THE LYNDE AND HARRY BRADLEY FOUNDATION, INC.

Fund Accounting and the Implications of FASB Nos. 116 and 117

Statement of Financial Accounting Standards (SFAS) No. 116 Accounting for Contributions Received and Contributions Made and SFAS No. 117 Financial Statements of Not-for-Profit Organizations include new standards of accounting for not-for-profit organizations. This statement is effective for annual financial statements issued for fiscal years beginning after December 15, 1994.

The key provisions of FASB Nos. 116 and 117 that affect the Foundation include:

1.	Financial statements are to include a cash flow statement.

2.	Net assets are to be classified into one of three classes:

(1)	Permanently restricted --

The part of the net assets of a not-for-profit organizations resulting (a) from contributions and other inflows of assets whose use by the organization is limited by donor-imposed stipulations that neither expire by passage of time nor can be fulfilled or otherwise removed by actions of the organization, (b) from other asset enhancements and diminishments subject to the same kinds of stipulations, and (c) from reclassifications from (or to) other classes of net assets as a consequence of donor-imposed stipulations.

(2)	Temporarily restricted --

The part of the net assets of a not-for-profit organization resulting (a) from contributions and other inflows of assets whose use by the organization is limited by donor-imposed stipulations that either expire by passage of time or can be fulfilled and removed by actions of the organization pursuant to those stipulations, (b) from other asset enhancements and diminishments subject to the same kinds of stipulations, and (c) from reclassifications to (or from) other classes of net assets as a consequence of donor-imposed stipulations, their expiration by passage of time, or their fulfillment and removal by action of the organization pursuant to those stipulations.

(3)	Unrestricted --

The part of net assets of a not-for-profit organization that is neither permanently restricted nor temporarily restricted by donor-imposed stipulations.

The Foundation currently has the following two restricted funds:

Fund History &	Balance

Fund	Background	December 31, 1995

Caroline D. Bradley Fund	Exhibit A	$5,314,909.00

Lynde and Caroline Bradley

Fund	Exhibit B	$2,829.00

The history and background of the funds are included in the attached exhibits A and B.

Based on FASB Nos. 116 and 117 criteria the suggested classification of the funds are as follows:

Caroline D. Bradley Fund

The original purpose and requirement for the restricted fund is 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 should be classified as temporarily restricted. Since the Foundation intends to retroactively adopt the provisions of FASB Nos. 116 and 117, the fund will be liquidated since the grants to Wisconsin charities have significantly exceeded the amount of the principal and income of the fund.

Lynde and Caroline Bradley Fund

The original $1,000 principal amount to this fund was from Foundation assets and was directly related to the agreement set forth in Exhibit B. While the amount of the fund is nominal, it is significant in relation to the potential funds to be received from the Sarah Doll Barder Trust. The agreement does permit the Board of Directors to use the principal of the fund in unusual circumstances. Given this latitude the net assets of this fund should be included as temporarily restricted in the December 31, 1995 financial statements. Since the Foundation intends to retroactively adopt the provisions of FASB Nos. 116 and 117, the fund will be liquidated since the grants for gifted children have significantly exceeded the amount of the principal and income of the fund.

At the time the assets are received form the Sarah Doll Barder Trust (+$70 million) a careful analysis will be necessary to establish if such proceeds from the Trust are permanently or temporarily restricted. If deemed to be permanently restricted, the total existing fund balance could be liquidated by grants to authorized individuals as provided in the original agreement. The new funds would be included in a separate permanently restricted fund if deemed necessary and accounted for in accordance with the donor imposed restrictions.

Robert N. Berkopec

May 3, 1996