The Phoenix Fund

The Phoenix Fund is helping Guatemalan farmers break into new and more lucrative markets by helping them grow high-value crops such as pineapple. Photo: David Evans/Mercy Corps

Across the developing world, communities are emerging from conflict, oppression and natural disasters. One key to successful, lasting recovery is economic development. Small businesses, including farmers, have the quickest recovery potential, but are often not included in initial large agency grants.

The Phoenix Fund gathers private seed capital to start-up projects in some of the world's poorest countries. It is designed to encourage high-risk high-reward ventures in communities recovering from war or social upheaval. Large foundations and government agencies are often less willing to support these kinds of urgent and innovative programs.

Mercy Corps capitalized the Phoenix Fund in 2005 to finance dynamic start-up programs in countries such as Nepal, Guatemala, Kyrgyzstan and the Ethiopia. The Fund is capitalized through charitable contributions.

Selecting global projects
Mercy Corps Country Directors manage comprehensive programs in more than 35 countries. These Directors submit proposals to the Phoenix Fund, which are evaluated by Mercy Corps staff and advisors with extensive experience in economic development and business. Grant approvals are made promptly to provide timely access to funds. Once approved, Country Directors and their staff implement and manage the project, typically in partnership with local organizations and communities

Successful proposals outline how funds will meet critical needs and achieve enduring change. We look for proposals that include:

• Livelihood creation: creation of a significant number of new jobs
• Income increase: higher earnings by a significant number in the community
• Social contribution: positive impact on conflict resolution, health, education, and community development
• Proof of concept: development of clear metrics to secure follow-on government and foundation funding
• Scalability: project can serve as a model for additional funding and in other countries Measurable outcomes: tracking and reporting of economic and non-economic outputs

The annual budgets of most Phoenix Fund proposals range from $25,000 to $75,000 — a small investment in U.S. terms, but a substantial sum in developing countries. If a project is selected for funding, Mercy Corps ensures sufficient resources for that project to achieve measurable results in 12 to 18 months.

Distinguishing characteristics

• The Phoenix Fund puts venture capital into the hands of our front-line managers to test new ideas that can scale and be sustainable over time.
• As Mercy Corps is operational on the ground, we have direct oversight and accountability on all of the investments made by the Phoenix Fund.
• Good ideas have immediate opportunity for replication through our worldwide network of programs.
• As appropriate to the projects, we encourage our donors to lend skills and expertise to Phoenix Fund grantees.

Phoenix Fund Success
Problem: In 2005 Mercy Corps Guatemala was implementing a highly successful land conflict mediation project in the Department of Alta Verapaz. To complete the conflict settlement process, farmers were required to compensate land holders in exchange for land titles. Indigenous Mayan beneficiaries were predominantly maize and bean subsistence farmers with little or no experience in commercial agriculture. Farmers unable to repay their debts in 5-7 years were subject to eviction and greater debt. This perpetuated the cycle of poverty and led to further conflict.

Solution: a Phoenix Fund grant of $50,000 to help farmers diversify and commercialize their small-scale farming operations, Mercy Corps could improve not only their food security and health, but also the economic prospects of the whole province

Results: Shattering the original estimate of achieving a 10% increase in earnings for 80% of the 80 participating farmers, average income rose by nearly 40% for those families. The success of this project was leveraged to secure two new sources of funding for a total of $2.2 million to scale the project to 600 additional farmers. In establishing these partnerships, Mercy Corps Guatemala demonstrated not only that there was a potential market for Guatemalan Pineapples, but also, and perhaps more importantly, that they had buyers and market channels. They learned to tap the knowledge and experience of their partners to create economic opportunities, which are key to successful proposals.

Current Phoenix Fund projects
To date, the Phoenix Fund has granted over $750,000. Currently, seven projects are making a difference in India, Nepal, , Ethiopia, Liberia, Zimbabwe, Bosnia & Herzegovina and Kyrgyzstan. A summary of several projects follows.

In Kyrgyzstan, the Fund is helping increase household income by improving land management, mobilizing 1,000 home gardeners to combine selling and marketing efforts, and begin a plastic waste management system to prevent soil contamination. One-third of Gross Domestic Product in Kyrgyzstan comes from the sale of produce grown in small gardens.

In Nepal, small cardamom farmers need assistance in planting, producing and drying the product. The worldwide demand for cardamom exceeds supply and, by improving agricultural and marketing practices, household income for 120 farmers will increase significantly. More than 1,000 families will be positively impacted. As this project comes to a close in late 2008, it's success has brought additional funding from other sources to scale this project from 120 farmers to 500 farmers. It is also being used as a model for a new Phoenix Fund project in Eastern Nepal to assist farmers in growing better quality ginger and providing better market linkages for selling their product.

In Bosnia and Herzegovina, awareness about renewable energy sources is in the early stages. With the help of the Phoenix Fund, three new businesses are designing, producing and installing solar systems for water heating.

In Ethiopia, unemployment is at 40% and women are one of the most marginalized groups with lower literacy rates, job opportunities or earning power. The Phoenix Fund is establishing 5 women-run businesses in developing cooking fuel briquettes from organic waste. This will bring at least 30 woman-headed households above the poverty line.

In Zimbabwe, residents of the Murehwa district rely on small scale subsistence farming and have not had access to the commercial market. With help from the Phoenix Fund, 250 farmers are learning how to use new farming equipment and agronomic practices to increase yields and income by producing market cash crops.

In Liberia, the Phoenix Fund is helping 25 farmers learn how to grow quality cocoa by rehabilitating an 80 acre cocoa tree farm. By forming a collective, these farmers will have access to the world market again, as it was before the civil war in this area.

Participation in the Phoenix Fund
Mercy Corps works amid disasters, conflicts, chronic poverty and instability to unleash the potential of people who can win against nearly impossible odds. Since 1979, Mercy Corps has provided $1.5 billion in assistance to people in 106 nations.

The Phoenix Fund is dedicated exclusively to start-up projects. We request a minimum charitable donation of $10,000 to build sufficient capital for rapid response and minimum bureaucracy. The Phoenix Fund invites businesses, foundations, entrepreneurs and others to join a new class of strategic philanthropists. For a strong social return, please consider becoming a donor to the Phoenix Fund.

A contribution to the Phoenix Fund is a charitable donation and is tax-deductible. Mercy Corps, a 501c3 charitable organization, will provide a receipt for tax purposes.

For questions about the Phoenix Fund, please contact:
Tori Gilbert
tgilbert@mercycorps.org
800-292-3355 ext. 418