On November 9, the Berlin Wall fell. The Iron Curtain lifted and opened the way to democracy and free markets for the countries from Central and Eastern Europe.
On November 28, 1989, the U.S. Congress passed the Support for East European Democracy (SEED) Act promoting transition to free markets and democracy in former communist countries. In a way, the program had similarities to the Marshall Plan of 1948, but this time, the economic assistance would not be government to government, but from private U.S. corporations to private companies, through a novel and unique creation – Enterprise Funds.
The Enterprise Funds authorized under the SEED Act were funded with U.S. tax money but managed by independent, volunteer Boards of Directors comprised of U.S. business executives and entrepreneurs, without direct U.S. government involvement. In all, ten funds were created in 17 countries across Central and Eastern Europe and Central Asia.
The Bulgarian-American Enterprise Fund (BAEF) was established, with capital of $55 million. The Fund began investing in Bulgaria’s emerging free-market economy by helping entrepreneurial Bulgarians create small and medium-sized businesses.
Through BAEF’s micro-lending, SME and Hotel Lending programs, in three years, the Fund made over 500 investments in businesses located in 130 cities, towns and villages across Bulgaria.
The successful development of the Fund and its increased investment activities led to the establishment of the Bulgarian-American Credit Bank (BACB). BACB began by creating a Home Mortgage Lending Program and assisting with the passage of Bulgaria’s Mortgage Bond Legislation. By 2001 and for several years to come, BACB was recognized as the most profitable and efficient bank in Bulgaria. Over the next ten years, BAEF and BACB invested in more than 5,000 Bulgarian businesses, which employed thousands of Bulgarians.
On January 1, 2007, Bulgaria entered the European Union. Having largely fulfilled its mission, BAEF began selling its assets.
In August 2008, BAEF sold its majority ownership of BACB to Allied Irish Bank, allocating the proceeds of the sale together with other asset sales to form the America for Bulgaria Foundation’s $400 million corpus. The total investment returns positioned BAEF as the most successful of the ten SEED Act Enterprise Funds.
The proceeds were earned in Bulgaria thanks to the good management of investments and the work of the Bulgaria team. It was a natural decision for this capital to be put to continued good work in Bulgaria to improve Bulgaria’s business environment, the quality of education, the prosperity of society in all its dimensions – culture, knowledge and everyday life. This vision was at the core of the 2009 founding of the America for Bulgaria Foundation.
Each year ABF donates about $20 million out of its $400 million endowment. The corpus is invested to allow ABF to continue as a perpetual foundation in its six key areas of interest: