RUGMARK Foundationnorthamerica

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RUGMARK FOUNDATION USA RUGMARK FOUNDATION NorthAmerica 2001 S Street NW, Suite 430 2006 ANNUAL REPORT Washington, D.C. 20009 Tel: (202) 234-9050 Fax: (202) 347-4885 www.RugMark.org Printed on paper certified by the Forest Stewardship Council (FSC). 31783 CVRspread 7/31/07 3:15 PM Page 2

RugMark is a nonprofit organization working to end BOARD OF DIRECTORS BOARD OF ADVISORS RUGMARK INTERNATIONAL BOARD Gary Coles-Christensen Pharis Harvey Charles Lyons Terry Collingsworth, Chair G. Coles-Christensen, Ltd. Stolen Childhoods Senator Howard Metzenbaum Malini Mehra, Vice-Chair exploitative child labor in the Maureen Orth Sharda Subramaniam, General Secretary Terry Collingsworth Stephanie Odegard Charles Porter Bijay Bahadur Shrestha, Treasurer carpet industry and offer International Rights Advocates Odegard, Inc. Caroline Ramsay Phil Schlein RUGMARK NATIONAL OFFICES educational opportunities to JD Doliner Lizann Peyton Opus 4 Consultant, Nonprofit Organization STAFF RugMark Germany Development children in India, Nepal and Sara Goodman Nina Smith RugMark Foundation India Fiber artist Executive Director ® James Silk Pakistan. The RugMark Orville Schell Center for Human Rights, Nepal RugMark Foundation 17 Steve Graubart Yale Law School Cyndi Janetzko label is your best assurance International Market Access Director of Operations RugMark Society Pakistan Natalie Halich Massa Cressall RugMark UK that no illegal child labor International Finance Corporation Communications Manager Denise Hamler Rebecca Shaloff was used in the manufacture Co-op America Development Officer

Senator Tom Harkin Biko Nagara of a carpet or rug. U.S. Senate Program and Technology Assistant 31783 TXT_R1:Layout 1 8/14/07 12:50 PM Page 2

A MESSAGE FROM THE EXECUTIVE DIRECTOR This was a year of tremendous progress for RugMark This year nearly 10,000 North Americans purchased $45 million worth of USA as we launched The Most Beautiful Rug. In less than 12 certified rugs. These consumers, along with our supporters, helped RugMark to: months this consumer awareness campaign has moved us • Rescue 144 children and prevent thousands more from entering servitude closer to our goal of ending child exploitation in carpet • Educate 3,172 former carpet kids and children of weavers in South Asia weaving. Thank you to our donors, business partners and • Build awareness among millions of consumers that the beauty of a rug is other supporters who have made this possible. dictated as much by the conditions under which it was made as by the pat- The premise behind The Most Beautiful Rug is that when terns and colors that adorn it. consumers are educated and offered the choice to pur- This report highlights other ways that RugMark ties together Western con- chase child-labor-free products, they will select the sumers and the artisans who craft the rugs they buy. This inter-connectedness humanitarian option. Indeed, sales of RugMark certified rugs increased by nearly brought about by the RugMark® label has the potential to end child labor: it 1 30 percent in 2006. truly is what makes a rug beautiful. The simple act of purchasing a RugMark rug can literally touch the life of a While we made outstanding progress this year, our goal is to build our cam- child. Hem Moktan is typical of a child weaver in Nepal. He worked in virtual slavery paign until the carpet industry is child-labor-free. With your continued involvement and was subjected to abuse. In three years he earned a mere $45 for his toil. Today Hem we can reach the estimated 300,000 remaining carpet kids in India, Nepal and studies at PTI College in Kathmandu, an unimaginable achievement a few years ago. Pakistan and demonstrate that market-driven solutions can change the world. The Most Beautiful Rug helps children like Hem by steadily increasing the market share of certified child-labor-free rugs to five percent and then to 15 percent, the estimated point by which we can declare victory. Nina Smith, Executive Director

Rug images (in order of appearance) by Odegard, Inc., Bennett MAKING A PURCHASE, MAKING A DIFFERENCE ...... 2 Bean Studio, Northfield Carpets International, Company C, Inc., WEAVINGTHE MOST BEAUTIFUL RUG: RugMark Launches AwarenessCampaign ...... 3 Bev Hisey, Lapchi, Lapchi, Northfield Carpets International, ARK OF EAUTY Angela Adams Designs and Bennett Bean Studio. A M B (Stories from the Field, RugMark Schools and Social Welfare Programs) ...... 4 HOW TO SELECT THE MOST BEAUTIFUL RUG ...... 8 RugMark is grateful to Robin Romano whose copyrighted photographs are featured throughout this report. Additional photog- DESIGNS OF THE TIMES: RUGMARK’S INDUSTRY PARTNERS LEAD THE WAY ...... 10 raphy by Kaja Glinski, Sam Kittner, Paul Kozel, FINANCIAL INFORMATION ...... 14 Mani Lama and RugMark USA. SUPPORTERS LISTING ...... 16 BOARD AND STAFF ...... 17 31783 TXT 7/31/07 3:07 PM Page 3

MAKING A PURCHASE,MAKING A DIFFERENCE Whether furnishing a home, buying clothes, handmade rug industry. Today, RugMark operates or filling a grocery cart, it can be difficult to find in six countries and fulfills its mission through: products that didn’t cause harm in their making. For Monitoring and Certification – Inspectors in the last decade, RugMark has led a nascent move- India, Nepal and Pakistan make random, surprise visits ment to change this, beginning with the carpets in to rug production sites. Companies that join RugMark American living rooms woven by children. and meet its strict no child labor standards are issued In the next decade, even sooner, it could be the certification labels for their carpets. Each numbered norm for industry to comply with humanitarian label can be traced back to the production site. and environmental standards and for certification Child Rescue and Education – RugMark rescues 2 labels to guide consumer purchases. What would the exploited children and offers them rehabilitation, world be like if every product coming from the education, vocational training and job placement. smallest-scale farmer or a major department store Consumer Action and Industry Outreach – had a good story to tell? RugMark educates consumers in North America This is the story of handmade rugs: An estimated 300,000 children are employed and Europe to look for the RugMark® label and recruits companies to join the by the rug industry, toiling in slave and slave-like conditions throughout South Asia. certification program. The rugs they make are sold to people in the U.S., the world’s largest rug market, RugMark is transforming an industry’s way of doing business and providing many of whom have no idea of the invisible crime that their purchase supports. a model for others to follow. In just 12 years of operation the rate of child labor RugMark was founded in 1994 by Kailash Satyarthi to end child labor in the on South Asian carpet looms has dropped by more than 60 percent. “We’re living in a generation of solutions. RugMark is a solution and has proven exploitative child labor can be ended.”– Charles Lyons, President, U.S. Fund for UNICEF 31783 TXT 7/31/07 3:07 PM Page 4

WEAVING THE MOST BEAUTIFUL RUG RugMark Launches Awareness Campaign 2006 saw the official RugMark unveiled a new advertising direction Highlights from RugMark’s extensive and unrolling of The Most Beautiful and a digital makeover for www.RugMark.org, created prominent press included: Rug: RugMark’s Campaign to and distributed in-store promotional materials, intro- • A feature in the Home & Garden section of the San End Child Labor. The Most duced a quarterly e-newsletter, hosted a series of aware- Francisco Chronicle entitled“Righteous Carpet Making”; Beautiful Rug aims to increase ness-raising events and was featured in media stories. • “Behind the Loom,”a full- the market share of certified This outreach has already delivered results. page story in Utne; rugs by educating end con- RugMark rugs comprise nearly $9 million - approx- • Louis Freedberg’s editorial sumers and those who influ- imately 2 percent - of the total import value of all in the San Francisco Chronicle, ence rug purchases – interior handmade rugs sold in the U.S. “Child Labor Beneath Our Kailash Satyarthi, RugMark’s designers, architects, retailers In 2006, RugMark advertising placements and Feet” in which he urges con- 3 founder, at the campaign launch and importers. editorial coverage in leading design and lifestyle sumers to “pitch in” and de- The Most Beautiful Rug previewed in January at the magazines raised consciousness about child labor. mand child-labor-free rugs; San Francisco Design Center’s Winter Market. It hit RugMark’s new public service announcement, “The and both coasts in September with events in San Most Beautiful Thing about an Imported Rug” • A feature in METROPOLIS, “The Ethics of Rugs,” Francisco and New York – the campaign’s target appeared in the pages of our media sponsors – which captured the essence of The Most Beautiful Rug markets. The launch culminated with a press confer- Dwell, METROPOLIS and the regional lifestyle mag- in a quote by Nina Smith:“The real goal is to create ence at UNICEF’s headquarters during the rug azines of Modern Luxury Publishing Group – and a marketplace that doesn’t tolerate child labor and trade’s New York Market Week. other publications throughout the year. sends that message right down the supply chain.”

WWW.RUGMARK .ORG: THE MOST BEAUTIFUL RUG CENTERPIECE • The U. S. market share of certified A new and improved www.RugMark.org went live in 2006. With fresh content, links and downloads, the site experienced an 82 percent increase rugs has grown by 64% over the past in average daily hits from the fall of 2005 to the fall of 2006. As the gateway to RugMark and The Most Beautiful Rug, the website contains a wealth of information for campaign audiences. Industry partners two years. can access point-of-sale materials, tips for training sales staff, templates for media and client outreach and more. Consumers can learn about the child labor problem, search for RugMark retailers in their neighborhood and view a virtual rug gallery. And all visitors are invited to join RugMark’s efforts to end illegal child labor in South Asia. 31783 TXT 7/31/07 3:07 PM Page 5

A MARK OF BEAUTY Certification Ensures Rugs Made by Adults and Education for Children Since 1995 RugMark has certified 5.5 million inaugural school in Jagapur village in Uttar Pradesh, al training and job placement, health services, and carpets as child-labor-free, ensuring their inner beau- India. Since its inception, RugMark has provided worker awareness trainings. More details about these ty. Behind each labeled rug is an independent mon- educational opportunities to thousands of children. programs may be found at www.RugMark.org. itoring system that offers everyone in the supply These children are given choices: for example, to Increasing educational opportunities in the chain – from producers to consumers – assurance pursue higher education or to enroll in vocational principal rug making centers, coupled with the that no illegal child labor was employed. training, to live at home with sponsored education or deterrent effect of RugMark inspections has led to a Factories and village-based looms are visited on a to attend boarding school. RugMark’s role is to ensure dramatic reduction random, surprise basis to ensure that only adult arti- students have the support needed to stay in the class- in the use of child sans are working. In 2006, RugMark inspectors in room and off the carpet loom and feel empowered to labor in the carpet 4 South Asia identified and freed 144 child carpet weave their own futures. industry. Through weavers, bringing the total number of rescued children RugMark programs go beyond formal schooling. The Most Beautiful Rug to 3,162. Every boy and girl found working is offered the Consultative meetings with weaving communities have campaign, RugMark opportunity to reunite led to a range of ini- USA aims to with their families and tiatives for affected reach the remaining Former Carpet Slaves Tailor New Lives get an education. children and families, estimated 300,00 In 2006, two former carpet slaves were hired as instructors In 2006, RugMark in a RugMark vocational training program. Punil and Bhola are including daycare children still weaving celebrated the 10th both from Bihar, India’s poorest state where nearly 50 percent of and early childhood rugs in India, Nepal anniversary of its the population lives below the poverty line and illiteracy and infant education, vocation- and Pakistan. mortality rates soar. Devastating poverty and extreme corruption have made Bihar the primary source point for trafficked children who end up working in various industries in India, including carpet weaving. • 3,172 children attended school or daycare programs with Punil and Bhola fell victim to this system and worked as rug RugMark support in 2006. laborers until RugMark inspectors found them in 1997 and 1998, respectively. They were admitted to the Balashraya Center for Child Laborers, and after completing their formal education and vocational training, Punil and Bhola qualified for openings in RugMark’s tailor training program. 31783 TXT 7/31/07 3:07 PM Page 6

PARTNERSHIP INCREASES LITERACY, PREVENTS TRAFFICKING

RugMark, in partnership with the Academy for Edu- cational Development, has broadened the scope of its efforts on the ground to include a child labor prevention program. Launched in 2006, this initiative offers basic literacy and awareness for carpet workers over the legal working age of 14. RugMark has educated 700 weavers across 20 partici- pating factories on topics such as child rights, family plan- ning, trafficking, HIV/AIDS, health, nutrition, sanitation and working conditions. The issue of trafficking is given special attention, as car- 5 pet workers and their children are particularly vulnerable. An ILO-IPEC report, International Trafficking Among Children Engaged in Prostitution, unveils that three out of nine trafficking sur- vivors were first recruited to carpet factories. Educating female rug weavers about these perils is espe- cially urgent. According to the U.S. State Department’s 2006 Trafficking in Persons Report, an estimated 12,000 Nepali women and children are trafficked into sexual slavery in India every single year. “[The goal] is not just getting kids off the looms but turning their lives around as well.” – Avner Lapovsky of Sloan Miyasato, RugMark Marketing Partner, as quoted in the San Francisco Chronicle 31783 TXT 7/31/07 3:07 PM Page 7

BEHIND THE LOOM: THE STORY OF HEM MOKTAN Hem Moktan grew up in a squatter settlement in Valpani, Chitwan, Nepal. His parents earned a small wage as farm laborers, but it was barely enough to feed their six children. So when a man came to Hem’s father with an offer to provide food and clothing plus a salary for work in the city, he considered it a great opportunity for his son. Hem was brought to a carpet factory in Kathmandu where the hopes of his parents quickly dissolved. He was forced to work day and night, often half-starved and regularly beaten. After three years, Hem 6 had earned 3,000 rupees - the equivalent of 45 American dollars. RugMark inspectors found Hem working on February 3, 1999. He was only 12 years-old. Hem was offered psychological support and enrolled in a RugMark-sponsored school for formal education. Though illiterate at the time of his rescue, Hem has distinguished himself as a disciplined student, quickly progressing to class eight, then 10 and obtaining his School Leaving Certificate in 2006. Today, Hem studies at PTI College in Lalitpur and plans to be a social worker. “My life up to today is only due to RugMark . . . my parents gave birth to me, but RugMark has given me the human life.”– Hem Moktan 31783 TXT 7/31/07 3:07 PM Page 8

RUGMARK AND AFFILIATED SCHOOLS IN SOUTH ASIA

NEPAL Children Welfare and Community Development Services, Mahankal, Kathmandu Non-formal Education Helpless Rehabilitation Society, Mahankal, Kathmandu Nepal RugMark Foundation Rehabilitation Center/Center for Child Studies and Development INDIA Sinamangal, Kathmandu Rehabilitation, Non-formal and Formal Education Formal Education Balashrya Centre for Bonded Laborers, Gopiganj, Bhadohi Little Angels’ School, Lalitpur, Kathmandu 7 Laboratory Higher Secondary School Primary Schools, Grades K-8 Kiripur, Kathmandu Jagapur, Bhadohi Annapurna English Secondary School Newada, Varanasi Sinamangal, Kathmandu Handia, Allahabad Day Care and Early Childhood Education Cherapur, Bhadohi Education, Protection & Help for Children Vijaypur, Mirzapur Jorpati, Kathmandu Lakhamanpatti, Bhodohi

• 2006 retail sales of RugMark rugs totaled nearly $45 million, generating approximately $90,000 to educate children in South Asia. 31783 TXT 7/31/07 3:07 PM Page 9

HOW TO SELECT THE MOST BEAUTIFUL RUG

The checklist below is a condensed version of HOW TO SELECT THE MOST BEAUTIFUL RUG RugMark’s Guide to Buying a Handmade Rug. Take it on At RugMark, the concern about child labor By definition, quality carpets are woven by your next rug shopping expedition or share it with a derives in part from a reverence for rug weaving, an experienced, adult artisans. friend to help ensure that your purchases are beautiful ancient tradition dating back at least 3,000 years. inside and out. Locating a Dealer The illegal use of child labor directly impacts more Some of the most ethical rug dealers in the coun- ❒ than a quarter million children, threatening the liveli- Purchase a RugMark certified rug. Look for the try can be located by zip code at www.RugMark.org. ® hood of adult craftspeople. RugMark label, your best assurance that no children In their showrooms an array of certified rugs may be Rugs are works of art, ranging from patterns were exploited in the manufacture of a rug. found. The best dealers guide without bullying and that have been passed down through the centuries to ❒ encourage you to take rugs home on approval. Find a dealer who sells rugs woven by adult artisans. the diverse styles of contemporary designers. RugMark certified rugs can be sourced at 8 Purchasing a handmade rug can be daunting, yet The Portrait of an Excellent Rug www.RugMark.org. those who succeed in buying beautiful rugs are richly Once in the showroom, look for rugs that lie ❒ Look for rugs that lie flat and straight and have a rewarded. Here are some guidelines to consider as flat and straight and have a reasonably regular shape. regular shape. The wool should be lustrous and lively you make your purchase. The wool should be lively and lustrous with colors that have neither faded nor bled. Quality rugs are not washed with colors that have neither faded nor bled. A Rug Made With Child Labor is Ugly No out, unnaturally shiny, nor unpleasantly bright. ❒ Think about the subjective considerations: desired Matter What It Looks Like knot density, type of dyes used, whether the wool was A rug made without the use of child labor is The Production Process spun by hand or machine, and the height of the pile. beautiful inside and out. The RugMark® label is your Knot Count. Rugs are available in myriad den- best assurance that no children were exploited. sities, with knot counts ranging from 30 knots per To view RugMark’s Guide to Buying a Handmade Rug in its entirety and to find a zip code searchable list of respected rug dealers near you, please visit www.RugMark.org “It’s not small fingers that make the best carpets, it is experienced hands. That’s what the RugMark® labelguarantees.” Stephanie Odegard of Odegard, Inc. as quoted in Traditional Home

RUGMARK FOUNDATION USA 2001 S Street NW, Suite 430, Washington, D.C. 20009 www.RugMark.org 31783 TXT 7/31/07 3:07 PM Page 10

RUGMARK’S GUIDE TO BUYING A HANDMADE RUG square inch to over 1,000. Generally, finely knotted or woven rugs are most desirable. However fine knot- ting alone does not make a rug good. Natural versus Synthetic Dyes. Natural dyes, such as reds from madder redroot or blues from the indigo plant are more desirable than synthetic. Natural dyes add roughly 30 percent to the cost of a rug, as well as to its charm and value. Yet, synthetic dyes used today are available in an infinite array of tones and hold their color well over time. 9 Hand Spun versus Machine Spun Wool. Most collectors and connoisseurs value the effect produced by hand spun wool, which absorbs more dye where it is loose and less dye where it is tight. This produces a pleasant variegation in color or abrash. thick pile for quality. In fact, the finest rugs are in its entirety, written by industry expert and Judging Quality by the Height of the Pile. often the thinnest. RugMark Marketing Partner Emmett Eiland, Inexperienced rug buyers sometimes mistake a To view RugMark’s Guide to Buying a Handmade Rug please visit www.RugMark.org.

THE RUGMARK CERTIFICATION LABEL: SOMETHING TO SMILE ABOUT Look for this smiling face on the back of an imported rug. It’s your best assurance that: • The loom or factory that wove your rug was visited by a RugMark inspector, who verified that no child labor was used. Each RugMark certification label has a unique number that traces the rug to the loom where it was made. • A portion of your purchase supports the education of former child laborers in South Asia. • Through your purchase, you are joining the global movement of conscious consumerism. 31783 TXT 7/31/07 3:07 PM Page 11

DESIGNS OF THE TIMES: RUGMARK’S INDUSTRY PARTNERS LEAD THE WAY Engaging industry in the fight against child labor is central to Beautiful Rug features increased joint marketing with partner companies in both the import and retail sec- RugMark’s market-driven model for change. Rug company involvement tors. New collateral materials support advertising, encourages manufacturers in South Asia to open their doors to independ- tradeshow participation, and editorial outreach. ent workplace inspections and agree to improved conditions. In the last U.S. consumers are seeing the beauty in this partnership. According to industry members, con- two years, RugMark’s industry member base in North America increased sumers are now asking for the RugMark® label more by 76 percent for importers and 90 percent for Marketing Partners, and than twice as often as last year. the retailer network is now 1,000 showrooms strong. Licensed exporters pay .25 percent of the export 10 value of rugs shipped and importers pay 1.75 per- Designers and Importers only achieved by the work of skilled adult artisans. cent. Sixty percent of these fees support the rehabil- Thirty-seven rug design and import companies The growth in ethical purchasing that hit the food itation, education and social welfare programs that participate in RugMark in the U.S. and Canada. They business with fair trade and organics is spreading to RugMark provides in South Asia. The remainder is include small start-ups to larger, more established the home sector. In 2006, 60 percent of building dedicated to increasing consumer awareness and companies, with rug designs from traditional to con- professionals reported specifying and installing green demand for child-labor-free rugs. temporary. The underlying characteristic that ties them building products in their projects. RugMark certifies 1.8 percent of the total hand- together is their commitment to transforming industry RugMark enables members to tap into this made rug market in the U.S., representing approximately labor standards. Inherent in their product is a quality expanding socially responsible market. The Most 3.5 percent of rugs from India, Nepal and Pakistan.

• While overall sales of handmade rugs were flat in 2006, sales of RugMark rugs posted an increase of 27 percentage points. 31783 TXT 7/31/07 3:07 PM Page 12

Retailers and Marketing Partners Certified rugs are sold through a network of showrooms and home furnishings retailers along with a growing number of online and catalog outlets nationwide. With more companies licensed by RugMark and selling the rugs, buying a certified 11 rug has never been easier. The Marketing Partnership program provides specialized tools to retailers who wish to further support RugMark’s mission and contribute financially to help children in weaving communities. Marketing Partners differentiate themselves from the competition through higher profile recognition on www.RugMark.org, editorial outreach and dedicated point-of-sale materials. “Through sourcing RugMark rugs, [interior designers] have the opportunity to give children back their childhoods. We can make a difference while offering our clients a finely made carpet that’s easier to sell because of the positive story behind it.” – Timothy Corrigan, designer, Corrigan, Inc. 31783 TXT 7/31/07 3:07 PM Page 13

2006 RUGMARK LICENSED IMPORTERS 2006 Marketing Partners

ALEURE, LTD. COMPANY C, INC. LAPCHI NEW MOON Classic Oriental Rugs J. Iloulian Rugs www.aleure.com www.companyc.com www.lapchi.com www.newmooncarpets.com Beachwood, Ohio Los Angeles, California

ALICIA D. KESHISHIAN DAVIS AND DAVIS LINDA GARRIOTT DESIGN, NORTHFIELD CARPETS Creative Flooring Madison Millinger CARPETS OF IMAGINATION www.davisrugs.com LLC INTERNATIONAL Houston, Texas Portland, Oregon www.acarpets.com www.lindagarriottdesign.com www.northfieldcarpets.com DELIANTE DESIGNS David E. Adler, Inc. Rug Chic AMY HELFAND STUDIO www.deliantedesigns.com LIZA PHILLIPS DESIGN NYING ZEMO Scottsdale, Arizona New Orleans, Louisiana www.amyhelfand.com www.lizaphillipsdesign.com www.nyingzemo.com Driscoll Robbins Oriental Carpets The Rug Source DELINEAR RUGS Seattle, Washington Denver, Colorado ANGELA ADAMS DESIGNS www.delinear.net LIZZ GREER ODEGARD, INC. www.angelaadams.com www.lizzgreer.com www.odegardinc.com Edgar Kelly Rugs Sloan Miyasato DUNCANARTS Austin, Texas San Francisco, California 12 BARBARA JACOBS COLOR M & M DESIGN PEDDADA AND DESIGN ELSON & COMPANY INTERNATIONAL www.peddada.com Emmett Eiland’s Oriental Rugs Stephen Miller Gallery www.integralcolor.com www.elsoncompany.com www.mandmgallery.com Berkeley, California Menlo Park, California SACCO CARPET BENNETT BEAN STUDIO EMMA GARDNER DESIGN MADELINE WEINRIB ATELIER Floor Styles Steven King, Inc. www.bennettbeanstudio.com www.emmagardnerdesign.com www.madelineweinrib.com STILE BK USA Cathedral City, California Boston, Massachusetts www.stilebkusa.com BEV HISEY INSTYLE HOME & RUGS MAT THE BASICS G. Coles-Christensen Ltd. Textures www.bevhisey.com www.instylerugs.com www.mat-thebasics.com STORY RUGS Santa Fe, New Mexico New York City, New York The Ghiordes Knot Weisshouse Showrooms CARINI LANG JOAN WEISSMAN STUDIO MESSENGER RUGS TEXTURES Pittsburgh, Pennsylvania www.carinilang.com www.joanweissman.com www.messengerrugs.com www.texturesdesign.com Birmingham, Michigan J. Asher Handmade and Decorative CLASSIC RUG COLLECTION, JUDY ROSS TEXTILES ZOË LUYENDIJK STUDIO Carpets INC. www.judyrosstextiles.com www.zoeluyendijk.com Washington, District of Columbia www.classicrug.com “RugMark sets a high standard and taught us a lot about how to manufacture globally and set an ethical code for our entire business.” – Angela Adams, Angela Adams Designs, Portland, ME 31783 TXT 7/31/07 3:07 PM Page 14

RUGMARK RUGS ENHANCE A MOST BEAUTIFUL SETTING

When Lucie Pastoriza and Ken Sharples began joy from the pure beauty and handcraft of the searching for carpets for their seaside California rugs and joy from knowing that the people who home in the award-winning community, Sea Ranch, made these wonderful works of art are well their objective was to select pieces that connect their cared for, their children at school and not at the home’s dramatic exterior surroundings with its near- loom, their futures improving and the craft con- minimalist modern interior. Complementing the tinuing.” The couple purchased their Lapchi beauty of the Sonoma coastline and the redwood and rugs from RugMark Marketing Partner G. fir forested coastal range are two handmade Tibetan Coles-Christensen of Santa Fe, New Mexico rugs made by RugMark licensed importer, Lapchi. and were educated about the child labor prob- 13 Sarong, with its simple, organic, Zen-like design har- lem during the purchasing process.“The right monizes perfectly with the vibrant colors of the blue choice is straightforward once you understand,” ocean and green meadow grasses visible through the said Mr. Sharples. office’s floor-to-ceiling glass walls. Pin Drop in the entryway is a composition of Sea Ranch was designed to blend into the natural setting and minimize white silk dots on a green background, reflecting the diminutive and fragrant white the visual as well as physical impact upon the landscape. It is an architect- flowers growing along the exterior entry steps and ocean-facing sunken patio. designed community that has been awarded the Gold Medal Award of the “When I look at these pieces,” said Ken Sharples, “I am filled with joy – American Institute of Architects, architecture's highest honor.

CHILD LABOR: MYTH VERSUS FACT MYTH: Slavery was abolished long ago. FACT: The International Labor Office estimates that 218 million children between the ages of 5 and 17 are engaged in child labor. The handmade carpet industry exploits nearly 300,000 children in South Asia. Children ages 4 to 14 are kidnapped, trafficked or sold into debt bondage. The commodification of children is a form of modern-day slavery. MYTH: Children in poor countries are needed to help supplement the family income. FACT: Child labor makes poverty worse. Child workers come cheaply and sometimes at no cost, and drive down wages for adult laborers. Plus children who work forfeit an education that could have helped them achieve a higher standard of living as adults. 31783 TXT 7/31/07 3:07 PM Page 15

FINANCIAL INFORMATION FORYEAR ENDING DECEMBER 31, 2006

STATEMENT OF FINANCIAL POSITION STATEMENT OF ACTIVITIES For the Year Ended 12/31/2006 with Comparative Totals for 2005 For the Year Ended 12/31/2006 with Comparative Totals for 2005

ASSETS 2006 2005 UNRESTRICTED SUPPORT AND REVENUE 2006 2005 Current Assets Foundation Grants $223,000 $249,000 Cash and Equivalents $612,380 $219,760 Licensing Fees 157,219 126,989 Investments 110.249 200,000 Marketing Partnership Fees 34,599 25,354 Licensing Fees Receivable 81,258 68,800 Major Gifts 29,450 33,693 Marketing Partnership Fees Receivable 14,859 10,615 Individual Contributions 25,532 25,481 Grants Receivable 20,474 215,000 Events 15,142 11,140 14 Prepaid Expenses and Other Assets 19,272 4,012 Interest and Other Revenue 10,528 7,480 In-Kind Contributions 309,364 173,094 Total Current Assets $858,492 $718,187 Net Assets Released from Restrictions 185,644 118,919 Property and Equipment Website $54,557 $19,728 TOTAL UNRESTRICTED SUPPORT AND REVENUE $990,478 $771,150 Property and Equipment, net 6,197 5,613 EXPENSES Total Property and Equipment $60,754 $25,341 Program Services TOTAL ASSETS $919,246 $743,528 Consumer Campaign $496,179 $230,197 Carpet Trade Outreach 166,789 108,695 LIABILITIES AND NET ASSETS International Programs 123,451 142,097 Current Liabilities Total Program Services $786,419 $480,989 Accounts Payable and Accrued Expenses $31,156 $27,665 Social Welfare Transfers 76,815 51,905 Supporting Services Funds Held as Fiscal Sponsor 12,076 36,111 General and Administration $37,853 $44,356 Fundraising 99,210 19,905 Total Current Liabilities $120,047 $115,681 Total Supporting Services $137,063 $64,261 Net Assets Temporarily Restricted $425,437 $321,081 TOTAL EXPENSES $923,482 $545,250 Unrestricted 373,762 306,766 CHANGE IN UNRESTRICTED ASSETS $66,996 $225,900 Total Net Assets $799,199 $627,847 TEMPORARILY RESTRICTED SUPPORT TOTAL LIABILITIES AND NET ASSETS $919,246 $743,528 Grants and Contributions $290,000 $440,000 Net Assets Released from Restrictions (185,644) (118,919) CHANGE IN TEMPORARILY RESTRICTED SUPPORT $104,356 $321,081 CHANGE IN NET ASSETS $171,352 $546,981 Net Assets at the Beginning of the Year $627,847 $80,866 NET ASSETS AT THE END OF THE YEAR $799,199 $627,847 31783 TXT 7/31/07 3:07 PM Page 16

2006 REVENUE 2006 EXPENSES 47% Foundation 85% Program Services 28% In-Kind 11% Fundraising 18% Industry 4% Administration 6% Individuals 15 1% Other

2006 FINANCIAL HIGHLIGHTS

• Over $190,000, representing 18% of total revenue, was generated from • Over $300,000 in in-kind support – primarily for advertising placements industry fees, a 26% increase from 2005. Industry fees are projected to rep- for The Most Beautiful Rug campaign - was generated, a 79% increase from 2005. resent more than 50% of our total revenues by 2010. • We spent less than $700,000 to increase the U.S. market share of certified • $90,000 or 1% of the $9 million in RugMark certified imports was gener- rugs by nearly 30% from 2005. RugMark estimates it will cost approximate- ated to rehabilitate and educate former child laborers and children of adult ly $10 million over 10 years (2003 – 2012) to create an industry free from carpet weavers, a 24% increase over 2005. child labor.

RugMark USA was audited by Cocchiaro & Associates, LLC, Certified Public Accountants of Alexandria, Virginia. Full audited financial statements are available upon request. 31783 TXT_R1:Layout 1 8/14/07 12:50 PM Page 17

2006 SUPPORTERS LISTING

RugMark Foundation USA is grateful to all of its supporters, including Dickson Family Fund Bev Hisey $100 - $199 Pharis Harvey Bruce Stokes & Wendy Sherman foundations, media sponsors, corporate contributors and individuals. elson & company, llc BLUESTEM Mary Altman Wendy Ho Richard Solloway Kenneth Kimmell Ted Boerner Inc. Amy Helfand Studio Ralph Huber David & Lynn Strauss $100,000+ Driscoll Robbins Oriental New Age Customs Clearance Dayna Burnett Bealy & Allan Bealy Bennett Bean InStyle Home & Rugs Maureen Stuart Anonymous Carpets Lizann Peyton Patrick Brady David Biss Lauranne Jones Benjaporn Suriyachan Calvert Foundation Edgar Kelly Rugs Bruce Rich Classic Rug Collection Terre Blair Ajit Joshi Linda Swift The Skoll Foundation emma gardner design, llc Donna E. Shalala JD Doliner & Steven Kaufman Heidi & Ritchie Bond Jim Kane Myles & Jacqui Taylor Emmett Eiland’s Oriental Rugs Sacco Carpet James Druckman Asta Bowen Sandra Killough Interiors, Inc. Julie Taylor Ely & Gigi Tsern Family Fund $50,000 - $99,999 Evangelical Lutheran Church in Stile BK USA Susan Bramhall Kimoon Kim Helen Toth & John Quincy Michael Frey & Karen Belden Frey Odegard, Inc. America Walden Asset Management Sharon Brownfield & Richard Lent Lois Kleen Adams Paola Gianturco Floor Styles Carpets & Rugs Zoë Luyendijk Studio Helena Brykarz Matthew Lehigh Elizabeth Umlas Hollis Hope & David Chapman $20,000 - $49,999 G. Coles-Christensen, Ltd. Frida Burling Yvonne Mariko Martin UNITE HERE Chicago & Mark & Gudrun Howard Lapchi Ghiordes Knot $500 - $999 Judy Hyde Douglas Cahn Betsy McGean Midwest Regional Joint Board Sara Goodman & David Hyerle Arizona Design Center Jocelyn Johnson Linda Garriott Design, LLC Josephine Merck Jeff Vogt $10,000 - $19,999 J. Asher Handmade and 16 Kelley Cheek Kathryn Johnson & Marshall Lynn Caporale Douglas & Thérése Moore Penina Weissman Angela Adams Designs Decorative Carpets Dave D’Agostino Hagins Andrew Carlson Ronald Myrom Wayne M. Winnick Arthur B. Schultz Foundation J. Iloulian Rugs Jacqueline Dedell & Ira Shapiro Judy Ross Textiles Michael & Nicholas Christie Jacqueline Nabb Bernard Yee & Stefanie Smith Carini Lang Joan Weissman Studio Laurel Ferris Sheryl Kalis & Adam Steinberg Marcie Cohen David & Mary Parker Karla Yoder Company C, Inc. Madeline Weinrib Atelier Denise Hamler Joshua Jay Kaufman Celeste Coughlin Dipesh Patel Ellen Ziffren Woodbury Fund Madison Millinger New York Design Center, Inc. Blake Kerr Margaret Courtney Robbin Phelps Anne Zollner M & M Design International Inc. Northfield Carpets International Darlene Adkins Kerr & Jeff Kerr Nina Covrljan Keith Pitts $5,000 - $9,999 Mat the Basics George & Margaret Ortenzo Bob & Jean Kloos Patricia Crawford Travis Price IN-KIND DONATIONS Arthur B. Schultz Presbyterian Hunger Program Searingtown School JaeGyeong Lee Daniel Della Luna Jill Riley & Stephen Fotis Co-op America, 2006 National Fidelity Charitable Gift Fund Rug Chic Karen Seiger & James Weselowski Arthur Lehman Deliante Designs LLC Deborah Robinson & Steven Green Pages New Moon The Rug Source in Denver Virginia Blair Thompson on Lilian Leong Dennis Dodds Lynch Colibri Solutions Ramsay Merriam Fund Sloan Miyasato behalf of University of Liza Phillips Design Susan Duncan Diane Schneiderman Covington & Burling Stephen Miller Gallery Georgia students Meling & Associates DuncanArts Timothy Seitz Crispin, Porter + Bogusky The Merchandise Mart $2,000 - $4,999 Steven King, Inc. Women's Division, United Martha Dyer Elizabeth & Stephen Shafer Dwell Mary O'Hara Anbinder Family Foundation Textures Methodist Church Alicia Eastman Esther Shakkarwar METROPOLIS Maureen Orth Boston Common Asset Angelo Tomedi Patricia & Dennis Zerega Jim Fruchterman Jennifer Shaloff-Rahimi & Idris Metropolitan Group William & Chrystal Reece Management U.S. Fund for UNICEF May Westfall Furlong Rahimi Modern Luxury Publishing Roosevelt Middle School Massimo Calabresi & Margaret Weisshouse $200 - $499 Gene Rostov Mia Gargiulo Rebecca Shaloff Group Emery John Ackerly Niklaus Salafsky & Julie Segre Silvana Garrido-Harty Shoreline Unitarian Universalist Relax Charitable Lead Annuity Trust $1,000 - $1,999 Alicia D. Keshishian/Carpets of Stanley & Esther Shaloff Michael & Peggy Gibbs Society Rug Insider ULWT of Gladys S. Borrus William and Frances Ackerly Imagination James & Jean Silk Paul Gitmik Mark Simon T-Solve Classic Oriental Rugs Ltd. David Christy & Shari Friedman Aleure, Ltd. Amelia Spooner Jane Godfrey Timothy Smith David E. Adler, Inc. Delinear Rugs Hilary Ball Jesty Thomas Charles Haims & Ellen Weinreb Bill & Catherine Smock 31783 CVRspread 7/31/07 3:15 PM Page 2

Senator Tom Harkin Biko Nagara of a carpet or rug. U.S. Senate Program and Technology Assistant 31783 CVRspread 7/31/07 3:15 PM Page 1