Mikestrathdee’s Blog


It is a gift, but is it charitable?
April 27, 2011, 3:32 pm
Filed under: Charitable Giving

Originally published in Christian Week Ontario, May 2011 Your Money column

People who attend church regularly donate significantly more money than the general population, studies show.

But not all “gifts” are eligible for a charitable receipt.

To understand the difference, we need to distinguish between charitable gifts, which are receiptable, and donations which Canada Revenue Agency (CRA) views as private benevolence, where the donor controls the use or specifies a person or family to receive the funds. No tax receipts can be issued for private benevolence. Here are some examples of gifts that donors can’t get a charitable receipt for:

  • Designating a gift to pay the tuition of a child, grandchild or some other relative at a Christian high school or college. This is private benevolence.
  • Donations designated for camp staff salary. Young people who serve as counsellors or in other summer camp positions may only receive only a small honorarium for the season’s work. Some donors want to give a camp a gift so a particular individual can receive a higher honorarium. A camp can’t issue a receipt for that gift.

Congregations are becoming more aware of the rules around what is and isn’t charitable, says Milly Siderius, manager of stewardship services for the Canadian Council of Christian Charities. “It’s moving, which is really good.”

At the same time, “We’ve still got a lot of work to do” in increasing awareness, she said.

Other things that are not always well understood:

  • Donations of services are not eligible for a charitable receipt.
  • Reimbursement of expenses. Some people who buy supplies for a program at their church are willing to accept a charitable receipt for the value of the out of pocket expenses. CRA strongly encourages churches not to give receipts, but to issue cheques for the documented expense.
  • Renting space to a church for meetings, youth group gatherings or other events. A church issuing a gift receipt in lieu of payment is offside of CRA rules. If the owner of the space truly wants to make a donation, an exchange of cheques is necessary.
  • You can’t make a profit from a charitable donation. As thousands of Canadians are now learning to their sorrow, the leveraged donations of medical supplies and other goods that were all the rage a few years back are now leading to massive tax reassessments, penalties and lawsuits against financial advisors and lawyers who promoted or blessed these shenanigans.

Flow-through shares are the latest example of an abused gifting vehicle. At time of this writing, the fate of the 2011 federal budget is an open question. But regardless of who is in charge of our government this fall, it’s likely that proposed changes around gifts of flow-through shares will become law. This type of gifting had become flavour of the month. Ottawa is cracking down because some organizations were approaching charities, offering to match buyers and sellers, and valuing donations up front, when the true value of the shares wouldn’t be known til later.

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Higher fees the price paid for not learning about investing
January 21, 2011, 10:17 pm
Filed under: Investing

published in the January 2011 issue of Christian Week Ontario, Your Money column

 

How can I avoid paying such high fees on my investments?

This question is increasingly common at financial literacy seminars.

Canadians are not that financially literate. We also pay some of the highest mutual fund fees in the world.

Getting a better understanding of your investments, and whether you are getting good value for money invested, would be a great New Years’ resolution. It will have lasting impact on your financial future.

Excessive mutual fund fees are the price we pay for  not educating ourselves about investing. We pay too much because we naively expect someone else to look out for our best interests.

Ratings agency Standard & Poor’s regularly studies how actively managed mutual funds perform compared to the index for various fund categories. (An index is a measurement of the ups and downs of a particular market by monitoring a group of securities over time).

S&P gives failing grades to the mutual fund industry.

In the first three months of 2010, six out of every 10 Canadian equity funds did worse than their index. The same results were found for funds made up of smaller and medium sized companies (Canadian Small/Mid Cap equity, in industry jargon).

Some types of mutual funds did better than their index during the period studied. But over a longer period of time, the poor record of most mutual funds looks even worse.

In the three and five year periods ending March 31, 2010, only 10.9 per cent and 3.3 per cent of actively managed Canadian equity funds  did better than the S&P/TSX Composite Index.

The picture isn’t much different for actively managed foreign mutual funds. Less than one in 10 International equity or U.S. equity funds did better than their respective indexes, S&P found.

Author John Lawrence Reynolds’ “The Skeptical Investor – How to Grow and Protect Your Retirement Savings” is a good start for people who haven’t thought much about the fees they are paying, and what possible alternatives might be.

For people who have a bit more understanding how the markets work, there are lots of places to go for ideas.

Two of my favourites are the Money Smarts blog, www.moneysmartsblog.com/, and Money Sense magazine.

Mike Holman, a Toronto-based writer who pens the MoneySmart blog, worked in financial services for several decades. His blog combines articles written from his own experience and links to insightful pieces on various topics related to investing and personal finance from a number of other blogs and websites.

Money Sense magazine, and its www.moneysense.ca website, provide lots of ideas of cost-effective ways to invest.  For people who want to deal with a stock broker or set up their own self-directed account, their “couch potato” approach is worth considering.

For people with smaller portfolios, at least one major bank offers e-series index funds that are much less expensive than regular mutual funds. But you won’t find it prominently advertised, as other products make them bigger profits.

Another alternative is to hire a fee-only financial planner to evaluate where you are at and what a suitable investment mix would be for your age and stage of life. More on that in my next column.



Is your church financially healthy?
January 21, 2011, 10:10 pm
Filed under: Charitable Giving

Is your church financially healthy?  – published in Christian Week Ontario, September, 2010

It’s not just about whether your congregation meets its annual budget. A church’s financial health speaks to its vision, whether it recognizes and acts on the spiritual importance of being intentional around money, and if it helps you wrestle with practical financial issues in your life.

Barbara Fullerton, a stewardship educator for the United Church of Canada, investigated congregational financial best practices in her doctor of ministry dissertation at Wesley Theological Seminary.  Fullerton studied giving trends in thousands of United Church congregations over a six year period, from 1998 through 2003.

She found a connection between increased giving levels and a number of intentional stewardship development habits.

“If the congregation is clear about who they are as a community of faith and their reason for being and explains this well, people will be excited about that mission and will more likely commit to it their gifts of time, talent and financial support, if explicitly invited to do so,” Fullerton wrote.

She found strong “links between increased generosity and lifting up stewardship in worship on a regular basis, preferably every Sunday.”

Other research suggests that what Fullerton, who is of Lutheran background, discovered in her United Church study is applicable in other churches, be they mainline or evangelical. A Lilly Endowment study found that denominational differences in individual giving are generated “almost entirely by the giving of the most committed members within each denomination.”

Annual financial response (pledge) campaigns are an important tool that most churches avoid Fullerton’s research shows.  Healthy churches were twice as likely to have annual campaigns as average congregations. Others suggest that people who pledge give twice as much as those who don’t make a commitment.

Sadly, some churches try these and abandon them after a year or two, missing out on positive change that could occur if the effort lasted a few years longer.

Thanking donors is an important strategy used by healthy churches. Something as simple as including thank-you notes with year-end tax receipts can make a big difference, Fullerton writes.

Pre-authorized remittance or electronic transfer programs for giving are also useful. Fullerton found that donations from people who give electronically are higher than from average givers, often half as much again in each calendar year.

A strong focus on personal spirituality is common to the healthiest churches. Fullerton discovered that churches with growing generosity are more likely to offer Bible study opportunities.

And the healthier a church is, the more likely to provide opportunities for personal finance training that can benefit everyone.  Churches that are growing in the numbers of people attending, number of givers and amounts of money coming in are more than twice as likely to offer personal finance or budgeting training as other congregations. Coincidence? Not likely.

Fullerton’s research will be incorporated in a revised edition of U.S. stewardship educator Mark Vincent’s book “A Christian View of Money: celebrating God’s generosity.”

The co-authored and expanded book will be released in early 2011 by Design Group International.



Tax Free Savings Accounts worth a look
January 21, 2011, 10:07 pm
Filed under: Investing

Tax Free Savings Accounts worth a look –  published in July 2010 Christian Week Ontario

Tax Free Savings Accounts (TFSAs) are the best savings and planning break Canadians have been given since the Registered Retirement Savings Plan (RRSP) was created in the late 1950s. For many lower income folks, it may well be a better way to save for retirement than RRSPs.

Almost one in three Canadians have put money into a TFSA since the new tax sheltered savings vehicle was introduced in 2009. But nearly as many people have no idea how a TFSA works, or why they might consider opening a TFSA.

 

Who can open a TFSA? Any Canadian resident 18 years of age or older who has a valid Social Insurance (SIN) number will earn TFSA contribution room every year.

How much money can I put into a TFSA?

The current contribution limit is $5,000 per year. That amount is indexed to inflation and will rise over time, rounded to the nearest $500. Unused contribution room can be carried forward to a future year. So if Jane Doe put $2,000 into a TFSA in 2009, she can contribute up to $8,000 (the regular $5,000 plus the $3,000 she didn’t contribute in 2009) in 2010.

Why would I put money in a TFSA?

-While you do not get a tax deduction for contributions, you do not have to declare TFSA earnings as income, nor is the money taxed when it is withdrawn.

-Young people saving for a home purchase or for education may in some circumstances want to use a TFSA instead of an RRSP. There is no requirement to repay funds from a TFSA.

-TFSAs are a good choice to build an emergency fund, or saving for a larger purchase such as replacing a vehicle.

– TFSAs can be used as collateral for a loan.

-A TFSA can be used for income splitting within a family. The higher income spouse can give the lower income spouse money to put in a TFSA.

-TFSAs don’t affect eligibility for the federal Old Age Security (OAS), Guaranteed Income Supplement (GIS) or other government benefits.

-Unlike RRSPs, which must eventually be converted to a RIF (or annuity) and withdrawn, a TFSA doesn’t expire. For people with income less than $36,000, a TFSA is a better choice for retirement savings than an RRSP.

-Money withdrawn from a TFSA can be recontributed later, which is not the case with an RRSP.

– TFSAs can be useful estate planning tools.  A TFSA can be passed on, tax-free, outside of an estate, to a surviving spouse, or to charity, if the owner of the plan completes a beneficiary designation form.  If you donate a TFSA to charity, your estate will receive a charitable receipt for the value of the gift.

What can I invest in a TFSA?

Cash, GICs, stocks, mutual funds, bonds, real estate investment trusts (REITS) and a wide range of other financial instruments can be invested in TFSAs.

 

What should I watch for?

Check the fine print before opening an account. Some organizations charge higher fees than others for opening or maintaining a TFSA account, or for withdrawals from your account.



Do RRSPs make sense for you?
January 21, 2011, 10:00 pm
Filed under: Investing

published in the January 2010 issue of Christian Week Ontario

Do RRSPs make sense for you?

With another New Year, the annual ad blitz reminding people to make their RRSP contributions is getting in full swing.  By one report, the number of RRSP plans opened in 2008-2009 decreased by more than 100,000 from the previous year.

Most Canadians aren’t saving enough (if anything) for retirement.  A drop in RSP contributions also isn’t hard to understand, given the economic downturn. At the same time, it may be the case that for some of these people, not contributing to an RSP was a wise choice, particularly in the following circumstances:

  • You have credit card debt. If you are carrying a balance on your credit card, there is no legal investment you can make that leaves you further ahead than paying off credit card debt.
  • You need to choose between RRSP and RESP contributions .  While there are no tax deductions for RESP contributions, the federal grant that comes alongside money you put into this plan makes it a superior choice, particularly for people who don’t owe much tax and have average household income. People with family incomes of $77,000 or less get a 30 per cent government grant for the first $500 they put in an RESP. A 20 per cent grant is available on the first $2,500 in annual contributions, regardless of income level. In the unlikely event a child ends up not pursuing post-secondary education, you can roll your contributions into your RRSP, provided you have contribution room.
  • Mortgage debt.  Paying down your mortgage might be a better choice depending on the interest rate of your mortgage, how comfortable you are with debt, and the guaranteed rate you can get on another investment.  In his book “Enough Bull – How to Retire Well Without The Stock Market, Mutual Funds, Or Even An Investment Advisor,” accountant David Trahair argues that if forced to choose, “there are many more reasons why I’d rather have the house than an RRSP.” Trahair is strongly opposed to investing in stocks or mutual funds, but his argument makes strong sense for risk-averse investors at least.
  • Low income bracket.   For people in the lowest income bracket, the tax benefit of putting money into an RRSP isn’t that great. When the RRSP is drawn down, receiving that income could also affect the amount of government benefits the person receives. Using a Tax-Free Savings Account (TFSA) instead could make more sense.
  • Saving for down payment on a home. Even as flexible as the federal RRSP Home Buyers’ Plan is, it is not for everyone. Some people are better off using a TFSA to save for their down payment, David Trahair argues. People whose mortgage and related payments strain their household cash flow may find it difficult to come up with the required money to replenish their RSP, he says.

On the other hand, an RRSP top-up may be your best move. Make sure you consider all your options before writing the cheque to add to your RRSP.



When to buy stocks? -published in May 2009 Christian Week Ontario
May 11, 2009, 11:48 pm
Filed under: Investing

When is a good time to buy stocks?   Many people are understandably nervous about putting money into the stock market, given the plunge in world markets since the fall.

Others say this could be the best opportunity in a generation to buy into quality firms.

I like the principle promoted by U.S. investor education site The Motley Fool www.fool.com

Motley Fool’s web site suggests that you think about how soon you will need the money. If your timeline for a return of invested capital is five years or less, stocks can be a dangerous place to be, and “you’ll want to avoid individual stocks and stock-centric mutual funds,” Motley Fool advises.

We need to balance that sage counsel with the reality that over the longer-term, stocks provide greater returns than bonds or bank term deposits (also known as guaranteed investment certificates, or GICS).

Warren Buffett, one of the most successful investors of modern times, says the best time to buy stocks is when everyone else is afraid to. By that rule of thumb, now would seem to be a good time to invest in quality, dividend paying securities.

A more important question may be, why do you buy stocks at all? Are you doing so in hopes of getting somewhat better returns than bonds or GICs offer, over the long term? Does a long-term return of eight to 10 per cent – in line with historical averages of broad market performance – seem reasonable?

Or are you chasing the latest fad, hoping to do as well as the friend who made a quick buck doubling his investment in XYZ Corporation a few years ago?

Gary Moore, in his excellent book Faithful Finances 101 – From the Poverty of Fear and Greed to the Riches of Spiritual Investing, notes that God calls us to a different path than the extremes of fear and greed that seem to drive thinking about buying stocks.  Writing about previous difficult periods, Moore cautions against being so wrapped up in fear that you don’t take advantage of opportunities to invest. “The biblical ethic calls for us to live with hope today, as opposed to being defeated by someone’s prediction of a dismal future.”

We also need to have reasonable expectations. The Apostle Paul writes in 1 Timothy 6: “Those who desire to be rich fall into temptation and a snare, and into many foolish and harmful lusts which drown men in destruction and perdition. For the love of money is a root of all kinds of evil…”

Even professional investors have made many bad calls recently. Making all own investment judgements, without serious study (such as the Canadian Securities Course) or the help of an advisor, may not be the best call. Would you rewire your own house?
Are you willing to take the time to read extensively and research companies that you are considering buying? As Gary Moore points out in his book, “spiritual investors will be enriched if we are humble enough to realize that we don’t know it all and need to know more.”



Mango time

 

Mango Time

Kenya vegetable packer helps small farmers expand into fruit production

By Mike Strathdee

As Printed in The Marketplace – March/April 2018

Jane answers questions best

NAIROBI, KENYA – Jane Maina has a plan to increase the incomes of thousands of Kenyan farmers, and diversify her own business in the process.

Maina, managing director and co-owner of Vert, aims to reduce her vegetable processing firm’s dependence on European markets, and replace some of her nation’s imports of one of its favorite juices.

Through a partnership with MEDA’s M-SAWA project, (M-SAWA stands for Maendeleo- Sawa, or Equitable Prosperity) –Vert aims to train subsistence farmers how to grow mangos and passion fruit that meet international standards.

Vert has focused on shipping and packaging green vegetables since it started 18 years ago. French (green) beans and peas are picked at farms one day, packaged at Vert’s plant the next afternoon, then put on a plane to Amsterdam that evening.

It started small with one or two shipments a week of one tonne at a time. In 2017, Vert shipped 1,300 metric tonnes of beans and peas.

The firm currently has 71 staff. Its entire production is exported to the UK, Netherlands, Denmark,

Germany and Belgium.

In 2013, the European Union brought in new regulations regarding the import of vegetables from Kenya to increase tests for pesticide residues. Because Kenya doesn’t have national regulations on this matter, 10 per cent of all of Vert’s shipments had to be pulled out for physical testing.

The testing adds 24 hours to the time from farm field to store shelf, undermining Vert’s goal of having products on shelves within three days of receiving them.

MANGO TREE BEST

Many Kenyan mangos don’t make it to market

Maina saw an opportunity to pivot her firm in the face of these rules, and the uncertainty about future access to the UK due to that country’s Brexit plan to leave the European Union.

Farmers producing fruits and vegetables see up to 41 per cent of their mangos being wasted “year in and year out,” because they don’t make their way to market. Of Kenyan mangos that do make it to market, almost all are consumed domestically. The country imports most of its pulp for mango juice, and there are only six pulping plants in the country.

“The need for pulp was very clear,” she said, noting that as consumption of carbonated drinks dips, demand for fresh juices is on the rise.

Fruit pulping, primarily for the domestic market, is the value-added goal of the next phase of Vert’s evolution. “It’s mostly guided by the realization that we are over-relying on the European markets.”

Mango pulp is taken from second-rate fruit that cannot be sold fresh. Unlike the highly perishable raw fruit, mango pulp has a shelf life of up to 18 months.

In April, Vert will move to a new plant in Machakos, about an hour southeast of Nairobi, that is four times the size of the current 10,000-square-foot (932-square-metre) operation. One side of the plant will replicate its existing vegetable packing operation.VERT WOMEN WITH SNOWPEAS BEST

Vert shipped 1,300 metric tonnes of snow peas and beans in 2017.

A larger building will be dedicated to pulping mangos and passion fruit, as well as drying a variety of fruits, including mangos, pineapple and banana. Some of that dried fruit may make its way to North America later this year, once direct flights start from New York City to Nairobi. Vert has landed a private label contract for dried fruit with a major US retailer.

The biggest challenges for mango growers is the middlemen, who want to take the fruit before it reaches maturity, she said “If the farmers take on and sell the fruit (then), it means they will have less than optimal production.”

Middlemen often purchase mangos for five Kenyan shillings, (about five cents US), then turn around and sell them for 15-20 shillings, she said. “We seek to cut out the middleman.”

Doing this will allow Vert to control quality and improve margins both for Vert and its growers.

Matching grants offered by MEDA are very important to this project, as they close gaps that Vert could not do on its own, she said. Training of farmers to attain organic certification and maintain good agricultural practices that allow for full traceability of produce can be an expensive task. Without MEDA’s help, attaining annual renewable certification would cost more than either Vert or the farmers could initially afford.

“The fact the grants take care of this training cost for us is invaluable. We are then able to go in and provide the training with the support of MEDA, and make sure the farmers are using good quality produce, and we are then able to use these products, either for our drying line or our pulping line.”

Over the next three years, Vert hopes to work with 5,000 new farmers in addition to the 1,726 vegetable farmers that they currently have contracts with. They will also hire another 88 workers for their processing plant. Vert has consistently strived to engage women, both by requiring that groups at the farmer level select one female leader and practicing gender equality at all levels in its factory.smiling snow pea packer

Vert practices gender equity throughout its factory

Many of the farmers that supply Vert have plots of land of only one to two acres, including their home and the area where their animals graze. A mango farmers co-op that a group of MEDA supporters visited in January claims almost 470 members, a slight majority of whom are women.

Members of the group admitted that they need help with marketing, caring for trees and financing inputs for production.

Vert has had its own struggles when it came to financing growth. Local banks were not receptive to lending for Vert’s new expansion project, which cost $2.75 million US.

“It isn’t a very easy thing,” Maina said.

The firm needed patient investors for the expansion. Because Vert has earnings in hard currency, it could get equity investments from Belgian and French social investment firms. Equipment for the new plant is being debt-financed from a third European social impact investor. The company hopes to repay those lenders within seven years.

Maina’s life and business partner in Vert is her husband Maina Inderito. “We tend to stay as far away (from each other) as possible,” she said with a smile when asked about how they divide responsibilities at the company. He focuses on construction and getting increased production from farmers. She does finance, administration, operations and contracts with retail customers.

In the past four years, the number of women-led food processing firms has increased greatly. About 40 per cent of company heads in her industry are women, particularly among medium-sized firms.

She is quick to respond when asked what motivates her desire to work with more farmers. “Being able to put products out that are safe, that I know where they have come from, and by who they were touched,” she said. ◆



For a greener future
June 26, 2018, 7:59 pm
Filed under: Business, Environment, Recycling, stewardship, Theology, Uncategorized

 

For a greener future

As printed in The Marketplace – May/June 2018

Kitchener group helps build more sustainable communities

By Mike Strathdee

Kitchener, ON — Mary Jane Patterson takes a long-term view when she describes the work of the environmental charity that she heads.

“It grows out of caring,” says Patterson, executive director of REEP Green Solutions. “Caring is in our vision. We believe by acting today we can leave our children a community that is more sustainable, vibrant, caring and resilient.”

A Catholic who is active in her local parish, she sees her work as being grounded in an expression of her faith. “There’s a sense of social justice in environmentalism, and recognizing that we have an impact on others in the way we live our lives. That is also faith-based for me.”

Patterson left a career in television production to enrol in a master’s degree in Environment Studies at the University of Waterloo in 1999. The environment faculty was using home energy evaluation software to do residential audits. Patterson was one of two people hired for the Residential Energy Efficiency Project (REEP). Audits cost only $25 back then, but drumming up business wasn’t easy in the early days, even with on-campus acquaintances. “People started ducking when they saw us coming down the hall,” she recalls.

Two years later, she became REEP’s manager, part-time at first. As the organization grew, it moved off campus, incorporated as a non-profit, and a few years later, became a registered charity.

Brendan and water tanksBrendan Schaefer, REEP House Facility manager, talks to a group about harvesting rainwater.REEP Green Solutions now provides services in many communities adjacent to the region where it was founded. It is one of a score of environmental organizations that are part of Green Communities Canada, a national association of community-based groups working with homeowners, businesses, governments, and communities for a sustainable future.

A nimble, highly entrepreneurial organization, REEP Green Solutions is often exploring new areas to provide service and generate funding for that work. About half of its budget comes from fee-for-service work and contracts with municipalities to provide services such as domestic water-use audits.

In addition to home energy efficiency audits and providing advice about worthwhile improvements, REEP Green Solutions advises homeowners on water conservation, RAIN Smart landscaping to manage runoff, waste reduction and related education around environment issues.

Storm water management is increasingly a concern for cities across North America. U.S. organizations working to educate people about best practices in this area include Blue Thumb in Minnesota, Riversmart Homes in Washington D.C.- Maryland, RainReady in Chicago, and the Watershed Management Group in Phoenix.

REEP Green Solutions operates and maintains the REEP House for Sustainable Living, a century-old property in a Kitchener residential neighborhood that has been upgraded to top level (LEED) energy efficiency. The site is a demonstration property where people can view several types of insulation, ground source heat pumps and other energy efficiency measures. Patterson is pleased with “all the things we show in the house that you can do in your own house (to reduce energy consumption).”

Solar panels, two large rain water cisterns that are used to flush toilets and irrigate plants around the house, and permeable paving are features of the property.

REEP House is also home to tours of school and university groups, as well as lecture series dealing with home energy use, upgrades and a variety of topics related to sustainable living, including green burials and electric vehicles.

The latter speaker series was “the beginning of opening our mind up to a broader vision of what we offer to the community.”

Wanting to reach people who aren’t homeowners, REEP launched a Zero Waste Challenge in 2016. This annual event asks people to try to send less waste to landfill. For five days, participants use a mason jar to hold all home garbage that would be destined for the trash. Refusing or reducing packaging, recycling and composting are all steps toward that goal.

RainGarden 33“The more we make requests of our vendors, the closer we will get to zero waste.”“The more we make requests of our vendors, the closer we will get to zero waste.”

REEP Green Solutions partners with Sustainable Waterloo Region (a group that helps businesses become more energy efficient) and the cities of Kitchener, Waterloo and Cambridge in Ontario in a collaboration known as Climate Action WR. That group will present a plan to area governments this spring on ways to achieve an 80 per cent reduction in greenhouse gas emissions from 2010 levels by 2050. Several other Ontario communities, including Toronto, Hamilton and London, have already set similar targets.

Patterson has seen her organization change and expand in reacting to what people say they need, or what municipalities or utilities are doing that they can support. Some programs have come and gone, including solar assessments, audits of church buildings, and helping rural landowners ensure their wells were being safely maintained (in response to a water contamination crisis in Walkerton, a rural Ontario community.)

New areas of emphasis include green infrastructure, helping people to put native plants in their yards and plant trees. She hopes the program will help people know what species to plant, where to put them and how to keep the trees thriving on their property.

REEP Green Solutions is as much part of a broader movement as it is a purveyor of individual services. Patterson acknowledges that staff efforts are multiplied by the support of a network of engaged volunteers, including the organization’s board, local students and community members. Even REEP’s volunteer co-ordinator is a volunteer. “This is work that is really meaningful to all of us working on it.”

Patterson is encouraged to see senior levels of government paying attention to climate change, “looking it in the eye and figuring out what we have to do.”

At the same time, while senior governments come and go, “the municipal level is where it’s at. This is where the work continues. That is really inspiring to be part of, and to see.



A flavor sensation
June 26, 2018, 7:51 pm
Filed under: Agriculture, International Development, MEDA, Uncategorized

A flavor sensation

1 IMG 9413
Vanilla beans provide an above average return for Tanzanian farmers.

Tanzanian firm partners with MEDA to grow farmers’ income

By Mike Strathdee

This story first appeared in the May 2018 issue of The Marketplace magazine

MOSHI, TANZANIA — Juan Guardado has abandoned several careers that could have made him quite well-to-do.

Money has been less important to him than making a difference and improving people’s lives.

“You have to think about what your legacy is going to be,” Guardado said of his abandoned career paths during a tour of NEI, the extracts firm he co-founded in 2011. “I definitely don’t regret it.

“When I go see the farmers, some of them just run out and give me a hug. A lot of clients in consulting don’t necessarily do that.”

NEI (Natural Extracts Industries) is a MEDA partner that is working to raise the living standards of thousands of Tanzanian farmers, primarily by teaching them how to grow organic vanilla.

Guardado was born in El Salvador, living there the first four years of his life. After college in the US, his early career was in the computer graphics industry, working for Matrox Graphics and NVIDIA Corp.

Wanting his legacy to be something more than pixels, he worked for McKinsey’s Business Technology Office in London, England, focusing on management consulting in the areas of health tech and health systems.

Discussions about becoming a partner at McKinsey’s didn’t seem fulfilling either, so he moved to Tanzania in 2010.

NEI came into existence the following year. His partner, Silas Losinyaari Noah, oversees the firm’s supply chain team, does government liaison and acts as legal secretary for NEI.

For the first three years of the business, NEI focused largely on training farmers and planting vanilla.

All but two of NEI’s 30 full-time and two part-time employees are Tanzanian nationals. Guardado expects the firm will grow to 50 staff this year.

More significantly, NEI plans to double the number of farmers it works with by the end of 2019. They currently have relationships with 3,000 farmers, about half of who are actively harvesting.

1 NEI Juan tells his story

Juan Guardado tells the NEI story to MEDA staff and supporters.

Juan Guardado pic by Mike Strathdee

“If you’re going to do economic development, it’s going to be in agriculture,” he said. “Seventy per cent of the people are employed in agriculture in some way, 30 per cent of the GDP comes from the agricultural sector, so clearly, that’s where it’s at.”

But he didn’t want to work in commodities. “In commodities, you’re fighting for the pennies. And yes, there is big volumes, but what we’re trying to do here is the opposite — we’re trying to push the price up for the farmer, give them an income.”

Giving farmers an income means a better-than-average return. NEI’s top-performing farmers last year earned $1,500 US for their vanilla beans.

That’s significant in a Tanzanian context, a doubling of purchasing power for some. A 2015 United Nations report suggested that the average small Tanzanian farm was only .9 hectares (just over 2.2 acres) and produced food worth $790 a hectare.

Knowing that he is creating value for the farmers, and that they appreciate those efforts, is deeply satisfying for Guardado.

While he recognizes that NEI has a long way to go, he feels the firm is already having an impact in a very tangible way. “I’m not just going to trade the vanilla. I’m going to try to add value by making the extracts.”

Initially, the firm sent small volumes of pods to online retailers in the US. Gradually they got more orders from Europe. Then orders switched to Indian Ocean islands, including Mauritius, during a crisis in Madagascar, which was a major vanilla supplier. Those buyers wanted extracts. (NEI currently produces vanilla, orange and cocoa extracts.)

Later, they turned their attention north as they began getting interest from online retailers in Europe.

When he and Noah started NEI and decided on their business focus, they found vanilla being grown, but very little of it. That forced them to focus on establishing the value chain, a slow process.

From 2012 to 2015, they barely had any harvest, spending their time working with farmers, planting and training. Over the past three years, they have seen steadily increasing production. NEI’s 2017 vanilla harvest was 2.5 times the previous crop.

This year, they expect at least doubling of production from newer farmers, and a lot more from producers with more mature vines.

1 NEI logo

NEI produces organic vanilla extract.

Last year was pivotal for NEI, as a luxury ice cream manufacturer found the company and said they wanted to direct source NEI’s vanilla. Luckily, NEI had implemented a traceability platform that allowed them to identify where shipments come from after registering farmers on mobile tablets.

“The value proposition for the ice cream manufacturer was clear: high- quality, unique flavor profile, full traceability, and because it’s direct, at a lower price than they were getting in the US.”

The ice cream manufacturer, which he cannot identify, has a deal with Sam’s Club, a major US retailer, for at least 2.5 million litres of Tanzanian direct-sourced vanilla ice cream. That product should be on store shelves this spring.

To meet this demand, NEI has been increasing the number of farmers they work with and ramping up efforts to increase production from existing producers. They hope to get organic certification for their products this year.

As they work to scale production, NEI has reduced its processing time for extraction from 15 days to six days.

They currently operate in four regions of Tanzania, unique among vanilla processors. Eventually, they hope to expand to two more regions.

Other future plans include expanding into cocoa. Recently, NEI has had inquiries from Japan, Germany and Turkey.

The vanilla extract market is very opaque both in terms of pricing and volumes, Guardado said. Global demand ranges from 3,000-7,000 metric tonnes, depending on the source.

Media reports in Canada this winter suggested that a global surge in the price of vanilla will push prices to record levels, as much as 20 times what it sold for only a few years back. Part of that is blamed on a 2017 cyclone hitting Madagascar, a world-leading vanilla producer, destroying a third of their expected 2018 output.

Guardado suspects a cartel in Madagascar may be holding back supply to keep prices high.

But he thinks demand is growing as major food manufacturers — Nestle, Unilever, General Mills and Hershey, to name a few — have all switched to natural ingredients or are in the process of doing so.

As this trend increases, the market for vanilla will split into niches. “Nowhere do I see slack in actual demand.” ◆



Growing vanilla in Tanzania
June 26, 2018, 7:43 pm
Filed under: Business, Environment, gardening, Uncategorized, Work

Growing vanilla in Tanzania

2 Rehema and Martha KisangaRehema and Martha Kisanga grow over a dozen different crops on their three-acre farm.

MEDA partnership helps with irrigation, training

2 polinating by handVanilla flowers must be pollinated by hand.As printed in The Marketplace – May/June 2018

Like many Tanzanian farmers, Martha Kisanga has a lot on the go.

She grows a dozen crops on her three-acre property in Lyamungo Village in the Machame area of Tanzania.

Squash, corn, yams, coffee and bananas have been among the mainstays until the last few years, when she began growing half an acre of vanilla.

She has three dairy cows that supply milk for her household plus a bit more to sell to neighbors. The primary value of her cows is in the by- product. Cow dung provides a free source of fertilizer to promote the growth of various crops. She needs to buy more cows to have enough fertilizer on hand.

Kisanga is also a lead farmer who has received training from MEDA partner NEI (story on previous page). She works with other farmers in quarterly training sessions that include best practices in planting, use of mulching and bio-pesticides, reducing harvest losses, and where to take beans after harvest. She is paid for her time, which includes recruiting new producers, and has an incentive to ensure farmers she works with do well, receiving a percentage from their production.

She harvests between 15-20 kilograms (33-44 pounds) of vanilla pods annually. Vanilla is by far the most lucrative crop of the many she grows. Top quality beans, 17 centimetres (almost seven inches) or larger, fetch $30 a kilogram. Smaller pods sell for $20 a kg. Martha earned about $400 US from the vanilla she sold to NEI in 2017.

2 Neil Ashworth deputy supply chain manager for NEINEI staffer Neil Ashworth works with farmers.Vanilla has to be pollinated by hand, producing one bean per flower, a labor-intensive process. The plant flowers for three months. Six months later, the harvest starts, continuing between July and October. Vanilla vines are not terribly thirsty. But they do need a regular drink, about a litre of water per week. That’s increasingly a problem in some parts of Tanzania. There is a short rainy season of a month or two from the end of November to early January, followed by a couple of months without rain. A longer rainy season begins in April. Then it gets really dry again in September and October. Many crops can’t wait that long for water.

2 IMG 9426Harvesting rainwater for dry season irrigationClimate change is leading to more erratic weather patterns. Some years the short rainy season hardly comes at all. “Every year it’s different,” says Neil Ashworth, NEI’s deputy supply chain manager. “Some years you have heavy long rains, and other years, you miss the short rains completely.”

Getting water from a nearby river is neither practical nor sustainable.

That’s where MEDA and NEI come in, by helping farmers like the Kisangas harvest rainwater from the roofs of their homes into large plastic collection tanks.

The project will supply 300 farmers with tanks, giving them a dependable water source during the dry months. “The more that we can supply (with barrels), that have no access, or very little access to water on the farm, it makes a big difference for them, not only in terms of vanilla, but other crops,” Ashworth said. “They are able to water in the dry season. It helps them with their income.”

MEDA also does training to promote capacity-building. NEI provides vanilla cuttings to farmers, covering 80 per cent of the cost. Farmers pay the other 20 per cent. A two-metre vine takes four years to reach a harvest. ◆



Climate and Coffee – Kenyan firm helps farmers grow beans amidst changing weather patterns
June 26, 2018, 7:39 pm
Filed under: Business, Environment, gardening, Generosity, Uncategorized, Work

Climate and coffee

CDD WORKER WITH SEEDLINGS 3 Women make up most of the workforce at Caffe Del Duca’s seedling nursery. Photos by Mike Strathdee

Kenyan firm helps farmers grow beans amidst changing weather patterns

By Mike Strathdee

As printed in The Marketplace – May/June 2018THIKA, KENYA — Arabica is the most popular coffee variety in the world, accounting for three-quarter of worldwide production by some estimates.

It’s also something that future generations will have to do without due to climate change, a Kenyan coffee expert suggests.

“Eventually, this type of coffee will disappear,” Elio Lolli predicted while giving a tour of his coffee plantation to MEDA supporters earlier this year. “It’s not (going to be) economically viable.”

Lolli, director of Caffe Del Duca, is looking for ways to develop new coffee varieties that will be able to thrive in the changing weather conditions.

A woman mixes coffee beans that are drying on long tables in the sun.Caffe Del Duca, located in Maboromoko- Thika, 26 miles north-east of Nairobi, works with thousands of farmers in Kenya, Tanzania and Uganda to source quality coffee, roasting the collected product for local and export markets.

Through a recent partnership with MEDA, the company will work with 1,000 new farmers and 100 micro-enterprises in Western Kenya over the next two years, targeting an equal number of female and male entrepreneurs.

cdd OWNER SMILINGElio LolliLolli’s father came to Tanzania from Italy in 1954 to work in coffee, planning to stay for two years. “Since then, we’re still here.”

Throughout his working lifetime, Lolli has been involved in growing coffee and making machinery, including pulpers that reduce water consumption.

Climate change is a concern that forces the development of new coffee blends, including Italian blends. “We are actually seeing the climate change,” he said.

Caffe Del Duca used to get a late crop in November or December. Now they get the crop in May or June “which means the quality is going down, not up. Any good food or fruit, it takes a long time to ripen.”

In addition to declining quality, “it’s getting more difficult to produce because of the climate change.”

Finding the right moisture levels for coffee is challenging. If there is not enough rain, the beans become too light, Lolli said.

If there is too much rain, the coffee berries (also known as cherries) become diseased.

A woman mixes coffee beans that are drying on long tables in the sun.Historically, Kenya has had two distinct coffee crops, Arabica and Robusta, says Leonard Murwayi, a value chain specialist with the firm. Farmers have been marginalized as Kenya imports Robusta, so Caffe Del Duca is working to increase the domestic supply of Robusta.

Robusta coffee has generally been less favored than the Arabica. Robusta is more bitter and less flavorful than Arabica. Espresso in Kenya and Ethiopia has historically been 70 per cent Robusta and 30 per cent Arabica, according to Caffe Del Duca’s web site.

Over the past four years, the company has been working to create a nursery to cross-pollinate and create a Robusta coffee that is water resistant and high production.

Caffe Del Duca has 14 employees, two-thirds of them women. Women have better manual dexterity than men, making them better suited for working with seedlings, Lolli explains.

The partnership with MEDA will help Caffe Del Duca gain improved access to local, regional and international markets and strengthen the business capacity of the 100 entrepreneurs (coffee vendors) it works with.

It  will also train farmers in post-harvest operations for improved quality, using collection points and helping groups to acquire drying tables.  Soil conservation activities such as protecting water catchment areas will be stressed to prevent soil erosion.

A gender consultant will be hired to train both men and women on equity leadership, decision making, business development and financial literacy, including bookkeeping and tracking money. CDD will help entrepreneurs get the public health licences they need to enter the coffee business and assist some of them in buying subsidized coffee-making cans.

Some farmers will receive assistance in purchasing pruning tools, sack sprayers and affordable fertilizer.

Kenyan coffee growers prune their plants, something that is foreign to Ethiopian farmers. (In an unrelated consulting project, Lolli is trying to teach sustainable farming practices to Ethiopian growers.)

One part of the MEDA project targets one of Kenya’s most vulnerable populations — widows who are farmers. Caffe Del Duca will help widows to set up five demonstration farms and nurseries.

CDD SEEDLINGSCaffe Del Duca grows up to 100,000 coffee plants a year to produce disease-resistant varieties.Vulnerable widows have been identified by CDD and MEDA as a specific group that  will be targeted within the overall client population, says Lloyd McCormick, MEDA’s country manager for MEDA’s M-SAWA (equitable prosperity) initiative.

“Western Kenya was hit hard by the HIV and AIDS epidemic of the recent past, thus leaving a significant number of widows,” McCormick said. “The project will help a number of these widows access better livelihood opportunities (including) farming and small-scale vendor retail.”

Each new farmer needs five seedlings and a tree to provide shade to get into coffee production. Coffee bushes are intercropped with both food crops and shade trees. Plants take two years to mature enough to produce and will yield for five years.

A coffee bean (or cherry) is a seed of the coffee plant and the source for coffee. It is the pit inside the red or purple fruit.

CDD’s nursery grows plants from cuttings and seeds, producing up to 100,000 plants a year, focusing on varieties that are resistant to several diseases. “As the climate gets warmer, it (coffee plant) is more susceptible to leaf rust,” Lolli said.

Climate change is also increasing the size of insect pests. As temperatures increase, yields drop. Yields were down by 50 per cent in 2017, he said. “The taste varies from the date of the rainfall.”



Challenges amidst business boom
June 26, 2018, 7:32 pm
Filed under: Business, business incubator, Generosity, stewardship, Uncategorized, Work

Tech innovators, charities need to understand each other to tackle social problems

As Printed in The Marketplace – September/October 2017

Rapidly increasing wealth and inequality in North American high-tech hubs is forcing charities to reach out to technology entrepreneurs for solutions to societal problems as well as donations.

That new, uncomfortable reality means that both sides need to understand each other’s challenges, a forum on technology and inequality in Kitchener, Ont. heard recently.

The event was held at the offices of Vidyard, a fast-growing firm which provides a platform that helps companies analyze the performance of their online sales videos. It was organized by FaithTech, a nascent movement operating in three tech clusters across Canada (Kitchener-Waterloo, Toronto and Vancouver).

FaithTech provides a place for Christians working in the technology sector to share their stories and think about ways to apply their talents to pressing social issues.

Speakers at the event came from both the social service and technology sectors. They included:DSC 0082John Neufeld holds a 3D-printed car in his office. His agency partnered with tech employ- ees to provide 3D-printing camps for low-income youth. Photo by Gail Martin

  • John Neufeld, executive director of Kitchener-based House of Friendship, which serves over 42,000 low-income men, women and children throughout Waterloo Region.
  • Christian Snyder, head of community relations at Smile.io, a Kitchener firm that manages corporate rewards programs.
  • Stephanie Rozek, executive director for Hive Waterloo Region, which works to teach digital literacy skills and to build diversity and greater inclusion within the tech sector.
  • Fizsum Areguy, who works with the Toronto Rehabilitation Institute researching the use of tech with health care.

FaithTech founder James Kelly, who moderated the event, recalls being told that in California’s Silicon Valley, home to many of the world’s largest tech firms, “you can taste the difference between the rich and the poor when you are there.”

Waterloo Region, home to one of the fastest-growing tech clusters in the world, could become the Silicon Valley of the North, he said. “The question is, will we like it (if the inequality accompanies the economic growth)?”

Under-representation of women and minorities in tech jobs, sexism and housing affordability as sections of the city undergo gentrification were the most frequently-named issues by an audience of 120 people, most of them young and employed in the tech sector.

Inviting the tech community to be part of community conversations around inequality requires adjustments by both parties, said Neufeld (who is a past president of MEDA’s Waterloo, Ont. chapter). “We don’t know what we are doing. We don’t have a template, we don’t have a formula for this.”

One of the disconnects that must be overcome is the inability of social services organizations to move quickly enough, and the need for tech firms to slow down, Snyder said. He experienced that first-hand in a previous job working at an organization that serves refugees. A large Kitchener tech firm volunteered to help his employer solve a problem, but could only devote resources for a limited time. The refugee organization couldn’t react quickly enough, and “eventually, it came to naught.”

Other conversations have borne fruit. Neufeld was invited last Christmas to the Accelerator Centre, a University of Waterloo-based incubator for tech firms, to thank them for donating to his agency. He challenged tech entrepreneurs to consider running computer coding camps for bright youth in low-income neighborhoods.

After his talk, some people came up to him with a counter-proposal. “We can’t do coding camps, but we can do 3D-printing with you,” employees of a 3D-printing firm told him.

Last summer, the company did a pilot 3D-printing campaign at a community centre in one of the region’s poorest neighborhoods. Neufeld is optimistic the idea will spread.

“I think we’ve got something good here that we can co-create,” he said, while acknowledging that success will require difficult conversations, “hearing things that we don’t want to hear.”

Systemic solutions take time, “which is counter-intuitive to how tech works,” Areguy noted.

Snyder agreed. Community development in the tech sector is difficult work with data-driven engineers, he said. Those professionals typically work in two-month sprints, and are oriented toward objectives and key results (OKRs). But relationships aren’t OKRs. “If you do work in tech, don’t think about relationships as OKRs,” he said. ◆



Peace Ventures
June 26, 2018, 7:29 pm
Filed under: business incubator, Peace, stewardship, Theology, Work

This story was published in the November 2017 issue of The Marketplace magazine:

https://www.meda.org/articles/features/1326-peace-ventures

Paul Heidebrecht is a different kind of business coach.

Heidebrecht is director of the Kindred Credit Union Centre for Peace Advancement, an inter-disciplinary organization that takes multi-sector approaches to the advancement of peace.

In a region that has many organizations working to encourage and support business start-ups in a variety of sectors, CPA is unique. It is currently the only university-based program in the world supporting peace-building related start-ups.

A program of Conrad Grebel University College in Waterloo, ON, the centre’s space was made possible by a $1 million donation from Kindred (formerly Mennonite) Credit Union. The centre is a natural fit at Grebel, home to Canada’s oldest Peace and Conflict Studies program.

CPA is agnostic about the best way to make an impact. It might be starting an NGO, or creating a social enterprise, or even developing a project that is best placed and implemented by an existing organization, whether a business or a charity.

Heidebrecht’s goal is “elevating somebody’s efforts so they can make some sort of systemic impact,” he said. “It could be through a venture that’s created, it could be through a venture that has failed, but has kind of moved the needle on a public policy debate.”

Working with start-ups is an amazing, enriching experience for Heidebrecht. “To be a part of these journeys, even for a short while, and to be able to point people, help them realign” is a tremendous privilege, he said.

“People are ready to fail, they are ready to learn, to turn corners and make progress. It is just breathtaking.”

Every week he comes away from a meeting thinking that the world is an amazing place, “and I get to know these amazing people, even for a short while.”

CPA works at supporting three kinds of activities: The Epp Peace Incubator, the Grebel Gallery, and collaborative efforts around research, training and community engagement. Participants include research fellows and a number of organizations that lease adjacent space.

The Epp Peace Incubator is named in honor of the late Frank Epp, a former Grebel president, and his wife Helen.

Plans for the Peace Centre go back at least 15 years, said Grebel director of advancement Fred Martin, who served as start-up manager for the centre at its inception.

Many of the incubator participants are graduates of Grebel’s Peace and Conflict Studies program. CPA “celebrates the entrepreneurial spirit in a way that reflects our (peacemaking) values, meeting the needs of our society in ways that use the talents of our students,” Martin said.

Heidebrecht regularly connects with students beyond the incubator. He teaches a fourth-year Peace and Conflict Studies course on engineering and peace to University of Waterloo (UW) engineering students.

“For Mennonites, plowshares ultimately matter more than swords,” he wrote in an op-ed piece in the Waterloo Region Record newspaper, challenging Communitech, an area technology lobby, to get more involved in PeaceTech.

“The worldview that drove the development of Silicon Valley couldn’t be more different. The opportunity and challenge for all of us in Waterloo Region is to embrace and enliven a commitment to collaboration and peace-building, and I think there are promising signs that we can do just that.”

Fifteen ventures have been part of the CPA incubator in its first years, including seven currently in the program. Those early efforts are just the tip of the iceberg in terms of potential, he says.

Heidebrecht started at CPA in 2014 after spending five years as Ottawa office director for Mennonite Central Committee Canada, where he led efforts to advocate for government policy change on behalf of program partners working at relief, development, and peacebuilding.

He also did seasonal stints for MCC in Nigeria and Bangladesh. His educational background includes a Ph.D. in religious studies from Marquette University, in Milwaukee, Wis., a master’s degree in theological studies from Anabaptist Mennonite Biblical Seminary in Elkhart, Ind., and a bachelor’s degree in mechanical engineering from UW. His work championing innovation brings him full circle to his student days in one respect. He worked for the Waterloo-based Canadian Industrial Innovation Centre in his first job after graduating.

CPA works with firms that have gone past phase one or the initial discovery phase, putting wheels to an idea that has been shown to have merit. Ventures that can say “it looks like it’s got legs, I’m ready to take it to the next level.”

The next level is sometimes handing off learnings to an established organization rather than continuing as a stand-alone entity. Food Not Waste, an early CPA participant, was designed to use food that would otherwise be wasted. Success for that venture came in the form of the Food Bank of Waterloo Region adopting the best practices used in the Food Not Waste pilot.

Three alumni of the Greenhouse residential incubator program at the nearby St. Paul’s College (see story, pg 16) have been part of CPA as well. “We see them as a crucial part of the pipeline, or the funnel of incubators.”

Demine Robotics (story pp. 13-14) is perhaps the most intriguing and significant CPA alumnus. The company, which uses mobile robots to excavate landmines without detonating them, took advantage of several local incubators: CPA, the Velocity Garage in downtown Kitchener, St. Paul’s Greenhouse and UW’s Sedra Student Design Centre, which consists of over 20,000 square feet of space dedicated to design teams and student prototype projects.

Demine Robotics is the first solid example Heidebrecht can point to of the centre playing a part in the rollout of “PeaceTech,” thinking about technological solutions to peacebuilding. Another initiative he puts in the PeaceTech category is current incubator participant World Vuze, an online discussion portal that connects classrooms in various countries.

Three firms Heidebrecht has coached — Demine Robotics, Marlena Books and EPOCH, a skills and services marketplace that connects refugees and community members through a mobile platform, have won $25,000 awards in the UW Velocity pitch competition. In total, firms that have gone through CPA have won about $300,000 in seed funding in a variety of competitions to date. In mid-September, EPOCH pitched at the United Nations with former US President Bill Clinton in the audience for the $1 million Hult Prize.

Finding long-term funding to add staffing support may be one of Heidebrecht’s larger challenges. CPA is the only university-based incubator program in Ontario that doesn’t receive any government funding. That leaves him working to run an incubator with much less staffing than other incubators.

CPA recently received a $100,000 memorial gift from the Bauman family to establish the Barry Bauman Mentorship fund, to develop mentoring relationships for incubator participants, and to provide small seed funding for incubator participants.

One area company has stepped up to sponsor a “hot desk” — a shared workspace that startups can make use of — at the incubator. Heidebrecht is in discussions with other companies about possible sponsorships. “I think we’re well-positioned in some respects. The social innovation programming has been under-resourced, compared to the tech side.” ◆