February 4, 2009

Here is a brief update of current general conditions within The Rainbow Network and the areas in Nicaragua where we operate:

• Our income (donations) is markedly down from this period last year. While we are blessed by a strong, committed donor base, the impact of a weakened U.S. economy is being felt.
• The Nicaraguan economy is heavily impacted by the U.S. and world economy; Nicaraguan exports for January fell 27.2% from January 2008, according to the Nicaraguan agency, The Center for Export Procedures. Unemployment and inflation are expected to continue to rise substantially without any notable increase in family incomes. At the same time, it is expected that assistance to the poor will see downward trends as not-for-profit organizations deal with reduced levels of funding.
• The number of children, elderly, and nursing or pregnant women seeking a daily meal from our nutrition programs has risen. In January, we provided an average of five meals per week to over 14,000 needy people through 194 centers in our 7 network regions.
• Under the direction of Keith Jaspers, president and founder of The Rainbow Network, and Nelson Palacios, national director, we have instituted a rationing program that is impacting, or will soon impact, the majority of our nutrition centers. We are hopeful that this will be a temporary, stopgap type measure and that we can resume normal operations as funding allows. In some cases, this will mean closing of nutrition centers.
• To address the above situation, we have made a special appeal to many of our loyal supporters to consider a special financial gift or to accelerate giving that was planned for later in the year.
• We continue to rely on several partners who have generously provided container shipments of food supplements from the U.S. and guaranteed financial funding for food or the freight expenses associated with exporting food to our operations within Nicaragua.
• We continue to monitor the Nicaraguan government's commitment to supply food to most schools during the school year. The 2009 academic year started this week. This is not a new program but one that has shown to be of great benefit in some areas of the country because of consistency, but unreliable in other areas where we serve the poor. Our experience in 2008 has shown that this program has helped with some food staples but has not met all of the basic needs even in areas where delivery has been fairly reliable. We are concerned that with the financial stress on the government to meet its basic needs, this program could be reduced or discontinued.
• In areas where we have reduced meals served, our staff has been diligent in identifying those people most threatened by malnutrition and providing "food bags" on an as-needed basis.
• We continue to encourage and educate people about Rainbow's home garden program. Through staff and community volunteer efforts, we continue to see the number of these gardens increase. In December, we estimate that as many as 6,000 families have participated in our program whereby we provide seeds and training to help them feed themselves. Challenges certainly exist, such as lack of irrigation for the dry season, soil erosion, etc., but we expect the present crisis to motivate many more people to participate in some kind of food garden.
• Similar changes are being adopted in our medical program, most notably in the purchase of medicines, frequency of doctor visits, and in the amount of disease prevention education performed.

We will continue to provide future updates as conditions change. Please continue to pray for our ability to maintain (and eventually resume growth) of our core programs, for our staff's and volunteers' ability to do more with fewer resources, and for continued generosity of our supporters who so much want to help some of the poorest of God's children help themselves.

David McCready
Vice-President of Operations

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