In 1989, the United States Congress enacted the Support for East European Democracy Act (SEED), which authorized the creation of enterprise funds to assist the development of private market economies in Central and Eastern Europe. SEED established the funds as unique “public-private partnerships” for the purpose of investing U.S. government funds to support the private sector and nascent market economies of Poland and Hungary. Subsequent Foreign Appropriations Acts extended the authorization to establish funds in other Central and Eastern European countries, including the Baltic states.
From 1989 to 1994, the U.S. Congress, through the U.S. Agency for International Development (USAID), appropriated $1.3 billion to establish 10 new investment funds, known collectively as the Enterprise Funds, throughout Central and Eastern Europe and the former Soviet Union.
The Baltic-American Enterprise Fund or BalAEF was established in 1994 to contribute to the private-sector development in the Baltic States. BalAEF’s work in the region was focused on the development and funding of primary and secondary mortgage market activities and the provision of capital to growth-oriented companies. The fund originated some 19,800 mortgage loans and financed more than 125 businesses. By late 2008, as BalAEF prepared to exit its investments, the fund’s leadership turned attention to what the fund might “leave behind” as a legacy to continue to enrich ties between the United States and Baltic citizens. Taking a cue from other Enterprise Funds, BalAEF’s leadership began setting up a legacy foundation, which became the Baltic-American Freedom Foundation or BAFF. The board saw BAFF as a natural outgrowth of the fund’s original mission.
In 2010 BAFF was established and authorized by USAID to fund educational exchange programs collectively known as BAFF Scholarships. With an endowment from BalAEF that would exceed $35 million after returning $25 million to the U.S. Treasury, BAFF has thus far disbursed more than $12 million in Scholarships to over 500 participants.
The Scholarships provided by BAFF are intended to be a gift from the American people to the citizens of the Baltic states, to further build and strengthen the friendship and goodwill existing between Estonia, Latvia, Lithuania, and the United States.