Presentation on theme: "Case Study ：Mercy Charitable Foundation"— Presentation transcript:
1Case Study ：Mercy Charitable Foundation 指導教授：王俊程第四組：鍾佳蓉、蔡青潣、宋政桓、陳昭錡、王琮仁
2Agenda Introduction of Mercy Charitable Foundation Conflict between Benefit and EthicThe Counterpart Alliance for Partnership (CAP)ChallengesSocial Impact and Business ResultsQ&A
3Introduction of Mercy Charitable Foundation Christian faith-based NGO, founded in 1997Zhytomyr in Ukrainethe problems result from the high unemployment rate(60%)the incident of Chernobyl nuclear power plant
4Activities For homeless children For elderly and substance abuse Provide mealsProvide mealsOffer educational,social activities,legal aid andcounseling programsOffer educational,social activities,legal aid andcounseling programs
5country economic situation Worsenedcountry economic situationFinanceMercyCharitableFoundationLocal NGOsbusiness partnersinternational donorsLocal agriculturalproducersand businesslocal governmentPrior Financial SupportDecide to initiate income-generating activitiesto sustain the organization and its operation.
6New 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.
7Conflict between Benefit and Ethic Sell alcohol and cigarettes or not？Benefit twicePrior activity is to help young people to quit smoking and avoid drugs and alcohol.It is estimated over 50% of the population in Ukraine smokesSome business advisors predict that the Café would go bankrupt in case of not selling alcohol and cigarettes.
8Decision to Start Kovcheg Café Smoke- and alcohol-free restaurantLow price strategy and emphasis on qualityKovcheg Café provides different service from other café in Zhytomyr.
9The Investment in FarmProvide vocational training and rehabilitation for drug addicts and alcoholicsReduce the incidents of relapseGive drug addicts and alcoholics in recovery new possibilities to earn an incomeProvide agricultural products to the café and Mercy’s free meals program.
10The 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.
11What 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.
12What did CAP do for Mercy?(2/3) The most important assistance was Marketing.At first, Mercy’s marketing approaches were random: 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.
13What did CAP do for Mercy?(3/3) Develop a niche market —The café serves a small, well-targeted market with a clearly defined concept: “healthy place.”Faith-based/Christian ethic —Mercy leveraged NGO relationships, networks and reputation as marketing channels.Low price penetration strategyHigh quality product is the first priorityResponsive to customer demand —Developing products and services according to customer preferences.
14Challenges- Financial Mercy lacked funds to invest in full-scale renovation and upgrades for the café.The kitchen needs a better ventilation system, a major expense.The café could serve more customers by building additional dining space.Mercy received a $1,000 loan from the CAP Program, but could not secure a bank loan.Utility prices have skyrocketed in 2000 & 2001.
15Challenges- LegalThere 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.
16Challenges- Human resources At fist, the Mercy team struggled with human resource and management issues:Professional manager or someone who understands Mercy’s mission?The number one criteria is character assessment—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.
17Challenges- 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.
18Challenges- Political Zhytomyr had a corrupt mayor who was vehemently 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.
19Social Impact and Business Results(1/4) The organization’s entire annual operating budget is covered by income earned from its entire activities94%($9,350) from the three thrift shops in 20016%($597) from the caféthe café played an invaluable role in raising political and public awareness regarding healthful lifestyle
20Social 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 SwedenThe 11- to 13-year-olds took third placeThe 14- to 17-year-olds took fifth place
21Social Impact and Business Results (3/4) Increased job creation in Zhytomyr CityAchieved sustainability of Mercy Charitable Foundation by creating a permanent funding source through its social enterprises and independence from donor supportGenerate incomeLaunched three new social enterprise thrift shops that contributed $9,350 or approximately 94 percent of Mercy’s budget
22Social Impact and Business Results (4/4) Provided 60 free meals a day in 2001; over 100 projected for 2002; 150 projected for 2003Changed public opinion and social consciousness about healthy lifestyle choicesInfluenced public policy and legislation for future social enterprisesIncreased cross-sector cooperation between NGOs, business and government
23Key Success Factors of Kovcheg Café Common missionTeam is very importantNiche creationCounterpart alliance for partnership CAP programSelf-confidence and determinationMarketingDevelop a niche marketHigh quality product is the first priorityLow pricesFaith-based/Christian ethicResponsive to customer demand
24Advice Don’t be afraid Get a good lawyer and learn the law Put together a good teamUse personal contacts and work with those people that you already knowOperate transparently and abide by the lawGet involved in the community and local politics
25Q&A How to improve the financial state of Mercy? Short term Long term Increase the price of mealLower the cost of operationHigher class meal for business menLong termExtend operation timeProvide additional services
26Q&A(2) Bribe the health department? Bribe: get higher profit and serve more clientsNo bribe: no money and no clientsNo money