Programs The Foundation Undertakes The Program Under The Following Major Areas in Purpose of Its Primary Purposes

PROGRAMS
The Foundation undertakes the program under the following major areas in purpose
of its primary purposes:
EDUCATION
Institutional Grants
The Foundation has contributed to the establishment of a graduate school in business, a college of
accountancy in a university and a research center.
Professorial Chairs
The Foundation has granted endowment funds and annual grants for professorial chairs to several
universities and a graduate school that support chair holders in their research and academic work,
case writings, public lectures and continuing development. Over the years, professorial chairs have
been established in the fields of accountancy, computer science and technology, business ethics,
economics, business management and entrepreneurship.
Scholarships
Investing in people, helping them pursue ambitions and realize their dreams is a serious mission of the
Foundation. Students have benefited from scholarships given by the Foundation to various schools and
colleges all over the country. Scholarship grants come in the form of tuition fee, stipend and book
allowances. Fields of study range from accounting, electrical and communications engineering, digital
arts and design, business and law. A number of SGV scholars have graduated with honors.
The Foundation also sponsors out-of-school youth to train in vocational skills such as automotive
mechanic, machine shop, welding, refrigeration, mechanical, electrical and electronic technologies, in
technical schools and training centers so that they become self-reliant and productive.
Children of SGV staff and service providers have been recipients of the SGV Childrens Scholarship
Fund since the program started in 2006. The scholarships have a term of 10 years.
Funds were contributed by SGV and its partners.
The Foundation also manages the SGV Retired Partners Scholarship Fund.
Book Donations and Sponsorships
Libraries of schools have received dictionaries, textbooks on management sciences, industry,
agribusiness, accounting and other related fields of study from the Foundation, including SGV studies
and publications on banking, urban development, small- and medium-scale industries, economics and
management development.
The SGV Foundation sponsors/co-sponsors the publication of books and materials to document
thoughts and declarations on public interest issues, leadership, management and professional
thinking.
view list of Publications
School Improvements
A student consultation room, new or renovated classrooms, desks and tables, an elevator, a science
laboratory, a gym are some school facilities that have been funded by the Foundation. Computer units
have also been donated to schools in order to give students access to technology.
ENTREPRENEURSHIP
Entrepreneur of the Year Philippines Program
EOY 2010 winner Mr. Tennyson Chen

of Bounty Fresh Food
Since its inception in 2003, the Entrepreneur Of The Year Philippines program has become one of the
most prestigious events for the local business community. The Philippine program seeks to recognize
the strength, dynamism and resilience of Filipino entrepreneurs who take the lead in founding and
operating sustainable, successful enterprises. The program is organized by the SGV Foundation and its
co-presenters, namely: the Department of Trade and Industry, the Philippine Business for Social
Progress, the Philippine Stock Exchange, and Media sponsors are BusinessWorld and the ABS-CBN
News Channel. Official airline is KLM.
The search is open to all Filipino entrepreneurs. To be eligible, a nominee has to be a Filipino business
owner or founder who is primarily responsible for the growth of his or her company. The nominee must
still be active in business, which must have been in operation for at least two years. A completed
nomination form, audited financial statements and other documents are required for a nomination to
be considered for further judging.
There are four award categories: Master Entrepreneur, Small Business Entrepreneur, Woman
Entrepreneur, and Young Entrepreneur. From among these category winners will emerge the
Entrepreneur Of The Year Philippines country winner, who will compete for the World Entrepreneur of
the Year title in an awards banquet sponsored by Ernst & Young in Monte Carlo, Monaco. Tony Tan
Caktiong of Jollibee Foods Corporation bagged the first Philippine title and went on to win the World
Entrepreneur Of The Year title in 2004. Succeeding Philippine winners are Socorro Ramos of National
Bookstore, Lance Y. Gokongwei of Cebu Air, Inc., Senen Bacani of La Frutera, Inc., Wilfred Steven
Uytengsu, Jr. of Alaska Milk Corporation, Ambassador Jesus Tambunting of Planters Development Bank,
Tennyson Chen of Bounty Fresh Food Corp., Erramon Aboitiz of AboitizPower Corporation, Jaime Ayala
of Hybrid Social Solution, Inc. and Ben Chan of Suyen Corporation.
Social and Community Development

Gawad Kalinga
In honor of the 88th birthday of SGV Founder W. SyCip in 2009, the SGV Foundation with funding from
SGV partners and staff partnered with Gawad Kalinga (GK) for the construction of 88 houses in
Camarin, Caloocan City. GK is a movement that builds integrated, holistic and sustainable
communities. In May 2011, through volunteerism of SGV partners and staff and sweat equity from the
house beneficiaries, the constructed homes were completed and turned over.
The Foundation has earlier supported a GK housing project in Davao in 2005.
Disaster-Response Activities
The Foundation, together with SGV partners and staff, responds to call for assistance in the aftermath
of disasters such as rebuilding of classrooms, donating to calamity funds, collection and distribution of
relief goods.
Partnering with Other Institutions
The Foundation has partnered or supported other foundations and institutions for a wider reach of
social initiatives, environment protection, educational endeavors, and culture and arts awareness.
Update on the Zero Dropout Program in Oriental

Mindoro
Because of his deep concern to improve basic public education in the Philippines, SGV
Founder Wash SyCip worked with the Center for Agriculture and Rural Development
Mutually Reinforcing Institutions (CARD MRI) to initiate the Zero Dropout Education
Scheme (ZeDrES), a program aimed at reducing the dropout rate among public
elementary schools to 0%. To help implement the program, the Kazarian-SyCip Fund was
established to serve as an educational loan fund for its benefi ciaries. CARD MRI
members, who are mostly from poverty-stricken communities, can borrow up to 5,000
pesos for their childrens school supplies, projects and activities. These loans are
payable weekly over three to twelve months.
For the past three years, SGV has been engaged to audit ZeDrES, a mission the
engagement team has dubbed Operation Zero. In 2014, the ZeDrES team focused on
fostering employment and entrepreneurship through identifi cation of possible ventures
in the areas agri-value chain.
One of the areas visited by Operation Zero was San Teodoro and Baco in Oriental
Mindoro. We asked Dennis Sam Lim and John Arididon about their experiences with the
program.
What was the SGV CARD engagement teams role in the Zero Dropout Program?
The engagement was designed to assess and evaluate the eff ectiveness of the Zero
Dropout Program. We interviewed selected benefi ciaries regarding the programs impact
on the continuing education of their children. Specifi cally, we inquired about how the
loan was spent, its impact on their budget, and the childrens performance in school.
We also tackled some important factors that would directly or indirectly contribute to
the success of the program. We interviewed teachers and school principals, local
offi cials, and local cooperatives within selected municipalities in Oriental Mindoro. Our
inquiries focused on the following:
Existing and/or planned programs geared toward curbing school dropout rates
Existing and/or planned programs to reach and encourage more indigenous people to
acquire education
Main sources of income of residents

Local offi cials livelihood programs and projects that will benefi t residents
Coordination and cooperation of the those sectors to improve childrens education
and address impediments to its success
What were the general issues that needed to be addressed?
The unstable sources of income of families, distance of schools from indigenous
communities, and the low teacher-pupil ratio are the main reasons why some of the
children dropout from classes.
The lack of regular income is particularly true for indigenous people, many of whom
regularly migrate to new places in search for work. This also forces the older child to
remain at home to attend to younger siblings.
In some instances, children who live far from school stop attending classes and choose
to help their parents with household chores instead. However, we appreciate the
alternative learning system of the Department of Education wherein mobile teachers
visit remote communities. We hope to see this program improve and increase in
coverage while new schools have not been constructed.
Additionally, the low teacher-pupil ratio impairs the teachers responsibility to monitor
and manage students. As we understand, teachers regularly visit the pupils and their
families especially if the children miss classes for a couple of days. In addition, if the
pupils performance declines, they invite the parents for a talk. With the low teacherpupil ratio, the concerns and problems of some pupils may not be addressed promptly.
What are the on-ground observations on how the Zero Dropout Program can
improve?
The Zero Dropout Program is a promising eff ort to help the parents fi nance their
childrens elementary education. Based on our observation, CARD members appreciate
the program as it augments their budget for expenses from the opening of classes and
throughout the school year. However, the daily expenses of the family and the lack of
attention from teachers may negatively aff ect the childrens attitude towards education.
Hence, moving forward, the program may wish to consider partnering with the local
government and businesses as well as the Department of Education to strengthen its
objective.
What made this engagement diff erent from other engagements you were
involved in?
This engagement not only improved our knowledge but also made us aware of the things
that matter most. Poverty is just a consequence of issues that have to be addressed
now. And we believe that the lack of education is one of these issues. Education gives
children access to their dreams or aspirations. When they start to own their rights and
hopes, they start to believe that they can. They establish goals and dreams in life, and
they pursue it. As long as everyone is given the chance to receive education, everything
is possible.
How has SGV made a diff erence in the community and in you as an individual?
SGV is true to its goal of building a better working world. The Firm believes that better
communities help build the foundation for a better working world. Helping businesses
fl ourish is not enough. SGV believes in the importance of education and equality in
honing a better world.
How can others contribute to the Zero Dropout Program?
To contribute to the program, people can make direct cash donations to CARD MRI. We
also highly encourage others to promote awareness of the program.
Special feature: Update on the Zero Dropout Program in

Misamis Occidental
One of the areas visited by Operation Zero was Oroquieta and Plaridel in Misamis
Occidental. We asked Gabriel Magno and Jester James Nacalaban about their experiences
with the program.
In general, our role was to perform a program audit of the CARDs Zero Dropout
Education Scheme (ZeDrES) loans. The program audit was meant to check on the
progress of the program, to see if it is able to achieve its objective of eliminating
dropouts. First, it involved interviewing the borrowers and benefi ciaries of the ZeDrES
loan to see how the loan has helped them with their education. Next, we also observed
CARD Center meetings to check on the status of the loans and other CARD products
within the community. We were also there to look at how members settle accounts and
observe the other services provided by CARD. Other activities involved interviewing the
teachers of the ZeDrES benefi ciaries regarding the progress of these students and
determining the state of the school, its facilities and materials (such as textbooks). We
also interviewed offi cials from the Department of Education regarding the dropout rate
and the percentage of out-of-school youth (OSY) within the province in the primary and
secondary levels as well as measures in place to address the dropout and OSY
situations. Lastly, we visited a CARD branch to perform a walkthrough of the ZeDrES
loan application, disbursement, and payment and collection process. In all these areas,
results have been encouraging.
For this years program audit, we also wanted to add the economic dimension,
particularly the job creation eff orts in the area. Hence, we interviewed local
cooperatives and the Provincial Governor or Administrator (when the Governor was not
available) on the current state of the local economy and the plans for job creation.
Our primary concern was the dropout rate. In the towns and communities we visited in
Misamis Occidental, we found that there are several programs in place that actually
complement each other. There were no dropouts in the communities we visited since the
Department of Social Welfare and Developments Pantawid Pamilyang Pilipino Program
(4Ps) requires the benefi ciaries to send their children to school. CARDs Zero Dropout
Education Scheme complemented this by providing the necessary funds for other schoolrelated expenses.
We also wanted to fi nd out about the job creation and economic enhancement programs
being implemented in the province, if any.
improve?
In an interview with the head of a local cooperative, we were told that the people in the
community have a number of diff erent funding sources that off er the same thing
(business loans, educational loans, etc.). This sometimes resulted in the practice of
taking a loan to pay off another loan instead of using the funds for their intended
purposes. We have not noted specifi c cases like this in the Zero Dropout Program which
can be attributed to a well-developed culture of fi nancial discipline among CARD
members who also regularly receive Credit With Education training from CARD.
Promoting similar fi nancial literacy programs to the wider community could help address
the issue on borrowing practices among the people in the area.
The Zero Dropout Program may also consider extending its coverage all the way to the
secondary level. This was pointed out several times by the members that we
interviewed.
involved in?
This engagement required us to immerse ourselves in a diff erent environment. The
issues are basic, such as ensuring collection and measuring the programs eff ectiveness,
but the policies and methodologies used are largely diff erent from a typical enterprise.
For example, CARDs way of addressing credit quality and collection effi ciency starts
with the selection of the site for a CARD center. From our observations, the existing
policies and methodologies put in place by CARD are eff ective. It was a great experience
being exposed to such an environment because you see the diff erent ways of
approaching a familiar issue.
Moreover, the concerns we faced are much more human in nature. The parents of the
benefi ciaries are not after profi t maximization or risk management. They just want to
send their children to school. And for you to be able to contribute to that endeavor in
your own little way is very fulfi lling. A lot of competent people within the fi rm can add
their own contribution to this eff ort.
The skills you learn during the normal course of business in SGV are very important. And
they are useful in other situations. We in FSRM have been told that You can never go
wrong with a good Current State. And this is what we brought to our program audit. You
learn to record things as they are and as accurately as possible because the appropriate
action plans will come from this exercise. If our observations and recommendations are
used to improve CARDs Zero Dropout Program, by extension this would be how SGV
makes a diff erence in the community it trains competent individuals who are able to
analyze issues as well as provide insights and improvements for the benefi t of the wider
community.
The Zero Dropout Program is well-structured and has helped all the benefi ciaries we
interviewed. But not a lot know about it, even within the communities we visited. Others
can contribute by spreading awareness of the program. If you, or your friends or even
your household helpers, are from a province where there is a CARD center, you can
research more on what the program is about, and tell others about it. The small loan
amounts coupled with the low interest rates actually go a long way towards improving
the lives of the youth. They are able to explore and discover their natural abilities given
the opportunities provided by a decent education. Awareness is a small but important
step in contributing to the Zero Dropout Program.
Update on the Zero Dropout Program in Northern Samar
One of the areas visited by Operation Zero was Las Navas, Catubig and Laoang in
Northern Samar. We asked Ruben Simon and Mio Amahan from the FSO group about their
experiences with the program.
The engagement teams role in the Zero Dropout Program is to broadly perform program
validation to verify and observe that the program funds are essentially responsive to
the needs of the benefi ciaries. In order to eff ectively perform this task, the team noted
on-ground observations as well as interactions with the benefi ciaries in the assigned
area. Furthermore, in order to have an in-depth analysis, the team not only observed the
funds utilization, but also the poverty and broader economic activities in the covered
areas.
As the main purpose of the program is to reduce, if not completely eliminate, the
dropout rate for as many people as possible especially those that have no access to
formal fi nancial services, we suggest that the program be made available as a standalone product which can be accessible to many more members and non-members of
CARD (the program has already been opened to non-members as well, particularly
families with out- of-school youth and areas like the Autonomous Region of Muslim
Mindanao).
improve?
Based on our on-ground observations, there were potential risks that the educational
loan programs may not be used appropriately. For example, some parents (and legal
guardians) may be tempted to use the funds for non-educational purposes. Although we
observed no such incidents in our assigned area, the risk is still present. One way to
avoid this is through the provision of actual school materials like notebooks, pens and
uniforms. But this suggestion must still be studied thoroughly as this would limit the
options of the benefi ciaries and we would not want that to occur. The locals we
interviewed also suggested expanding the program in the future so it will be able to
support benefi ciaries entering college, helping them maximize their future employment
opportunities. However, at the onset of the K-12 program, its reach can not only be
expanded upward (i.e., junior and senior high school up to college) but also downward
at the base (i.e., preparatory to kinder). Focusing on this segment would generally
ensure that the children enter school and start on their path to functional literacy.
involved in?
This engagement was life-changing and very personal to us because we were able to
witness the situation of the people living in the municipalities assigned to us. We also
experienced fi rst-hand that the risks involved are all too real; there was an encounter
between government forces and New Peoples Army rebels in Las Navas just a day
before we left. We learned that the encounter happened around 5 km away from the
school that we visited. We could only imagine what the students have to put up with
during those turbulent times. Staying there for almost a week and seeing the smiling
faces of the benefi ciaries as they told stories of how the program assisted them in their
studies helped us appreciate our role even more. It was inspiring to encounter the
benefi ciaries because it gave us a sense of purpose. It was one fulfi lling engagement
and a breath of fresh air for us, who are most of the time engrossed in urban corporate
life.
Through our interactions with the community, we believe they felt that we were there to
support and motivate them. One telling sign, although this may be trivial, is that they
were very happy to see Manileos visiting their municipality it was very evident. It
gave them hope that we from the big city are looking out for them and that we care
since we are willing to understand their situation. And that, for us, made a big
diff erence.
Willing donors can contribute any amount through CARD Inc., which manages the Zero
Dropout fund. More than giving contributions, it would be helpful if people spread the
idea that the program exists. We should inform everyone that people in the provinces
need our help. Anyone can join us in FSRM to further enhance the program. After all,
monetary donations are not an end-all solution. What we need are your genius, your
young minds and able bodies to join the discourse. Stop being just a keyboard warrior!
Think, and most importantly, Act!
Special feature: Update on Zero Dropout Program in

Capiz
fostering employment and entrepreneurship through the identifi cation of possible
ventures in the agri-value chain of the benefi ciary communities.
One of the areas visited by Operation Zero was Capiz. We asked Mel Villaber and Justine
Go from the Financial Services Organization (FSO) about their experiences with the
program.
Our team performed an assessment and audit of the eff ectiveness and impact of the
ZeDrES program in Capiz. Along with our on-ground observations, we interviewed key
stakeholders such as Local Government Units (LGUs), the Department of Education
(DepEd), school principals, teachers, local cooperatives, and the families of the
benefi ciaries themselves. We were able to gain insights on the educational and
economic situation in Capiz, how the benefi ciaries used the funds allotted to them, and
how the ZeDrES program could be further improved.
Per the DepEd planning offi cer for Capiz, there is a shortage of accessible schools in
certain remote areas. Thus many children have no choice but to attend schools that are
far from their homes. Moreover, most schools lack facilities such as classrooms,
playgrounds, and libraries.
The students were often pressured into working instead of studying, not just out of
necessity (i.e., familys lack of income) but also from the infl uence of their peers.
Additionally, each family had limited income sources, which hindered their access to
nutritious meals, school supplies, and equipment for extra-curricular activities.
improve?
Based on our immersion, we fi nd that the Zero Dropout Program can be further improved
by continually monitoring whether the loan was actually used for educational purposes.
The Program may also partner with LGUs, non-government organizations and foundations
that can provide much needed help in the form of facilities (e.g., libraries, classrooms),
feeding programs, and scholarships. These can go a long way in improving the state of
education in the province.
involved in?
As part of the FSO, we are often exposed to clients in the banking and fi nancial services
sector. Being part of the ZeDrES audit team showed us the rare side of fi nance that
applies to the poorest of the poor. Since the program provides educational loans to poor
families, we saw fi rsthand the application and impact of fi nance on our underprivileged
countrymen.
By visiting the province and the families themselves, we saw another perspective of
society and we broadened our horizons beyond our normal environment. Seeing the
bigger picture encouraged us to contribute to society at large and use our time and
talents to make a diff erence in our communities.
Although the amount of the programs educational loan is not much, it provides the
students with access to better tools to handle the daily challenges in school. Aside from
witnessing how the program assists poor families, we discovered a newfound
appreciation of our privileged access to high quality education.
The importance of education in the success and improvement of our nation cannot be
overstated. With education, people can access better livelihood opportunities that can
improve their quality of life. By spreading awareness of the Zero Dropout Program, we
can support the cause of CARD and SGV towards the goal of eradicating dropouts from
our educational system.
Special feature: Update on Zero Dropout Program in

Albay
One of the areas visited by Operation Zero was Oas and Polangu in Albay. We asked Mark
Dionisio-See and Alec Machacon from the FSRM group about their experiences with the
program.
To assess the present educational and economic structure in the community, we
interviewed teachers, local offi cials, and benefi ciaries of the program. In particular, we
inquired about the causes of student dropouts and the programs role in reducing the
number. We gathered information to better understand the economic system of the area.
We also reviewed the end-to-end process of the loan application and how it was carried
out.
The main issues include access to education, lack of resources, and the seemingly
popular choice to immediately work instead of going to school.
improve?
The Zero Dropout Program has made a signifi cant impact on the lives of the
benefi ciaries. It served as another resource in addition to the income from their
livelihood. It helped them achieve their dream of giving their children the gift of
education even in the direst of situations.
The program can be improved by creating platforms that reach the poor in the most
remote areas. In this way, they are also given access to education and consequently
given the opportunity to lead more meaningful lives.
involved in?
In this engagement, we strongly felt that we were advocates of education. Throughout
the immersion, we both admired how people recognized the importance of education and
instilled this in others who did not. We developed a keen appreciation of organizations
whose missions are for the improvement of humanity.
We also had the opportunity to talk with Governor Salceda about abaca as a primary
commodity and as a major source of income in the province of Bicol. The demand for
abaca has been high both here and abroad due to its fl exibility as a raw material for
handbags, baskets, and storage containers. We also discussed the use of value chain
analysis as a tool in creating the greatest possible value for its customers.
Poverty is a persisting problem in the country. CARD and SGV believe that education is
one of the most eff ective platforms to alleviate poverty. Therefore, they continue to
engage in activities that give education the utmost importance (e.g., Zero Dropout
Education Scheme). The participation of SGV in this venture inculcated in us both the
appreciation of what we have and the motivation to share them with others. As Benjamin
Franklin put it, An investment in knowledge pays the best interest.
To contribute to the program, people can make direct cash donations to CARD MRI.
Promoting awareness makes a big diff erence as well.
Special Feature: Update on Zero Dropout Program in

Zamboanga del Norte
One of the areas visited by Operation Zero was Manukan and Pinan in Zamboanga del
Norte. We asked Belvin Armenion and Jason Naniong from the FSRM group about their
experiences with the program.
1. What was the SGV CARD engagement teams role in the Zero Dropout
Program?
Our goal was to fi nd out exactly how the Zero Dropout Program aff ects the lives of its
benefi ciaries and the community since its introduction in the Zamboanga province in
2013. We interviewed CARD members to fi nd out how the loan has specifi cally helped
them. We also asked school teachers, principals, and the provincial Department of
Education (DepEd) superintendent about how ZeDrES ties up with the governments
general eff orts to curb dropout rates at the grassroots level. As the program is now in
its third year of operation, we wanted to look at the bigger picture to see how education
aligns with the livelihood and industry in the province, so we interviewed the director of
a local cooperative as well as the city planner of Dipolog. Finally, we performed a
process review of the ZeDrES loan origination process at CARD to ensure that operations
were running smoothly and that loans were being disbursed to those who needed it the
most, the poorest of the poor .
2. What were the general issues that needed to be addressed?
Zamboanga del Norte always tops the list of the poorest provinces in the Philippines,
with one in every two Zamboaguenos currently classifi ed as poor. Through our
observations and interviews, we saw that poverty was linked with the lack of industry. In
inland municipalities, the primary industry is farming, but the land is not particularly
fertile, and the people are mere tenants, not landowners. In coastal municipalities, the
primary industry is fi shing, but their income is unstable and dependent on the weather.
Although Zamboanga is primarily agricultural with 50% of land use devoted to cropplanting, only 20% of its income is derived from agriculture. Most of the local
governments agricultural programs have to do with rice and corn self-sustainability,
meaning they are concerned only with local output, with no drive to market these
commodities as exports.
We also learned that most of the Technical Education and Skills Development Authority
(TESDA)/vocational centers in Zamboanga off ered IT courses rather than practical
courses which could benefi t the provinces growth, such as agricultural science. This
disconnect would lead to a brain drain situation, as high school or college graduates
would rather head to Metro Cebu or Metro Manila to seek a better future.
In terms of education, the majority of the population are only elementary graduates,
which could contribute to the high poverty rate. We observed numerous dilapidated
infrastructure, and lack of resources such as clinics, canteens, and libraries. The number
of secondary schools is not enough to accommodate elementary school graduates, which
may also be a cause for high dropout rates. Based on our interview with the DepEd
superintendent, they have a shortage of an estimated 500 teachers.
3. What are the on-ground observations on how the Zero Dropout Program can
improve?
We saw fi rsthand how CARD has benefi ted their members through livelihood and
agricultural loans. Some of the members we interviewed already have small businesses
such as sari-sari stores due to their participation in CARD. Since the ZeDrES program is
still somewhat new, its signifi cance is not yet felt in the community. We observed that
the ZeDrES loan enhanced the students learning experience by providing them with new
bags, notebooks, or shoes.
One way to improve the ZeDrES program is to coordinate with the local government
units (LGUs) to increase awareness of the program beyond CARD, since LGUs have
records on dropouts in the community.
4. What made this engagement diff erent from other engagements you were
involved in?
We were able to observe the process not just from end to end, but also from top to
bottom: from our in-depth discussions with various government offi ces, to the loan
origination process back at the CARD offi ce, the loan disbursement process at the CARD
center meeting, our interviews with the members and benefi ciaries at their homes. This
gave us the unique insight to see how education and livelihood were interconnected,
enabling us to provide recommendations which were strategic and visionary yet
grassroots in nature. It was clear that top-down initiatives from LGUs need to be
combined with the communal bayanihan spirit in order to combat the scourge of poverty.
All in all, we were thankful for the opportunity to be involved in this unique engagement.
Our only regret is not being able to stay longer than three days, in order to immerse
ourselves further in the community.
5. How has SGV made a diff erence in the community and in you as an
individual?
In several ways, SGV provides policy inputs in the twin spheres of education and
livelihood. For example, there are working discussions with the DepEd and
representatives from public-private sectors on the acceleration of interventions in areas
such as scholarship and vocational or technical programs that would align with the agroindustrial plans of the region. Were hopeful and optimistic that the initiative
channeled through Abot-Alam in coordination with DepEd, TESDA and the Department of
Science and Technology will lead to concrete and sustainable outcomes.
As thought leaders and forerunners in their own individual fi elds, each SGVean has the
capacity and platform to bring to light the perennial issue of poverty. The aim of the
ZeDrES program is inextricably linked to our true goal of nation-building and providing a
better future for the 100 million Filipinos.
6. How can others contribute to the Zero Dropout Program?
To support the ZeDrES Program, individuals can make a direct cash donation to CARD
MRI. Simple acts like volunteering, sharing articles on social media, and donations in
kind can also make a big diff erence collectively.
Special Feature: Update on Zero Dropout Program in

SOCCSKSARGEN
Mutually Reinforcing Institutions (CARD MRI) to initiate a program aimed at reducing the
dropout rate among public elementary schools to 0%, the Zero Dropout Education
Scheme (ZeDrES). To help implement the program, the Kazarian-SyCip Fund was
payable weekly over 3 to 12 months.
engagement team has dubbed Operation Zero. Apart from the program validation
exercises, Operation Zero has its own theme each year that is basically grounded on the
aim to alleviate poverty. On its fi rst year, Operation Zero geared towards describing the
segment that composed the poorest of the poor. The succeeding year focused on the
eff orts of local government units (LGUs), along with other government offi ces, to give
fi nancially disadvantaged children access to education. In 2014, the ZeDrES team
shifted its attention to fostering employment and entrepreneurship through
identifi cation of possible ventures in the areas agri-value chain.
One of the areas visited by Operation Zero was the SOCCSKSARGEN Corridor (Sarangani,
General Santos City, and South Cotabato). We asked Shiela Marie Antonio and Lyca
Regina Antonio from the FSRM group about their experiences with the program.
We interviewed students, school and division heads, cooperatives, and local offi cials to
gain knowledge and evaluate the current educational and economic situation in the
area. We interacted with the program benefi ciaries and got a glimpse of how they are
doing in school. Also, while attending center meetings, we observed that the primary
livelihood of most people in the community, as well as those who are clients of CARD, is
farming. Corn and cassava are the major crops in Sarangani, General Santos and South
Cotabato.
Taking part in Operation Zero is a like shooting two birds with one stone. While we try to
assess how the program helps to alleviate poverty through education, we were also
given the opportunity to identify points of improvement in the communities we visited in
order to promote employment generation and SME capacity building.
Based on our on-ground observation, one of the issues is still access to education.
According to the school heads, some students still cannot make it to school because of
the long distance they need to travel. Their parents would rather make their kids stay
and do household chores than go to school, which entails allowance and transportation
costs.
Culture is also an issue. In addition to costs, according to the Department of Education
(DepEd) offi cers we interviewed, some parents prefer that their children stay and work
because they themselves, being from remote areas, were not exposed to schools. The
childrens dreams are also primarily infl uenced by their environment. One of the children
we interviewed said that she is studying because her mom told her its the only way to
get a decent job, but when she grows up, she wants to go abroad and be a yaya. This
left us shaken, but we understand that this is what she is seeing in her community. We
just hope (and we will try to act further) that she will realize that through education,
there are many other things she can be, beyond what has been set by her community.
In terms of the areas economy, Governor Daisy Fuentes and Mr. Abner Navarro, the
Provincial Planning and Development Coordinator of South Cotabato, asserted that they
were able to attract investments in their area by giving incentives to investors. The only
problem is the overall perception in South Cotabato or Mindanao about peace and order.
The local offi cials, in coordination with the Department of Agriculture, are developing
ways to maximize the potential of cassava, which is a growing industry in
SOCCSKSARGEN. However, it is also observed as a threat to the corn industry due to its
higher income potential. The development of a crop should not serve as a threat to
another crop since both commodities contribute to the areas economy.
improve?
Currently, the program has already reached all municipalities in the country, and has
now been expanded to cover out- of-school youth. The loanable amount has also been
increased to 5,000 pesos from the maximum loanable amount of 1,500 pesos. But since
the program is off ered only to primary school students, we recommend extending the
fi nancial help to high school students, which have a higher dropout rate according to
DepEd.
Also, we think it would help CARD in their endeavors if the program were to partner with
the DepEd and other educational institutions. Moving forward, partnership with
Department of Trade and Industry and other livelihood organizations can also help
promote sources of income for underprivileged families.
involved in?
This engagement is partly a form of immersion. We went where the benefi ciaries lived,
and we were able to listen to their everyday struggles. We see this on the news, learned
this when studying economics and had our own experiences back in college, but this
engagement gave us a wider sense of involvement and a fi rsthand view of the real
situation facing our less fortunate countrymen. It exposed us to the truth that there is
still much that needs to be done and that we can always do something to help. We were
there for just few days but the experience undeniably changed the way we viewed
ourselves and the world.
SGV actively participates in ensuring that the objective of the Zero Dropout Program is
met by doing fi nancial statement audit, program validation and improvement
identifi cation exercises. While the fi eldwork requires us to gather, consolidate and
present information, as well as provide insights for the program, the information we
gathered and insights provided can serve as important input for the national
development agenda, particularly on policy development both for education and
economy.
And personally, the involvement of SGV in this particular endeavor made us more
socially responsible individuals and instilled in us a desire to help the needy.
People who want to help can make direct cash donations to CARD MRI. Also, they can
take part in disseminating the information about ZeDrES to inspire others to take action.
Accounting for customer loyalty programs by

Dhonabee B. Seeres (December 12, 2011)
SUITS THE C-SUITE By Dhonabee B. Seeres
Business World (12/12/2011)
Stiff , cut-throat competition in the global market and intense rivalry prompt companies
to devise creative marketing strategies to keep ahead of competition. A popular and
eff ective initiative is to introduce a customer loyalty program to reward previous

purchases and off er incentives to encourage repeat purchases.
Customer loyalty programs range from simple ones that off er, for example, a free
coupon for a certain number of visits or volume purchased, to complex ones such as an
airlines frequent fl yer program or a telecom operators loyalty awards. These programs
also diff er, among others, on the manner of redemption (e.g., redeemable upon grant vs.
those requiring accumulation), who operates (e.g., the company itself vs. outsourced to
third party or the company participates in a program run by a third party), and the
source of credit (e.g., from single or group of purchase or purchases over a specifi ed
period of time). Credits can also be earned by buying products or services from another
entity who is not necessarily participating in the program, or awards can be redeemed
for products or services of the company or of another entity. A good example is an
airline alliance mileage program where loyalty miles can be earned from one airline but
may be used to fl y another airline within the alliance.
As loyalty programs vary, so do their accounting treatment. In general, there are two
main approaches which have evolved in practice the marketing expense approach and
the deferred revenue approach. Under the marketing expense approach, the cost of
supplying goods or services in the future related to the loyalty award credit is
recognized as an expense at the time of selling the goods or service (initial sale). Under
the deferred revenue approach, the award credit is treated as a separate component of
the sales transaction that requires delivery in the future.
To address this divergence in practice and to improve consistency and comparability, the
International Financial Reporting Interpretation Committee (IFRIC) issued IFRIC
Interpretation 13, Customer Loyalty Programmes. For annual periods beginning on or
after 1 July 2008, IFRIC 13 requires the use of the deferred revenue approach, which
entails apportionment of the consideration received or receivable from customers for the
initial sale between the: (a) award credit and (b) other components of the sale (goods or
services sold). The amount allocated to the award credit is deferred and recognized as
revenue only upon redemption or usage, expiration or, in some cases, when the entity
revises its expectations of the number of award credits expected to be redeemed. IFRIC
13 also requires that the award credit be measured at fair value the amount for which
the award credit could be sold separately (not the cost to the entity when the award is
redeemed by the customer).
For companies which have adopted the interpretation, the diffi culties they have
encountered in transitioning to, and complying with, IFRIC 13 generally revolve around
(1) the estimation of the fair value and the redemption rate of the award credits; and,
(2) the availability of data.
The degree of diffi culty depends on the extent of alignment between the entitys
accounting treatment and the requirements of IFRIC 13. In some of the cases, the
companys information system had to be reconfi gured, or the company had to employ a
new system for tracking grants, redemptions, expiration and inputs to estimate the fair
value of the award credits. The challenge here is balancing the level of detail of the data
to be tracked in the system to ensure compliance with the interpretation (and provide
management with information to evaluate the eff ectiveness of the program), against the
related costs (e.g., acquisition or development and maintenance of the system). In any
case, the system implication of transitioning to or implementing IFRIC 13 should be
anticipated and continually assessed as the companys loyalty program evolves.
In terms of fi nancial reporting, adopting IFRIC 13 would mean a change in accounting
policy for companies previously using the marketing expense approach. Instead of
recognizing marketing expense and the corresponding liability (representing the
expected cost of settlement of the award) when the award credit is earned by
customers, revenue is reduced (or deferred) and a liability is recognized (representing
the obligation to render services or deliver goods in the future when the award credit is
redeemed). Additionally, the interpretation requires the change in accounting policy to
be taken retroactively and refl ected in the fi nancial statements since the earliest period
presented. This poses a challenge particularly when information or systems for the
comparative prior periods are nonexistent.
On the other hand, companies that have been using the deferred revenue approach but
changed the valuation method (e.g., from residual fair value to relative fair value) upon
adoption of IFRIC 13 need to account for this as a change in estimate (i.e., the eff ect of
adoption is taken prospectively). As IFRIC 13 does not prescribe a specifi c method for
estimating the fair value of the award credit, management would have to choose an
appropriate method and apply the selected method consistently.
Given these requirements of IFRIC 13, it can potentially impact the companys top line
performance and debt ratios.
Over the years, the use of customer loyalty programs to boost sales has been employed
successfully by various industries (airline, telecommunications, hotels, retail and
consumer credit are but a few). These programs will continue to evolve as market
demands change. The key challenge for management, therefore, is to keep the
companys loyalty program responsive to customer preferences and to establish an
information system or process that can fl exibly respond to these changing demands,
while complying with the reporting requirements at a minimal cost.
Dhonabee B. Seeres is a Partner of SGV & Co.
Thi s ar ti cl e w as o rigin all y publ ish ed in the Bus ine ss Wo rld ne ws pap er. It i s fo r gene ra l infor ma ti on only
and i s no t a sub stitute for pr ofes si on al adv ic e w he re the fac ts and c irc um stan ce s w ar ran t. Th e vi ew s
and op inion e xp re ss ed ab ov e ar e th os e of the au th or and do not ne ce ss ar il y r epr es en t th e vi ew s o f SG V
& Co .

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