-Workers Cooperative, Al Jamelah and So-riano Eco-Fiber to the NGO Trade Fair and Exhibitat the TriNoma Activity Center in Quezon City rom

December 14-16, 2009 during the Social Develop-ment Celebrations.

The Foundation also assisted Tumandok Cra ts Inc.in its brand strategy, production o marketing collat-erals and developing channels or distribution.

The in omercial produced by FSSI to raise theconsumers awareness on ethical buying, Let uschange the world, has been an e ective teachingsupplement in many activities o air trade advo-cates nationwide. In addition, the Foundation alsobegan leveraging social media to disseminate sub-sector studies generated rom various partnerships.It seeks to promote its work through video and pho-tos to its extended network o ethical consumers,researchers, and campaigners or economic justiceand sustainable agriculture.

For three straight years, the Foundation has sup-ported Philippine Business In Development (PhilBiD) Challenge, an annual business competitionhosted by PBSP. Its continued membership in the

Technical Working Group composed o reputablenancing institutions and corporations has becomea learning venue or corporate managers and de-velopment practitioners to gain perspectives andimprove the parameters o a viable business that in-clude bottomlines that measure environmental andsocial contributions. In the recent PhilBiD challenge,

FSSI also advocated or the calibration o the se-lection criteria and inclusion o a Special Award orBest 3BL Business Plan to recognize initiatives o small producers adhering to 3BL principles.


32/72


POOlINGRESOuRCES

TO ENABlEECO-ENTERPRISES


33/72


CSO managed enterprises, due to its nature to be in the juvenile enterprise stage have limitations to insti-tutionalize critical managements systems and to access needed capital rom nancial institutions to propelgrowth. Ventures o eco-entrepreneurs that are already generating income are not shielded rom negative exter-nalities such as un air competition that are prevalent in the existing trade system. Some stable eco-enterprise

can also be vulnerable to natures wrath. As experienced by partners, the twin storms, Ondoy and Pepeng haveravaged some o the Foundations micro nance and enterprise partners. However, an eco-entrepreneur doesnot alter too easily but instead immediately looks or ways to bounce rom crises.

All o these actors impact on the ability o eco-enterprises to achieve and sustain their triple bottomlines.

In this respect, the Foundation whose social investments is oremost in the orm o loans mobilized resourcesto support initiatives that will help demonstrate support to building resiliencies o communities and model sus-tainable livelihoods among poor communities. Two proposals have been approved amounting to a total o PhP63.179 million worth o grants rom the Swiss Interchurch Aid, Swiss Solidarity and the European Com-mission.

The Foundation was also able to use in additional unds or PATAMABA, an existing enterprise partner com-posed on in ormal workers. Through a US$5,000.00 grant rom Western Union Foundation, 45 individual mem-bers, majority o which are women were able to undergo training on gender sensitivity, simple bookkeeping andbasic entrepreneurship, and organization and leadership. The project also enabled the bene ciaries to build

new or expand their existing small enterprises relatedto rice and production, dried sh and vegetable trad-ing, hog raising, retail stores, home-based ood pro-cessing, scrap materials trading and retail trading o ready-to-wear clothes.

FSSI acilitated a disaster agriculture rehabilita-tion project with existing enterprise-partners to en-able poor armers in Benguet, Cagayan and Isabelaprovinces cope with the impacts o typhoon Pepeng(Parma). The Foundation pulled in ASKI, JVOFI andKapatagan to partner with FSSI in implementing theproject that seeks to support the rehabilitation o atleast 1,427 arming amilies through provision o agri-cultural production inputs such as seeds and ertiliz-

ers and materials or repair o arm in rastructure. Theproject also aims to generate savings among a ectedarmers by opening access to zero-interest agricul-tural support which otherwise would be availed romtraders at usurious rates. In the long term, it hopesto cushion the impact o huge losses in householdincome and address ood security issues due to cli-mate change.

The organizational and nancial capacity o FSSI tomeet administrative requirements o relatively big-

ger unding organizations and to provide counterpartunds which CSO-managed enterprises would ndit di cult to provide are assets that were mobilizedto generate unds or the Foundations grant making

acility. It has orged partnerships with FPE, PTFCFand PEF to leverage resources with the EuropeanCommission or a project in the province o Isabelathat seeks to integrate the critical aspects o strate-gic governance, orest management and protectionand enterprise development.

The Foundation ensured that new projects are rel-evant to its strategic objectives and that it meetsthe management requirements or implementation.FSSI is able to harness other local resource institu-tions to support and enhance complementation toensure synergy and integrated development inter-ventions to poor communities.

However, these new projects have increased thedemand or grants contribution o FSSI in the ormo counterpart unds on top o its annual commit-ment o PhP5 million annual allocation or the FSCS,its grantsgiving program. Likewise, the global nan-cial and economic crisis delimited the capacity o local resource organizations to provide additionalnancial commitments in new ventures.

Although new partnerships are ways to infuenceand promote 3BL to partners and members it also

have setbacks to FSSI in relation to the cost o de-veloping programs and meeting additional humanresource requirements.


34/72


AdvANCINGAdvOCACIESAS A SOCIAlORGANIzATION


35/72


Economic empowerment o marginalized communities requires changes in prevailing policies and practicesthat causes their discrimination. The thrust o the Foundation is to initiate collaboration with organizations andnetworks to increase stakeholders awareness, improve their capacities and contribute to policy developmentprocesses that a ect the countrys environmental sustainability, social equity and economic viability.

The Foundation increased its participation and role in policy development processes. It has contributed in thediscussions as member o the UNCSA as a plat orm or civil society organizations to engage government anddonors on development priorities. It has also engaged in climate change discussions in di erent networks tolearn as a resource institution and to raise discussions on the impacts to small producers and how poor liveli-hoods are a ected. At the time when world leaders were discussing new commitments to reduce carbon emis-sions in Copenhagen last year, FSSI walked with basic sectors as part o the PMCJ in calling or developedcountries pay climate debt obligations.

A orum participated by members, enterprise-partners and media was organized in June 2009 to enlighten itsstakeholders on the global nancial crisis that debilitated rich and poor economies. Reputable economists rom

di erent perspectives have shed light on the issue which acilitated discussions among development practitio-ners and entrepreneurs on ways to best respond or adapt to the situation.

Brought about by the increasing need to nd alternative ways at nancing development including resourcesor climate change adaptation and mitigation, FSSI in partnership with FDC held a orum to showcase existing

debt-swap arrangements in the country. The FSSI,with FPE, PFTFC and economic justice campaigners,were able to lay down options and principles or a

just and sustainable debt strategy. A debt swap wasamong the identi ed possible options to reduce ex-ternal debt or social impacts.

In the context o an unpopular government and ananticipated national elections in 2010, FSSI engagedin initiatives that sought to develop in ormed voting.Economic empowerment is dependent a ter all onleaders which decide how and to whom resourcesshould be allocated to.

The 2009 Social Development Celebrations led bythe CODE-NGO and the PEF supported by FSSI

with other organizations, enabled CSOs to raise criti-cal development concerns to candidates running orthe topmost leadership position through a presiden-tial candidates orum. It was also a vehicle to in ormthe public on the perspectives o presidentiables re-garding developmental issues advocated by NGOnetworks and coalitions, especially the youth sector.

In a separate initiative, FSSI also contributed to PETAsvoters education campaign through the staging o amusicale entitled Si Juan Tamad, Ang Diyablo at ang

5 Milyong Boto on Oct 12, 2009. The play sought toopen the eyes o the youth as change agents by par-ticipating in the political processes either by in ormedvoting and community work.

The FSSI also increased its engagement with themedia either to in orm the public on policy issues a -ecting sustainable development or to promote eco-enterprises. There is an increase in discussion o oneco-entrepreneurship or issues surrounding it in onlineand print news, radio and television. The media brie -ings in celebration o the World Fair Trade Day andthe pending legislation supportive o a nuclear energyacility being packaged as a clean energy option wereboth actively participated by leaders and enterprise-partners o FSSI and networks.

Issues a ecting economic empowerment o mar-ginalized sectors are ceaseless and orthcoming. Tobe e ective and responsive amid limited resourcesor advocacy, the Foundation has yet to identi y key

strategic policy areas with its stakeholders to developmeaning ul interventions and orm strategic partner-ships.


36/72


OuRGOvERNANCE


37/72


Our strength lies in our ability to understand our triple bottom-lines o generating environmental sustainability, social equity andfnancial soundness in various perpectives -- as we are comingrom di erent felds in social work. Our diversity can sometimesmake it di fcult to agree on things, but is also enriching in manyways in fnding appropriate solutions to the challenges in achiev-ing sustainable economic production.

To ensure e ective decision-making, the Foundation improved its policies and systemsto e ectively to guide the delivery o services to partners in achieving the triple bottom-line principles. E orts towards knowledge build-up was continually undertaken throughmanagement, program reporting and in ensuring adequate documentation are gener-ated in the objective o improving development intervention.


38/72


Improving human resources

FSSI strived to develop its human resource by creat-ing an environment that is conducive or continuouslearning, drive or excellence and clear accountabili-ties. A revised individual per ormance managementsystem and institutional rewards and incentive sys-tem had been cra ted to align individual and institu-tional goals and to oster better eedback processesthat will acilitate developmental aspects o a per or-mance review.

With the objective o ostering a work-li e balanceand reducing its carbon ootprints, FSSI has ex-tended the implementation o a Four-Day Workweekwhich it initially piloted or two months in 2008. Asa result, most sta expressed that they were ableto spend more time or amily, riends and other so-

cial unctions. In terms o reducing its environmentalimpacts, FSSI was able to reduce its electricity con-sumption by 15%-22% and its water consumptionby 45% rom 2008.

Opening doors or dialogue

One o the major initiatives o the Foundation in2009 was the conduct o our major con erencesconvening our enterprise-partners. These meet-ings, not being regular Foundation activities, gaveenterprise-partners the opportunity to deepen their3BL knowledge and commitment, network andlearn rom other projects. It created a mechanismor enterprise-partners to share their wealth o ex-periences and expertise as valuable inputs in pro-gram development.

In general, the partners con erences recognizedthe importance o advocacy as they develop theirsocial enterprises, the need or retooling theirknowledge and understanding about 3BL princi-ples, expand appropriate approaches to model 3BL

through sharing o business practices and environ-mental management technologies. Dialogue withpartners also opens up opportunities or businesslinkages and resource mobilization. Such process, i regularly implemented would enhance a relationshipthat goes beyond that o between a grantee and agrantor; an investor and investee.


39/72


Financial management

The FSSI has ensured e cient cash fow manage-ment which optimizes investment returns and meet-ing unds disbursements requirements to develop-ment projects. Its improved compliance to internalcontrol systems and standards protocols o all nan-cial transactions.

While managing loan delinquency and ROPOA man-agement remains to be a major challenge, appropri-ate remedial measures are continually undertaken.However, it is recognized that the Foundation needsto urther strengthen its capacity to manager riskand uncertainties particularly in the light o continu-ing economic vulnerabilities and threats o climatechange.

increasing delinquency particularly among new ac-counts had been identi ed as a strategies or 2010.

Environmental and gender mainstreaming

The environmental management and gender ocalteams are institutional structures in the Foundationestablished to ensure that its bottomlines on genderequality and environmental soundness are achieved.Each team has its plans and members.

The internal EMS implementation in FSSI o ce op-eration was started way back in 2007. An environ-mental management program ocused on energyreduction, solid waste reduction and management,ink reduction and paper reduction has been cra tedas priority environmental aspects. During the currentyear, the EMS team has started the ormal docu-mentation o resource consumption o the Founda-tion as a basis or managing its carbon ootprintsand was able to nalize operational procedures on

energy reduction and solid waste management.

A gender mainstreaming plan was ormulated whichidenti ed developing policies, people, programs andenabling mechanisms as ocus areas or implemen-tation. At least one enterprise in each o the pro-grams are to be piloted or gender mainstreamingin 2010. Likewise, the Foundation consulted withother development agencies on developing param-eters to ensure gender equity in enterprise-relatedprojects.


40/72


COMMITTEES

OuR PEOPlE

Alliance of Philippine Partners in Enterprise Development (APPEND) Association of Foundations (AF)Convergence for Community Centered Development (CONVERGENCE)Federation of Peoples Sustainable Development Cooperative, Inc (FPSDC)Freedom from Debt Coalition (FDC)Green Forum Philippines (GF)Swiss Association for International Cooperation (HELVETAS)Mindanao Alliance of Self-Help Society Southern Philippines Education

Center for Cooperatives (MASS-SPECC)Mindanao Coalition for Development (MINCODE)National Confederation of Cooperatives (NATCCO)National Council of Churches in the Philippines (NCCP)National Council or Social Development (NCSD)National Secretariat or Social Action (NASSA)Partnership o Philippine Support Service Agencies (PHILSSA)Philippine Business or Social Progress (PBSP)Philippine Network or Rural Development Institute (PhilNet-RDI)

Philippine Partnership or the Development o the HumanResources in Rural Areas (PHiLDHRRA)

Swiss Interchurch Aid (HEKS)Philippine Cooperative Federation (PCF)Womens Action Network or Development (WAND)

INTERNAL AUDIT AND GOVERNANCE COMMITTEECHAIRPERSON: Virginia Juan, APPEND

MEMBERS:Norman Jiao, AFWil redo Dimamay, NATCCO Aurora Villaviray, DoF

INVESTMENTS AND FINANCE COMMITTEECHAIRPERSON:Lauro C. Millan, NCCPMEMBERS:Felix Taedo, HELVETASGil Salazar, PBSPNap Reymunde, MINCODE Amie Gonzalez, PCFJenni er Cruz, PHILSSA Aurora Villaviray, DoF

THE GENERAL ASSEMBLY



41/72


Martin Tanchuling, FDCChairperson

Sam Ferrer, Green Forum Vice-Chairperson

Florencia Dorotan,WANDCorporate Secretary

June Rodriguez, Convergence Auditor

Lauro Millan, NCCPTreasurer

Mercedes Castillo, PhilDHRRA Member

Barbara Salazar, HEKSMember

Aurora Luz VillavirayDepartment o Finance

Ex-O cio Member

Atty. Alex Enriquez Asst. Corporate Secretary

BOARD OF TRUSTEES

PROJECTS COMMITTEE CHAIRPERSON:Sam Ferrer, Green Forum

MEMBERS:Barbara Salazar, HEKSJune Rodrguez, CONVERGENCEFlorencia Cassanova-Dorotan, WANDChristy Rowena Plantilla, FPSDCReuel Velarde, PhilNet-RDILauro C. Millan, ECLOFCarlito Santos, NASSA Virginia Juan, APPENDWil redo Dimamay, NATCCOErma Ramos, PHILDHRRA Betta Socorro-Salera, PCF Aurora Villaviray, DoF

COMMITTEE ON EDUCATION AND ADVOCACYCHAIRPERSON:Mercedes Castillo, PHiLDHRRA

MEMBERS:Noel Embing, APPENDCarlito Santos, NASSA Dick Balderrama, PHILSSA DaniDaniel, FDCAurora Villaviray, DoF

INTERNAL AFFAIRS COMMITTEECHAIRPERSON: Florencia Cassanova-Dorotan, WANDMEMBERS:Barbara Salazar, HEKSJune Rodrguez, CONVERGENCE

Virginia Juan, APPEND Aurora Villaviray, DoF



42/72


43/72

43FSSI ANNUAL REPORT 2009 43FSSI ANNUAL REPORT 2009


44/72


FOUNDATION FOR A SUSTAINABLE SOCIETY (FSSI), INCORPORATED(A Non-stock, Non-pro t Organization)STATEMENTS OF FINANCIAL POSITION

DECEMBER 31, 2009 AND 2008(Amounts in Philippine Pesos)

Notes 2009 2008

A S S E T S

CURRENT ASSETS

Cash and cash equivalents 4 P 15,915,356 P 17,590,275Loans and other receivables - net 5 111,647,052 111,938,132Held-to-maturity investments 7 107,880,000 100,280,000

Total Current Assets 235,442,408 229,808,407

NON-CURRENT ASSETSLoans and other receivables - net 5 78,794,832 80,825,258Financial asset at air value through pro t or loss 6 8,441,087 8,162,315 Available- or-sale nancial assets 8 383,242,975 375,355,478 Advances to and investments in subsidiary and

9 39,411,619 53,510,423associate - netProperty and equipment - net 10 22,123,269 5,333,213Investment properties 11 34,320,559 34,320,559

Other assets - net 12 6,576,873 5,914,200

Total Non-current Assets 572,911,214 563,421,446

TOTAL ASSETS P 808,353,622 P 793,229,853

LIABILITIES AND FUND BALANCE

CURRENT LIABILITIESUnused project unds 13 P 751,847 P 2,435,056 Accounts payable and other liabilities 14 5,254,847 2,534,277Income tax payable 19 9,951 13,047

Total Current Liabilities 6,016,645 4,982,380

FUND BALANCEMembers contribution 85,500 85,500Grant 454,822,597 454,822,597 Accumulated air value gains (losses) 9,187,118 ( 3,738,109 )Cumulative excess o revenues over expenditures 338,241,762 337,077,485

Total Fund Balance 802,336,977 788,247,473

TOTAL LIABILITIES AND FUND BALANCE P 808,353,622 P 793,229,853

See Notes to Financial Statements.

STATEMENTS OFFINANCIAl POSITION


45/72


FOUNDATION FOR A SUSTAINABLE SOCIETY (FSSI), INCORPORATED(A Non-stock, Non-pro t Organization)

STATEMENTS OF COMPREHENSIVE INCOMEFOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

(Amounts in Philippine Pesos)

Notes 2009 2008

REVENUESFinance income 16 P 53,661,149 P 61,778,013Grants 15 1,984,734 3,747,765Others 407,686 132,689

56,053,569 65,658,467

EXPENDITURESFinance costs 16 29,921,471 21,724,428Salaries and employee bene ts 18 10,481,034 10,077,431Project and developmental grants 17 4,281,243 5,260,996Meetings and con erences 2,721,611 2,393,332In ormation, communications

and advocacy2,067,590 370,355

Project monitoring and developmentPro essional ees

1,416,3321,177,724

2,097,771698,847

Depreciation 10 588,237 1,178,971Security services 489,821 492,857Transportation 272,954 722,572Miscellaneous 1,270,506 1,522,231

54,688,523 46,539,791

EXCESS OF REVENUES OVER EXPENDITURESBEFORE INCOME TAX 1,365,046 19,118,676

TAX EXPENSE 19 200,769 120,147

EXCESS OF REVENUES OVER EXPENDITURES

OTHER COMPREHENSIVE INCOMENet unrealized gain (loss) on

8

P 1,164,277 P 18,998,529

available- or-sale nancial assets 13,753,097 ( 26,573,728 )Reclassi cation to pro t or loss ( 827,870 ) 11,559,597

12,925,227 ( 15,014,131 )

TOTAL COMPREHENSIVE INCOME P 14,089,504 P 3,984,398


STATEMENTS OFCOMPREHENSIvE INCOME



46/72



STATEMENTS OF CHANGES IN FUND BALANCEFOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008


Notes

MEMBERS CONTRIBUTION P 85,500 P 85,500

GRANT 1 454,822,597 454,822,597

ACCUMULATED FAIR VALUE GAINS (LOSSES)

Balance at beginning o year ( 3,738,109 ) 11,276,022

Other comprehensive income (loss) or the year 8 12,925,227 ( 15,014,131 )

Balance at end o year 9,187,118 ( 3,738,109 )

CUMULATIVE EXCESS OF REVENUESBalance at beginning o year

337,077,485 318,078,956

Excess o revenues over expenditures or the year 1,164,277 18,998,529

Balance at end o year 338,241,762 337,077,485

TOTAL FUND BALANCE P 802,336,977 P 788,247,473

2008


2009

STATEMENTS OF CHANGESIN FuNd BAlANCE


47/72



STATEMENTS OF CASH FLOWSFOR THE YEAR ENDED DECEMBER 31, 2009 AND 2008


Notes 2009 2008

CASH FLOWS FROM OPERATING ACTIVITIESExcess o revenues over expenditures be ore income tax P 1,365,046 P 19,118,676 Adjustments or:

Interest income 16 ( 48,237,331 ) ( 50,516,275 )

Impairment losses 16 27,511,035 16,869,376Unrealized oreign currency gains-net 16 ( 876,591 ) ( 8,609,170 )Gain on sale o available- or-sale nancial assets 16 ( 820,022 ) ( 782,112 )Depreciation 10 588,237 1,178,971Fair value gains (losses) on nancial asset

at air value through pro t or lossGain on disposal o property and equipment

16 ( 513,551 )-

219,218(_ _ 2,584 )

Operating loss be ore working capital changes ( 20,983,177 ) ( 22,523,901 )Decrease (increase) in loans and other receivablesIncrease in other assetsDecrease in unused project undsIncrease in accounts payable and other liabilities

( 2,961,902 ) 3,570,129( 662,673 ) ( 333,194 )( 1,683,209 ) ( 2,327,433 )

2,720,570 1,443,357Cash used in operations ( 23,570,391 ) ( 20,171,042 )Cash paid or income taxes ( 203,865 ) ( 117,739 )

Net Cash Used in Operating Activities ( 23,774,256 ) ( 20,288,781 )

CASH FLOWS FROM INVESTING ACTIVITIESInterest received 40,604,175 8,684,646 Acquisitions o property and equipment 10 ( 17,381,814 ) ( 427,654 ) Acquisitions o held-to-maturity investments ( 7,600,000 ) ( 8,900,000 )Increase in available- or-sale nancial assets 5,857,752 25,958,886Decrease in advances to and investments in subsidiary and

( 495,667 )

-associateIncrease in nancial assets at air-value-through pro t and

234,779-

lossProceeds rom disposal o property and equipment 3,521 2,585Increase in investment properties - 250,755

Net Cash From Investing Activities 21,222,746 25,569,218

E ect o Exchange Rate Changes on Cash and Cash Equivalents 876,591 ( 715,654 )

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ( 1,674,919 ) 4,564,783

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 17,590,275 13,025,492

CASH AND CASH EQUIVALENTS AT END OF YEAR P 15,915,356 P 17,590,275

Supplemental In ormation on Noncash Investing and Financing Activities:

In 2008, the Foundation oreclosed a parcel o land held as collateral or a project loan receivable amounting to P2.2 million (see Note 11). Also in 2008, the Foundation entered into alease-to-own arrangement or the parcel o land oreclosed in previous years amounting to P2.3 million which was accounted or by the Foundation as nance lease. Outstanding bal-ance o the nance lease receivables amounted to P2.0 million and is presented as part o Loans and Other Receivables account in the statement o nancial position (see Note 5).

STATEMENTS OF CASH FlOWS




48/72


NOTES TO FINANCIAl STATEMENTS

FOUNDATION FOR A SUSTAINABLE SOCIETY (FSSI), INCORPORATED (A Non-stock, Non-proft Organization)

NOTES TO FINANCIAL STATEMENTSDECEMBER 31, 2009 AND 2008(Amounts in Philippines Pesos)

1. ORGANIZATIONAL INFORMATION Foundation or a Sustainable Society (FSSI), Incorporated(the Foundation) is a non-stock, non-pro t organizationregistered with the Philippines Securities and ExchangeCommission on September 6, 1995. The Foundation is presentlyengaged in providing nancial and non- nancial servicesby means o grants,guarantees, loans and equity in usion tocommunity-based eco-enterprises. The Foundation holds 100%ownership interest in Soriano Multi-Purpose Fiber Corporation

(SMPFC), a company also incorporated in the Philippines and isengaged in the processing o coir ber and by-waste products. On September 6, 1995, the Philippine Government, through theDepartment o Finance, granted P454.8 million consisting o 5%in cash and 95% in government securities to the Foundationrom the proceeds o a debt cancellation under the Bilateral

Agreement on the Reduction o External Debt entered intoby the Philippines and Switzerland on August 11, 1995. OnDecember 16, 2003, the Swiss Government, in a joint statementby the Embassy o Switzerland represented by the Board oTrustees (BOT), expressed its decision to exit rom the BOT o theFoundation. The decision was a result o a vote o con dencein the Foundations management to continue its operations

o empowering various marginalized communities in thePhilippines. The Foundations registered o ce, which is also its principalplace o business, is located at Unit E, 46 Samar Avenue cornerEugenio Lopez Street, South Triangle, Quezon City.

The nancial statements o the Foundation or the year endedDecember 31, 2009 (including the comparatives or the yearended December 31, 2008) were authorized or issue by theFoundations BOT on September 1, 2010.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The signi cant accounting policies that have been used in thepreparation o these nancial statements are summarized below.These policies have been consistently applied to all the yearspresented, unless otherwise stated.

2.1 Basis o Preparation o Financial Statements

(a) Statement o Compliance with Philippine Financial Reporting Standards

The nancial statements o the Foundation have been preparedin accordance with Philippine Financial Reporting Standards(PFRS). PFRS are adopted by the Financial Reporting Standards

Council (FRSC) rom the pronouncements issued by theInternational Accounting Standards Board.

The nancial statements have been prepared using themeasurement bases speci ed by PFRS or each type o asset,

liability, income and expense. These nancial statementshave been prepared on the historical cost basis except orthe revaluation o certain nancial assets. The measurementbases are more ully described in the accounting policies thatollow.

(b) Presentation o Financial Statements

The nancial statements are presented in accordance withPhilippine Accounting Standard (PAS) 1 (Revised 2007),Presentation o Financial Statements. The Foundation electedto present all items o income and expenses in a singlestatement o comprehensive income. Two comparative periodsare presented or the statement o nancial position when theFoundation applies an accounting policy retrospectively, makesa retrospective restatement o items in its nancial statements,or reclassi es items in the nancial statements.

(c) Functional and Presentation Currency

These nancial statements are presented in Philippine pesos,the Foundations unctional currency and presentation currency,

and all values represent absolute amounts except whenotherwise indicated.

Items included in the nancial statements o the Foundationare measured using the Foundations unctional currency, thecurrency o the primary economic environment in which theentity operates. 2.2 Adoption o New Interpretations, Revisions and

Amendments to PFRS

(a) E ective in 2009 that are Relevant to the Foundation

In 2009, the Foundation adopted the ollowing new revisionsand amendments to PFRS that are relevant to the Foundationand e ective or nancial statements or the annual periodbeginning on or a ter January 1, 2009:

PAS 1 (Revised 2007) : Presentation o Financial StatementsPFRS 7 (Amendment) : Financial Instruments: Disclosures Various Standards : 2008 Annual Improvements to PFRS

Discussed below are the e ects on the nancial statements othe new and amended standards.

(i) PAS 1 (Revised 2007),Presentation o Financial Statements , requires an entity to present all items o income

and expense recognized in the period in a single statemento comprehensive income or in two statements: a separatestatement o income and a statement o comprehensiveincome. Income and expense recognized in pro t or loss ispresented in the statement o income in the same way as the


49/72


NOTES TO FINANCIAl STATEMENTS

previous version o PAS 1. The statement o comprehensiveincome includes the pro t or loss or the period and eachcomponent o income and expense recognized outside o pro tor loss or the non-owner changes in equity, which are nolonger allowed to be presented in the statements o changes inequity, classi ed by nature (e.g., gains or losses on available-or-sale assets or translation di erences related to oreignoperations). A statement showing an entitys nancial positionat the beginning o the previous period is also required whenthe entity retrospectively applies an accounting policy or makesa retrospective restatement, or when it reclassi es items in itsnancial statements.

The Foundations adoption o PAS 1 (Revised 2007) did not resultin any material adjustments in its nancial statements as thechange in accounting policy only a ects presentation aspects.The Foundation has elected to present a single statement ocomprehensive income (see Note 2.1).

(ii) PFRS 7 (Amendment),Financial Instruments: Disclosures . The amendments require additional disclosuresor nancial instruments that are measured at air value in thestatement o nancial position. These air value measurementsare categorized into a three-level air value hierarchy, which

refects the extent to which they are based on observablemarket data. A separate quantitative maturity analysis mustbe presented or derivative nancial liabilities that shows theremaining contractual maturities, where these are essential oran understanding o the timing o cash fows. The change inaccounting policy only resulted in additional disclosures(see Note 23.2).

(iii) 2008 Annual Improvements to PFRS. The FRSChas adopted the Improvements to PFRS 2008 which becamee ective or the annual periods beginning on or a ter January1, 2009. Among those improvements, the ollowing are theamendments relevant to the Foundation:

PAS 1 (Amendment), Presentation o Financial Statements . The amendment clari es that nancial instrumentsclassi ed as held or trading in accordance with PAS 39 are notnecessarily required to be presented as current assets or currentliabilities. Instead, normal classi cation principles under PAS1 should be applied. The Foundation determined that adoptiono this amendment had no material e ect on its 2009 nancialstatements.

PAS 19 (Amendment), Employee Benefts . Theamendment includes the ollowing:

- Clari cation that a curtailment is consideredto have occurred to the extent that bene t promises area ected by uture salary increases and a reduction in thepresent value o the de ned bene t obligation results innegative past service cost.

- Change in the de nition o return on plan assetsto require the deduction o plan administration costs in the

calculation o plan assets return only to the extent that suchcosts have been excluded rom measurement o the de nedbene t obligation.

- Distinction between short-term and long-termemployee bene ts will be based on whether bene ts are dueto be settled within or a ter 12 months o employee servicebeing rendered.

- Removal o the re erence to recognition in relationto contingent liabilities in order to be consistent with PAS 37,Provisions, Contingent Liabilities and Contingent Assets , whichrequires contingent liabilities to be disclosed and not recognized.

The Foundations management assessed that this amendmentto PAS 19 had no material e ect on its 2009 nancial statements

PAS 39 (Amendment), Financial Instruments:Recognition and Measurement. The de nition o nancialasset or nancial liability at air value through pro t or loss asit related to items that are held or trading was changed. A nancial asset or liability that is part o a port olio o nancialinstruments managed together with evidence o an actual recentpattern o short-term pro t taking is included in such a port olio

on initial recognition. The Foundation determined that adoptiono this amendment had no material e ect on its 2009 nancialstatements.

PAS 40 (Amendment), Investment Property.PAS 40 is amended to include property under constructionor development or uture use as investment property in itsde nition o investment property. This results in such propertybeing within the scope o PAS 40; previously,it was withinthe scope o PAS 16. Also, i an entitys policy is to measureinvestment property at air value, but during construction ordevelopment o an investment property the entity is unable toreliably measure its air value, then the entity would be permittedto measure the investment property at cost until construction or

fssi annual report 2009

Documents