The M S Hershey Foundation

“GOVERNING BODY & MANAGEMENT Several of the board of managers members and officers of the filing organization also serve as directors and officers of business entities that are related to this filing organization.”

“GOVERNING BODY & MANAGEMENT The M.S. Hershey Foundation has several operations in Hershey, Pennsylvania, including the Hershey Gardens, the Hershey Community Archives, the Hershey Theatre, the Hershey Story, and Chocolatetown Square, collectively referred to as "Foundation Operations". These operations exist to preserve and enhance Milton Hershey's legacy and community vision and to provide educational and cultural enrichment to residents and visitors of Hershey, PA. Hershey Entertainment & Resorts Company (HE&R), a related for profit operation, has established a reputation for providing high quality services, and has extensive experience providing live performance entertainment, retail, catering, food and beverage and associates services. HE&R owns and operates numerous entertainment and hospitality venues in Hershey, Pennsylvania. Founded in 1927, by Milton Hershey, HE&R's mission and goals include demonstrating sensitivity about the quality of life for the community and using its reservoir of talent and experience to make a positive difference with the M.S. Hershey Foundation. In order to enhance Foundation operations and further its tax-exempt mission, the M.S. Hershey Foundation entered into a contract with HE&R to provide various services including the following: 1. Wedding, party and event caterings 2. Retail operations support 3. Theatre Operations management 4. IT, communications and security services. Prior to the commencement of services, the M.S. Hershey Foundation, assisted by independent outside counsel, evaluated the proposed services to ensure compliance with intermediate sanctions rules pursuant to IRC Section 4958 and Private Inurement Rules pursuant to Treasury Regulations 53.4958-4. These services are reviewed and approved by the Board of Managers on an annual basis. The M.S. Hershey Foundation has established an independent committee to periodically review the services being performed and the contractual relationship with HE&R to ensure it is in the best interest of the M.S. Hershey Foundation to continue using the services of HE&R and to ensure compliance with the IRC Section and Treasury Regulation noted above.”

“FORM 990 REVIEW PROCESS The Form 990 is prepared under the direction of the Director of Finance of the M.S. Hershey Foundation. The Form 990 is reviewed by the Executive Director of the M.S. Hershey Foundation, outside counsel and its independent tax advisors who sign the return as "paid preparers." The board of managers of the M.S. Hershey Foundation reviews and discusses the Form 990 either via conference call or at one of its scheduled meetings prior to filing the return with the Internal Revenue Service, noting key disclosures.”

“CONFLICT OF INTEREST The Board of Managers, Officers and key employees of the M.S. HERSHEY FOUNDATION have a fiduciary relationship with the M.S. HERSHEY FOUNDATION which requires that they act in good faith with regard to the M.S. HERSHEY FOUNDATION's best interests. It is essential in fulfilling their duties that they apply the highest moral, legal, and ethical standards in their conduct and business relationships. Both, the M.S. Hershey Foundation and the Hershey Trust Company, trustee for the M.S. HERSHEY FOUNDATION, have written conflict of interest polices which are intended to permit the M.S. HERSHEY FOUNDATION and its Managers, Officers and other key employees to identify, evaluate and address any conflict of interest that might call into question this fiduciary duty to the M.S. HERSHEY FOUNDATION. The conflict of interest policy covering the Managers, Officers and key employees is documented in the "Conflict of Interest" section of the Governance Guidelines for the M.S. Hershey Foundation. Additionally, the conflict of interest policy covering Managers, Officers and key employees is documented in "Ethical Standards" and "Conflict of Interest" and "Code of Conduct" sections of the Policy Manual for the Hershey Trust Company. Each Manager, Officer and key employee is required to avoid all activity that could create a conflict of interest or even give an appearance of a conflict of interest. Any conflicts of interest are to be reported as soon as practical after they become aware of such a conflict. Annually each Manager, Officer and key employee is required to complete an Annual Statement of Disclosure. The forms identify vendors, investments, other board memberships, and family members that could give rise to conflicts of interest. The statements are reviewed by the FOUNDATION'S EXECUTIVE DIRECTOR AND THE DIRECTOR OF FINANCE in order for THEM to be aware of activities that could give rise to conflicts of interest. Potential conflicts of interest related to managers, officers and key employees are brought to the attention of the Chairperson OF THE BOARD OF MANAGERS OF THE M.S. HERSHEY FOUNDATION. The Chairperson (or his designee) determines the corrective measure, if any, to be taken to resolve the conflict, or will impose appropriate restrictions, if any on the person with the conflict. For conflicts of interest involving the Chairperson, the matter would be discussed with the chair of the audit committee and the chair of the board of the Hershey Trust Company. The two chair persons, in consultation with the other board members, excluding such conflicted person, have the final approval of any recommended corrective measures or imposed restrictions.”

“COMPENSATION PROCESS The M.S. Hershey Foundation's board of managers (the governing body of the M.S. Hershey Foundation) controls the process in determining whether the total compensation of the Executive Director is fair and reasonable. This process occurs at the initial hire of the executive director and at regular intervals thereafter. The review of the total compensation of the executive director, includes but is not limited to, a review of comparable executive director total compensation as disclosed in the forms 990 of similar-sized exempt organizations. As part of this process, the compensation information is reviewed and approved by the Board of Managers FOR THE executive director. Those board of managers with a conflict in regard to the executive director's compensation review process abstain from the deliberations. The Board of Managers do not receive any compensation from M.S. HERSHEY FOUNDATION. The Board of Managers receive compensation from Hershey Trust Company as directors of the Trust Company in accordance with Article iii, Section 16 of its bylaws. The compensation is periodically reviewed by third party compensation consultants. Any member of the Board of Managers who also serves as a director or officer of The Hershey Company or of Hershey Entertainment & Resorts Co. receives compensation from such related for-profit company, pursuant to such company's procedures. The compensation of the M.S. Hershey Foundation's officers, who are directors or employees of the Hershey Trust Company (Trustee of M.S. HERSHEY FOUNDATION), is determined by periodic review (generally performed at least every 3 years) by third party compensation consultants to determine that it is fair and reasonable as part of the Hershey Trust Company's compensation review process. The compensation of Hershey Trust Company, the statutory officers, the Chief Executive Officer and chief Compliance Officer is fixed by the Board of Directors of Hershey Trust Company in accordance with Article V, Section 5 of its bylaws. The CEO of Hershey Trust Company approves compensation of the other officers and key employees and reports this compensation to the Board of Directors or a designated committee of the Board of Directors as any changes are made.”

“PUBLIC AVAILABILITY OF DOCUMENTS The Foundation makes the Deed of Trust available to the public on its website. The Foundation's Conflict of Interest Policy and its audited financial statements are available to the public upon request.”

“SUMMARY SECTION Volunteers are a vital part of the M.S. Hershey Foundation. Many of our volunteers have introduced a child to history, nature or live theatre. Others have helped beautify Hershey Gardens, ushered a show at the Hershey Theatre or proudly answered questions about our community's rich history at the museum: The Hershey Story.”

“STATEMENT OF PROGRAM SERVICE ACCOMPLISHMENTS Program Service Accomplishment #1 (Line 4a): HERSHEY THEATRE - Completed during Milton Hersheys Great Building Campaign program in the 1930s, the new Community Center Building housed Hershey Theatre, which first opened as a vaudeville and movie house. Today, the Theatre is the area's premier performing arts center. Presenting touring Broadway shows, classical music, dance attractions and world-renowned entertainers, the Theatres rich history and performing arts presentations provide cultural and educational enrichment to patrons of all ages. Developed in 2008, The Hershey Theatre Apollo Awards is a scholarship program which recognizes excellence in local high school theater productions. All Derry Township School District students may participate in field trips to the Hershey Theatre at no charge. Number Benefitted: 103,000 Expenses:$5,887,996 Revenue: $5,459,084 Program Service Accomplishment #2 (Line 4b): The Hershey Story, The Museum on Chocolate Avenue opened in 2009. The Museum Experience is an educational, interactive permanent exhibit space that shares the stories of Milton S. Hershey, his businesses, philanthropies and community. The Apprentice Program is an activity designed to further engage children as they explore the exhibits. In the Chocolate Lab, guests learn about the origins of chocolate and participate in hands-on activities using chocolate. Special exhibits highlight the Native American and Pennsylvania German collections, originally purchased by Milton Hershey. School field trips, homeschool and summer camp programs all meet PA state academic standards. All Derry Township School District students may participate in field trips to the Museum Experience at no charge. Number Benefitted: 124,000 Expenses: $ 3,968,128 Revenue: $ 1,465,750 Program Service Accomplishment #3 (Line 4c): Hershey Gardens was originally developed in 1937 at Milton Hersheys request. It has since expanded and now features 23 acres of seasonal displays and rare trees within 11 theme gardens. The Childrens Garden and Butterfly House offer children hands-on learning as they discover the wonders of nature and plants. The Great Garden Adventure is a program featuring an interactive guide that helps children explore and learn throughout The Childrens Garden. Adult education opportunities include classes on gardening and nature. School field trips, homeschool and summer camp programs all meet PA state academic standards. All Derry Township School District students may participate in field trips to Hershey Gardens at no charge. Number Benefitted: 105,000 Expenses:$1,328,733 Revenue: $700,159 Program Service Accomplishment - Other: Archives & Other Miscellaneous Services - The Hershey Community Archives collects and maintains historical documentation such as photographs, oral histories, and other two dimensional artifacts chronicling the history of the community. Educational programming is offered to the third graders of the Derry township school district and in the form of lectures and demonstrations at various venues. Number Benefitted: 18,000 Expenses:$ 259,369 Revenue: $130,264”

“RECONCILIATION OF NET ASSETS Decrease in unrecognized benefit cost $1,094,361 Decrease in interest rate swap liability 677,321 ---------- TOTAL $1,771,682”