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Empowering Microfinance2009 ANNUAL REPORT

Letter from the Board Chairman

Almost a decade ago, Unitus was established with two primary goals: (1) to bring commercial

funding into the worldwide microfinance marketplace, thus greatly increasing the amount of

money available for microloans, and (2) to help demonstrate that microfinance organizations

can scale to serve hundreds of thousands (even millions) of clients at the bottom of the

economic pyramid.

Today, as we close the chapter on Unitus 1.0, we are proud of our legacy which includes

channeling nearly $40 million in donations and $30 million in investment capital to our

microfinance partners, who have gone on to harness $2 billion in loan capital to serve more

than 12 million micro-entrepreneurs worldwide. We express our heartfelt thanks to the

talented and dedicated team of employees who have been part of Unitus over the

past decade and have made these achievements possible.

There is a great deal of work yet to be done in extending access to microcredit to the

hundreds of millions who still need it, and we applaud the fine organizations who continue to

labor to that end. Fortunately, now that commercial investors have taken an interest in the

effort, the pace of growth in the industry is accelerating. With $50 billion of microfinance

capital available to more than 150 million of the world’s working poor, the commercial case

has been made, so Unitus is redirecting our attention to search for other scalable solutions

that combat global poverty.

2009 Unitus Annual Report ©2010 Unitus www.unitus.com

> Continued on next page

Chairman of the Board Joseph Grenny with a client of Unitus partner Jamii Bora

Group loan meeting with clients of Bangalore-based Unitus partner Grameen Koota.

Tim Atterton leads an African Microfinance Growth Centre workshop outside Nairobi, Kenya.

On behalf of the Board of Directors of Unitus,

I sincerely thank you for your support.

Sincerely,

Joseph Grenny

Chairman of the Board

Unitus

EMPOWERMENT BY THE NUMBERS

> Number of clients served by Unitus MFI partners (the local providers

of microfinance) as of December 31, 2009:

10.5 MILLION

> Number of clients added by Unitus partners in 2009:

3.4 MILLION

> Number of family members impacted by microfinance in 2009 via a Unitus

partner (assuming developing world average of five members per household):

52.4 MILLION

Catalyzing Microfinance Growth

0 M

2 M

4 M

6 M

8 M

10 M

12 M

7,092,038

3,378,643

1,410,137

545,874249,110

27,693

10,484,820

200820072006200520042003 2009

TOTAL UNITUS PARTNER CLIENTS (MILLIONS)


Shashwat Mody, Unitus Advisory Services Senior Associate, guides MFI staff through a business training workshop as part of the Africa Microfinance Growth Centre program.

AFRICA MICROFINANCE GROWTH CENTRE

In 2009, Unitus launched the Africa Microfinance Growth Centre, co-developed by Unitus

and Financial Sector Deepening (FSD), with additional financial support by Omidyar Network,

The Boeing Company, and SV2: Silicon Valley Social Venture Fund.

A leadership development program for CEOs of microfinance institutions (MFIs) in East

Africa, the Africa Microfinance Growth Centre program spanned 14 months and incorporated

intensive workshops, trainings, and peer-to-peer networking opportunities.

Unitus began accepting applications in early 2009, with the goal of finding CEOs of

entrepreneurial, early-stage MFIs in Kenya and Tanzania that served low-income households,

had aggressive growth targets, and focused on sustainability.

After a rigorous review and screening process, Unitus kicked off workshops and trainings in

July 2009. Participants will complete the program in 2010 with a strategic plan for their

organization, training in functional business

topics needed for day-to-day management,

and strengthened leadership skills.

The following audio slideshow, narrated

by Unitus Senior Director Natalie Barndt,

features photos from Growth Centre

workshops and training sessions that took

place at the end of January 2010 outside

Nairobi, Kenya.

> Empowering East Africa


GROWTH CENTRE PARTICIPANTS

MFIs: Kenya

> Adok Timo

> BIMAS

> KEEF

> KFS

> PAWDEP

> Yehu Microfinance

MFIs: Tanzania

> Mbinga

> MuCoBa

> Tujijenge Microfinance

> Tujijenge Tanzania

> YOSEFO

“This pilot was a valuable real-world

test of what might be possible

when using mobile payments

in microfinance. It was a great

learning process for Unitus,

Grameen Koota, and mChek,

and helped demonstrate the huge

potential for using mobile

technology to lower operational

costs and increase access.”

– Vikas Jhunjhunwala, Sr. Manager, IS Solutions | Unitus Solutions

GRAMEEN KOOTA / mCHEK MOBILE MONEY PILOT

Throughout the developing world, cell phone technology is spreading like wildfire. More than

4.6 billion mobile phone subscriptions were reported at the end of 2009, with developing

countries now accounting for the majority of the world’s mobile phones—and thousands more

signing up every day.

This represents an incredible change in a short amount of time, leapfrogging over countless

other infrastructure challenges. In India, the United Nations recently reported that nearly 180

million more people have access to cell phones than to toilet or sanitation facilities. Likewise,

by 2012, the number of people without a bank account but with a mobile phone worldwide is

estimated to be 1.7 billion.

The possibilities for this new technology—including its power to connect the poor to desperately

needed financial services—are only beginning to be explored. That’s why in late 2008 and early

2009, Unitus helped pilot a project by mChek (India’s leading mobile payment company) and

Unitus MFI partner Grameen Koota to test the benefits of mobile banking in microfinance.

Members of the pilot, which started with one center (20 customers) in an urban branch in

Bangalore and progressed to five centers (100 customers), made all loan transactions

(disbursements, repayments, etc.) using a mobile phone.

The pilot helped prove that mobile payments can be successfully integrated into an Indian MFI’s

operations while providing a model for scaling up. Other findings demonstrated the potential for

reducing operational costs, increasing security for clients and MFI agents by reducing the need

for holding cash, and faster and more convenient loan meetings.

Not only are the insights being rolled out further within Grameen Koota—to three branches and

an estimated 10,000 borrowers —but the pilot itself is being used by other MFIs as a model for

adopting mobile technology into their operations.

> Empowering Breakthrough Strategies


The Grameen Koota / mChek mobile money pilot helped demonstrate the promise of using cell phones to manage financial accounts for both clients and microfinance operators. (Photos by Valerie Rozycki, Head - Strategic Initiatives, mChek)

Borrowers at a Mimo Finance group loan meeting in Dehradun, India.

SOCIAL PERFORMANCE MANAGEMENT IMPLEMENTATION PROJECT

Looking to ensure that our work creates the best possible outcome for borrowers—and that

our partner microfinance institutions (MFIs) are best positioned to do so—Unitus launched

the Social Performance Management Implementation Project (SPM IP) in late 2009.

Social performance management helps translate an MFI’s mission into practice by

institutionalizing a process to set clear social goals (such as improved quality of housing,

healthcare, etc.), monitor progress toward those goals, and use this information to improve

the organization’s performance by better meeting customer needs.

Designed in partnership with the Michael & Susan Dell Foundation and supported by the

Boeing foundation and Deutsche Bank, the SPM IP recognizes that positive social impact is

more than a good idea for MFIs—it’s also good business practice. By enabling MFIs to

understand their clients better, products and services can be shaped to best meet the needs

of individuals working their way out of poverty.

As Unitus winds down its microfinance operations, it is working in conjunction with the

Michael and Susan Dell Foundation to transfer the remainder of the SPM IP program to

another well-established organization in India (most likely MicroSave). Stay tuned to

www.unitus.com for updates.

> Empowering Microfinance Effectiveness


“Unitus has held our hands to navigate through mine fields … develop our

internal strength … and make us a better organization step by step, day by day.

Thank you, Unitus.”

– Manab Chakraborty, CEO | Mimo Finance

“The customer acquisition and maintenance workshop assured us of the quality,

relevance, and excellence of Unitus’s workshops. We have since worked with

Unitus on other valuable hands-on trainings and look forward to more.”

– Mr. S. Devaraj, Chairman and Managing Director | Grama Vidiyal

“The Unitus partnership offered us an opportunity to network with some of

the most dynamic and progressive microfinance institutions in the world.

Unitus provided various business development services of value, and has

stayed a supportive partner through our early challenges.”

– Praseeda Kunam, Founder and CEO | Samhita

2009 Partner Feedback

> The 2009 Unitus Leadership Summit

in Mussoorie, India, brought together

27 representatives from our amazing

microfinance partners, spanning

six countries and three continents,

to gain insight into industry trends,

share progress, and cross-pollinate

strategies and best practices. Partners

departed the three-day conference with

defined steps toward a broad array of

organizational improvements.

> View audio slideshow2009 Unitus Annual Report ©2010 Unitus www.unitus.com

Unitus staff member Windy Wilkins speaks with a Mimo Finance loan officer in October 2009.


CLIENT GROWTH BY PARTNER BEFORE AND AFTER PARTNERSHIP

Yehu

SKS

Grama Vidiyal

Mimo Finance

Bandhan

Finsol Brazil

Credex

LifeBank

Grameen Koota

Jamii Bora Trust

MONTHS -48 -36 -24 -12 0 +12 +24 +36 +48 +60 +72 +84

200,000

150,000

100,000

50,000

5,000,000

2,000,000

NU

MB

ER

OF C

LIEN

TS

Acceleration Period

BSS

FIS

Months Before Partnership< > Months After Partnership< >

250,000

The Unitus EffectCLIENT GROWTH BY PARTNER BEFORE AND AFTER PARTNERSHIP

Excludes partners with insufficient data.

Unitus Portfolio


UNITUS ENGAGEMENTS AND PARTNERSHIP HIGHLIGHTS1

PartnerPartnership

Start Date Country

Number of Active

Clients

Board Representation/

GovernanceOperations Consulting

Human Resources

SupportMIS/IT

Assistance

Strategic/Financial Planning

Executive Training Grants

Debt Capital2

Other Financing3

Yehu 03.2009 Kenya 5,573 Yes Yes Yes Yes $38,000 Yes

Tujijenge Tanzania 10.2008 Tanzania 11,340 Yes Yes Yes Yes Yes

AMK 05.2008 Cambodia 217,477 Yes Yes $50,000

Samhita 02.2008 India 26,398 Yes Yes Yes Yes $150,000 $25,000

Mimo Finance 01.2008 India 45,746 Yes Yes Yes Yes Yes $1,000,000 Yes

Finsol Brazil 11.2007 Brazil 29,997 Yes Yes Yes

Equitas 09.2007 India 706,000 Yes Yes Yes Yes

MokshaYug Access 08.2007 India 37,550 Yes Yes Yes Yes Yes Yes Yes

Adhikar 04.2007 India 55,892 Yes Yes Yes Yes $85,000 $550,000 Yes

IIRM 04.2007 India 10,523 Yes Yes Yes Yes Yes Yes $155,000 $550,000 Yes

MBK Ventura 12.2006 Indonesia 143,000 Yes Yes $170,361 $750,000 Yes

Credex 12.2006 Mexico 40,907 Yes Yes Yes Yes $100,000 Yes

LifeBank 11.2006 Philippines 236,917 Yes Yes Yes Yes Yes $250,000 Yes

Swadhaar 05.2006 India 21,964 Yes Yes Yes Yes $117,935 $105,000 Yes

Ujjivan 05.2006 India 503,377 Yes Yes Yes Yes Yes Yes $130,000 Yes

FIS 02.2006 Argentina 2,885 Yes Yes $100,000 $180,000 Yes

Bandhan 04.2005 India 2,016,518 Yes Yes Yes Yes $100,000

Grameen Koota 04.2005 India 326,920 Yes Yes Yes Yes $100,000

Grama Vidiyal 12.2004 India 586,177 Yes Yes Yes $200,000 $750,000 Yes

BSS 12.2004 India 187,818 Yes Yes Yes Yes $106,250

Jamii Bora 06.2004 Kenya 260,063 Yes Yes $1,288,400 $1,000,000

SKS 03.2003 India 4,993,210 Yes Yes Yes Yes Yes $150,000 $550,000 Yes

Pro Mujer Mexico 03.2002 Mexico 24,141 Yes Yes Yes Yes Yes $380,000 $500,000 Yes

Ultra Poor Initiative Partners N/A Yes Yes $450,000

Africa Growth Centre Participants N/A Yes Yes

TOTAL 10,484,820 $4,082,946 $5,960,000

1 Partnership inception to 12.31.2009 2 Debt Capital: Funds loaned or guaranteed by Unitus3 Other Financing: Indicates debt arranged by Unitus, investments

by Unitus Equity Fund, and/or debt arranged by Unitus Capital

AS OF 12.31.2009

BALANCE SHEET

DECEMBER 2008 DECEMBER 2009

Assets $21,380,060 $19,376,994

Liabilities $11,301,463 $8,053,240

NET ASSETS $10,078,597 $11,323,754

2009 Financials


75% Program Services

15% Management & General

10% Fundraising

Note: Up until July 2, 2010, Unitus utilized our philanthropic support to continue our work of

accelerating the growth of microfinance across the globe. Since the announcement that we will

be winding down our microfinance operations, we are working with donors, partners, and other

organizations in the microfinance space to use remaining funds to fulfill all our commitments.

Once that has been achieved, future resources will be directed to other activities that help us

achieve our mission of reducing global poverty. Updates on all our work will be made available

on our website and in our 2010 Annual Report.


INCOME STATEMENT FOR FISCAL YEAR 2009

REVENUE ACTUAL

Contributed Income $7,205,785

Earned Income $2,086,245

Total Revenue $9,292,030

PROGRAM MANAGEMENT EXPENSES TOTAL SERVICES & GENERAL FUNDRAISING

Salaries & Benefits $3,249,018 $1,957,584 $685,934 $605,500

Grants & Financing $600,099 $600,099

Professional Services $1,386,564 $1,064,250 $268,143 $54,171

Travel $611,499 $523,995 $37,684 $49,820

All Other Expenses $2,199,693 $1,868,456 $183,501 $147,736

Total Expenses $8,046,873 $6,014,384 $1,175,262 $857,227

74.7% 14.6% 10.7%

NET INCOME $1,245,157

BOARD OF DIRECTORS*

BOARD CHAIR

Joseph GrennyChairman, VitalSmarts

Robert C. GayChief Executive Officer and Managing Director, Huntsman-Gay Capital Partners

Mike MurrayRetired Vice President of Human Resources, Microsoft Corp.

Dave Richards Principal, Bodega Ventures

Tim StayCo-Founder and Publisher, Know More Media

Board List


ANNUAL REPORT CREDITS

Photography> J. Adam Huggins for Unitus> NonFiction Media> Valerie Rozycki, Head - Strategic

Initiatives, mChek

Design> InsideDown Design Studio

* Current as of July 2010

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