Return to Freedom Inc.

“The organization's endowment was established for the purpose of attracting additional major donations and for the long-term needs of the organization. The endowment includes one donor-restricted endowment fund and one fund designated by the board of directors to function as endowments. As required by accounting principles generally accepted in the united states of america, net assets associated with endowment funds, including funds designated by the board of directors to function as endowments, are classified and reported based on the existence or absence of donor-imposed restrictions. The board of directors of the organization has interpreted the state prudent management of institutional funds act (spmifa) as requiring the preservation of fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the organization classifies as permanently restricted net assets (a) the original value of the gifts donated (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. In accordance with spmifa, the organization considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: (1) the duration and preservation of the fund (2) the purposes of the organization and the donor-restricted endowment fund (3) general economic conditions (4) the possible effect of inflation and deflation (5) the expected total return from income and the appreciation of investments (6) other resources of the organization (7) the investment policies of the organization return objectives and risk parameters the organization has adopted investment and spending policies for endowment assets that attempt to provide a predictable stream of funding to programs supported by the endowment while seeking to maintain the purchasing power of the endowment assets. Endowment assets include those assets of donor-restricted funds that the organization must hold in perpetuity as well as board-designated funds. Under this policy, as approved by the board of directors, the endowment assets are invested in a manner that is intended to produce results that exceed the price and yield results of the s&p 500 index. The organization expects its endowment funds, over time, to provide an average rate of return of approximately 5 percent annually. Actual returns in any given year may vary from this amount. Strategies employed for achieving objectives to satisfy its long-term rate-of-return objectives, the organization relies on a growth and income model in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The organization targets a diversified asset allocation that places a greater emphasis on equity and fixed income investments to achieve its long-term return objectives within prudent risk constraints. Spending policy and how the investment objectives relate to spending policy the organization has a policy to appropriate for distributions amounts recommended by the investment committee such that real return from the fund remains positive. This is consistent with the organization's objective to maintain the purchasing power of the endowment assets held in perpetuity as well as to provide additional real growth through new gifts and investment returns.”

“The organization has adopted the accounting for uncertainty in income tax positions contained within accounting principles generally accepted in the united states of america ("gaap"). This guidance requires the evaluation of tax positions taken or expected to be taken in the course of preparing the organization's financial statements to determine whether the tax positions are more likely than not of being sustained by the applicable tax authority. Tax positions not deemed to meet the more likely than not threshold would be recorded as a tax benefit or expense in the current year. Management evaluated the organization's tax positions and concluded that the organization had taken no uncertain tax positions that require adjustment to or disclosure in the financial statements to comply with the provisions of this guidance. However, the conclusions regarding accounting for uncertainty in income taxes will be subject to review and may be adjusted at a later date based on factors including, but not limited to, ongoing analysis of tax laws, regulations, and interpretations thereof. The organization files income tax returns in the u.s. Federal jurisdiction and in the state of california. The organization is no longer subject to u.s. Federal tax authorities for the years before 2015 and by state of california tax authorities for years before 2014.”