sweep; Return df.0rganization Exempt From Income Tax Under section 501(c). 527. or 4947(a)(1) ofthe Internal Revenue Code (except black lung benelit trust or private foundation) OMB No 1545-0047 2004 Departmentlsaf the Treasury to flit)!? (mama. Revenue gems The organization may have to use a copy of this return to satisfy state reporting requrrements Mammy A For the 2004 calendar year, or tax year beginning SEP 1 2 4 and ending AUG 3 1 2 0 5 Sgg?g?ia 32%: I: Name of organization 0 Employer identification number 25343? Effig?iiERCATus CENTER, INC . 54?1436224 5:23:13 Number and street (or 0 box if marl is not delivered to street address) Room/surte Telephone number 121% Speci?c3401 NORTH FAIRFAX DRIVE 450 (703)993?4930 2a?? [253:0 City or town, state or country, and ZIP 4 Pccounbng method I: Cash Accrual made? ARLINGTON VA 2 2 2 1 Egg?g?glon 0 Section 501(c)(3) organizations and 4947(a)(1) nonexempt charitable trusts and I are not appfmabje to semen 527 Organization type (checxoniyone) 501(c)( 3 must attach a completed Schedule A (Form 990 or QQD-EZ). . . ORG )4 (Insert no) 4947(a)(1) or Cl 527 It Check here if the organization's gross receipts are normally not more than 325.000 The organization need not file a return With the IRS, but if the organization received a Form 990 Package in the mail, It should file a return wrthout financral data Some states require a complete return Gross receipts Add lines 6b. 8b. 9b. and 10b to line 12 (Farm? Revenue, Expenses, and Changes in Net Assets or Fund Balances 6,417,898. H(a) Is this a group return for affiliates? H(b) If "Yes." enter number of affiliates H(c) Are all affiliates included? (If attach a list H(d) Is this a separate return filed by an or- ganization covered by a group ruling9 I Group Exemption Number Check It the organization Is not requrred to attach (Form 990, 990-EZ. or 990-PF) Yes No 11mm EYes No 1 Contributions. gifts. grants, and amounts received a a Direct public support Indirect public support 1b 1: Government contributions (grants) 4,488,486. noncash$ 357,078.) 1d 4,845,564. 2 Program sewice revenue including government fees and contracts (from Part VII, line 93Membership dues and assessments 3 a 4 Interest on sayings and temporary cash investments Dryidends and interest from securities Gross rents 53 Less rentai expenses 6b 27)) Net rental Income 0r (loss) (subtract line 6b from line 63) 6c 0 7 Otherinvestment income (describe 7 8 a Gross amount from sales of assets other (A) Securities (3) Other than inventory Less cost or other basrs and sales expenses (loss) (attach schedule) <16 546 .>3c Net gain or (loss) (combine line 8c, columns (A) and STMT Special events and activities (attach schedule) If any amount is from gaming. check here I: a Gross revenue (not including of contributions reported on line 1a) 93 Less direct expenses other than fundraising expenses 9b 1: Net income or (loss) from specral events (subtract line 9b from line 9a) 9c 10 a Gross sales of inventory, less returns and allowances 10a in Less cost of goods sold 10b 1: Gross profit or (loss) from sales of inventoly (attach 109 11 Other revenue (from 103) 11 8 42 - 12 Total revenue (add lines was, 4. 5.51Program servrces (from line 44, column Management and general (from line 44, column Fundraisrng (from line 44, column Payments to affiliates (attach schedule) 16 17 Total expenses (add lines 16 and 44 column 17 5 372 349 . 18 Excess or (deficrt) for the year (subtract line 17 from line 12Net assets orfund balances at beginning of year (from line 73, column Other changes In net assets or fund balances (attach explanation) SEE STATEMENT Net assets orfund balances at end of year (combine lines 18319193-105 LHA For Privacy Act and Paperwork Reduction Act Notice. see the separate instructions Form 990 (2004) 08391230 786783 MCI 2004 . 07000 MERCATUS CENTER, INC . MC MERCATUS CENTER, INC. 54?1436224 ?l 1 353383 (Expenses ?mom (messes ?Teaser 22 Grants and allocatrons (attach schedule) (cash 5261;026-nonca5h3 22 5 23 aSSIstance to IndIVIduals (attach schedule) 23 24 Benefits paid to or for members (attach schedule) 24 25 Compensatlon of officers. dIrectorsOthersalarlesandwages 26 2,082,048. 1,869,557. 53,244. 159,247. 27 Pensron plan contributions 27 23 Otheremployeebeneflts 28 113,696. 98,464. 6,195. 9,037. 29 Payrolltaxes 29 155,616. 134,768. 8,480. 12,368. 30 Professmnal fees 30 31 31 21,612. 0. 21,612. 0. 32 Legalfees 32 14,453. 5,400. 927. 8,126. 33 Supplies 33 221,475. 199,928. 10,247. 11,300. 34 Telephone 34 31,397. 25,848. 3,447. 2,102. 35 35 247,416. 40,284. 614. 206,518. 36 Occupancy 36 37 Equrpment rental and marntenance 37 38 PrIntIngandpublIcatIons 38 335,774. 92,012. 37. 243,725. 39 Travel 39 166,085. 159,292. 661. 6,132. 40 Conferences. conventlons, and meetings Interest 41 42 Deprecratlon, depietron. etc (attach scheduleOther expenses not covered above (ItemIze) 3 43a [1 43!) 43c 43d 3 SEE STATEMENT 3 432 907,961. 709,197. 12,642. 186,122Joint Costs. Check If you are followrng SOP 98-2 Are any Iornt costs from a comhlned educatlonal campalgn and solIcltatIon reported In (B) Program servrces" If 'Yes," enter (I) the aggregate amount of these Jelnt costs (Hi) the amount allocated to Management and general What Is the organIzatIon?s prlmary exempt purpose9 5 SEE STATEMENT 4 >Ites No the am0unt allocated to Program servrces$ . and (iv) the amount allocated to [Part 1 Statement of Program Service Accomplishments All organrzatrons must theIr exempt purpose achrevements In a clear and conclse manner State the number of clients served. publIcatIons Issued. etc DIscuss achrevements that are not measurable (Sectron 501(c)(3) and (4) organrzations and 4947(a)(1) nonexempt chantable trusts must also enter the amount ofgrants and allocations to others Pro ram Service (Requrred for 501(c)(3) and (4) orgs. and 4947(a)(1) trusts. but optIonal for others THE PUBLIC AFFAIRS PROGRAM SEEKS TO INFORM a PUBLIC AFFAIRS: ALUMNI, FACULTY, SUPPORTERS, AND THE GENERAL PUBLIC ABOUT THE EFFORTS OF IMPORTANT ISSUES OF SCHOLARSHIP AND POLICY AND THE EFFORTS OF THE CENTER. _(Grantsandallocatrons$ I 775,698. CAPITOL HILL CAMPUS: BRINGS EDUCATION IN ECONOMIC IDEAS TO KEY IN THE PUBLIC POLICY PROCESS. A MAJOR COMPONENT OF THE PROGRAM IS THE CHIEF OF STAFF RETREAT. (Grants and allocatrons 1 0 99 888 . RESEARCH AND APPLICATION: THE RESEARCH EFFORTS ARE DIRECTED TOWARD GENERATING KNOWLEDGE AND UNDERSTANDING ABOUT THE INSTITUTIONS THAT AFFECT THE FREEDOM TO PROSPER. (Grantsandallocatlons$ 826,492. REGULATORY STUDIES PROGRAM: GENERATES ACADEMIC AND PRACTICAL INFORMATION ABOUT REGULATIONS IN ORDER TO ENHANCE THE QUALITY OF DISCUSSION AND DEBATE REGARDING REGULATORY POLICY. (Grantsand allocatlons$ 621,944. schedule) STATEMENT 6 (Grants arid 3'10C3tlon55 1907943?) 975r704- Totalol ProgramService Expenses (should equal IIne Program servrces) 4,299,726. 3891115 2 Form 990 (2004) 08391230 786783 MCI 2004.07000 MERCATUS CENTER, INC. MCI Form 990 (2004) MERCATUS INC . 54?1436224 Pege3 Part. I Balat'rice Sheets Note: Where required, attached schedules and amounts the column (A) (B) should be for end-of-year amounts only Beginning of year End of year 45 Cash - non-interest-bearing Sayings and temporary cash investments Accounts receivable 473 5 5 6 . Less allowance for doubh?ul accounts 47b Pledges receivable 48:: 6 Less allowance for doubtful accounts 486 43;; 49 Grantsreceivable 876,922. 49 1,992,025. 50 Receivables trorn of?cers, directors trustees, and key employees 50 51 a Othet notes and loans receivable 51a 2 Less allowance for doubttul accounts 51b 51 52 Inventories for sale or use 52 53 Prepaid expenses and deferred charges Investments -securtties STMT 7 :1 Cost HUN Investments - land, burldings, and eourpment basrs 55a 6 Less accumulated deprecration 556 55c 56 Investments - other 56 57 a Land, burldings, and equrpment basrs 57a 32 4 2 . Less accumulated deprecration 576 Other assets (describe 53 59 Total assets (add lines 45 through ssirmust equal ?Accounts payable and accrued expenses Grantspayable 870,301. 61 737,621. 62 Deferred revenue 62 63 Loans from officers, directors, trustees. and key employees 63 64 a Tax-exempt bond liabilities 64a Mortgages and other notes payable 64b 65 Other liabilitres (describe GIFT ANNUITY Total llabilitresladd lines 60 through 65Organizations that lollow SFAS 117, check here and complete lines 67 through 69 and lines 73 and 74 3 or Unrestricted 1,238,662. 57 617,586. 5 68 Temporarily restricted Permanently restricted 69 Organizations that do not lollow SFAS 117, check here 5 El and complete lines 70 through 74 3 76 Capital stock, trust princrpal, or current funds 76 71 Paid-in or capital surplus, or land, burlding, and equrpment tund 71 72 Retained earnings, endowment, accumulated income, or other funds 72 73 Total net assets or lund balances (add lines 67 through 69 or lines 70 through 72, column (A) must equal line 19, column must equal line 21Total liabilities and net assets/fund balances (add lines Forrn 990 is available for public inspection and, for some peopie, serves as the primary pr sole source of information about a particular organization How the public perceives an organization in such cases may be determined by the information presented on its return Therefore, ptease make sure the return is complete and accurate and fully descnbes, to Part the organization's programs and accomplishments 42302". 01-13-05 3 08391230 786783 MCI 2004.07000 MERCATUS CENTER, INC. MCI 1 Form 990 (?004) I MERCATUS INC . fParth-A] Reconciliation of Revenue per Audited Inancial Statements with Revenue per 54?1436224 Page 4 art W-B Reconciliation of Expenses per Audited Lu Financial Statements with Expenses per Return Return . . l??ileedxii?iifa??254233;?? Amounts Included on Itne a but not on Amounts Included on Itne a but not on 12- Form 990 (1) Donated servrces (1) Net unrealized gains and use Investments 5 3 I 7 4 - (2) Prioryear adlustments (2) Donated serVIces - reperted on Itne 20, and use of faculties Form 990 (3) Recoveries otprtor (3) Losses reported on year grants 5 Itne 20. Form 990 (4) Other (specrly) (4) Other (specrty) 5 Add amounts on ttnes (1) through (4) 2 5 2 858 . Add amounts on lines (1) through (Ltneamtnusltneb t: 4:891:517- 0 Ltneamtnusltneb t: 5,372,349. Amounts Included on Itne 12, Form 0 Amounts Included on Itne 17, Form 990 but not on Itne a' 990 but not on Itne a (1) Investment expenses (1) Investment expenses not included on not Included on Itne Eb, Form 990 Itne Eb, Form 990 (2) Other (spectty) (2) Other (spectfy) 3 Add amounts on ltnes (1) and (2) 0 - Add amounts on lines (1) and (2) . Total revenue per Itne 12. Form 990 at Total expenses per Itne 17, Form 990 (Itnecplusltned) 3 4,891,517. (ltnecplusltned) 3 5,372,349. Part V) List of Officers, Directors, Trustees, and Key Employees (Ltst each one even If not compensated) (B) Tttle and< ajveratgt:j lttours (0) Compensation (ngeg?guggonl-shtm (E) Expense1 not and. enter accoun an a pOSItlon PD- other allowances 234,551. 17,180. 0. 75 Old any of?cer, director, trustee. or key employee tecetve aggregate cempensatton of more than $100,000 from your organizatton and all related organizations. of which more than $10,000 was provtded by the related organtzattons9 If "Yes." attach schedule Yes No 423031 01-13-05 Form 990 (2004) 4 2004.07000 MERCATUS CENTER, INC. MCI 1 08391230 786783 MCI Form 990(2004) MERCATUS INC . 54?1436224 Page5 I Part VI FOth?er Information Yes No 76 Did the organization engage in any aCtIVlty not previously reported to the If ?Yes,' attach a detailed description of each actiwty 75 77 Were any changes made In the organizing or governing documents but not reported to the 77 If 'Yes.? attach a conformed copy of the changes 78 a Did the organization have unrelated busmess gross income of $1 ,000 or more during the year covered by this return? 78a If "Yes," has it filed a tax return on Form 990-T for this year9 731) 79 Was there a liqmdation, dissolution, termination, or substantial contraction during the year? 79 lf "Yes,' attach a statement 80 a Is the organization related (otherthan by assomation With a stateWIde or nationWIde organization) through common membership, governing bodies, trustees, of?cers, etc to any other exempt or nonexempt organization? 80a If 'Yes,? enter the name of the organization and check whetherit is exempt or CI nonexempt 81 3 Enter direct or indirect political expenditures See line 81 Instructions I 81a I 0 . Did the organization file Form 1120-POL for this year? an: 82 a Did the organization receive donated sewices er the use of materials, eqUIpment, or faculties at no charge or at substantially less than fair rental value? 323 ti f"Yes," you may indicate the value of these items here Do not include this amount as revenue in Part I or as an expense in Part ll (See instructions in Part Did the organization comply With the public inspection requvements for returns and exemption applications9 83a Did the organization comply the disclosure requrrements relating to pro quo contributions? 83b 84 it Did the organization solicit any contributions or gifts that were not tax deductible? A 343 If 'Yes,? did the organizatIOn include With every solicdation an express statement that such contributions or gifts were not tax deductible? 84b 85 501(c)(4), (5), or (6) organizations 3 Were substantially all dues nondeductible by members? A 85a 11 Did the organization make only in-house lobbying expenditures of $2.000 or less? 85b If "Yes" was answered to either 853 or 85b. do not complete 85c through 85h below unless the organization received a waiver for proxy tax owed for the prior year Dues, assessments. and Similar amounts from members 85c Section 162(e) lobbying and political expenditures 85d Aggregate nondeductible amount of section 6033(e)(1)(A) dues notices 85o 1 Taxable amount of lobbying and political expenditures (line 85d less 85a) 851 Does the organization elect to pay the section 6033(e) tax on the amount on line 85f? 85 It section 6033(e)(1)(A) dues notices were sent. does the organization agree to add the amount on line 85f to its reasonable estimate of dues allocable to nondeductible lobbying and political expenditures for the tollowrng tax year? ash BB 501(c)(7) organizations Enter a Initiation fees and capital contributions included on line 12 86a Gross receipts, included on line 12, for public use of club facnities 86b 87 501(c)(12) organizations Enter a Gross income from members or shareholders 873 Gross income from other sources (00 not net amounts due or paid to other sources against amounts due or received from them 87b 88 At any time during the year. did the organization own a 50% or greater interest in a taxable corporation or partnership. or an entity disregarded as separate from the organization under Regulations sections 301 7701-2 and 301 7701-39 it 'Yes,? complete Part ix 38 89 a 501(c)(3) organizations Enter Amount of tax imposed on the organization during the year under section 4911 0 - ,sectton 4912 0 - ,section 4955 0 - 501(c)(3) and 501(c)(4) organizations Did the organization engage in any section 4958 excess benefit transaction during the year or did it become aware of an excess benefit transaction from a prior year? If "Yes." attach a statement explaining each transaction 89b Enter Amount of tax imposed on the organization managers or disqualified persons during the year under sections 4912, 4955, and 4958 . it Enter Amount of tax on line 89c, above, reimbursed by the organization 0 . 90 a List the states With which a copy ofthis return is filed IN ALL STATES BUT NC WV, WI AL PA Number of employees employed in the pay period that includes March 12. 2004 I?b I 34 91 The books are in care of MERCATUS CENTER INC - Telephone Located at 3301 NORTH FAIRFAX DRIVE. #450 ARLINGTON, VA 2ip+4 22201 92 Section 494 1) nonexempt charitable trusts filing Form 990 in lieu of Form 1041- Check here and enter the amount of tax-exemptinterest received oraccrued dunno the taxyear I 92 I 3993.35 Form 990 (2004) 5 08391230 786783 MCI 2004.07000 MERCATUS CENTER, INC. MCI 1 Form 990 (2004) INC . 54?1436224 Pages Part Analysis of Income-Producing Activities (See page 33 otthe Instructions) Note amounts unless otherwme Unrelated busrness income Excluded by section 512, 513. cr514 (E) indicated Busyess (B) (D) Related or exempt 93 Program Servtce revenue code Amount :53; Amount function income 3 PUBLICATIONS 110 . Medicare/Medicaid payments 9 Fees and contracts from government agenCIes 94 Membership dues and assessments 95 interest on sayings and temporary cash investments Dryidends and interest from securities Net rental Income or (loss) trorn real estate a debt-financed property not debt-financed property 98 Net rental Income or (loss) from personal property 99 Other investment income 100 Gain or (loss) from sales of assets other than inventory 101 Net income or (loss) from specral events 102 Gross profit or (loss) from sales of inventory 103 Other revenue a MISCELLANEOUS 8,421, t: tt 104 Subtotal (add columns and . 105 Total (add line 104, columns and 45 9 5 3 . Note. Line 105 plus line 1d, Part I, should equal the amount on line 12, Part! part Relationship of Activities to the Accomplishment of Exempt Purposes (See page 34 of the Instructions) Line No. Explain how each for which income is reported in column (E) of Part VII contributed importantly to the accomplishment of the organization's exempt purposes (other than by provrding funds for such purposes) SEE STATEMENT 9 {Par-g 1x Information Regarding Taxable Subsidiaries and Disregarded Entities (See page 34 ofthe Instructions) (A) (B) (C) (D) (E) Name, address, and EIN of corporation, Percentage of Nature of Total income End-of-year partnership, or disregarded entity ownership Interest assets A {Part I Information Regarding Transfers Associated with Personal Benefit Contracts (See page 34 of the Instructions Did the organization, during the year, receive any funds, directly or Indirectly. to pay premiums on a personal benefit contract? Yes No (11) Did the organization, during the year, pay premiums, directly or indirectly, on a personal benefit contract? Yes No Note. If "Yes" to file Form 8870 and Form 4720 (see instructions) ccompanying schedules and statements. and to the best of my knowledge and belief, It Is true, Information of which preparerg any knowledge I . f? (1240 UPC Mil I?mxi L-Qi/f/ Type or print dame and title Date Clineck it Preparer sen or SE 08391230 786783 MCI SCHEDULE A (Form 990 or 999-EZ) Or?ganiZation Exempt Under Section 501(c)(3) (Except Prlvate Foundation) and Sectlon 501(9), 501?), 501(k), 501(n), or Section 4947(alt1) Nonexempt Charitable Trust Department of the Treasury Internal Revenue Serwce Supplementary Information-(See separate instructions.) MUST be completed by the above organizations and attached to their Form 990 or QQD-EZ OMB No 1545-0047 2004 Name of the organization MERCATUS CENTER, INC. Employer Identification number 54 1436224 [Part1 Compensation of the Five Highest Paid Employees Other Than Officers, Directors, and Trustees (See page 1 of the Instructions List each one Ifthere are none, enter "None GOV. ACC 3301 FAIRFAX DR ARLINGTON, VA 2220140 145,019. 3,330. 0. DIR. 3301 FAIRFAX DR ARLINGTON, VA 2220140 115,000. 3,655. O. EC. EDUC 3301 FAIRFAX DR ARLINGTON, VA 2220140 111,657. 3,420. 0. ELLIG . RES . FEL . 3301 FAIRFAX DR ARLINGTON, VA 2220140 124,000. 3,925. 0. DIST. SCHOLAR 3301 FAIRFAX DR ARLINGTON, VA 2220140 132,257. 3,260. 0. Total number of other employees paid over $50,000 9 Part ii Compensation of the Five Highest Paid Independent Contractors for Professional Services (See page 2 of the Instructions List each one (whether Indiwduals or firms) If there are none. enter "None Name and address of each Independent contractor paid more than $50,000 (0) Type of servnce Compensation STEPHEN CLOUSE ASSOCIATES VIDEO PRODUCTION 43538 GOLDEN MEADOW CIRCLE, ASHBURN, VA 20147 SERVICES 181,436. 600 13TH ST. NW SUITE 790, WASHINGTON, D.C. 20005CONSULTING 75,000. ONE DAG HAMMERSKJOLD PLAZA, 885 2ND AVENUE AT CONSULTING 70,000. 48TH ST. 26TH FLOOR, NEW YORK, NY 10017 Total number of others recetvmg over $50,000 tor protessronal servuces 423101.11-24-04 7 LHA For Paperwork Reduction Act Notice. see the for Form 990 and Form QQU-EZ 2004 . 07000 MERCATUS CENTER, INC . Schedule A (Form 990 or goo-52) 2004 Schedule A (Form 990 or 990-EZ) 2004 MERCATUS CENTER INC . Page 2 Part "1 Statements About Activities (See page 2 of the Instructions Yes No 1 Durlng the year, has the organIzatIon attempted to Influence natlonal, state. or local legIslatIon. IncludIng any attempt to Influence publlc oplnlon on a leglslatlve matter or referendum? If "Yes." enter the total expenses mm or Incurred In connectlon the aCthItteS (Must equal amounts on ?he 38. Part or Me i of Part 1 Organlzatlons that made an electron under sectlon 501(h) by fIlIng Form 5768 must complete Part VI-A Other organlzatlons "Yes.' must complete Part AND attach a statement gIVIng a detalled of the actIVItIes 2 DurIng the year. has the organlzatlon. eIther dIrectly or IndIrectly. engaged In any of the followrng acts any substantlal trustees. dIrectors. offIcers. creators. key employees. or members of then famIlIes. or any taxable organlzatlon w1th any such person Is as an of?cer. dlrector. trustee. malorIty owner. or prInCIpaI benefICIa ry9 (If the answer to any questron Is "Yes, attach a detalled statement explainan the transactions a Sale. exchange. orleasmg ofproperty7 2; l) LendIng of money or other extenSIon of credIt7 211 FurnIshIng ofgoods, serVIces. 25 SEE PART V, FORM 990 2d Transfer of any part of Its Income 0r assets? 29 3 a Do you make grants for fellowshIps. student loans. etc 9 (lf "Yes," attach an explanatlon of ho you determlne that reCIplents quallfy to recelve payments STATEMENT 0 33 Do you have a sectIorI 403(b) annUIty plan for your employees9 an 4 3 Old you malntaln any separate acc0unt for partICIpattng donors where donors have the right to provrde adVIce on the use ordIstrIbutIon of funds? 43 Do you prowoe credrt counsellng. debt management. credlt repalr. or debt negotIatIon servrces? 4b Part Reason for Non-Private Foundation Status (See pages 3 through 6 of the Instructlons The organIzatIon Is not a prIvate foundatlon because It Is (Please check only ONE box) 5 Ci A church. conventlon of churches, or assomatlon of churches Sectlon 5 Ci A school Sectlon 170(b)(1)(A)(ll) (Also complete Part V) 7 :i A hospltal or a cooperatfve hospltal serVIce organIzatIon Sectlon [j A Federal. state. or local government orgovernmental unlt Sectlon 9 A medlcal research organlzatlon operated In conjunctlon WIth a hospltal Enter the hospltal's name, My, and state 10 i: An organizatlon operated for the bene?t of a college or unIverSIty owned or operated by a governmental unIt Sectlon 170(b)(1)(A)(Iv) (Also complete the Support Schedule In Part 11a An organIzatIon that normally receres a substantIal part of Its support from a governmental pm! or from the general publIc Sectlon (Also complete the Support Schedule In Part IV-A) 11b i:i A communlty trust Sectlon170(b)(1)(A)(VI) (Also complete the Support Schedule In Part 12 Ci An organlzatlon that normally receres (1) more than 331/3% of Its support from contrIbutIons. fees. and gross recelpts from actIVItIes related to Its chantable. etc .functlons subject to certaln exceptlons. and (2) no more than 331f3% of Its support from gross Investment Income and unrelated busmess taxable Income (less sectlon 511 tax) from busmesses achIred by the organIzatIon after June 30. 1975 See sectIon 509(a)(2) (Also complete the Support Schedule In Part IV-A) 13 An organlzatlon that Is not controlled by any persons (otherthan foundallon managers) and supports organlzatlons In (1) lInes 5 through 12 above. or (2) sectlon 501(c)(4). (S). If they meet the test of sectlon 509(a)(2) (See sectlon 509(a)(3)) Prowde the followmg InformatIon about the supported organIzatIons (See page 5 of the Instructlons Name(s) of supported organIzatIon(s) {Toeniiggiotzg 14 An orgamzatlon organIzed and operated to test for publlc safety Sectlon 509(a)(4) (See page 5 of the Instructlons) 11:53:04 Schedule A(Form 990 8 08391230 786783 MCI 2004.07000 MERCATUS CENTER, INC. Schedule A (Form 990 or 990-EZ) 2004 MERCATUS ENTERJ Support Schedule (Complete only if you checked a box on line 10. 1 1. or 12) Use cash method of accounting. Note: You may use the worksheet In the Instructions for converting from the accrual to the cash method of accounting. (Part INC. 54?1436224 Page 3 Calendar year (or fiscal year beginning in) 2003 (it) 2002 2001 2000 Total 15 Gifts, grants. and contributions received (00 not Include unusual grants See line 28) 3,678,594. 4,489,323. 2,656,093. 4,769,635. 15,593,645. 16 Membership fees received Gross receipts from merchandise sold or serwces performed, or furnisning of facmties in any activity that is related to the organization's charitable, etc . purpose 89,491. 178,029. 43,698. 128,188. 439,406. 18 Gross income from interest, div1dends. amounts received from payments on securities loans (sec- tion rents, royalties, and unrelated busmess taxable income (less section 511 taxes) from businesses acquued by the organization after June 30, 1975 178,191. 148,234. 24,542. 71,822. 422,789. 19 Net Income from unrelated busmess actiwties not included in line 18 20 Tax revenues evred for the organization's benefit and either paid to It or expended on its behalf 21 The value of servrces or facnities furnished to the organization by a governmental unit Without charge Do not Include the value of servrces or faculties generally furnished to the public Without charge 22 Other income Attach a schedule 00 not Include gain or (loss) from sale of capital assets 4,249. 4,437. SEE STATEMENT 11 3,302. 4,163. 16,151. 23 Total of lines 15 through 22 3,950,525. 4,820,023. 2,727,635. 4,973,808. 16,471,991. 24 Line 23 minus line 17 3,861,034. 4,641,994. 2,683,937. 4,845,620. 16,032,585. 25 Enter 1% of line 23 39,505. 48,200. 27,276. 49,738. 26 Organizations described on lines 10 or 11 Do not file this list With your return. Enter the total of all these excess amounts Total supportfor section 509(a)(1)test Enter line 24, column Add Amounts from column lorlines 18 422,789. 22 16,151. 26b Public suppert (line 26c mlnus line 26d total) Public support percentageillne ZBeLnumerator) dwided byline 26c (denominatnrn a Enter 2% of amount In column (9), line 24 Prepare a list for your records to show the name of and amount contributed by each person (other than a gavernmental unit or publicly supported organization) whose total gifts for 2000 through 2003 exceeded the amount shown in line 263 26a 320,652. 260 218,696. 261: 16,032,585. 218,696. 251! 657,636. 25a 15,374,949. VV 261 95.8981% 27 9 Organizations described on line 12 a For amounts included In lines 15. 15, and 17 that were received from a "disquali?ed person,? prepare a list foryour records to show the name of, and total amounts received in each year from, each 'drsqualified person Do not hie this list With your return Enter the sum of such amounts for each year (2003) (2003) Add Amounts from column for lines 15 17 Add Line 273 total (2002) (2002) 20 emu and line 27b total Public support (line 27c total minus line 27d total) Total support for section 509(a)(2) test Enter amount on line 23, column Public support percentage (line We (numerator) divided by line 271 (denominator)) Investment income percentage (line 18, column (numeratr?divided by line 271? (genominatorj) 16 21 >l yd (2000) For any amount included in line 17 that was received from each person (otherthan "disqualified persons"), prepare a list for your records to show the name of, and amount received for each year, that was more than the larger of (1) the amount on line 25 for the year or (2) $5,000 (include in the list organizations described in lines 5 through 11, as well as InleIduaIS Do not me this list With your return After computing the difference between the amount received and the larger amount described In (1) or (2). enter the sum of these differences (the excess amounts) for each year (2001) (2000) 27c 2711 27a 27g 27h 28 Unusual Grants: For an organization described in line 10, 11, or 12 that received any unusual grants durrng 2000 through 2003, prepare a list for your records to show, for each year, the name of the contributor, the date and amount of the grant, and a brief description of the nature of the grant Do not file this list With your return. Do not include these grants in line 15 423121 12-03-04 08461230 786783 MCI 2004.07000 MERCATUS CENTER, NONE 9 INC. Schedule A (Farm 990 or 990-EZ) 2004 MCI 1 Schedule A (Form 990 or 990-52) 2004 MERCATUS CENTER INC . Page 4 Part VI Priyate Questionnaire (See page 7 of the Instructrons.) . (To be completed ONLY by schools that checked the box on line 6 in Part IV) 29 Does the organrzatron have a raCIaIly nondIscrImInatory polrcy toward students by statement In Its charter, bylaws, other governIng Yes No Instrument. or In a resolutron of Its body? 29 30 Does the organIzatIon Include a statement of Its racrally nondIscrImInatory poIIcy toward students In all Its brochures, catalogues. and other when communrcatrons the mom dealrng student programs, and 3g 31 Has the organIzatIon Its raCIaIIy polIcy through newspaper or broadcast medra durIng the perlod of for students, or durIng the perrod If It has no solIcrtatIon program, In a way that makes the poIIcy known to all parts of the general commumty It serves? 31 If 'Yes," please descnbe, If please epraIn (It you need more space, attach a separate statement 32 Does the organIzatIon maIntaIn the tollowrng a Records IndIcatIng the racral composrtron of the student body, faculty, and admInIstratIve staff? 323 Records that and other frnancral aSSIstance are awarded on a racrally basrs? 32b Copres of all catalogues, brochures, announcements, and other when communrcatrons to the publlc deallng WIth student programs, and 32; Copres of all materral used by the organrzatlon or on Its behalfto 32d Ifyou answered 'No" to any of the above, please explarn (If you need more space, attach a separate statement 33 Does the organIzatIon dIscrImInate by race In any way respect to a Students? rIghts or prIvrleges? 333 AdmIssIons polrcres" 33b I: Employment of faculty or admInIstratIve staff? 33c or other fInancraI 33d EducatIonaI potICIes9 338 Use of 33f Athletrc programs? 339 Other actIvrtIes?r? 33h If you answered 'Yes" to any of the above. please explarn (It you need mere space, attach a separate statement 34 a Does the organrzatIon recerve any fInancIaI aId or assIstance from a governmental agency? 34a Has the organIzatIon's rIght to such aId ever been revoked or su5pended? 34b It you answered 'Yes' to eIther 34a orb, please explarn usrng an attached statement 35 Does the organrzatIon that It has complred the reqmrements of sectlons 4 01 through 4 05 of Rev Proo 75-50. 1975-2 58?, coverIng racral It attach an explanatron 35 Schedule A (Form 990 or 2004 423131 11-24-04 10 08391230 786783 MCI 2004.07000 MERCATUS CENTER, INC. 1 Schedule A (Form 990 or 990-EZ) 2004 MERCATUS CENTER INC . Page 5 Part ViuAi Lobbying Expenditures by Electing Public Charities (See page 9 of the instructions A (To be completed ONLY by an eligible organization that tried Form 5768) Check a I: if the organization belmgyo an affiliated group Check 5 If you checked and 'limited control"prov15ions apply Limits on LObbying Expenditures To be torALL (The term 'expenditures" means amounts paid 0r incurred totals Electing Olganllatlons A 36 Total lobbying expenditures to Influence public opinion (grassroots lobbying) 36 37 Total lobbying expenditures to influence a legislative body (direct lobbying) 37 38 Total lobbying expenditures (add lines 36 and 37) 38 39 Other exempt purpose expenditures 39 40 Total exempt purpose expenditures (add lines 38 and 39) 40 41 Lobbying nontaxable amount Enterthe amount from the followrng table - ll the amount on line 40 Is - The lobbying nontaxable amount is - Not over $500,000 20% of the amount on line 40 Over $500,000 but not over $1,000,000 $100,000 plus 15% oi the excess over $500,000 Over $1,000,000 but not over $1,500,000 $175,000 plus 10% of the excess over 31 000,000 41 Over $1,500,000 but not over $17,000,000 $225,000 plus 5% of the excess over $1,500,000 Over$17,000,000 $1,000,000 42 Grassroots nontaxable amount (enter 25% of line 41) 42 43 Subtract line 42 from line 36 Enter -0- if line 4215 more than line 36 43 44 Subtract line 41 from line 38 Enter -0- if line 41 is more than line 38 44 Cuban If there IS an amount on either line 43 or line 44, you must file Form 4720 4-Year Averaging Period Under Section 501 (Some organizations that made a section 501(h) electron do not have to complete all of the five columns below See the instructions for lines 45 through 50 on page 11 of the instructions Lobbying Expenditures During 4-Year Averaging Period Calendaryear (or (D) (C) (B) liscal year beginning in) 2004 2003 2002 2001 Total 45 Lobbying nontaxable amount 0 45 Lobbying ceiling amount (150% or line 45(9)) 0 - 47 Total lobbying expenditures 0 - 4B Grassroots nontaxable amount 0 - 49 Grassroots ceiling amount (150% of line 4302)) 0 - 50 Grassroots lobbying expenditures 0 - Part Lobbying Activity by Nonelecting Public Charities (For rep0rting only by organizations that did not complete Part (See page 11 of the instructions) During the year, did the organization attempt to inlluence national, state or local legislation, including any attempt to Yes No Amount influence public opinion on a legislative matter or reierendum, through the use of a Volunteers Paid staff or management (Include compensation in expenses reported on lines 1: through Media advertisements it Mailings to members, legislators, or the public 3 Publications. or published or broadcast statements 1 Grants to other organizations tor lobbying purposes Direct contact With legislators, their staffs, government albums, or a legislative body Rallies, demonstrations. seminars. conventions, speeches, lectures, or any other means i Total lobbying expenditures (Add lines 1: through 0 . If "Yes" to any of the ab0ve, also attach a statement givmg a detailed description of the lobbying activities Schedule A (Form 990 or 990-52) 2004 1 08391230 786783 MCI 2004.07000 MERCATUS CENTER, INC. MCI 1 Schedule A (Form 990 0r 990-EZ) 2004 MERCATUS CENTER INC . Page 5 Part Vii I Information Regarding Transfers To and Transactions and Relationships With Noncharitable i Exempt Organizations (See page ii of the Instructions) 51 Did the reporting organization directly or indirectly engage in any of the followmg With any other Organization described in section 501(0) of the Code (other than section 501(c)(3) organizations) or in section 527, relating to political organizations? a Transfers from the reporting organization to a nonrharitable exempt organization of Yes No Cash 51 am (ii) Other assets a(il) ti Othertransactions (1) Sales or exchanges of assets With a noncharitable exempt organization ti(l) (Ii) Purchases of assets from a noncharltable exempt organization b(li) Flental of faculties, equment, or other assets b(iil) (W) Reimbursement arrangements ti(iv) Loans or loan guarantees ti(lr) Performance of sewices or membership or fundralsmg sollmtatlons b(v1) Sharing of facilities. eqmpment, mailing lists, other assets. or paid employees It If the answer to any of the above is ?Yes,' complete the followrng schedule Column should always show the fair market value of the goods, other assets. or services given by the reporting organization If the organization received less than fair market value in any transaction orsharln arra ment, show in column the value of the ends, other assets. or serwces recalved (C) Line no Amount involved Name of nonchantable exempt organization Description of transfers. transactions, and sharing arrangements 52 a Is the organization directly or indirectly affiliated wrth. or related to. one or more tax-exempt organizations described in section 501(c) of the Code (otherthan section 501(c)(3)) or in section 5277 Yes No If 'Yes,? complete the schedule lb) (6) Name of organization Type oi Organization Description of relationship 11.233104 Schedule A (Form 990 or QQD-EZ) 2004 12 08391230 786783 MCI 2004.07000 MERCATUS CENTER, INC. MCI MERCATUS CENTER, INC. 54?1436224 FORM 990 I GAIN (LOSS) FROM PUBLICLY TRADED SECURITIES STATEMENT 1 GROSS COST OR EXPENSE NET GAIN DESCRIPTION SALES PRICE OTHER BASIS OF SALE OR (LOSS) INVESTMENTS 1,509,835. 1,526,381. 0. <16,546.> TO FORM 990, PART I, LINE 8 1,509,835. 1,526,381. 0. <16,546.> FORM 990 OTHER CHANGES IN NET ASSETS OR FUND BALANCES STATEMENT 2 DESCRIPTION AMOUNT UNREALIZED GAIN ON INVESTMENTS 3,074. TOTAL TO FORM 990, PART I, LINE 20 3,074. FORM 990 OTHER EXPENSES STATEMENT 3 (A) (B) (C) (D) PROGRAM MANAGEMENT DESCRIPTION TOTAL SERVICES AND GENERAL FUNDRAISING INSURANCE 8,547. 7,436. 513. 598. PROPERTY TAX 2,730. 2,375. 164. 191. AUDIO VISUAL 12,828. 12,828. 0. 0. MISCELLANEOUS 25,318. 14,504. 10,187. 627. SPACE ADVERTISING 1,530. 1,530. 0. 0. BOOKS AND SUBSCRIPTIONS 16,415. 16,234. 147. 34. PROFESSIONAL FEES 489,415. 303,136. 1,607. 184,672. HONORARIA 351,178. 351,154. 24. 0. TOTAL TO FM 990, LN 43 907,961. 709,197. 12,642. 186,122. FORM 990 STATEMENT OF PRIMARY EXEMPT PURPOSE STATEMENT 4 PART EXPLANATION THE PRIMARY EXEMPT PURPOSE IS TO EDUCATE STUDENTS AND IS AN ORGANIZATION WHICH USES SOUND INTERDISCIPLINARY RESEARCH AND APPLICATION IN THE HUMANE SCIENCES THAT INTEGRATES THEORY AND PRACTICE TO DEVELOP INSIGHTS AND TOOLS THAT CAN SUSTAINABLY ADVANCE A FREE, PROSPEROUS, AND CIVIL SOCIETY. 16 1, 2, 3, 4 08391230 786783 MCI 2004.07000 MERCATUS CENTER, INC. MERCATUS CENTER, INC. 54-1436224 FORM 990 CASH GRANTS AND ALLOCATIONS STATEMENT 5 CLASSIFICATION NAME ADDRESS RELATIONSHIP AMOUNT GMU ACADEMIC GEORGE MASON 4400 UNIVERSITY NONE ACTIVITIES UNIVERSITY DR. FAIRFAX, VA FOUNDATION 22030 40,000. DEPARTMENT OF GEORGE MASON 4400 UNIVERSITY NONE ECONOMICS UNIVERSITY DR. FAIRFAX, VA 22030 29,276. STUDENT GEORGE MASON 4400 UNIVERSITY NONE SUPPORT UNIVERSITY DR. FAIRFAX, VA 22030 162,959. CENTER FOR GEORGE MASON 4400 UNIVERSITY NONE STUDY OF UNIVERSITY DR. FAIRFAX, VA PUBLIC CHOICE 22030 2,300. FELLOWSHIPS GEORGE MASON 4400 UNIVERSITY NONE UNIVERSITY DR. FAIRFAX, VA 22030 26,491. TOTAL INCLUDED ON FORM 990, PART II, LINE 22 261,026. FORM 990 OTHER PROGRAM SERVICES STATEMENT 6 GRANTS AND DESCRIPTION ALLOCATIONS EXPENSES UNIVERSITY RESEARCH TEACHING 190,943. 496,817. GOVERNMENT ACCOUNTABILITY 363,042. OTHER 115,845. TOTAL TO FORM 990, PART LINE 190,943. 975,704. 17 5, 6 08391230 786783 MCI 2004.07000 MERCATUS CENTER, INC. MCI MERCATUS CENTER, INC. 54?1436224 FORM 990 I SECURITIES STATEMENT 7 OTHER PUBLICLY TOTAL CORPORATE CORPORATE TRADED SECURITY DESCRIPTION STOCKS BONDS SECURITIES SECURITIES CORPORATE BONDS FMV 132,580. 132,580. MUTUAL FUNDS FMV 483,107. 483,107. TO FORM 990, LINE 54, COL 132,580. 483,107. 615,687. FORM 990 PART LIST OF OFFICERS, DIRECTORS, STATEMENT 8 TRUSTEES AND KEY EMPLOYEES EMPLOYEE TITLE AND BEN PLAN EXPENSE NAME AND ADDRESS AVRG SATION CONTRIB ACCOUNT PROF. TYLER COWEN CHAIRMAN 3301 N. FAIRFAX DR. STE. 450 <1 0. 0. 0. ARLINGTON, VA 22201 DR. ANTHONY WOODLIEF PRESIDENT 3301 N. FAIRFAX DR. STE. 450 40 125,000. 13,351. 0. ARLINGTON, VA 22201 COLLEEN MORRETTA SECRETARY 3301 N. FAIRFAX DR. STE. 450 40 58,000. 301. 0. ARLINGTON, VA 22201 GARY D. LEFF TREASURER 3301 N. FAIRFAX DR. STE. 450 20 51,551. 3,528. 0. ARLINGTON, VA 22201 FRANK B. ATKINSON DIRECTOR 3301 N. FAIRFAX DR. STE. 450 <1 0. 0. 0. ARLINGTON, VA 22201 DR. VERNON L. SMITH DIRECTOR 3301 N. FAIRFAX DR. STE. 450 <1 0. 0. 0. ARLINGTON, VA 22201 DWIGHT C. SCHAR DIRECTOR 3301 N. FAIRFAX DR. STE. 450 <1 0. 0. 0. ARLINGTON, VA 22201 18 7, 8 08391230 786783 MCI 2004.07000 MERCATUS CENTER, INC. MCI MERCATUS CENTER, INC. 54?1436224 G. KOCH DIRECTOR 3301 N..FAIRFAX DR. STE. 450 <1 0. 0. 0. ARLINGTON, VA 22201 DR. RICHARD H. FINK DIRECTOR 3301 N. FAIRFAX DR. STE. 450 <1 0. 0. 0. ARLINGTON, VA 22201 THE HON. MANUEL H. JOHNSON DIRECTOR 3301 N. FAIRFAX DR. STE. 450 <1 0. 0. 0. ARLINGTON, VA 22201 MENLO SMITH DIRECTOR 3301 N. FAIRFAX DR. STE. 450 <1 0. 0. 0. ARLINGTON, VA 22201 TOTALS INCLUDED ON FORM 990, PART 234,551. 17,180. 0. FORM 990 PART RELATIONSHIP OF ACTIVITIES TO STATEMENT 9 ACCOMPLISHMENT OF EXEMPT PURPOSES LINE EXPLANATION OF RELATIONSHIP OF ACTIVITIES 93A REVENUE FROM SALES OF THE PUBLICATIONS RELATING TO RESEARCH CONDUCTED BY ITS FACULTY AND STAFF. THE CENTER CHARGES A NOMINAL AMOUNT FOR PUBLICATIONS, PRIMARILY TO COVER COSTS OF PRODUCTION, MATERIALS, AND POSTAGE. THE PUBLICATIONS ARE OFTEN USED IN THE CLASSROOM AND ARE DISTRIBUTED TO EDUCATIONAL AND ORGANIZATIONS. 103A MISCELLANEOUS REVENUE GENERATED IN RELATION TO THE DISSEMINATION OF INFORMATION ON RESEARCH OF SOLUTIONS TO SOCIAL AND ECONOMIC PROBLEMS. SCHEDULE A EXPLANATION OF QUALIFICATIONS TO RECEIVE PAYMENTS STATEMENT 10 PART LINE 3 THE PURPOSE OF THE GRANT AWARD PROGRAM IS TO RECRUIT AND DEVELOP YOUNG SCHOLARS TO PUSH OUT THE FRONTIER OF KNOWLEDGE IN MARKET PROCESS THEORY, LAW AND ECONOMICS, AND CONSTITUTIONAL POLITICAL AND TO HELP THOSE YOUNG SCHOLARS BECOME SKILLED EXPOSITORS OF MARKET ECONOMICS AND PUBLIC POLICY IN THE CLASSROOM, IN THE POLICY ARENA, AND TO THE MEDIA. 19 8, 9, 10 08391230 786783 MCI 2004.07000 MERCATUS CENTER, INC. MERCATUS CENTER, INC. 54?1436224 FACULTY AWARDS ARE GIVEN TO THOSE CENTER FACULTY MEMBERS WHO ARE IN GOOD STANDING AT GEORGE MASON UNIVERSITY AND WHO ACTIVELY ENGAGE IN ORIGINAL RESEARCH. AWARDS ARE USUALLY RESTRICTED TO THOSE PROJECTS AND FACULTY FOR WHICH RESEARCH SUPPORT CAN BE OBTAINED. RESEARCH PROJECTS ARE EXPECTED TO RESULT IN SCHOLARLY JOURNAL ARTICLES, BOOK MANUSCRIPTS, MONOGRAPHS, OR OTHER QUALITY PRODUCTS. SCHEDULE A OTHER INCOME STATEMENT 11 2003 2002 2001 2000 DESCRIPTION AMOUNT AMOUNT AMOUNT AMOUNT MISCELLANEOUS REVENUE 4,249. 4,437. 3,302. 4,163. TOTAL TO SCHEDULE A, LINE 22 4,249. 4,437. 3,302. 4,163. 20 10, 11 08391230 786783 MCI 2004.07000 MERCATUS CENTER, JNC. i Mercatus Center, Inc. Form 990, Part II, Line 42 - Depreciation Form 990, Part IV, Line 57 - Land, Buildings, and Equlpment Year Ended August 31, 2005 ASSETS Furmture, ?xtures, and equ1pment Leasehold Improvements Total ACCUMULATED DEPRECIATION Furmture, ?xtures, and equlpment Leasehold Improvements Total 54-1436224 End of Year Dlsposals of Year 5 318,954 16,036 (16,751) 318,239 2,903 - - 2,903 3 321,857 16,036 8 (16,751) 321,142 Current Year End of Year Deprecrauon Drsposals of Year 260,480 36.041 35 (16,751) 279,770 2,053 - - 2,053 5 262,533 36,041 3 (16,751) 281,823 Nani Property and equnpment are stated at cost and are deprec1ated over estunated useful lwes of ?ve to seven years usmg the stra1ght-lme method, no salvage value Leasehold unprovements are stated at cost and are amomzed over the remammg term of the lease or the1r useful llfe, IS shorter