CAROLINE D. BRADLEY FUND

The source of the funds in the Caroline D. Bradley Fund was from the Caroline D. Bradley Life Trust (Life Trust). The Life Trust was originally established in 1951 by Mrs. Bradley. The Trust became designated for the benefit of the Foundation upon Mrs. Bradley's death in 1954. In order for the inheritance tax deduction to be available in Mrs. Bradley's estate, a resolution was required by the Wisconsin Department of Taxation to be adopted by the Foundation in 1956 by which the corpus and income received by the Foundation in accordance with the provisions of the Caroline D. Bradley Life Trust were to be used and permanently set aside by the Foundation for use exclusively within the State of Wisconsin. Contributions from the Trust were designated for the then Community Chest until further resolution of the Foundation which was adopted in 1965 designating thirty-five Wisconsin charities to be the recipients of the benefits of this Trust. The Caroline D. Bradley Life Trust was terminated with Court approval in 1976 and the transfer of the funds to this Foundation completed in 1977.

During the period 1977-1985 the Foundation made extensive contributions to Wisconsin charities, both including the designated charities, as well as others. No further resolutions were adopted by the Board of Directors, nor was the direction and designation of such contributions actively monitored by the Board of Directors. Mr. Wayne Roper, Board Member and Foundation Legal Counsel, advised that his law firm had studied the legal authorities and it is their legal opinion that the corpus of the Caroline D. Bradley Life Trust which had been received by the Foundation, together with cumulative amounts of income calculated to have been earned upon these assets and which had not been distributed to the designated Wisconsin charities, should be segregated and held for use and distribution to or for the benefit of Wisconsin charities. As confirmed by the 1985 audit report, the total amount to be so segregated as of July 31, 1985 is $8,898,423. At the September 23, 1985 Foundation Board meeting a resolution was passed which included the following:

1.	Effective August 1, 1985, $8,898,423 is to be segregated as a separate fund to be called the Caroline D. Bradley Fund.

2.	Average income from investment of the total assets of the Foundation shall be allocated in proportion to the portion of such funds attributable to the Caroline D. Bradley Fund for each year and shall be set aside for use and distribution for Wisconsin charities as herein provided.

3.	The resolutions adopted by the Foundation Board of Directors in 1965 were amended in their entirety so that effective with contributions paid on and after August 1, 1985, all Wisconsin charities are hereby designated as eligible recipients of income and corpus of the Caroline D. Bradley Fund.

At the May 15, 1989 Board meeting a resolution was passed that $3,515,160 of major grants to Wisconsin charities be allocated to the principal amount of the segregated fund. After such allocation the fund balance was $5,383,263.

During the period 1985 through 1995, income (loss) of the Foundation was allocated to the fund as required. In 1994 the Foundation incurred a net investment loss resulting in a $131,548 reduction in the fund balance to $5,251,715. This amount was subsequently adjusted in 1995 to $5,314,909 (Exhibit A). A summary of Board actions between 1985 and 1994 are included in Exhibit B.

Grants to Wisconsin organizations were allocated each year to the fund to the extent of the investment income. The grants of the Foundation to Wisconsin charities consistently exceeded the allocated investment income. For example, for the period 1992 through 1995 grants paid to Wisconsin charities exceeded the allocated net investment to the fund by $25,403,053.

In 1995 the Foundation was required to adopt the provisions of SFAS No. 116 and No. 117 for the year ended December 31, 1995 in order to conform with generally accepted accounting principles. In this connection, advice (Exhibit C) was sought from Wayne Roper, von Briesen, Purtell & Roper, regarding the classification of the Caroline D. Bradley Fund resulting from the provisions of SFAS No. 116 and No. 117. It was their opinion that the Caroline D. Bradley Fund should be classified as temporarily restricted and such fund could be amortized through contributions to charities within the State of Wisconsin. The original purpose and requirement for the restricted fund was determined to be no longer relevant. In addition, the Board of Directors has the authority to use the principal of the fund for Wisconsin grantees. Accordingly, the net assets of this fund were classified as temporarily restricted. Since the Foundation retroactively adopted the provisions of the FASB No. 116 and 117, the fund was liquidated since the grants to Wisconsin charities significantly exceeded the amount of the principal and income of the fund.