2016-03-24T08:00:52-05:00 2015-06-30 420714325 RSM US LLP 100 INTERNATIONAL DRIVE SUITE 1400 BALTIMORE MD 21202 990 2014-07-01 237003516 US NAVAL ACADEMY FOUNDATION INC USNA 4102954100 247 KING GEORGE STREET ANNAPOLIS MD 21402 HENRY J SANFORD CFO & TREASURER 4102954100 2016-02-19 1 JULIA FLANNERY CPA P00928918 4102469300 2014 2016-08-17 19:52:53Z BYRON MARCHANT 247 KING GEORGE STREET ANNAPOLIS MD 21402 80220992 0 X WWW.USNA.COM X 1969 MD TO SUPPORT, PROMOTE, AND ADVANCE THE MISSION OF THE NAVAL ACADEMY. 32 31 36 40 -64555 -64555 33252107 34440261 1905434 2402343 10798647 9574108 0 0 45956188 46416712 22794435 18045529 0 0 4365718 4773778 404891 422981 6853098 2951014 3691569 30516058 26933857 15440130 19482855 171175970 180489959 10065651 7983115 161110319 172506844 X SEE SCHEDULE O. 0 0 18301590 18045529 2402343 SUPPORT INCLUDED DIRECT AND INDIRECT SUPPORT FOR USNA ENDOWED POSITIONS AND PROGRAM SUPPORT FOR CYBER SECURITY, ATHLETIC EXCELLENCE, STEM, MINORITY OUTREACH, LEADERSHIP DEVELOPMENT AND INTERNATIONAL PROGRAMS. GRANTS TO USNA ALSO SUPPORTED THE WAR OF 1812 EXHIBIT, ADMISSIONS SUPPORT, THE ACADEMIC CENTER AND THE CENTER OF ETHICAL LEADERSHIP. GRANTS TO THE ALUMNI ASSOCIATION WERE IN SUPPORT OF OPERATIONS. 18301590 1 1 0 0 0 0 0 0 0 1 1 1 0 0 1 1 0 1 0 0 1 0 1 1 0 0 0 1 1 1 0 0 0 0 0 0 0 0 1 0 0 0 0 1 0 0 0 1 23 0 1 36 1 1 1 0 0 0 0 0 0 0 0 0 X 32 31 0 0 0 0 0 0 0 1 1 0 0 1 1 1 1 1 1 1 1 0 MD OH X X X HENRY J SANFORD CFO & TREASURER 4102954100 247 KING GEORGE STREET ANNAPOLIS MD 21402 X ADM CHARLES S ABBOT USN RET DIRECTOR 2.00 X 0 0 0 DANIEL F AKERSON DIRECTOR 2.00 X 0 0 0 RICHARD C ATKINSON DIRECTOR 2.00 X 0 0 0 ROBERT C BELLAS JR DIRECTOR 2.00 X 0 0 0 PHILIP M BILDEN DIRECTOR 2.00 X 0 0 0 THOMAS C BRASCO DIRECTOR 2.00 X 0 0 0 WESLEY BUSH DIRECTOR 2.00 X 0 0 0 GEORGE CAMPBELL JR DIRECTOR 2.00 X 0 0 0 PETER F DE VOS DIRECTOR 2.00 X 0 0 0 ADM THOMAS B FARGO USN RET DIRECTOR 2.00 X 0 0 0 LEROY F FIELD JR DIRECTOR 2.00 X 0 0 0 GENERAL CARLTON W FULFORD JR USMC DIRECTOR 2.00 X 0 0 0 CHARLES S GARBER JR DIRECTOR 2.00 X 0 0 0 LINDA GOODEN DIRECTOR 2.00 X 0 0 0 ERIC P GRUBMAN DIRECTOR 2.00 X 0 0 0 COL WALTER P HAVENSTEIN USMCR RET DIRECTOR 2.00 X 0 0 0 THE HONORABLE JON M HUNTSMAN JR DIRECTOR 2.00 X 0 0 0 ADM JAY L JOHNSON USN RET DIRECTOR 2.00 X 0 0 0 GREER O LAUTRUP DIRECTOR 2.00 X 0 0 0 RADM THOMAS C LYNCH USN RET DIRECTOR 2.00 X 0 0 0 CORBIN A MCNEILL JR DIRECTOR 2.00 X 0 0 0 ADM RICHARD W MIES USN RET DIRECTOR 2.00 X 0 0 0 JERROLD L MILLER DIRECTOR 2.00 X 0 0 0 ADM ROBERT J NATTER USN RET DIRECTOR 2.00 2.00 X 0 0 0 C MICHAEL PETTERS DIRECTOR 2.00 X 0 0 0 PAUL B PRAGER DIRECTOR 2.00 X 0 0 0 STEVEN REINEMUND DIRECTOR 2.00 X 0 0 0 VADM JOHN R RYAN USN RET CHAIRMAN 2.00 X X 0 0 0 KEVIN W SHARER DIRECTOR 2.00 X 0 0 0 ROGER T STAUBACH DIRECTOR 2.00 X 0 0 0 TIMOTHY P SULLIVAN DIRECTOR 2.00 X 0 0 0 J RONALD TERWILLIGER DIRECTOR 2.00 X 0 0 0 DEBORAH L WINCE-SMITH DIRECTOR 2.00 X 0 0 0 BYRON F MARCHANT PRESIDENT/CEO (SEE SCH. J) 36.00 24.00 X X 243773 162515 36377 HENRY J SANFORD TREASURER & CFO (SEE SCH. J) 33.00 27.00 X 134691 110202 11644 WILLIAM O'CONNOR SECRETARY/EVP (SEE SCH. J) 50.00 X 301210 0 32092 GERALDINE S FARMER COMPTROLLER (SEE SCH. J) 33.00 27.00 X 85344 69827 7709 EDWARD WALLACE VP A&S (SEE SCH. J) 50.00 X 153312 0 7893 HARRY YEISER DIR. OF DEV. OPS. 50.00 X 131651 0 6882 JOHN RUDDER SR. DIR. OF DEVELOPMENT (SEE SCH J.) 50.00 X 135906 0 26903 DENA PATTERSON MGO 50.00 X 117487 0 8384 MICHAEL HOFFMAN MGO 50.00 X 104349 0 9933 RANDALL SAWYER MGO 50.00 X 104293 0 25345 1512016 342544 173162 9 0 1 0 ADVANTAGE PLUS CONSULTING PO BOX 746 CALDWELL NJ 07007 FUNDRAISING CONSULTANT 426777 COMMUNITY COUNSELING SERVICE CO LLC PO BOX 824885 PHILADELPHIA PA 19182 CONSULTANT 384000 TIFF ADVISORY SERVICES 170N RADNOR CHESTER RD SUITE 300 RADNOR PA 19087 INVESTMENT ADVISORS 189145 ARAMARK FOOD & SUPPORT SERVICES ONE LINCOLN FINANCIAL FIELD WAY PHILADELPHIA PA 19148 CATERING 124061 SIGNCRAFT ANNAPOLIS LLP 2012 RENARD CT SUITE O ANNAPOLIS MD 21401 GRAPHIC DESIGN 120342 6 34440261 7424941 34440261 FUND ADMIN. FEE 900099 2324142 2324142 MISCELLANEOUS FEES & S 900099 78201 78201 2402343 2787148 -64555 2851703 40591240 33804280 6786960 6786960 6786960 46416712 2402343 -64555 9638663 X 17384716 17384716 565738 565738 95075 95075 982267 35365 192740 754162 3063744 110449 601194 2352101 195412 7043 38345 150024 273472 9858 53663 209951 258883 9330 50800 198753 60385 2176 11849 46360 77534 77534 422981 422981 307452 307452 821051 30008 163384 627659 227498 8199 44641 174658 253814 9147 49805 194862 201156 7250 39472 154434 100834 3634 19786 77414 262456 9459 51501 201496 44790 1614 8789 34387 BAD DEBT 986964 986964 DONOR CULTIVATION 276699 9972 54296 212431 TRAINING 30363 1094 5958 23311 LICENSES & DUES 10807 389 2121 8297 29766 1074 5839 22853 26933857 18301590 1779169 6853098 100 100 10401732 7830457 19609075 27311951 9243 8957 108317 117052 5710384 2831983 3026721 2878401 23699804 23151854 111250388 116218605 3070590 2972582 171175970 180489959 450261 734474 1006274 755088 8609116 6493553 10065651 7983115 X 12442035 14758711 110113718 118709557 38554566 39038576 161110319 172506844 171175970 180489959 X 19482855 -8297423 211093 X X 0 1 X 1 0 X 15463471 17496994 28702477 33252107 34440261 129355310 15463471 17496994 28702477 33252107 34440261 129355310 13894592 115460718 2841049 1045896 1735127 1564840 2787148 9974060 139329370 8091299 0.82870 0.82210 X RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED 92011669 475770 1405475 21118 93871796 84291282 248478 10513714 3041805 92011669 78391286 1380798 7026166 2506968 84291282 80326494 176196 420654 2532058 78391286 69729801 6637 11752074 1162018 80326494 0.65600 0.34400 0 1 1 644316 644316 4229106 2137874 2091232 836962 694109 142853 2878401 INVESTMENTS IN PARTNERSHIPS, HEDGE FUNDS, OTHER 33083296 F TIFF MULTI-ASSET FUND 83135309 F 116218605 SPLIT INTEREST AGREEMENTS 4683428 INTERCOMPANY PAYABLE 1810125 6493553 X 43662340 -8297423 382549 7309797 -605077 44267417 307452 1841843 2149295 46416712 34241227 382549 9074116 9456665 24784562 307452 1841843 2149295 26933857 PART V, LINE 4: THE ENDOWMENT CONSISTS OF OVER 100 INDIVIDUAL FUNDS ESTABLISHED FOR A VARIETY OF PURPOSES. THESE ENDOWMENT FUNDS ARE DONOR-RESTRICTED. THE FOUNDATION DOES NOT HAVE ANY BOARD-DESIGNATED ENDOWMENT FUNDS. AS REQUIRED BY GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, NET ASSETS ASSOCIATED WITH ENDOWMENT FUNDS ARE CLASSIFIED AND REPORTED BASED ON THE EXISTENCE OR ABSENCE OF DONOR-IMPOSED RESTRICTIONS. PART X, LINE 2: THE ASSOCIATIONS HAVE ADOPTED THE ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES, WHICH ADDRESSES THE DETERMINATION OF WHETHER TAX BENEFITS CLAIMED OR EXPECTED TO BE CLAIMED ON A TAX RETURN SHOULD BE RECORDED IN THE FINANCIAL STATEMENTS. UNDER THIS POLICY, THE ASSOCIATIONS MAY RECOGNIZE THE TAX BENEFIT FROM AN UNCERTAIN TAX POSITION ONLY IF IT IS MORE-LIKELY-THAN-NOT THAT THE TAX POSITION WOULD BE SUSTAINED ON EXAMINATION BY TAXING AUTHORITIES, BASED ON THE TECHNICAL MERITS OF THE POSITION. MANAGEMENT HAS EVALUATED THE ASSOCIATIONS' TAX POSITIONS AND HAS CONCLUDED THAT THE ASSOCIATIONS HAVE TAKEN NO UNCERTAIN TAX POSITIONS THAT REQUIRE ADJUSTMENT TO THE CONSOLIDATED FINANCIAL STATEMENTS TO COMPLY WITH PROVISIONS OF THIS GUIDANCE. AS OF JUNE 30, 2015, THERE ARE NO MATERIAL UNRECOGNIZED/DERECOGNIZED TAX BENEFITS OR TAX PENALTIES OR INTEREST. THE ASSOCIATIONS ARE NO LONGER SUBJECT TO U.S. FEDERAL, STATE OR LOCAL TAX EXAMINATIONS BY TAX AUTHORITIES FOR YEARS ENDED BEFORE JUNE 30, 2012. PART XI, LINE 2D - OTHER ADJUSTMENTS: CHANGE IN VALUE OF SPLIT INTEREST AGREEMENTS 211,093. REVENUE OF AFFILIATE INCLUDED ON CONSOLIDATED FINANCIAL STATEMENTS 7,098,704. PART XI, LINE 4B - OTHER ADJUSTMENTS: GRANT TO NAVAL ACADEMY ALUMNI ASSOCIATION 1,841,843. PART XII, LINE 2D - OTHER ADJUSTMENTS: EXPENSES OF AFFILIATE INCLUDED ON CONSOLIDATED FINANCIAL STATEMENTS 9,074,116. PART XII, LINE 4B - OTHER ADJUSTMENTS: GRANT TO NAVAL ACADEMY ALUMNI ASSOCIATION 1,841,843. 1 EUROPE 0 0 PROGRAM SERVICES & GRANTMAKING SCHOLARSHIPS 95075 CENTRAL AMERICA AND THE CARIBBEAN 0 0 INVESTMENTS 11312289 EUROPE INVESTMENTS 32650 0 0 0 0 0 0 11440014 0 11440014 SCHOLARSHIP EUROPE 3 95075 FOREIGN DRAFT 1 0 1 1 1 0 PART I, LINE 2: THE U.S. NAVAL ACADEMY DETERMINES WHO RECEIVES THE SCHOLARSHIP FUNDS. THE U.S. NAVAL ACADEMY FOUNDATION VERIFIES THAT THE SCHOLAR AND THEIR CHOICE OF HIGHER LEARNING ARE APPROPRIATE BASED ON THE U.S. NAVAL ACADEMY'S SCHOLAR SELECTION PROCESS. THE FUNDS ARE THEN TRANSFERRED DIRECTLY TO THE INSTITUTION OF HIGHER LEARNING. X X X X X 1 ADVANTAGE CONSULTING 2500 PASEO VERDE PARKWAY HENDERSON NV 89074 SOLICITATION 0 1901331 422981 1478350 1901331 422981 1478350 MD OH 1 US NAVAL ACADEMY ALUMNI ASSOCIATION INC 247 KING GEORGE STREET ANNAPOLIS MD 21402 520548411 501(C)(3) 2177345 GENERAL SUPPORT US NAVAL ACADEMY 121 BLAKE ROAD ANNAPOLIS MD 21402 311575142 GOVERNMENT ORG 15207371 GENERAL SUPPORT 2 0 SCHOLARSHIP SUPPORT 51 565738 PART I, LINE 2: THE FOUNDATION KEEPS DETAILED RECORDS OF GRANTS TO THE U.S. NAVAL ACADEMY ALUMNI ASSOCIATION AND THE U.S. NAVAL ACADEMY. ALL GRANTS ARE REVIEWED BY MANAGEMENT PRIOR TO PAYMENT. THE GRANT TO THE U.S. NAVAL ACADEMY ALUMNI ASSOCIATION IS BUDGETED FOR AND APPROVED BY THE BOARD OF DIRECTORS. THE UNRESTRICTED PORTION OF THE GRANT TO THE U.S. NAVAL ACADEMY IS BUDGETED FOR AND APPROVED BY THE BOARD OF DIRECTORS. ALL OTHER GRANTS TO THE U.S. NAVAL ACADEMY ARE BASED ON DONOR DIRECTION OF THEIR RESTRICTED GIFTS. THE FOUNDATION HAS ELECTED TO DISCLOSE THE JOINTLY ADMINISTERED PRIVATE PREPERATORY SCHOLARSHIP PROGRAM FOR INCREASED TRANSPARENCY. X X X X X 0 1 0 0 0 0 0 1 0 BYRON F MARCHANT PRESIDENT/CEO (SEE SCH. J) 192000 128000 28800 19200 22973 15315 7800 5200 14026 9351 265599 177066 0 0 HENRY J SANFORD TREASURER & CFO (SEE SCH. J) 93445 76455 14014 11466 27232 22281 4672 3823 1732 1417 141095 115442 0 0 WILLIAM O'CONNOR SECRETARY/EVP (SEE SCH. J) 250000 0 37500 0 13710 0 12500 0 19592 0 333302 0 0 0 GERALDINE S FARMER COMPTROLLER (SEE SCH. J) 67063 54870 5082 4158 13199 10799 3353 2744 887 725 89584 73296 0 0 EDWARD WALLACE VP A&S (SEE SCH. J) 125000 0 18750 0 9562 0 6250 0 1643 0 161205 0 0 0 JOHN RUDDER SR. DIR. OF DEVELOPMENT (SEE SCH J.) 131800 0 10400 0 -6294 0 6590 0 20313 0 162809 0 0 0 PART I, LINE 4B BYRON MARCHANT AND HENRY SANFORD PARTICIPATE IN A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN. BYRON MARCHANT RECEIVED A PAYMENT OF $32,500 AND HENRY SANFORD RECEIVED A PAYMENT OF $22,500 DURING 2014. THESE AMOUNTS ARE INCLUDED ON FORM 990, PART VII, COLUMN D AND E AND ON SCHEDULE J, PART II, COLUMN BIII. PART I, LINE 7 ON AN ANNUAL BASIS, THE COMPENSATION COMMITTEE REVIEWS THE PERFORMANCE OF CERTAIN PERSONS LISTED ON PART VII AND SCHEDULE J, AND IN ITS SOLE DISCRETION, AWARDS BONUSES BASED ON THEIR INTERNAL REVIEW. SOME YEARS BONUSES ARE NOT PAID AS WELL, PER THE SOLE DISCRETION OF THE COMPENSATION COMMITTEE. SUCH BONUSES AWARDED ARE PROPERLY LISTED AS PAID AND AS REPORTABLE COMPENSATION IN PART VII, COLUMN D, AND ON SCHEDULE J, PART II, COLUMN B(II). FORM 990, SCHEDULE J, PART I, LINE 3 THE WRITTEN EMPLOYMENT CONTRACT IS AN INTERNAL CONTRACT ONLY. SCHEDULE J, PART II: TO PROVIDE CLARITY AS TO THE MAKEUP OF AMOUNT REPORTED FOR LISTED PERSONS ON SCHEDULE J, PART II, THE AMOUNTS ON COLUMNS B (I-III) REPORT INCOME TAXABLE TO THE ORGANIZATION'S PERSONS AND AS PROPERLY REPORTED ON FORM W-2 FOR THE YEAR ENDING ON DECEMBER 31ST WHICH OCCURS WITHIN THE ORGANIZATION'S TAX REPORTING PERIOD. THE AMOUNTS REPORTED IN COLUMN C REPORT INFORMATION RELATED TO CONTRIBUTIONS BY THE ORGANIZATION TO THE EMPLOYEE'S RETIREMENT PLANS PER AGREEMENTS IN PLACE, THE AMOUNTS REPORTED IN COLUMN D, REPORT ITEMS OF NONTAXABLE INCOME THAT ARE GENERALLY REPORTED ON OTHER TAX EXEMPT ORGANIZATION RETURNS, INCLUDING HEALTH INSURANCE, DENTAL INSURANCE, ETC. THESE AMOUNTS REPORTED IN COLUMN D ARE GENERALLY NONTAXABLE TO THE RECIPIENT'S PER OTHER CODE SECTIONS IN THE INTERNAL REVENUE CODE. X 170 7196521 FAIR MARKET VALUE X 1 32650 FAIR MARKET VALUE X EQUIPMENT 2 157334 FAIR MARKET VALUE X TICKETS/EVENTS 4 38436 FAIR MARKET VALUE 0 1 0 FORM 990, PART III, LINE 1: TO SUPPORT, PROMOTE AND ADVANCE THE MISSION OF THE NAVAL ACADEMY BY WORKING IN CONJUNCTION WITH ACADEMY LEADERSHIP TO IDENTIFY STRATEGIC INSTITUTIONAL PRIORITIES AND BY RAISING, MANAGING AND DISBURSING PRIVATE GIFT FUNDS THAT PROVIDE A MARGIN OF EXCELLENCE IN SUPPORT OF THE NATION'S PREMIER LEADERSHIP INSTITUTION. THE MISSION STATEMENT OF THE RELATED ENTITY, THE U.S. NAVAL ACADEMY ALUMNI ASSOCIATION: TO SERVE AND SUPPORT THE UNITED STATES, THE NAVAL SERVICE, THE NAVAL ACADEMY AND ITS ALUMNI: BY FURTHERING THE HIGHEST STANDARDS AT THE NAVAL ACADEMY; BY SEEKING OUT, INFORMING, ENCOURAGING, AND ASSISTING OUTSTANDING, QUALIFIED YOUNG MEN AND WOMEN TO PURSUE CAREERS AS OFFICERS IN THE NAVY AND MARINE CORPS THROUGH THE NAVAL ACADEMY; AND BY INITIATING AND SPONSORING ACTIVITIES WHICH WILL PERPETUATE THE HISTORY, TRADITIONS, MEMORIES AND GROWTH OF THE NAVAL ACADEMY AND BIND ALUMNI TOGETHER IN SUPPORT OF THE HIGHEST IDEALS OF COMMAND, CITIZENSHIP AND GOVERNMENT. FORM 990, PART VI, SECTION B, LINE 11 THE FORM 990 WAS REVIEWED BY MANAGEMENT AND MEMBERS OF THE JOINT FINANCE AND AUDIT COMMITTEE OF U.S. NAVAL ACADEMY ALUMNI ASSOCIATION AND U.S. NAVAL ACADEMY FOUNDATION WITH OUR TAX PREPARERS AND SENT TO MEMBERS OF THE BOARD OF DIRECTORS AND TO THE IRS. FORM 990, PART VI, SECTION B, LINE 12C THE CONFLICT OF INTEREST POLICY IS SENT TO EACH BOARD/TRUSTEE MEMBER AT THE BEGINNING OF THE CALENDAR YEAR WITH A SELF ADDRESSED ENVELOPE FOR RESPONDING. THE POLICY DETAILS POTENTIAL CONFLICTS OF INTEREST AND THE NEED TO DISCLOSE SUCH CONFLICTS. THE POLICY ALSO DEFINES THE BOARD/TRUSTEE'S MEMBER FIDUCIARY OBLIGATION TO THE ORGANIZATION. ALL CONFLICTS OF INTEREST STATEMENTS ARE RETURNED TO THE BOARD SECRETARY'S OFFICE AND KEPT ON FILE. THE COMPLETED SIGNED CONFLICTS OF INTEREST STATEMENTS ARE REVIEWED BY THE ORGANIZATION'S AUDIT FIRM DURING THE ANNUAL AUDIT FOR COMPLETENESS AND TO ENSURE THAT ALL BOARD/TRUSTEE MEMBERS ARE INCLUDED. UPON A DETERMINATION THAT A CONFLICT EXISTS, THE BOARD SHALL APPOINT A DISINTERESTED PERSON OR COMMITTEE TO INVESTIGATE ALTERNATIVES TO THE PROPOSED TRANSACTION OR ARRANGEMENT TO WHICH THE CONFLICT RELATES. AFTER EXERCISING THIS DUE DILIGENCE, THE BOARD SHALL DETERMINE WHETHER THE FOUNDATION CAN OBTAIN WITH REASONABLE EFFORTS A MORE ADVANTAGEOUS TRANSACTION FROM A SOURCE THAT WOULD NOT GIVE RISE TO A CONFLICT. IF A MORE ADVANTAGEOUS TRANSACTION WHICH WOULD NOT CREATE A CONFLICT IS NOT REASONABLY POSSIBLE, THE BOARD SHALL DETERMINE BY A MAJORITY VOTE OF THE DISINTERESTED DIRECTORS WHETHER THE TRANSACTION OR ARRANGEMENT IS FAIR, REASONABLE AND IN THE FOUNDATION'S BEST INTERESTS. IN CONFORMITY WITH THE ABOVE DETERMINATION, THE BOARD SHALL MAKE ITS DECISION AS TO WHETHER TO ENTER INTO THE TRANSACTION OR ARRANGEMENT. FORM 990, PART VI, SECTION B, LINE 15 THE PROCESS FOR DETERMINING COMPENSATION OF THE CEO, OTHER OFFICERS AND KEY EMPLOYEES OF THE ORGANIZATION "INCLUDES A REVIEW AND APPROVAL BY INDEPENDENT PERSONS, COMPARABILITY DATA, AND CONTEMPORANEOUS SUBSTANTIATION OF THE DELIBERATION AND DECISION." SPECIFICALLY, THE ORGANIZATION TAKES ALL OF THE STEPS NECESSARY TO ENSURE THAT THE COMPENSATION PACKAGES OF THESE INDIVIDUALS ARE NOT ONLY REASONABLE AND COMPETITIVE, BUT ARE DESIGNED AND DETERMINED IN THE PRECISE MANNER SPECIFIED IN THE INTERNAL REVENUE SERVICE'S "INTERMEDIATE SANCTIONS" REGULATIONS. THE PROCESS FOR DETERMINING THE COMPENSATION PACKAGES OF THESE INDIVIDUALS IS AS FOLLOWS: 1. A JOINT COMPENSATION COMMITTEE IS CONSTITUTED THAT IS COMPOSED ENTIRELY OF CURRENT AND FORMER TRUSTEES AND DIRECTORS MEETING A STRICT "NO CONFLICTS" INDEPENDENCE TEST SET FORTH IN THE IRS REGULATIONS. THE JOINT COMMITTEE IS CHARTERED BY THE BOARDS TO EVALUATE AND APPROVE THE COMPENSATION OF THE SENIOR EXECUTIVES. THE APPROVED COMPENSATION LEVELS ARE INCLUDED IN THE ANNUAL OPERATING BUDGET WHICH IS SUBSEQUENTLY APPROVED BY BOTH BOARDS. 2. THE COMMITTEE ACQUIRES APPROPRIATE, INDEPENDENT MARKET COMPARABILITY DATA FROM ITS PROFESSIONAL COMPENSATION CONSULTANT. 3. THE COMMITTEE REVIEWS THIS COMPARABILITY DATA IN DETAIL, POSING APPROPRIATE QUESTIONS TO ITS PROFESSIONAL COMPENSATION CONSULTANT. 4. THE COMMITTEE REVIEWS THE QUALIFICATIONS, EXPERIENCE AND PERFORMANCE OF EACH OF THE INDIVIDUALS AGAINST THE COMPARABILITY DATA ACQUIRED FROM THE PROFESSIONAL COMPENSATION CONSULTANT. 5. THE COMMITTEE DESIGNS A PROPOSED COMPENSATION PACKAGE FOR EACH OF THE INDIVIDUALS AND SEEKS A WRITTEN OPINION FROM THE PROFESSIONAL COMPENSATION CONSULTANT THAT THE PROPOSED COMPENSATION PACKAGE IS REASONABLE. (THE COMMITTEE MAKES ANY ADJUSTMENTS TO THE PROPOSAL REQUIRED IN ORDER FOR THE PROFESSIONAL COMPENSATION CONSULTANT TO CONCLUDE THAT THE PACKAGE IS REASONABLE.) 6. THE COMMITTEE MEMORIALIZES ALL OF ITS DELIBERATIONS IN DETAILED COMMITTEE MINUTES THAT ARE REVIEWED AND CORRECTED, IF NECESSARY AND APPROVED AT ITS FOLLOWING MEETING. 7. THE COMMITTEE ACQUIRES AN OPINION OF COUNSEL CONCLUDING THAT THE PROCESS FOLLOWED BY THE COMMITTEE MEETS THE REQUIREMENTS OF THE IRS REGULATIONS. 8. THE COMMITTEE REGULARLY REVIEWS ITS PROCESS TO ENSURE THAT IT CONTINUES TO MEET ALL OF THE REQUIREMENTS OF APPLICABLE LAW. FORM 990, PART VI, SECTION C, LINE 19 THE ORGANIZATION MAKES ALL NECESSARY AND REQUIRED GOVERNING DOCUMENTS, CONFLICTS OF INTEREST POLICIES, FINANCIAL STATEMENTS, FORM 990S AND ANNUAL REPORT AVAILABLE ON ITS WEBSITE: WWW.USNA.COM, FOR THE SAME PERIOD OF DISCLOSURE AS SET FORTH IN SECTION 6104(D). FORM 990, PART VII, LINE 1A, COLUMN B SEVERAL OFFICERS OF THE U.S. NAVAL ACADEMY FOUNDATION ARE DUALLY EMPLOYED BY A RELATED ORGANIZATION, THE U.S. NAVAL ACADEMY ALUMNI ASSOCIATION. HOURS DEVOTED TO THE ALUMNI ASSOCIATION ARE LISTED BELOW FOR THE OFFICERS INVOLVED IN BOTH ORGANIZATIONS: OFFICER HOURS PER WEEK DEVOTED TO ALUMNI ASSOCIATION BYRON F. MARCHANT 24 HENRY J. SANFORD 27 GERALDINE S. FARMER 27 FORM 990, PART IX, LINE 5 COMPENSATION OF CURRENT OFFICERS, DIRECTORS, TRUSTEES, AND KEY EMPLOYEES IS REPORTED ON PART IX, LINE 5 BASED ON THE ACCOUNTING METHOD AND TAX YEAR USED BY THE ORGANIZATION RATHER THAN THE DEFINITIONS AND CALENDAR YEAR USED ON PART VII OR SCHEDULE J. THE AMOUNTS ON LINE 5 ON THE 2014 FORM 990 ARE HIGHER THAN REPORTED ON LINE 5 OF THE 2013 FORM 990 BECAUSE THERE WAS A CHANGE IN THE STATUS OF AN EMPLOYEE FROM A HIGHLY COMPENSATED EMPLOYEE IN 2013 TO A KEY EMPLOYEE IN 2014. FORM 990, PART XI, LINE 9: CHANGE IN SPLIT INTEREST AGREEMENTS 211,093. 990, PART XI, QUESTION 2B - AUDITED FINANCIAL STATEMENTS FOR GAAP PURPOSES, THE ORGANIZATION PRESENTS ITS ACTIVITY IN A CONSOLIDATED FORMAT WITH ITS RELATED ENTITY, THE U.S. NAVAL ACADEMY ALUMNI ASSOCIATION. THESE CONSOLIDATED FINANCIAL STATEMENTS ARE AUDITED BY INDEPENDENT AUDITORS. THE GAAP FINANCIAL STATEMENTS INCLUDE SUPPLEMENTARY INFORMATION THAT PRESENTS THE FINANCIAL POSITION AND THE CHANGES IN NET ASSETS OF THE FOUNDATION. FORM 990, PART I, LINE 5 AND FORM 990, PART V, LINE 2A THE U.S. NAVAL ACADEMY ALUMNI ASSOCIATION (A RELATED ORGANIZATION) IS THE PAYMASTER FOR BOTH THE ASSOCIATION AND THE U.S. NAVAL ACADEMY FOUNDATION. DUE TO THE ASSOCIATION'S ROLE AS PAYMASTER FOR BOTH ORGANIZATIONS, THE ASSOCIATION REPORTS BOTH ASSOCIATION AND FOUNDATION EMPLOYEES FOR W-3 PURPOSES. THE ASSOCIATION FILES ALL RELATED EMPLOYMENT TAX FORMS. ALL PAYROLL EXPENSES RELATED TO THE FOUNDATION ARE RECORDED AS A RECEIVABLE TO THE ASSOCIATION AND A PAYABLE FROM THE FOUNDATION. THE 36 FOUNDATION EMPLOYEES ARE REPORTED ON PART I, LINE 5 AND PART V, LINE 2A EVEN THOUGH THE FOUNDATION DOES NOT FILE A FORM W-3. FORM 990, PART VII, SECTION A AND PART VII, SECTION B ALL INFORMATION REPORTED ON THIS 2014 FORM 990 IS REPORTED ON A FISCAL YEAR BEGINNING JULY 1, 2014 AND ENDING JUNE 30, 2015, WITH THE EXCEPTION OF INFORMATION THAT IS REPORTED FOR COMPENSATION ON SCHEDULE J AND PART VII OF THE RETURN. COMPENSATION LISTED ON THESE SCHEDULES IS BASED ON CALENDAR YEAR REPORTED COMPENSATION (PER THE 990 INSTRUCTIONS) FOR THE CALENDAR YEAR JANUARY 1, 2014 AND ENDING DECEMBER 31, 2014. US NAVAL ACADEMY ALUMNI ASSOCIATION INC 247 KING GEORGE STREET ANNAPOLIS MD 21402 520548411 SUPPORT OF U.S. NAVAL ACADEMY & ALUMNI MD 501(C)(3) 9 N/A 0 1922 CLASS OF THE UNITED STATES NAVAL ACADEMY MEMORIAL SCHOLARSHIP FUND PNC BANK NA 620 LIBERTY AVENUE 10TH PITTSBURGH PA 15222 526076146 SUPPORT OF U.S. NAVAL ACADEMY FOUNDATION, INC. MD 501(C)(3) LINE 11D, III-O N/A 0 0 1 1 1 1 0 0 0 1 0 0 1 1 1 1 1 1 1 1 SCHEDULE R, PART II THE 1922 CLASS OF THE UNITED STATES NAVAL ACADEMY MEMORIAL SCHOLARSHIP FUND IS TRUST EXEMPT UNDER 501(C)(3) OF THE INTERNAL REVENUE CODE. IT IS CLASSIFIED AS A PUBLIC CHARITY UNDER SECTION 509(A)(3) AS A NON-FUNCTIONALLY INTEGRATED SUPPORTING ORGANIZATION TO THE U.S. NAVAL ACADEMY FOUNDATION.