annual report 2006

03president’s message 06ministry overview07servants on assignment larry ward: building a legacy of love tetsunao yamamori: establishing strong roots benjamin homan: championing real transformation18fiscal 2006 highlights rebuilding from the rubble breaking the stigma of AIDS equipping the youth for service and leadership promoting healthy growth of children28countries of operation30independent auditors’ report

c o n t e n t stable of

1975 Provides assistance to some

of the earliest “boat PeoPle” from

vietnam.

1976 sends relief to victims of

Guatemala and romania earthquakes.

1978 launches child sPonsorshiP

ProGram.

1979 Provides assistance to

southeast asian refuGees.

1980 beGins lonG-term missionary

ProGram called hunGer corPs.

1981 food for the hunGry u.s. and

food for the hunGry international

become two orGanizations.

1982 Provides assistance to refuGees

in Poland.

1983 oPens a suPPort office in JaPan.

1984 dr. tetsunao yamamori becomes

President of food for the hunGry

u.s. and food for the hunGry

InternatIonal •

oPens a suPPort

offIce In norway •

Provides emerGency

relief to victims of

famine in ethioPia.

The year was 1971. Idi Amin declared himself president of Uganda. Apollo 14 landed on the Moon. Walt Disney World opened in Florida.

In the same year, Food for the Hungry was born, albeit quietly – with neither fanfare nor media frenzy – but founded solidly on God’s unconditional love toward the poor around the world. Thirty-five years later, and with greater hope and intentionality, we continue to carry our God-given vision to defeat all forms of human poverty by helping one person, one family, one village – one at a time.

This vision has taken countless Food for the Hungry staff, partners and advocates to some of the world’s poorest and most fragile territories to convey God’s big idea of transformation.

Fiscal Year 2006, in particular, saw Food for the Hungry responding immediately and effectively to natural disasters that hit the countries of Pakistan, Guatemala, Philippines, Indonesia and Ethiopia. We provided affected families with essential household and medical supplies, compassionate care, and counseling. In most cases, we transitioned these relief programs to long-term development. To this day, we work actively in these countries, helping survivors of natural calamities rebuild their lives through our agriculture, water, health, education, and child development programs.

We continue to raise the awareness of many adults and young people in sub-Saharan Africa about HIV/AIDS care and prevention, while supporting global efforts to build a better world for the poor and the afflicted. Our dedicated staff members and community volunteers serve with excellence, visiting AIDS patients, caring for the orphans and vulnerable children, and providing medical assistance, prayers and counseling.

We accelerated our efforts to invest in the youth and the future with the launch of several programs designed to equip college-aged adults for service and leadership. We believe that God has called and gifted this young generation to take His love to the hard places around the world.

The past 35 years testify to God’s work of calling forth and carrying forward. And just as we saw His faithfulness in inspiring one man to pioneer a work that goes beyond relief and development, we have faith that God will continue to direct us as we faithfully execute our calling.

Our great vision to see physical and spiritual hungers ended worldwide compels us to walk in humility and total dependence on God, but it also requires that we move forward with boldness, engaging leaders of the nations, speaking out with courage, and sending people to help communities transform themselves.

As you read through the pages of this report, I know you’ll see why we celebrate God’s goodness. Thank you for your faithful partnership with us all these years.

Benjamin K. HomanPresident and Chief Executive Officer

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Pr

es

ide

nt

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es

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ge

seasonsa vision for

all

,

1971 dr. larry ward starts food for

the hunGry. the name is insPired by

Psalm 146:7, “he uPholds the cause of

the oPPressed and Gives food to the

hunGry.”

1972 Provides relief in war-torn

banGladesh.

1973 Provides earthquake relief

to victims of the december 1972

earthquake that riPs throuGh

manaGua, the caPital of nicaraGua,

destroyinG nearly 90 Percent of the

city.

1974 sends emerGency suPPlies to the

survivors of the “Great west african

drouGht.” the six-year drouGht (1968-

1974) killed between 100,000 and

250,000 PeoPle.

1 9 7 1

1 9 8 4

food for the

hungry timeline:

Celebrating

35 years of

transforming lives

who we are Since 1971, Food for the Hungry has boldly served and spoken out for the poor, sending courageous men and women to help communities transform themselves. Food for the Hungry is more than a relief and development organization. We are a tested, trusted and innovative partner who respectfully walks with the poor while intentionally reflecting the love of Jesus.

whaT is our Vision God called and we responded until physical and spiritual hungers ended worldwide.

whaT is our mission Food for the Hungry embraces an intensely personal and biblical response to God’s call to end physical and spiritual hungers worldwide. We humbly walk with churches, leaders and families in helping them overcome all forms of human poverty by living in healthy relationship with God and His creation.

how do we achieVe our mission Motivated by Christ’s love, we achieve our mission through a three-dimensional approach:

speaking out to all people and nations about God’s call to end physical and spiritual hungers.

sending people to share Christ’s love.

serVing the transformation of communities

who do we serVe Food for the Hungry goes to the hard places – places darkened by poverty, war and injustice – to shine the light of Jesus and bring hope and help to children, families and communities in the most impoverished countries around the world.

why we serVe The love of Christ compels us to reach out to the least of our neighbors and advance God’s Kingdom on earth. Micah 6:8, our Scriptural basis, undergirds our work: “whaT does The Lord require of you buT To do jusTice, LoVe mercy, and To waLk humbLy wiTh your god.”

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overviewministry

06

1985 Provides relief to survivors of a

massive earthquake in mexico city.

1986 beGins work in china.

1987 beGins work in mozambique.

1988 oPens a

suPPort office

in canada.

1989 oPens

suPPort offices

in korea,

the united

kinGdom and

washinGton,

d.c. 1990 beGins work in laos.

1991 resPonds to humanitarian

crIsIs In northern Iraq • BegIns work

in cambodia. 1992 drafts ministry

PhilosoPhy statement

called vision of

a community.

1993 launches

web site, www.

fh.org • BegIns

work in vietnam.

1994 beGins work in

honduras • ProvIdes

relief helP to victims of the 1994

northridGe earthquake that hits los

anGeles, california.

Servants on aSsignmentOver the past 35 years of Food for the Hungry’s ministry

to the poor, God has called three men to play pivotal roles

in leading the organization toward fulfilling His vision of

ending physical and spiritual hungers worldwide. These

servants of the Lord – and thousands of Food for the

Hungry staff who serve in impoverished countries around

the world – have exercised their unique gifts to shine

the love of Jesus Christ to a world darkened by poverty,

disease and oppression.

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dr. Larry ward, founder of food for The hungry, was well-educated and had both masters and doctorate degrees from Columbia Pacific University. Early in his career, he successfully scaled the publishing ladder and became the managing editor of chrisTian Life and chrisTianiTy Today magazines. He also was director of ep news, a source for news stories written from a biblical worldview.

But Dr. Ward was, foremost, a compassionate person with a heart for the poor – and it was this passion that led him to start Food for the Hungry.

“What was most Christ-like about Larry Ward was his respect for every person, whether that was a child or a refugee or a foreign minister. They were the same to him,” says Dwight Vogt, Vice President for Ministry Services and Operations at Food for the Hungry, and friend of Ward for 24 years.

Dr. Ward often was one of the first to offer help after natural disasters, no matter where in they world they occurred. In 1971, he flew to Haiti and gave $1,000 from his own pocket to meet emergency needs.

And thus began Food for the Hungry. After returning from Haiti, Dr. Ward sailed the South China Sea with the Vietnamese “boat people,” who were fleeing the war in their home country. He helped them learn English and gain training to secure jobs upon landing on the California coast.

But despite such generous giving of himself and his resources, Dr. Ward made it a point never to provide handouts. Rather, with love and humility, he helped those in need become self-sustaining.

Dr. Ward recognized the inseparable link between one’s soul and body and the need to minister to both.

“He wanted Food for the Hungry to be known as a Christian organization that was unashamedly following Jesus Christ,” says Vogt. “His vision for the organization was one of helping people actually get involved and work. He wanted to connect people, and I see that still happening.”

Thirty-five years after Dr. Ward started his ministry, Food for the Hungry works in impoverished communities on four continents, helping meet the physical and spiritual needs of the poor. And as these communities experience the hope that comes when God’s people share with those in need, the legacy of Dr. Ward lives on.

1995 Provides relief to rwandan

PeoPle in the aftermath of the

genocIde • resPonds to Powerful

earthquake that strikes kobe, JaPan.

1996 beGins

orGanizinG short-

term team triPs

to develoPinG

countrIes • starts

ProGram for child-

headed households

in rwanda.

1997 Provides relief

helP in resPonse to the humanitarian

crIsIs In sudan • launches the

christian artist ProGram to raise

sPonsorshiPs for children around

the world • forms dIscIPlIng natIons

alliance.

1998 oPens a suPPort office in

sweden • ProvIdes helP to the PeoPle

of honduras in the aftermath of

hurricane mitch.

1999 sends

emerGency

helP to

refuGees in

macedonia

and

alBanIa •

Provides

relief helP to turkey after a massive

earthquake kills more than 17,000

and destroys the cIty of IzmIt •

resPonds to heavy rains in northern

coastal venezuela, causinG mudslides

that kill 15,000 PeoPle.

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Wa

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1 9 9 5

of

Dr. Larry Ward started

Food for the Hungry in

1971 with the conviction

that “people die one at

a time, and we can help

them one at a time.”

loVea legacy

dr. Ted yamamori was 7 years old at the end of World War II, and was one of many young Japanese children who faced starvation and sought refuge in Buddhist temples. “Famine was on,” he recalls. There was no food anywhere, even for those with money to buy it.

Dr. Yamamori caught the vision of Food for the Hungry in the summer of 1979 while ministering to Cambodian refugees in Thailand.

“In my mind’s eye, I began seeing my own face on the faces of those dying children,” he recalls of the experience.

After returning from Thailand to his teaching position at Biola University in California, Dr. Yamamori found himself unable to focus on his academic work, as his heart had been stirred by the desperation he witnessed. In June 1981, he joined Food for the Hungry.

Dr. Yamamori embraced all that Dr. Ward envisioned for the organization and implemented specific programs and strategies to help it grow.

By the end of his nearly 17 years as president, Dr. Yamamori had helped build support offices in Japan, Korea, Norway and the United Kingdom. He also had forged strong relationships with other humanitarian agencies and the U.S. government, securing grants from USAID (United States Agency for International Development). As a result, Food for the Hungry experienced significant growth during his tenure.

Dr. Yamamori was instrumental in putting into action God’s vision of ending hunger – physical and spiritual – by walking alongside churches, leaders and families in impoverished communities.

And as the organization matured beyond initial relief efforts and toward community development, physical and spiritual transformation became the hallmark of the ministry of Food for the Hungry.

2000 resPonds

to near famine

conditions in

ethIoPIa • ProvIdes

temPorary livinG

quarters, food and medical suPPlies to

thousands in mozambique after worst

floodinG in 50 years.

2001 food for the hunGry President

dr. ted yamamori retires after 17

years as PresIdent • randall hoag

assumes Presidency of food for the

hungry InternatIonal • Ben homan

assumes

Presidency of

food for the

hunGry u.s.

• ProvIdes

earthquake

resPonse to

el salvador

and india, two earthquakes strikinG

wIthIn two weeks of each other •

resPonds to the sePtember 11 attacks

In new york • BegIns relIef efforts In

afGhanistan.

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In February 2001, Dr. Yamamori retired from Food for the Hungry, but he still remains closely connected, consulting with FH leadership, speaking at FH events and chapel services, and serving as academic advisor of Micah Initiatives, a Food for the Hungry department that is tasked with equipping and mobilizing young adults for service and leadership.

Food for the Hungry also supports Dr. Yamamori’s efforts as senior advisor for the Lausanne Committee for World Evangelization, a global movement committed to holistic ministry. In addition to his ongoing involvement with Food for the Hungry, Dr. Yamamori teaches doctoral classes at seminaries in Kentucky and Oregon, serves as honorary wing chaplain at the U.S. Air Force Base in Glendale, Ariz, and is finishing his 24th book, Global Pentecostalism: The New Face of Christian Social Engagement, which is scheduled for release in August 2007.

2002 Provides relief and

develoPment helP to those

affected by famine in malawi, in

southeastern afrIca • food for the

hunGry international relocates to

Bangkok, thaIland • resPonds to

victims of the volcanic eruPtion

in the democratic rePublic of the

congo • oPens offIce In hong kong

• assIsts vIctIms of tyPhoon rusa,

one of the worst storms to hit

korea In 43 years • ProvIdes food

and construction materials to flood

vIctIms In honduras and nIcaragua •

oPens a suPPort office in costa rica.

2003 Provides emerGency relief

to fleeinG refuGees and disPlaced

PeoPle in iraq.

11

rootSestablishing

actionand a plan for

2003 food for the

hunGry founder

dr. larry ward

dies on oct.

25, 2003 •sends relIef suPPlIes to

victims of a Powerful earthquake

that destroys most of the city of bam,

Iran • food for the hungry u.s. moves

from scottsdale, ariz., to downtown

Phoenix, strenGtheninG its local ties

by workinG with churches, leaders and

families. Provides earthquake relief

In Bachu county, chIna • launches

advocates ProGram.

2004 Provides emerGency suPPlies

followinG tsunami traGedy and

sends teams to assess and imPlement

lonG-term develoPment ProGrams

in indonesia,

thailand, india

and srI lanka •

Provides relief

to victims of

hurricane Jeanne

in the dominican

rePublic and haiti

• ProvIdes relIef

assistance to

refuGees fleeinG to eastern chad from

war-torn sudan.

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Food for the Hungry President and CEO Benjamin K. Homan goes the extra mile to personally reach out to the poor and hurting around the world and to work with churches, families and leaders in overcoming physical and spiritual hungers in places ravaged by poverty, war and injustice.

doing justice

loving mercy

and

walking humbly

with our god

micah 6:8

change2 0 0 3

championingreAlbuiLding upon The foundaTion laid by the former presidents of Food for the Hungry, Benjamin K. Homan is leading the organization into an exciting era of its ministry.

Definitely not an “armchair general,” Homan often traverses the most impoverished parts of the world to see first-hand God’s work among the poor through Food for the Hungry. And as one who puts a high premium on relationships, Homan makes it a point to meet with field staff – “heroes,” he calls them – and encourage them to fulfill God’s vision to end physical and spiritual hungers around the world.

His message to everyone who works in partnership with Food for the Hungry carries a sense of urgency and a gentle challenge: “We have to be the kind of people that can engage the leaders of this world and help them bring about transformation, rather than just criticize them.”

“Our calling and expertise will give us the authority to speak to leaders of the nations,” he says.

Homan’s passion to see real transformation take place in the lives of the poor as well as the powerful has propelled him to several influential leadership positions, among them as president of AERDO (Association of Evangelical Relief and Development Organizations), chairperson of ACVFA (Advisory Committee on Voluntary Foreign Aid), and presidential appointee to the HELP (Helping to Enhance the Livelihood of People around the Globe) Commission, an entity formed by the U.S. Congress to advise the government on how to reform foreign assistance.

These leadership roles have granted him the platform to connect with key leaders and decision makers and challenge them to impact the world.

As Homan leads the multifaceted ministry of Food for the Hungry into the future, he exhorts everyone in the organization to move towards excellence in fulfilling God’s call to end physical and spiritual hungers around the world.

2004 restores nearly 300 miles of

railway in the democratic rePublic

of the conGo, ProvidinG access for

15 million PeoPle to numerous areas

that were PrevIously InaccessIBle •

sends emerGency relief resPonse

to victims of morocco earthquake.

oPens us relief unit office in

washIngton, d.c • food for the

hunGry President/ceo benJamin

k. homan is aPPointed to the

advisory committee on voluntary

foreiGn aid (acvfa) of the

u.s. aGency for international

develoPment (usaId) • ProvIdes

flood relIef In Bangladesh •

Provides flood relief in the

PhiliPPines.

2005 forms unPrecedented

PartnershiP with the city of Phoenix

in resPonse to the tsunami. the

PartnershiP, called “risinG to helP,”

aims to restore the city of meulaboh

(which lost one-third of its PoPulation

to the tsunami) and helP individuals

rebuild their lives.

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t a

tim

e

35 years of2005 food for the hunGry President/

ceo benJamin k. homan is aPPointed

chairman of the advisory committee

on voluntary foreiGn aid (acvfa)

of the u.s. aGency for international

develoPment (usaId) • ProvIdes

emerGency relief to the survivors

of hurrIcane katrIna • ProvIdes

emerGency relief to the food crisis

In nIger’s nomadIc communItIes •

relief teams brinG tents, food and

other suPPlies to victims of massive

earthquake near islamabad, Pakistan

• BenjamIn k. homan serves as the

President of the association of

evanGelical relief and develoPment

orGanizations (aerdo), a network

that serves relief orGanizations and

assists in creatinG PartnershiiPs.

livestransforming

When a massive earthquake rocked the northern areas of Pakistan in October 2005, displacing millions of people and killing tens of thousands more, Food for the Hungry responded immediately in partnership with local relief and development organizations.

Food for the Hungry was most active in the Muzaffarabad district, where nearly 70 percent of the city was destroyed by the earthquake. Displaced families set up hundreds of spontaneous camps on the mountainsides and in the valley surrounding Muzaffarabad, and as the harsh winter set in, these families struggled to keep warm and alive.

Responding to the grave threat to people’s lives, Food for the Hungry took the role as the lead nongovernmental organization in the management and distribution of relief goods to these camps. Food, clean water and nonfood emergency supplies such as blankets, jerry cans and winterized tents were distributed to affected villages, many of which were in the mountainous regions where roads had been rendered impassable by numerous landslides. Relief efforts faced many challenges, but through its distribution networks, Food for the Hungry was able to reach settlement areas that were in desperate need of help.

When the summer season started, relief work immediately transitioned into rebuilding and development. With so much wreckage covering the land, the city of Muzaffarabad had become a huge dumpsite. To help the residents start the rebuilding process, Food for the Hungry embarked on a rubble-removal program that saw the clearing of 700,000 cubic feet of debris. Many residents participated in this project through a cash-for-work program, which helped provide income for their families.

Food for the Hungry’s long-term recovery program also included the reconstruction of damaged roads and the rebuilding of retaining walls to prevent further erosions. With roads repaired and opened for the public once again, social and economic recovery was stimulated.

The successful implementation of Food for the Hungry’s programs in Muzaffarabad and outlining areas did not go unnoticed. The local media reported about it, and the municipal authorities publicly welcomed and appreciated Food for the Hungry for how its relief and development work alleviated people’s suffering and supported the city’s efforts toward recovery.

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• Heavy rains from hurricane Stan caused an avalanche of mud and massive flooding in the Mayan highland area of Guatemala, killing hundreds of people and destroying many homes. Food for the Hungry distributed food, medicine and other emergency supplies to survivors.

• Two months apart from each other, super typhoons “Milenyo” and “Reming” slammed the Philippines, causing massive loss of lives and widespread damage to property and infrastructure. Food for the Hungry responded by providing medical assistance, blankets and other emergency supplies to affected families.

• A powerful earthquake devastated Yogyakarta, Indonesia. Food for the Hungry arrived on the ground the next day and began relief operations including water and sanitation projects. Food for the Hungry provided blankets, tarpaulins, hygiene kits, tents, cooking kits, temporary shelters and other relief goods to thousands of people in the provinces of Central Java and Yogyakarta.

• Heavy rains caused rivers to overflow in the Amhara region of Ethiopia resulting in the destruction of many farmlands. Food for the Hungry responded by providing seed support to farmers in the affected districts.

other relief efforts in 2006

rubblefrom therebuilding

stigma of

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since The firsT cases of aids were reporTed in 1981, 25 million people have died of the disease and 65 million have been infected with HIV. The pandemic is felt most strongly in the developing world, particularly in sub-Saharan Africa where approximately 25 million adults and children were living with HIV at the end of 2005.

Across the world, support and sympathy pours in for HIV/AIDS victims, resulting in increased funding for prevention, treatment and care. However, stigma and discrimination remains an enormous barrier to the fight against AIDS. People living with HIV/AIDS suffer rejection, even violent assaults, from family members and their communities when what they need the most is support.

Such was the case of Stella Betty Pedun, a 30-year-old Ugandan widow and mother of five girls. Following her husband’s death, Stella decided to get tested for AIDS, and when the test showed that she was HIV-positive, her life turned into a nightmare. While many African families and churches show compassion to those with AIDS, Stella’s husband’s relatives drove her and her children out of their home, calling them “dead bodies” and threatening to kill them if they did not leave.”

Thankfully, Stella’s brother gave her a small hut, where she and her children lived in isolation – without food, without water, without hope.

Then help came. Staff members of Food for the Hungry’s “Bringing Hope” program learned of Stella’s plight, and they immediately visited her and gave her and her children food, blankets, clean water, mosquito nets and other basic household supplies. They also provided her with counseling support and training to raise her awareness of AIDS and its care and prevention. Today, Stella lives a life of hope and gratitude.

Stella represents many HIV-positive people in Africa who benefit from the Bringing Hope program of Food for the Hungry. The program is funded by a private grant and addresses the AIDS crisis from a biblical perspective. In Ethiopia, Kenya, Mozambique, Rwanda and Uganda, Food for the Hungry’s HIV/AIDS program focuses on (a) prevention based on abstinence and marital faithfulness, (b) home-based care and counseling for those living with HIV/AIDS and (c) support for orphans and vulnerable children. AIDS education is a crucial component of the program as it fights the ignorance that causes people to discriminate against those with HIV/AIDS.

Since Bringing Hope was launched in 2004, Food for the Hungry has exponentially increased its ability to address the AIDS pandemic in the developing world. Strategic partnerships with churches and community-based organizations have allowed for more resources and services, resulting in a much more effective approach to AIDS prevention and care.

Stella Betty Pedum, a Ugandan widow infected with HIV, found support through “Bringing Hope,” a Food for the Hungry program aimed at stopping the spread of HIV/AIDS and providing care to those affected by it.

Strategic reSponSeS

to the hiV/aiDS panDemic

breaking The

“Francis Schaeffer once said that we must preach the gospel in the vernacular of every generation,” says Bo White, senior manager of the department of internships and college initiatives. “So, if we are going to preach the gospel with clarity – in word and in deed – we must seek to understand and equip young people.”

One strategy to engage this vital generation is the internship program, which has doubled in size since its formal inception in early 2006. With several internship opportunities in five countries, students responding to God’s call on their lives put their passions and talents to work in the office or in the field.

Interns get involved in areas such as emergency relief operations, health and nutrition education, agricultural training and promotion, community development, and communication. They play a big role in bringing transformation to hard places around the world.

In September 2006, with the arrival of the first batch of students in Kampala, Uganda, Food for the Hungry launched its cutting-edge study-abroad program called Go ED. Having experienced Food for the Hungry’s holistic ministry first-hand, they returned to the United States with a broader perspective and a stronger desire to serve the poor.

To provide experiential learning to each participant, the Go ED. program offers eight weeks of challenging classroom instruction followed by a four-week practicum in one of four African countries where Food for the Hungry works. During the practicum, students engage in programs involving education, health and sanitation, agriculture, communication, and church development.

The Go ED. program will expand with an additional site in Chengdu, China, as soon as fall 2008.

Food for the Hungry gives thanks to God for how He equips the young generation to advance His kingdom in places broken by poverty, war and injustice.

It is amazing what can happen in a short time when God’s people align their hopes and efforts with His will.

Fiscal year 2006 saw the launch of several progressive programs designed to serve and engage college-aged adults. The programs have helped create an environment where young people can be nurtured professionally, spiritually and personally while growing their vision and mission to meet physical and spiritual needs worldwide.

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sequipping the

service leadership

living lifea bit differently

“Together we can unite to serve a powerful God who intrepidly, daringly and boldly calls us to take His love to hard places around the world.”

– Ben Homan, Food for the Hungry President and CEO

youth for

And

“We celebrate how God actively uses the vigorous brillance of young people and values their radical and sacrificial service.”

– Ben Homan Food for the Hungry President and CEO

seVere maLnuTriTion in chiLdren under the age of 5 often causes lifelong and irreversible consequences. Robbed of vital nutrients during their formative years, young children grow up stunted and sickly, significantly diminishing – if not totally eliminating – any chance of a better future.

In 53 developing countries, nearly 13 million children under the age of 5 die each year, and more than half of those deaths are associated with malnutrition. In Africa alone, five million children under the age of 5 died in 2005, and malnutrition was a major contributor to half of those deaths.

Food for the Hungry addresses the issue of malnutrition in very young children through preventive care and nutrition education. In Mozambique, for example, Food for the Hungry works in partnership with the United States Agency for International Development (USAID) in reducing malnutrition through food security and child survival programs that include health and nutrition training.

Food for the Hungry uses a methodology called “Hearth nutritional rehabilitation” where all malnourished preschool children and their parents are invited to attend a 12-day nutrition class.

In any poor community, you will find some poor mothers who are coping and have well-nourished children. During the first days of the class, the mothers conduct a participatory study to find out why some of their poor neighbors in their village have healthy, well-nourished children: how they care for their children, their health care practices, what and how they feed their children, and their spiritual beliefs.

The results of this study are then used to put together recipes for healthy, low-cost meals and messages that are taught during the classes. Mothers are taught how to feed their children these special meals and to adopt these new practices and ways of thinking during the class and beyond.

In several districts in Mozambique, an average of 81 percent of malnourished children completed the Hearth program. The results are very encouraging: As much as 78 percent of children who attended the nutrition training are still well-nourished six months after participating in the program. In the last evaluation, severe malnutrition was cut in half in the districts where Food for the Hungry was working.

Eradicating malnutrition and hunger in developing countries remains a big challenge to governments and humanitarian agencies. However, Food for the Hungry continues to equip the poor with skills, tools and training so they can provide sufficient food for their families and effectively transform their communities.

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promoting

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To help minimize malnutrition in

Mozambique, a group of

farmers started to grow

a community garden, providing mothers a

steady source of healthy

food for their children.

healthy

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Board of DirectorsFood for the Hungry, Inc. andFood for the Hungry Foundation, Inc.

Phoenix, Arizona

We have audited the accompanying consolidated statements of financial position of Food for the Hungry, Inc. and Food for the Hungry Foundation, Inc. as of September 30, 2006, and 2005, and the related consolidated statements of activities, functional expenses, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the organization’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with U.S. generally accepted auditing standards and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes consideration of internal controls over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the organization’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Food for the Hungry, Inc. and Food for the Hungry Foundation, Inc. as of September 30, 2006, and 2005, and the results of its consolidated activities, functional expenses, and cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

Atlanta, GeorgiaJanuary 10, 2007

independent auditors’ report

Consolidated Statement of Financial PositionFood For the hungry, InC. and Food For the hungry FoundatIon, InC.

Consolidated Statement of activitiesFood For the hungry, InC. and Food For the hungry FoundatIon, InC.

Assets Current asset: Cash and cash equivalents $ 1,647,836 $ 3,168,733 Investments 2,320,146 2,951,695 grants receivable 4,579,476 1,842,813 Loan receivable 500,000 - gifts-in-kind inventory 2,155,410 - Inventory of commodities awaiting monetization 1,126,217 1,704,681 Prepaid expenses and other assets 658,175 496,434 12,987,260 10,164,356

Investments held for Charitable trusts 155,172 159,975 gift annuity reinsurance asset 429,981 468,231 Land, buildings, and equipment, at cost–net 2,219,197 2,269,550 Child Vocational Scholarship Fund 1,174,769 1,157,713

Total Assets $ 16,966,379 $ 14,219,825

Liabilities and Net AssetsCurrent Liabilities: accounts payable $ 3,306,214 $ 1,024,019 accrued expenses 148,993 101,328 grants payable 1,588,014 884,038 gifts-in-kind payable 2,155,410 - amounts due other ministries from pending commodity sales 1,126,217 1,704,681 Long-term debt - current portion 251,651 558,542 8,576,499 4,272,608

trusts and annuities 514,306 557,934 Long-term debt - net of current portion 29,133 44,744 total Liabilities 9,119,938 4,875,286

net assets: unrestricted: undesignated (149,077) 1,118,971 Board designated - Child Vocational Scholarship Fund 160,000 160,000 net investment in land, buildings, and equipment 2,158,166 2,111,152 2,169,089 3,390,123 temporarily restricted 5,337,352 5,614,416 Permanently restricted - Child Vocational Scholarship Fund 340,000 340,000total net assets 7,846,441 9,344,539

Total Liabilities and Net Assets $ 16,966,379 $ 14,219,825

See notes to consolidated financial statements.

year ended September 30,

2006 2005


Support, Revenue andReclassifications Contributions $ 4,310,152 $ 15,599,603 $ - $ 19,909,755 $ 4,218,699 $ 16,418,190 $ - $ 20,636,889 government grants 21,825,870 - - 21,825,870 12,873,413 - - 12,873,413 government donated

commodities 12,070,823 - - 12,070,823 9,017,483 - - 9,017,483 Private gifts-in-kind 18,943,217 - - 18,943,217 23,783,136 - - 23,783,136 Investment income 218,086 77,631 - 295,717 114,366 189,968 - 304,334 Change in value of trusts and annuities (11,772) 12,348 - 576 (16,889) 20,423 - 3,534 other income 163,599 - - 163,599 43,848 - - 43,848

net assets released from restrictions:

administrative allocations 5,363,234 (5,363,234) - - 5,511,204 (5,511,204) - - Child sponsorship 3,403,265 (3,403,265) - - 2,966,573 (2,966,573) - - International hunger Corps staff support 2,713,326 (2,713,326) - - 1,934,267 (1,934,267) - - Child Vocational Scholarships granted 74,720 (74,720) - - 50,624 (50,624) - - relief efforts and other projects 4,412,101 (4,412,101) - - 4,494,304 (4,494,304) - -

Total Support, Revenue and Reclassifications 73,486,621 (277,064) - 73,209,557 64,991,028 1,671,609 - 66,662,637

ExpensesProgram ministries: grants to Food for the hungry International 39,042,258 - - 39,042,258 28,519,890 - - 28,519,890 gifts-in-kind to other organizations 18,593,569 - - 18,593,569 23,237,869 - - 23,237,869 other programs 8,598,291 - - 8,598,291 4,853,145 - - 4,853,145 Information and education 596,200 - - 596,200 520,476 - - 520,476 66,830,318 - - 66,830,318 57,131,380 - - 57,131,380

Supporting services: Fundraising 4,719,322 - - 4,719,322 4,480,061 - - 4,480,061 general and administrative 3,158,015 - - 3,158,015 3,016,035 - - 3,016,035 7,877,337 - - 7,877,337 7,496,096 - - 7,496,096

Total Expenses 74,707,655 - - 74,707,655 64,627,476 - - 64,627,476 Change in net assets (1,221,034) (277,064) - (1,498,098) 363,552 1,671,609 - 2,035,161

net assets, Beginning of year 3,390,123 5,614,416 340,000 9,344,539 3,026,571 3,942,807 340,000 7,309,378

Net Assets, End of Year $ 2,169,089 $ 5,337,352 $ 340,000 $ 7,846,441 $ 3,390,123 $ 5,614,416 $ 340,000 $ 9,344,539

temporarily Permanently unrestricted restricted restricted total

year ended September 30, 2005 temporarily Permanently unrestricted restricted restricted total

year ended September 30, 2006

Cash Flows from Operating Activities: reconciliation of change in net assets to net cash provided by operating activities: Change in net assets $ (1,498,098) $ 2,035,161 depreciation 273,183 238,058 non-cash stock gifts (238,027) (144,566) net realized and unrealized loss on investments (77,845) (173,020) net loss on sale of fixed assets 3,774 27,478 net change in grant receivable and payable (2,032,687) (837,641) net change in bequest and promises-to-give receivable - 1,183,961 net change in prepaids and other assets (161,741) (229,478) net change in accounts payable 2,282,195 369,176 net change in accrued expenses 47,665 12,893net Cash Provided by operating activities (1,401,581) 2,482,022

Cash Flows from Investing Activities: Fixed asset purchases (196,482) (250,317) Proceeds from sale of fixed assets 993 900 Issuance of loan receivable (500,000) Investment purchases (123,371) (1,116,948) Proceeds from sale of investments 1,041,616 676,931net Cash Provided (used) by Investing activities 222,756 (689,434)

Cash Flows from Financing Activities: Payments on long-term debt (341,497) (131,499) Change in trusts and annuities (575) (3,564)net Cash used by Financing activities (342,072) (135,063)

Increase (decrease) in Cash and Cash equivalents (1,520,897) 1,657,525Cash and Cash equivalents, Beginning of year 3,168,733 1,511,208Cash and Cash Equivalents, End of Year $ 1,647,836 $ 3,168,733

Supplemental Disclosures: Cash paid for interest - net of capitalized interest $ 40,891 $ 43,655 non-cash transactions: gifts-in-kind and donated commodities received and distributed $ 31,014,040 $ 32,800,619 gifts-in-kind received and held for distribution $ 2,155,410 $ - Fixed assets acquired through accounts payable $ - $ 17,212


years ended September 30,

2006 2005

at Food for the hungry, we are accountable before god and before you to use your gifts in the best way possible to help hungry people.

We’re a charter member of the evangelical Council for Financial accountability (eCFa) and abide by all of its strict reporting standards.

Use of Resources

90% Programs

6% Fund raising

4% administrative

Commodities Distributed

grants to Food for the hungry International $ 39,042,258 $ - $ - $ - $ 39,042,258 $ 28,519,890

In-Kind grants to other organizations 18,593,569 - - - 18,593,569 23,237,869

grants to other organizations 1,862,929 - - - 1,862,929 457,188

Salaries and Benefits 4,452,688 363,185 1,011,010 1,856,368 7,683,251 6,106,261

Professional Services 486,612 25,196 146,061 195,703 853,572 703,067

travel 729,338 20,469 298,314 172,282 1,220,403 788,123

office expense 199,682 38,950 94,222 225,096 557,950 456,188

occupancy 131,502 29,293 159,996 3,680 324,471 294,147

Postage 80,056 787 54,833 24,221 159,897 132,838

Interest 507 - 17 40,994 41,518 47,897

depreciation 36,859 6,188 27,776 202,360 273,183 238,058

general Information, education and Promotion 75,649 88,695 2,852,901 7,277 3,024,522 2,850,355

other expenses 542,469 23,437 74,192 430,034 1,070,132 795,595

Total Expenses 2006 $ 66,234,118 $ 596,200 $ 4,719,322 $ 3,158,015 $ 74,707,655

Total Expenses 2005 $ 56,610,904 $ 520,476 $ 4,480,061 $ 3,016,035 $ 64,627,476

direct Program Information general and distributions and education Fundraising administrative total total

Program Ministries Support Services years ended September 30, 2006 2005

Consolidated Statement of Functional expensesFood For the hungry, InC. and Food For the hungry FoundatIon, InC.

Consolidated Statement of Cash FlowsFood For the hungry, InC. and Food For the hungry FoundatIon, InC.


86% Medical Supplies

12% Clothing

2% Seeds/Food/other

Public Support

93% Individuals

5% Businesses

2% Foundations

September 30, 2006

1. NATURE OF ORGANIZATION:Food for the hungry, Inc. (FhuS) is a Christian international relief and development organization, incorporated in the united States in 1971, and dedicated to helping people in the poorest areas of the world by advocating for them and providing relief, rehabilitation, and development programs. the operational Statement or Vision of Community philosophy is: FhuS seeks to walk with churches, leaders, and families in overcoming all forms of human poverty by living in healthy relationship with god and his Creation.

Food for the hungry Foundation, Inc. (FhF) incorporated in the united States in 2003. FhF is organized and operated under the control and for the benefit of FHUS.

Food for the hungry International (FhI), incorporated in geneva, Switzerland, works in 43 countries through the help of donors who support its 11 national organizations (n.o.s),–one of those being Food for the hungry, Inc.

these n.o.s, located around the world, raise funds, supply human resources, and help design and evaluate relief and development programs implemented in communities across South and Central america, asia, africa, europe and the Middle east. the 11 n.o.s are: Costa rica, Canada, hong Kong, Japan, Korea, Sweden, Switzerland, thailand, united Kingdom, united States, and united States–Korea.

the 41 countries that Food for the hungry, Inc. has an ongoing presence in as a relief and development or exploratory fields, or supported by FHI are: afghanistan, Bangladesh, Bolivia, Brazil, Cambodia, China, Costa rica, drC Congo, Cuba, dominican republic, ethiopia, guatemala, haiti, honduras, Indonesia, India, Iraq, Iran, Kazakhstan, Kenya, Krygystan, Laos, Malaysia, Mongolia, Mozambique, nepal, nicaragua, north Korea, Paraguay, Pakistan, Peru, Philippines, romania, rwanda, Sudan, tajikistan, tanzania, thailand, uganda, united States, and uzbekistan.

Food for the hungry’s activities include:

Child Sponsorship $28 a month helps provide a child with access to nutritious food, clothing, medical care, and spiritual nourishment through community development programs. Because the programs are family and community based, gifts help the entire family and community.

Hunger CorpsStaff also work with indigenous organizations to help them better serve the needs of people in their own communities. Missions opportunities are offered through Food for the hungry, Inc.’s short-term teams and longer-term assignments with our unique hunger Corps program.

General Relief and DevelopmentFood for the hungry, Inc., using the Vision of Community philosophy, provides emergency relief and rehabilitation, community clean-water projects, health education and intervention, agriculture development, income generation, life-skills training, and education.

Micah InitiativesCollege students can receive first-hand experience and training through several programs offered through Micah Initiatives. go-ed is an accredited overseas learning experience where college students spend a semester abroad. other programs for college students include the College Campus Ministry and the Internship Program.

Gifts-in-KindFood for the hungry, Inc. procures donations for food, seeds, clothing, medical supplies, and other commodities for use in relief, rehabilitation, and development programs. these donations are then matched with the needs of Food for the hungry International and other agencies.

Information and EducationBy providing information and implementing educational programs, Food for the hungry, Inc. serves as an advocate for some of the poorest people in the world.

SummaryFood for the hungry, Inc. and Food for the hungry Foundation, Inc. are not-for-profit corporations exempt from federal income taxes under Section 501(c)(3) of the Internal revenue Code and are also exempt from state income taxes. Food for the hungry, Inc. and Food for the Hungry Foundation, Inc. have been classified as a publicly supported organizations, which are not private foundations, under section 509(a) of the Code. Contributions by the public are deductible for income tax purposes. during the years ending September 30, 2006, and 2005, contributions approximated 27% and 31% of total support and revenue, respectively. In the same years, gifts-in-kind and government donated commodities approximated 42% and 49% of total support and revenue, and cash government grants approximated 30% and 19% of total support and revenue.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:The consolidated financial statements of Food for the Hungry, Inc. have been prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles. A summary of significant accounting policies followed are described below to enhance the usefulness of the consolidated financial statements to the reader.

Principles of ConsolidationThe consolidated financial statements include the operations of Food For the hungry, Inc. and Food for the hungry Foundation, Inc., collectively referred to as the Food for the Hungry, Inc. All significant intercompany balances and transactions have been eliminated. For the years ended September 30, 2006, and 2005, Food for the hungry Foundation, Inc. had total assets of $1,856,572 and $2,321,288 and total liabilities of $1,726,269 and $2,281,270, respectively.

Affiliated OrganizationsFood for the hungry, Inc. and Food for the hungry International have separate and distinct Boards of Directors. Therefore, the financial statements have not been consolidated with those of Food for the hungry International.

the primary purpose of Food for the hungry, Inc. is to provide support for the programs of Food for the hungry International. accordingly, grants to Food for the hungry International for the years ended September 30, 2006, and 2005, totaled $39,042,258 and $28,519,890 as follows:

September 30, 2006 2005Cash grants $ 17,352,040 $ 13,353,298 government donated commodities monetized or awaiting monetization overseas 5,428,861 4,807,354 government donated commodities distributed overseas 6,641,962 4,755,396Private gifts-in-kind distributed overseas 349,649 - reimbursements for costs of shipping gifts-in-kind and donated government commoditites 9,269,746 5,603,842 $ 39,042,258 $ 28,519,890

grants payable to Food for the hungry International are related to government grants for which valid expenditures had been incurred at year end. grants payable as of September 30, 2006, and 2005, were $952,824 and $884,038, respectively.

Cash and Cash EquivalentsCash and cash equivalents consist primarily of cash on hand and cash on deposit. these accounts may, at times, exceed federally insured limits. Food for the hungry, Inc. has not experienced any losses in such accounts. Management believes it is not exposed to any significant credit risk on cash and cash equivalents.

InvestmentsMoney market mutual funds, certificates of deposit, and cash in investment brokerage accounts held in trust for the Child Vocational Scholarship Fund and to fund trusts and annuities are included in investments. Investments are carried at market value. donated securities are recorded at market value on the date of the gift and thereafter carried in accordance with the above provisions.

Investments are held for the Child Vocational Scholarship Fund and to fund trusts and annuities for which Food for the hungry, Inc. is trustee.

Gifts-In-Kind Inventorygifts-in-kind inventory consists of private donated commodities that are held by a third-party in an off-site storage facility. Food for the hungry, Inc. receives the donations of commodities at these off-site storage facilities, which are then shipped to another nonprofit organization.

Inventory of CommoditiesFood for the hungry, Inc. receives donations of commodities for monetization from the united States agency for International development (uSaId). Proceeds from monetized commodities are used to fund program activities. these commodities are valued at the estimated future proceeds from monetization.

Land, Buildings, and Equipmentexpenditures greater than $1,000 for land, buildings, and equipment are capitalized at cost. during the year ended September 30, 2006, Food for the hungry, Inc. adopted the provisions of Statement of Financial accounting Standards no. 154, accounting Changes and error Corrections and increased their capitalization to include only expenditures greater than $2,500. accordingly, items which would have been previously capitalized approximating $67,000 are now expensed. donated items are recorded at

September 30, 2006

fair market value on the date of the gift. depreciation is computed on the straight line method over the estimated useful lives of the assets, ranging from 2 years for software to 30 years for buildings.

Trusts and Annuities Food for the hungry, Inc. has established a gift annuity plan that allows donors to contribute assets to the organization in exchange for the right to receive a fixed dollar annual return during their lifetimes. A portion of the transfer is considered a charitable contribution for income tax purposes.

as trustee, Food for the hungry, Inc. administers irrevocable charitable remainder unitrusts. these trusts provide for the payment of lifetime distributions to the grantor or other designated beneficiaries. At the death of the lifetime beneficiaries, the trusts provide for the distribution of assets to Food for the hungry, Inc.

the difference between the amount contributed for gift annuities and irrevocable agreements and the liability for future payments, determined on an actuarial basis, is recognized as income at the date of the gift and is included on the consolidated statements of activities in contributions. the difference between assets in trust and liabilities is reported on the consolidated statements of financial position as net assets.

the present value of the expected payments to the trustors and annuitants over their life expectancy is included on the consolidated statements of financial position as a liability under the caption trusts and annuities. the liability is revalued annually based upon actuarially computed present values. the change in the present value, net of investment income, payments to annuitants, and terminations, is included on the consolidated statements of activities as change in value of trusts and annuities.

the present value of expected payments to annuitants over their life expectancy is $429,981 and $468,231, respectively as of September 30, 2006, and 2005. the present value of expected payments to trustors over their life expectancy is $84,325 and $89,703, respectively as of September 30, 2006, and 2005.

In March 2002, Food for the hungry, Inc. purchased a nonparticipating terminal Funding group annuity from an insurance company. the purpose of this policy is to reinsure the gift annuity obligations of Food for the hungry, Inc. the insurance company has assumed all mortality and investment risk associated with the gift annuities. however, Food for the Hungry, Inc. remains liable for fulfilling the requirements of the gift annuity agreements. the value of this policy has been determined to equal the outstanding annuity obligations of Food for the hungry, Inc. and is included on the consolidated statements of financial position as gift annuity reinsurance asset.

as a result of the reinsurance of the mortality and investment risk associated with gift annuities, changes in the present value of expected payments to annuitants over their life expectancies from the date of the policy forward represent changes in the associated gift annuity reinsurance asset and not income to Food for the hungry, Inc.

Net AssetsThe consolidated financial statements report amounts by classification of net assets as follows:

•Unrestricted amounts are those currently available at the discretion of the board for use in the organization’s operations, those for specific purposes as designated by the board, and those resources invested in land, buildings, and equipment.

•Temporarily restricted amounts are those which are stipulated by donors for specific operating purposes, for capital projects, and for time restrictions. See note 7 for a summary of temporarily restricted net assets.

•Permanently restricted amounts are those which represent permanent endowments where it is stipulated by donors that the principal remain in perpetuity and only the income is available as unrestricted or temporarily restricted, as specified in endowment agreements. Permanently restricted net assets consist of the Child Vocational Scholarship Fund. each year, all or part of the investment income from the Child Vocational Scholarship Fund is available for award to graduates of the child sponsorship program for additional vocational training. the investment income can also be used by Food for the hungry International staff toward funding of courses that would enable them to better serve the country in which they minister.

all contributions are considered available for unrestricted use unless specifically restricted by the donor or subject to legal restrictions.

Contributions are recorded as temporarily restricted if they are received with donor stipulations that limit their use through purpose and/or time restrictions. When donor restrictions expire, that is, when the purpose restriction is fulfilled or the time restriction expires, the net assets are reclassified from temporarily restricted to unrestricted net

assets and reported in the consolidated statements of activities as net assets released from restrictions. Food for the hungry, Inc.’s policy is to record temporarily restricted contributions received and expended in the same accounting period as temporarily restricted contributions and net assets released from restrictions. temporarily restricted contributions are subject to assessments ranging from 10% to 60%, which is used for general and administrative expenses. Assessments are classified as unrestricted contributions at the time the contributions are received.

For contributions restricted by donors for the acquisition of property or other long-lived assets, the restriction is considered to be met when the property or other long-lived asset is placed in service.

Public Support, Revenue and ExpensesContributions are recorded when cash or unconditional promises-to-give have been received or ownership of donated assets is transferred to Food for the hungry, Inc. Conditional promises-to-give are recognized when the conditions on which they depend are substantially met. Food for the hungry, Inc. receives noncash gifts which are recorded as support at the estimated fair market value on the date of the gift. goods given to Food for the hungry, Inc. that do not have an objective basis for valuation are not recorded.

revenue is recorded when earned. expenses are recorded when incurred in accordance with the accrual basis of accounting.

Contributed ServicesStatement of Financial accounting Standards no. 116, accounting for Contributions received and Contributions Made, requires recording the value of donated services that create or enhance nonfinancial assets or require specialized skills. Many volunteers have contributed significant amounts of their time to activities of Food for the hungry, Inc. however, since the above requirements were not met, the value of the contributed services is not recorded in the consolidated financial statements.

Functional Allocation of Expensesthe costs of providing the various program services and supporting activities have been summarized on a functional basis. accordingly, certain costs, such as depreciation and payroll, have been allocated among the program and supporting activities benefited.

Allocation of Joint CostsFood for the hungry, Inc. has implemented the american Institute of Certified Public Accountants’ Statement of Position 98-2, Accounting for Costs of Not-for-Profit Organizations and State and Local Governmental entities that Include Fundraising. Food for the hungry, Inc.’s policy is to allocate all costs of activities which have a fundraising component as 100% fundraising.

Use of EstimatesThe preparation of consolidated financial statements in conformity with u.S. generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. accordingly, actual results could differ from those estimates.

3. INVESTMENTS:Investments consist of the following:

September 30, 2006 2005 Money market funds $ 1,756,034 $ 963,957 treasury notes 575,117 1,401,544 Common stock 953,624 1,136,829 Corporate bonds 109,559 672,453 Mutual funds 255,753 94,600 3,650,087 4,269,383 Less long-term investments: Investments held for charitable trusts and annuities (155,172) (159,975) Investments held for Child Vocational Scholarship Fund (1,174,769) (1,157,713Current Investments $ 2,320,146 $ 2,951,695

Investment income consists of: Interest and dividends $ 238,942 $ 143,861 realized and unrealized gain on investments 83,219 188,114 Investment fees (14,096) (7,218) 308,065 324,757 Less investment income included in change in value of trusts and annuities (12,348) (20,423)net investment income $ 295,717 $ 304,334

notes to Consolidated Financial StatementsFood For the hungry, InC. and Food For the hungry FoundatIon, InC.


Howard BergConsultant Scottsdale, AZ

Ray J. Berryman

BusinessmanWindermere, FL

Theodore S. Corwin, Jr.

BusinessmanHickory, NC

Shelle EnsioEngineerTucson, AZ

Randall L. HoagFood for the Hungry Int’l

Bangkok, Thailand

Benjamin K. Homan

Food for the Hungry, Inc.

Phoenix, AZ

Scott Krippayne

Artist/Songwriter

Tacoma, WA

Scot RiddleBusinessmanCanyon Country, CA

John RowellMissions Executive

Atlanta, GA

John A. Tanksley

PhysicianSpringfield, MO

Gregory L. Vestri

ConsultantAustin, TX

Carolyn Wheeler

Realtor/Developer

Nicholasville, KY

our thanksWe would like to thank our advocate for the hungry world, photographer Rodney

Rascona, and O’Neil Printing, for their faithful support in maintaining graphic

industry standards at reduced costs, allowing us to be faithful stewards to God

and our donors.

board of directors

1224 E. Washington Sreet

Phoenix, AZ 85034Phone: 480-998-3100Toll-free: 1-800-2-HUNGERSwww.fh.org

8. GIFTS-IN-KINDFood for the hungry, Inc. receives donations of food, clothing, medical supplies, and other commodities for use in relief and development programs. Food for the hungry, Inc. transfers all such gifts-in-kind to Food for the Hungry International and similar not-for-profit organizations for ultimate distribution to the poor and hungry throughout the world.

gifts-in-kind for the years ended September 30, 2006, and 2005, include $12,073,780 and $9,017,483, respectively, of commodities received through the united States agency for International development (uSaId), of which $6,641,962 and $4,210,129, respectively, were distributed to foreign programs. the remainder was monetized overseas and the proceeds used in foreign programs. Such goods were valued at wholesale value using guidelines published by the united States department of agriculture and uSaId. the remaining $18,943,217 and $23,783,136 for the years ended September 30, 2006, and 2005, respectively, relates to gifts-in-kind received through private donations, which were recorded at estimated fair value on the date of the gift.

gifts-in-kind and government donated commodities were distributed as follows:

September 30, 2006 2005Food for the hungry International $ 12,420,471 $ 9,562,750 other agencies 18,593,569 23,237,869 $ 31,014,040 $ 32,800,619

In accordance with Interagency Standards established by the association of evangelical relief and development organizations (aerdo), Food for the hungry, Inc. only records the value of gifts-in-kind for which they were either the original recipient of the gift, were involved in partnership with another organization for distribution internationally, or granted the gift for use in a Food for the hungry International program.

during 2005, Food for the hungry, Inc.’s management voluntarily applied more rigorous verification requirements to external partners that facilitated gifts-in-kind to nonprofit organization recipients supported by Food for the hungry, Inc. other than those received directly by Food for the hungry International. one external partner that facilitated both donations and shipments did not meet these more stringent requirements and hence the value of those shipments are not included in this report. only gifts-in-kind donations and shipments that could be substantiated by supporting evidence obtained from and verified by independent third parties were deemed acceptable for reporting in the current year financial statements.

9. LEASESFood for the Hungry, Inc. leases office space in Washington D.C. under a month to month operating lease agreement with monthly payments of $6,048.

Food for the Hungry, Inc. also leases office equipment with total monthly payments of $2,952, maturing from May 2007 to July 2011. total lease expense was $109,350 and $92,591 for the years ended September 30, 2006 and 2005, respectively.the future minimum payments are as follows:

Year Ending September 30, 2007 $ 30,036 2008 25,070 2009 13,558 2010 6,326 2011 5,457 $ 80,447

10. RETIREMENT PLANFood for the Hungry, Inc. has a defined contribution pension plan covering substantially all employees over 18 years of age who have completed one year of service. Food for the hungry, Inc. makes contributions based on a percentage of salary, and employees may make additional contributions. Vesting in Food for the hungry, Inc. contributions is based on years of continuous service, which reaches 100% after the fifth year of service. retirement expense was $198,440 and $172,194 for the years ended September 30, 2006, and 2005, respectively.

11. RELATED PARTYduring the year ended September 30, 2006, Food for the hungry, Inc. loaned $500,000 to Canadian Food for the hungry, Inc. to be repaid in full within one year with no interest.

In addition, during the year ended September 30, 2006, the CFo for Food for the hungry, Inc. took over the CFo responsibilities for Food for the Hungry International. All salaries and benefits have been paid by Food for the hungry, Inc.

4. LAND, BUILDINGS AND EQUIPMENT:Land, buildings and equipment consist of the following:

September 30, 2006 2005 Land $ 168,851 $ 168,851 Buildings and improvements 1,777,468 1,691,189 Furniture and fixtures 283,359 283,359 Office equipment 274,103 211,968 Computer equipment 604,607 631,618 Vehicles 41,540 29,420 3,149,928 3,016,405 Less accumulated depreciation (930,731) (746,855Land, buildings and equipment–net 2,219,197 2,269,550 Less debt secured by land, buildings and equipment (61,031) (158,398) net investment in land, buildings and equipment $ 2,158,166 $ 2,111,152 depreciation expense $ 273,183 $ 238,058

5. GRANTS PAYABLE:Food for the hungry, Inc. receives government grants for use in relief and development programs. Food for the hungry, Inc. expends a portion of these funds and sub-receipts the remaining portions to Food for the Hungry International and similar not-for-profit organizations. The amounts payable to these sub-recipients are as follows:

September 30, 2006 2005Food for the hungry International $ 952,824 $ 884,038 other agencies 635,190 - $ 1,588,014 $ 884,038

6. LONG-TERM DEBT:Long-term debt consists of the following:

Food for the Hungry Inc. leases various equipment from unaffiliated entities under capital lease agreements with total monthly payments of $10,979 due from october 2006 to January 2011. at September 30, 2006, the gross amount of equipment and related accumulated amortization recorded under the capital leases was $281,216 and $280,359, respectively.

September 30, 2006 2005 $ 61,031 $ 158,398

Food for the hungry, Inc. has a secured line of credit with a bank with a limit of $500,000, due on demand. the interest rate is LIBor plus a sliding percentage depending on the loan balance. the rate at September 30, 2006 was 7.079%. 219,753 444,888 280,784 603,286 Less current portion (251,651) (558,542) $ 29,133 $ 44,744Interest expense $ 41,518 $ 47,897

the future minimum payments are as follows:

Capital Leases Line of CreditYear Ending September 30, 2007 $ 37,263 $ 219,753 2008 22,110 - 2009 4,032 - 2010 4,032 - 2011 1,008 - $ 68,445 $ 219,753Less amount representing interest (7,414) Present value of net minimum capital lease payment $ 61,031

7. TEMPORARILY RESTRICTED NET ASSETS:temporarily restricted net assets consist of the following:

September 30, 2006 2005 Program restrictions: relief efforts and international projects $ 3,252,031 $ 3,632,637 International hunger Corps staff support 1,207,017 917,859 Child sponsorship 85,837 243,382 Child Vocational Scholarship Fund 674,769 657,713 Future interest in irrevocable trusts 70,848 70,272 other 46,850 92,553 $ 5,337,352 $ 5,614,416

September 30, 2006


annual report 2006

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Transcript of annual report 2006