The Hungarian-American Enterprise Scholarship Fund's (HAESF) objective is to promote free enterprise and development in Hungary and to continue strengthening ties between the United States and Hungary by creating opportunities for accomplished Hungarians and those of great promise to gain professional experience in the United States. HAESF's roots trace back to 1989 with the creation of the Hungarian-American Enterprise Fund (HAEF).
In 1989, amidst the continuous disintegration of Communism, the United States Congress enacted the Support of Eastern European Democracy Act (SEED), which authorized the creation of enterprise funds to assist the development of private market economy in Central and Eastern Europe. Between 1989 and 1994, the U.S. Congress, through The U.S. Agency for International Development (USAID), appropriated a total of $1.3 billion to establish ten new investment funds known collectively as the Enterprise Funds, throughout Central and Eastern Europe and the Former Soviet Union. From the beginning, USAID structured the Enterprise Funds to be guided by independent Boards of Directors selected from the upper tiers of the U.S. private sector, who in turn selected the Fund's day-to-day operating management.
HAEF, established through a grant of $72.5 million as one of the original Enterprise Funds, was a unique, Western-style venture capital fund, tasked with achieving both critical economic development goals, as well as serving as a model for conducting effective, efficient and transparent investment practices. It was charged with promoting private sector in Hungary by financing small and medium-sized private enterprises through loans, grants, equity investments, feasibility studies, technical assistance, training, insurance, guarantees, and other measures.
HAEF made investments in existing and new Hungarian companies and took an active role in assisting them with strategic and financial planning, training, and identifying strategic partners. In most cases, HAEF invested in companies where operating management participated in the profits and/or ownership of the business.
By the successful and efficient use of its resources during the 15 years of active investment operations HAEF was able to make a significant long-term impact, in line with its original goals of promoting free enterprise in Hungary. The Fund was also able to realize financial success from many of their investments, so that there was a substantial remaining pool of capital available at the end of its active investment period. With this pool of available capital in mind the Fund created a new vision to further the HAEF mission. HAEF began the process of liquidating its portfolio investments with the intention of returning half of the funds to the U.S. Treasury and creating a scholarship fund - this time as an independent not-for-profit organization - with the other half. It established HAESF as a major legacy fellowship program to further improve the economic development in Hungary by providing accomplished Hungarians with professional training opportunities in the U.S.