FreedomWorks & FreedomWorks Foundation WINTER 2012 BOARD OF DIRECTOR'S MEETING December 19, 2012 Washington, DC 2012 Board Meeting Agenda August 2012 Board Meeting Minutes President's Report Finance Consolidated Income Statement Consolidated Balance Sheet Development I Community Building Onljne Communications FreedomWorks & FreedomWorks Foundation Winter Board of Directors Meeting BOARD MEETING AGENDA Sands Capital Management | 1101 Wilson Blvd. | Suite 2300 | Arlington, VA 22209 2:30 PM Business Meeting Called to Order Approval of Minutes 2:45 PM Update Bylaws 4:15 PM 2012 in Review 4:45 PM Going forward to 2013 5:15PM Business Meeting Adjourns MINUTES OF BOARD OF DIRECTORS MEETING OF FREEDOMWORKS, INC. A meeting of the Board of Directors of FreedomWorks, Inc., was held at the Snake River Resort & Spa in Teton Village, Wyoming on August 16, 2012. Present were FreedomWorks, Inc., Board Chairman Dick Armey and Board Members Tom Knudsen, Mary Albaugh, Jim Burnley (by phone), Dick Stephenson, and Matt Kibbe. Also present were C. Boyden Gray (by phone), Rob Lansing, Ted Abram (by phone), Frank Sands, Wayne Brough, Lucas Blanchard, Annie Holsonback, Chris Stephenson, Susan Armey, David Kirby, Terry Kibbe, Adam Brandon, and Alan Dye. President Matt Kibbe announced the presence of a quorum and the meeting was called to order at 12:05 p.m. The minutes from the FreedomWorks, Inc., February 22, 2012 meeting were approved. (Frank Sands offered the motion, Rob Lansing seconded). New business was discussed. As mandated by law, there was a request for board members to sign the Governance and Ethics policy. A motion was offered by Tom Knudsen and seconded by Frank Sands to elect Lucas Blanchard as Treasurer. Adam Brandon presented a report on potential changes to the 401(k) program. Matt Kibbe presented the president's report, which provided an overview of the Restore Liberty project. Lucas Blanchard presented the financial overview. David Kirby presented the development report. There being no further business, the meeting was adjourned at 2:15 p.m. Respectfully submitted, Wayne T. Brough MINUTES OF BOARD OF DIRECTORS MEETING OF FREEDOMWORKS FOUNDATION, INC. A meeting of the Board of Directors of FreedomWorks Foundation, Inc., was held at the Snake River Resort & Spa in Teton Village, Wyoming on August 16, 2012. Present were FreedomWorks Foundation, Inc., Board Chairman Dick Armey and Co-chairman C. Boyden Gray (by phone), and Board Members Rob Lansing, Ted Abram (by phone), Frank Sands, and Matt Kibbe. Also present were Tom Knudsen, Mary Albaugh, Jim Burnley (by phone), Dick Stephenson, Wayne Brough, Lucas Blanchard, Annie Holsonback, Chris Stephenson, Susan Armey, David Kirby, Terry Kibbe, Adam Brandon, and Alan Dye. President Matt Kibbe announced the presence of a quorum and the meeting was called to order at 12:05 p.m. The minutes from the FreedomWorks Foundation, Inc., February 22, 2012 meeting were approved. (Frank Sands offered the motion, Rob Lansing seconded). New business was discussed. As mandated by law, there was a request for board members to sign the Governance and Ethics policy. A motion was offered to elect Lucas Blanchard as Treasurer. Adam Brandon presented a report on potential changes to the 401(k) program. Matt Kibbe presented the president's report, which provided an overview of the Restore Liberty project. Lucas Blanchard presented the financial overview. David Kirby presented the development report. There being no further business, the meeting was adjourned at 2:15 p.m. Respectfully submitted, Wayne T. Brough TO: FreedomWorks Board of Directors FROM: Matt Kibbe President and CEO RE: President's Report DATE: December 17, 2012 Here in our nation's capital, December's drama feels a lot like a community theater's amateur mash-up of a Shakespearian tragedy and Groundhog Day. Groundhog Day, because in this great Bill Murray movie, he woke up every morning and relived--with growing frustration--the same day, over and over again. Shakespeare, because you know things won't end well. In the "real" world of Washington politics, everyone is in full panic mode over the "fiscal cliff," this year's version of last year's debate over raising the debt ceiling. I debated this on C-SPAN's Washington Journal Sunday. The spending cliff is an automatic sequester of $900 billion over the next 10 years, promised by last year's Super Committee in exchange for another increase in the amount the U.S. Treasury is allowed to borrow. The tax cliff sunsets Bush-era tax rates on December 31st, and taxes revert to the higher Clinton-era rates set in 1993. Neither of these events comes as a surprise to anyone that has paid attention. But still, it is a crisis. Here is the political establishment's logic: "If we don't get a bipartisan deal that raises taxes and cuts spending, taxes will automatically go up and spending will automatically be cut." Let me restate this political dilemma, lest their logic eludes you: "If we don't get Republicans to raise taxes and 'cut' spending," howl the Democrats and the media, "we will automatically raise taxes and 'cut' spending!" Now you can start to panic. If you are reading this, you already appreciate the absurdity of our political theater. You are already aware of the fact that our federal government had long ago launched off a fiscal cliff--the American economy fully suspended in thin air, Thelma and Louise style--with its annual deficits of up to $1.3 trillion and over $16 trillion in national debt. Our suicidal spending and borrowing habits have been monetized with an unprecedented expansion of money and cheap credit by the Federal Reserve, in an attempt to create enough of an updraft to keep that ragtop Thunderbird suspended for as long as possible. But the moment of reckoning is inevitable, like the laws of gravity. If real factors--like tax rates, unfunded liabilities, debt-to-GDP ratios, and the trashing of our standard of value--actually matter, no bipartisan deal is going to paper over reality. As F.A. Hayek might say, reality will eventually trump animal spirits and political spin, regardless of headlines in the New York Times. "Bipartisan" is such a curious word. Among the political cognoscenti, it is uttered with an almost mystical sense of reverence. In mainstream media, it implies a level of seriousness in public policy seemingly unconnected to the content of the policies themselves. A "bipartisan" budget deal is more valued than actually balancing the budget. It's all about the process itself, not the substance of the issues debated in the process. Here's a quote from the Speaker of the House: "It just comes down to one simple thing. They have described a precipice. We are on the brink of doing something that might pull us back from that precipice. I think we have a responsibility. We have worked in a bipartisan way." Is this John Boehner defending the need for a bipartisan deal that raises new revenue? No, this argument comes from September 29, 2008, as Speaker Nancy Pelosi defended a $700 billion bailout of bad banks. Moments later, the American people defeated that bill by inundating both Democrats and Republicans in the U.S. House of Representatives with an avalanche of calls. For one day, at least, crony capitalism and the bipartisanship that never, ever solves problems was defeated by a spontaneous shareholder uprising that turned out to be the very first national Tea Party protest. I remember a day when the House and Senate passed Budget Resolutions, the annual budget blueprint for the expenditures of the federal government, by the statutory deadline of April 15th. I remember a day when all thirteen appropriations bills were passed through the regular order of the legislative process, and reconciled within the limits set by the Budget Resolution before the beginning of the new fiscal year on October 1st. I remember when tax rates were permanent and tax-writing committees were not able to annually shake down special interests for "extenders" of special favors carved out of the tax code. I remember a day when December was the quietest month in Washington, because Congress and their staff had gone home until January. But those days seem like a fairy tale, like the two miles I walked to school every morning as a kid. The Senate Democrats don't even bother to pass a budget anymore. Everything is a crisis, as our politicians run right up to the edge of catastrophic deadlines on debt ceilings and government shutdowns and fiscal cliffs. What if this permanent crisis was designed to grow government? Why does it seem like We The People are suffering the same crises over and over again in a bad mash-up of Groundhog Day and Shakespearian tragedy? Maybe this bipartisanship thing isn't nearly all it's advertised to be? Maybe bipartisan deals are just another form of insider collusion, a conspiracy of interests intended to screw over customers and shareholders alike? Consider the legal definition: "Collusion occurs when two persons or representatives of an entity or organization make an agreement to deceive or mislead another. Such agreements are usually secretive, and involve fraud or gaining an unfair advantage over a third party, competitors, consumers or others with whom they are negotiating. The collusion, therefore, makes the bargaining process inherently unfair. Collusion can involve price or wage fixing, kickbacks, or misrepresenting the independence of the relationship between the colluding parties." Does any of this sound familiar? Is it possible that the real battle is not between Republicans and Democrats, but rather us versus the Washington insiders that meet in secret to gain an unfair advantage, fix wages, secure kickbacks, and deceive the American shareholders? The answer has to be "yes," and knowing all of this at the end of 2012 informs the path forward for freedom in America. The Election The Los Angeles Times asked, just six days after the election, "Has America gone from centerright to center libertarian?" The answer, I think, is: we always have been. Harvard historian Bernard Bailyn describes the subterranean homespun values that emerged, from the bottom up, in 1760's America in his definitive book on the subject, The Ideological Origins of the American Revolution. It was the beautiful chaos of anti-authoritarian republicanism, Adam Smith's Theory of Moral Sentiments, and libertarian populism which held that anyone could make it in America--and that everyone had a right to, regardless of who they knew inside the halls of power. 2 "The details of this new world were not yet clearly depicted; but faith ran high that a better world than any that had ever been known could be built where authority was distrusted and held in constant scrutiny; where the status of men flowed from their achievements and from their personal qualities, not from distinctions ascribed to them at birth; and where the use of power over the lives of men was jealously guarded and severely restricted. It was only where there was this defiance, this refusal to truckle, this distrust of all authority, political or social, that institutions would express human aspirations, not crush them." With a few variations, Bailyn might well be describing a roadmap back to electoral success for Republicans. Freedom is in our genes. It's what defines America, and always has. Two and a half centuries later, this sacred fire of liberty still burns, but you won't find it at the top of a political ticket. We will have to search elsewhere. We need younger, more diverse, more substantive voices for freedom in America. We need a new generation--freed of the political establishment's baggage--that can convey the values of liberty, economic opportunity, and self-determination to independent-minded voters, young voters, Hispanic and black voters. We need to build a freedom-based populism that rejects crony capitalism and the insiders that collude against the freedoms of the rest of us. And we need to draw a line in the sand between the limited role for government and politics, and the personal values that govern our conduct as individuals. We expect our politicians to balance the budget, and that may well be expecting too much. Do we really want them to codify a moral code, and impose it, from the top down? No, our moral values come from America, from the bottom-up, not Washington, D.C. We need to be separate and distinct from the D.C. power brokers and political consultants who do the same things over and over, while expecting different results. Republicans have now run an old white guy from the Republican establishment three times in my adult life--Bob Dole, John McCain, Mitt Romney-- and are still somehow surprised by the results. Was Mitt Romney an authentic critic of ObamaCare, the defining, winning issue of the 2010 elections? Of course not. Our best issues, the only differences between us and them that actually mattered, were swept under the table. Fewer showed up to vote, with nothing substantive to vote for. If you showed up anyway, if you stood in line to vote in 2012, you were likely voting against someone, not voting for an articulated economic agenda or a positive alternative to big government and economic decline. The 2010 election had very few personality-driven races but plenty of vivid choices between big and small government. By contrast, 2012 was a beauty contest, and the old white guy--an unfairly-redefined caricature from Bain who drove with the family dog on the roof--lost. FreedomWorks for America set out to win despite what we saw as weakness at the top of the Republican ticket. We wanted to drive up-ballot voting based on Senate candidates that would motivate people to show up despite ambivalence about the presidential candidates. In terms of wins and losses, this strategy didn't work well, and our goal of taking the Senate didn't work at all. We take our lumps with humility. Todd Akin, the eventual Republican candidate from Missouri, allowed Democrats to change the narrative with his offensive comments about "legitimate rape," and simultaneously lost at least two seats we could have won. Indiana's Richard Mourdock would later step on that easy-to-spot landmine and lose a seat he had in the bag. But don't let anyone tell you that the Tea Party lost the Senate. Todd Akin was at one point the establishment favorite who won because two Tea Party-backed challengers split the primary vote. FreedomWorks endorsed John Brunner in the Missouri Senate primary, but he lost to Akin by a few slim points. 3 More telling was the underperformance of establishment-blessed Republicans like Heather Wilson in New Mexico, Tommy Thompson in Wisconsin, and Denny Rehberg in Montana. Comparing their vote performance with the top of the ticket in their state, they did worse than Tea Party favorites like Josh Mandel in Ohio, Connie Mack in Florida, and even Tom Smith in Pennsylvania. Indeed, establishment-pick Rehberg even underperformed Richard Mourdock, selfinflicted wound and all. After the dust settled on November 6th, it became easier to see some upside to the downside losses. The historic gains in 2010 were essentially locked in, and although the Republican majority surrendered seven net seats (gained during the midterm elections), fiscal conservatives enjoyed a net gain in the House. Of the 75 candidates we endorsed, 65 won. The five we lost were replaced with eight new gains, for a net increase of three fiscal conservatives. Gains made by freedom-friendly conservatives will qualitatively buck-up the Republican majority's fiscal bona fides in the 113th Congress. Despite our disappointments in the Senate battlegrounds, the Freedom Caucus added new names--Ted Cruz and Jeff Flake--to the ranks of free-market conservatives in the Senate. Both men will stand strong beside fiscally-conservative colleagues like Mike Lee, Rand Paul, Ron Johnson, Pat Toomey, Marco Rubio, and others. There has never been a block of votes quite like this in the history of our country. Expect them to lead accordingly. Building to Win The big difference between us and other SuperPACs is our commitment to building a machine that outlives any election, won or lost. Our money was spent on the ground, serving the needs of any citizen who wanted to mobilize others to vote. As a result, in our first responsibility--to build community--FreedomWorks has had its best year ever, building what I believe is the largest community for individual freedom ever assembled. Allow me a moment to summarize some topline successes: 1. Our community is massive. Our Facebook page will soon pass four million fans. According to the charity news report Xperedon, that makes FreedomWorks the most popular non-profit on social media. "FreedomWorks, a non-profit org that promotes economic freedom, including voluntary charity giving, and campaigns for a smaller state has continued its astonishing social media success on Facebook.... The latest surge of popularity on social media confirms the non-profit organization as one of the most significant campaigning organizations in America today." Since this article was written, we have added 400,000 new fans. 2. OhMyGov.com ranks FreedomWorks as "#1 Media Power Rank" among PACs in terms of social media growth and mention metrics, beating out American Crossroads, Club for Growth, Priorities USA, and House Majority PAC. 3. Add to this the 2.1 million members that have opted into our email list, and you start to get a sense for the size of what we have built. Now that even Karl Rove is acknowledging that the future is all about grassroots organization and the need for a "50 state strategy," we are uniquely positioned to be that community. 4. FreedomWorks has already put into place a commercial-class customer service database infrastructure that allows for exactly the type of "mass customization" and personalized communication strategies that the Obama campaign successfully employed. 5. The size and scope of our network of investors is equally impressive. So far this year, we have raised over $41 million. We now have roughly 85,000 individual donors. Corporate gifts now represent just 1 percent of total giving. This broad-based community of 4 philosophically-motivated donors is the foundation for continued institutional strength and growth, a foundation that cannot be peeled off by angry politicians who believe that we work for them, not vice versa. 6. Our super PAC is fundamentally different from others in its bottom-up approach to fundraising. According to Open Secrets, a left-leaning political spending watchdog, FreedomWorks for America is "an anomaly among super PACs in its emphasis on smalldonor funding. In September, unitemized contributions, or those of $200 or less, made up 47 percent of contributions to the super PAC, exceeding its 35 percent average for the year... FreedomWorks' network of small donors is all the more impressive when compared to other major super PACs' fundraising statistics. None of the other active super PACs raising much more money this election cycle comes close to having as large a share of funds from unitemized contributions." 7. We have evolved beyond massive protests into more organized events that build sustainable communities of freedom-loving activists. Our 16,000-person event in Dallas spawned a quickly-assembled tour of the country. FreePAC Cincinnati, Orlando, Phoenix, Chicago, and Columbus attracted an amazing 36,000 paying, ticketed attendees, and another 92,000 viewers online. In 2013, the FreePAC franchise--think "Principled Action Community"--will expand to include more allied organizations. These are big tent events for constitutional conservatives, libertarians, and unaffiliated parents who just want to be left free to raise and educate their children without federal meddling; black Baptist preachers; Ayn Rand disciples; tattooed Ron Paul Millenials; and grandparents worried about the burden of unfunded liabilities on their grandkids. 8. Of course, the Election results from November 6th overshadow everything else, and it is appropriate to embark on a clinical assessment of what we need to do better; what needs to be completely reconsidered; and how we pivot, evolve, and continue to grow the constituency for freedom, fiscal responsibility, and limited government in America. I have said all along that FreedomWorks is not a political organization. We are a communitybuilding and educational organization that functions as a service center for our customers. Our super PAC serves as one product line for activists who wish to work on campaigns and elections. But our core business is the values, ideas, and issues--educating people about them, building the means of conveying them, and connecting people to them, and to each other. Many of our top institutional priorities for 2013 were already scratched out on the chalk board in the early planning phases of 2012. While we anticipated many of the challenges and opportunities that we currently face, there is still plenty to do. Here are a few headlines: o Mass Customization: As I've written, much has been made of the Obama campaign's advances in personalized targeting of potential voters online. With a $100 million, fouryear head start, Obama recruited a dream team of data engineers from Facebook, Twitter, and Google. The result--what the Democrats called "Project Narwhal"--signaled a seismic shift in campaign mechanics. This should sound familiar. FreedomWorks has invested significant resources to do much the same within our own community. The basic infrastructure is already in place, and we are out in front of the non-profit competition. However, we have only begun to scratch the surface of what can be accomplished. As we continue to construct our community framework, the upside potential transcends a one-off data mining exercise. Rather, the digital profile of our community will resonate and grow with every engagement, event, and campaign, allowing mass customization to treat our customers like individuals. 5 o The Freedom Agenda: What are the ideas and messages that form a positive, compelling case for freedom? How do we get issue-based independents to show up for something? Can liberty, personal responsibility, and doing things for yourself be the new "cool"? We want to embark on a fundamental rebranding exercise for the Freedom Agenda and the Freedom Movement. This includes comprehensive polling, messaging, crowd-sourcing of opinions and ideas, and lots and lots of micro-targeted testing online. o Candidate Recruitment: In 2010, we chose sides in some important elections when we saw compelling candidates, like Marco Rubio. In 2012, we thoroughly vetted dozens of candidates and conducted extensive opposition research, identifying a number of compelling stars that few gave a chance, like Ted Cruz in Texas. In 2013, we need to proactively find the best candidates and recruit them to run. We also need to work more closely with allied PACs to avoid splitting our coalition (two splits ended up costing us Senate pickups in Wisconsin and Missouri). All of this proactive information collecting is also a valuable service to our millions of activists and our 50,000 individual political donors. o New Markets: As I have pointed out, our community has already repopulated the Republican party with a rainbow of young, principled men and women of various colors, demographics, and personal stories; people with names like Mia Love, Ted Cruz, Tim Scott, Raul Labrador, Justin Amash, and Marco Rubio. We didn't set out to meet some politically correct distribution based on a federally-imposed formula, but the fact is that the freedom movement is no longer the sole providence of old white men. The biggest opportunity is with "Ron Paul Millennials," young people who have already demonstrated an interest in showing up for libertarian values. We have big plans this year to bring more young people into our networks. Indeed, FreePAC is in many ways specifically designed to appeal to a younger audience. We put a lot of young, engaging, rising stars on our stage. As for Blacks and Hispanics, the success of our Black & White tour starring Deneen Borelli is just the beginning. Next up is Black & Brown, adding in FreedomWorks' Ana Puig, who emigrated from Brazil seeking freedom that wasn't available to her there. o Service: Our core business is still serving the community we are building. Providing the best customer service-- the best support, information, tools, events, and reasons to act--is the key to our ability to lead in the very disintermediated world we live in. People have infinite choices online, and big institutions have no particular advantage in such a brutally competitive world. But that's the very reason the opportunity is so compelling. Freedom can win in this decentralized playing field. o Early and Cheap: We have managed to be first-to-market in a number of innovations over the past five years, in large part because of your willingness to invest the start-up capital that built the systems of the future. The size and sophistication of our community would not have been possible otherwise. The big difference between FreedomWorks and the Obama campaign, or the Republican Party, or an army of political consultants, is that asset, that community. Identifying the challenges and opportunities early, and building to win now, means that we can compete with our well-financed competitors at pennies on the dollar. Constant Change Is Here To Stay I have been an integral part of FreedomWorks since 1996 and have seen many changes, and generations come and go. Dick Armey's recent resignation from FreedomWorks was, for me, one of the most difficult to absorb. There was a time when he was a father figure to me, and we collaborated on things like our bestselling book Give Us Liberty. This particular change has been painful. But we respect his desires and wish him all the best in his future endeavors. We also 6 thank him for his years of dedicated service to this organization and the broader freedom community. Unfortunately, what I had hoped to be a quiet and focused transition has instead attracted quite a bit of media attention. Parlor intrigue aside, what's most important is the future of our great nation, conceived in liberty. FreedomWorks remains singularly committed to continuing to build the freedom community and our shared mission to defend individual liberty, fiscal responsibility, and constitutionally-limited government. Now is no time to let the political establishment try to reassert the old rules of citizen engagement where they dictate, from the top down, when and where our voices will be heard. Now it's out with the old rules and in with the new. The old rules stated a candidate couldn't win without big money from established special interests. The old rules said you couldn't win without name-ID and a thumbs-up from party heavyweights and political elites here in Washington, D.C. The old rules said that annual budget crises would allow the insiders to grow government unabated. The old rules told us to fall in line when it was Republicans that were driving the growth of government. With your support, we've thrown out the old rules. Time and again, our community has upset politically-connected candidates with deep pockets where victory once seemed impossible. This primary season, energized citizenries took over the political process. Freedom moved on foot as they assembled in the streets. They mobilized online to prove social media impressions, banner ads, and online videos can trump outmoded electionday tactics. They took it to the polls. The impact of this change will only accelerate. The individual's ability to dismantle centralized structures in the era of America's knowledge economy will continue to grow. Freedom is trending, thanks to your willingness to keep up the fight. Why would we stop now? 7 TO: Matt Kibbe, President and CEO FROM: Lucas Blanchard Director of Operations and Treasurer RE: Finance Report DATE: December17, 2012 Despite electoral disappointments, FreedomWorks has had an epic year! Changes abound in the Operations department as we continue to focus on process improvements and building efficiencies for our ever-growing staff, main offices, and temporary field offices. We are truly positioning ourselves for leadership in 2013. Since our last meeting, the Operations department has revised FreedomWorks' Personnel Manual with multiple policy updates and additions, and we are beginning the implementation of a state-of-the-art automated accounts payable system (AnyBill) that will help remove the potential for human error when paying vendors. AnyBill will allow staff to virtually receive, code, and approve invoices, which will assist with reporting and coding mistakes. This new system will be revolutionary--a true timesaver, with added benefit for each staff member. As you are aware, FreedomWorks acquired and renovated new office space across the hall from our main suite earlier this year. Since our last meeting, we approved the build-out of a dedicated studio space for our Production department, providing acoustical tiles for soundproofing, lighting, and new camera and computer equipment. This new studio will allow FreedomWorks to create, edit, and release professional video content as required. Additionally, this new, professional studio space sparked the interest of Glenn Beck's TheBlaze website and television network, and we are currently finalizing the terms of a sublease to house their Washington news bureau. In this agreement, the Blaze will acquire 1396 square feet of our additional suite and share the use of our studio, which will prove convenient for our partnership with the Blaze Action Center, powered by FreedomWorks. Detailed information, and corresponding attachments, pertaining to the financial position of FreedomWorks' entities as of September 30, 2012, is as follows: September 2012 Consolidated Entity Income Statement and Preliminary Year End Forecast o As of the September 2012 income statement, we have raised $22,289,446 in contributions, $1,804,204 in direct mail revenue, $1,215,077 in FWFA direct mail revenue, and $273,631 in miscellaneous revenue for a year-to-date total revenue of $25,582,358. o We have incurred $22,543,317 in expenses resulting in a year-to-date (as of 9/30/12) net surplus of $3,039,041. o We are currently projecting total consolidated 2012 revenues that include major donor revenue, direct mail revenue, FWFA direct mail revenue, and miscellaneous income in the amount of $42,300,714. This is a 39 percent increase over the approved 2012 high budget and a 52 percent increase over 2011 actual revenue. o We are projecting total consolidated expenses this year of $40,294,309. o Projected revenue versus expenses for 2012 could result in an estimated $2,006,406 net surplus at year-end. o September 2012 detailed income statements for separate entities are included for review. September 2012 Consolidated Balance Sheet o The Consolidated Balance Sheet shows comparative numbers from September 2011, Year End 2011, and September 2012 actuals. o Total assets as of September 2012 are $18,404,592, compared to September 2011 assets totaling $5,412,932, and 2011 year-end assets totaling $14,141,182. Total assets include cash & cash equivalents, accounts receivable, investments, prepaid expenses and long-term assets. This is an increase of 71 percent over last year at this time, and an increase of 23 percent over year-end 2011 assets. o Total liabilities as of September 2012 are $2,475,967, compared to September 2011 liabilities totaling $377,956 and 2011 year-end liabilities totaling $1,251,596. o September 2012 detailed balance sheets for separate entities are included for review. Planning for 2013 Budget The 2013 Draft Consolidated Budget is a work in process. In preparation for budget season, we have provided budget templates to all senior staff to assist in the creation of robust and detailed budgets at the department level. We plan for finalize for the High and Low budget for board approval in January 2013. For 2013, very early estimates anticipate a Low budget of $25,000,000 and a High budget of $30,000,000. The High budget will consist of current programs as well as programs and projects that we look to have fully funded prior to their execution. Based on early estimates, the development team projects we can raise at least the Low budget for next year. The budget includes the following major programs and projects planned for 2013: o o o o o o o o o o Major Donor DVD Project Glenn Beck Radio Ads Glenn Beck TV (GBTV) TheBlaze Action Center Youth/Minority Outreach FreePAC 2013 (six regional events) Substantial FreedomConnector Upgrades 4th Annual Blog-Con Bloggers & Blogger Outreach Development Publications & Mailings o o o o o o o o o 2 Activist Fly-Ins (quarterly) FreedomWorks University Legislative Entrepreneur Events Online Marketing FreedomConnector International FreedomConnector Mobile App Upgrading Campaign Technology Hill Briefings (retreat, meetings, breakfasts) Rush Limbaugh Contract FreedomWorks Consolidated Entity Income Statement Comparative and Year End Forecast Compiled November 7, 2012 2011 Actuals 2012 Low Budget 2012 High Budget 2012 Actual September YTD 2012 Year End Forecast Revenues Contributions Direct Mail Revenue Total Contributions 19,038,932 1,879,878 20,918,810 Miscellaneous Income (424,258) Total Revenue 12,272,527 3,727,473 16,000,000 18,771,991 7,228,009 26,000,000 - 22,289,446 3,019,281 25,308,727 38,460,334 3,566,749 42,027,083 273,631 273,631 20,494,552 16,000,000 26,000,000 25,582,358 42,300,714 3,841,871 112,590 2,453,192 118,098 160,096 75,987 35,865 32,833 54,956 58,720 102,426 733,303 626,870 6,048 114,293 500,089 1,515,275 344,970 207,730 451,069 42,645 94,172 465,789 1,068,113 362,645 233,604 96,975 13,910,224 4,475,470 100,000 1,964,500 88,500 57,500 43,000 15,000 77,500 15,500 1,773,637 1,760,937 202,000 1,192,001 726,000 314,000 2,500 402,000 19,500 70,250 317,000 810,500 284,500 288,333 129,038 15,129,166 5,012,270 220,000 3,927,000 725,000 317,179 67,000 43,000 15,000 82,500 15,500 12,000 3,743,615 3,540,915 21,000 302,000 1,359,201 1,636,000 436,500 262,500 402,000 39,500 90,250 317,000 1,390,500 843,500 455,000 279,620 25,555,550 3,294,478 80,500 4,819,640 1,043,143 234,608 42,199 36,440 96,434 52,453 323,639 232,564 1,143,902 927,926 6,194 281,035 1,016,593 4,721,557 247,828 135,473 390,962 69,046 63,609 733,380 1,176,948 985,032 235,379 152,355 22,543,317 5,072,789 90,000 10,477,798 2,025,000 273,198 64,696 49,919 96,434 75,066 464,465 261,660 1,199,614 3,271,253 10,290 298,035 1,124,392 10,278,223 331,714 149,676 565,500 86,550 122,104 937,820 1,481,073 997,242 323,670 166,128 40,294,309 6,584,328 870,834 444,450 3,039,041 2,006,406 Expenses Salaries and Benefits Grants and Contributions Advertising & Promotion Print Advertising Novelties Dues Equipment Rent & Maintenance Non-Capital Expenses Insurance Rentals Photography Postage Printing Training & Staff Development Professional Fees: Fundraising Professional Fees: Administration Professional Fees: Cons. & Other Professional Fees: Legal Publication Costs Rent & Utilities Subscriptions Supplies Telecommunications Travel Meetings Depreciation Miscellaneous Total Expenses Net Surplus (Loss) Unaudited, for internal use only Income Statement Comparative & Preliminary Year-End Forecast Net Surplus/(Loss) Total Expenses Total Revenue Net Surplus $2,006,406 Expenses $40,294,309 2012 Year End Forecast Revenue $42,300,714 Net Surplus $3,039,041 Expenses $22,543,317 2012 Actual September YTD Revenue $25,582,358 Net Surplus $444,450 Expenses $25,555,550 2012 High Budget Revenue $26,000,000 Net Surplus $870,834 Expenses $15,129,166 2012 Low Budget Revenue $16,000,000 $(10,000,000) $- $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 FreedomWorks, Inc. Freedomworks Consolidated Entity Income Statement For the Nine Months Ended September 30, 2012 2011 Total 2012 Budget January February Actual March Actual April Actual May Actual June Actual Actual July August Actual September Actual Actual 2012 Total Budget Remaining/(Over Budget) Revenues Contributions $19,952,127 $18,771,991 $375,667 $1,768,544 $631,210 $2,236,220 $738,732 $1,586,334 $697,295 $6,817,910 $7,437,534 22,289,446 ($3,517,455) 1,879,878 0 3,727,473 3,500,536 108,594 10,262 387,272 113,612 108,446 118,037 218,797 14,176 266,832 31,929 129,631 152,873 137,033 188,236 118,423 315,036 329,176 270,916 1,804,204 1,215,077 $1,923,269 $2,285,459 21,832,005 26,000,000 494,523 2,269,428 857,693 2,469,193 1,037,493 1,868,838 1,022,564 7,251,369 8,037,626 25,308,727 691,273 3,841,871 1,025,785 2,453,192 118,098 160,096 75,987 5,012,270 220,000 3,817,000 725,000 317,179 67,000 351,151 309,998 330,426 553,718 25,527 7,541 12,397 654,504 22,361 5,350 633 334,695 5,500 335,281 77,247 13,237 6,249 381,505 303,103 52,002 (2,103) 1,886 330,014 5,000 265,838 37,808 44,560 10,210 707,580 131,854 41,764 973 366,165 35,000 532,775 47,185 2,098 8,683 353,926 30,000 589,326 226,546 3,774 278 536,595 5,000 877,515 422,614 118,388 890 3,294,478 80,500 4,819,640 1,043,143 234,608 42,199 1,717,792 139,500 (1,002,640) (318,143) 82,571 24,801 35,865 32,833 54,956 58,720 102,426 733,303 626,870 43,000 37,500 60,000 118,000 12,000 3,743,615 3,540,915 7,833 70 4,791 2,935 455 19,765 774 879 9,542 7,834 2,570 47,850 54,749 18,543 5,002 2,201 5,208 8,613 18,945 95,351 658,542 4,818 4,973 7,400 2,179 11,500 37,376 122,372 1,038 9,310 6,150 53,659 7,680 156,495 151,006 8,600 1,022 6,150 92,397 44,400 42,716 241,620 (20,749) 19,882 6,068 4,131 14,181 200,235 (242,973) 39,489 4,700 4,369 107,211 10,771 31,126 193,276 (10,471) 44,735 4,484 49,944 76,782 506,089 (215,234) 36,440 96,434 52,453 323,639 232,564 1,143,902 927,926 6,560 (58,934) 7,547 (205,639) (220,564) 2,599,713 2,612,988 Training & Staff Development 6,048 21,000 3,995 900 250 Professional Fees: Fundraising Professional Fees: Administration 114,293 302,000 153,144 (153,144) 153,439 500,089 654,701 22,228 126,720 211,718 1,515,275 344,970 207,730 451,069 42,645 94,172 465,789 1,068,113 362,645 233,604 96,975 2,348,000 436,500 262,500 402,000 39,500 90,250 317,000 1,390,500 843,500 455,000 279,620 91,813 (7,550) 4,200 35,648 20,935 1,150 23,872 34,827 7,417 20,691 6,663 150,326 29,143 16,565 66,085 1,999 4,768 76,189 111,432 26,651 28,211 416,246 14,823,419 25,555,550 1,157,700 1,736,588 Operating Profit (Loss) 7,008,586 444,450 (663,177) 532,840 Misc Income (Expense) (424,257) non-FWFA Direct Mail Revenue FWFA Direct Mail Revenue Total Contributions Expenses Salaries and Benefits Grants and Contributions Advertising & Promotion Print Advertising Novelties Dues Equipment Rent & Maintenance Non-Capital Expenses Insurance Rentals Photography Postage Printing Professional Fees: Cons. & Other Professional Fees: Legal Publication Costs Rent & Utilities Subscriptions Supplies Telecommunications Travel Meetings Depreciation Miscellaneous Total Expenses Net Profit (Loss) 6,584,329 9 444,450 (663,168) 9 532,849 1,049 6,194 14,806 20,964 3,185 1,894 25,902 19,418 77,197 281,035 86,055 149,369 115,557 60,442 104,290 140,214 1,016,593 (361,391) 472,522 10,333 9,333 20,038 477 10,462 51,087 97,480 32,278 28,048 (393,618) 215,523 6,823 32,606 1,033 5,111 92,354 70,019 11,979 28,048 14,682 364,846 59,377 14,011 34,151 1,543 5,927 117,179 88,666 28,962 28,048 10,573 131,392 67,731 (14,771) 35,722 34,288 6,134 83,229 137,095 32,439 28,789 8,093 349,341 1,569 69,894 55,376 1,205 5,372 192,122 166,687 633,287 15,590 11,141 344,241 4,374 9,950 52,624 1,643 10,154 67,215 93,771 208,563 22,079 19,609 2,601,553 76,028 26,291 58,712 5,923 14,531 30,133 376,971 3,458 35,877 58,969 4,721,557 247,828 135,473 390,962 69,046 63,609 733,380 1,176,948 985,032 235,379 152,355 (2,374,056) 188,673 127,027 11,036 (29,544) 26,641 (416,380) 213,552 (141,532) 219,621 127,265 2,410,635 1,769,025 2,063,634 2,368,173 2,560,609 2,552,723 5,924,237 22,543,317 3,012,234 (1,538,045) 4,698,646 2,113,389 2,765,410 (2,320,961) 0 239,750 273,631 (273,631) 4,698,646 2,353,139 3,039,041 (2,594,591) (1,552,942) 417 (1,552,525) 700,168 19 700,187 (1,026,141) 28,023 (998,118) RESTRICTED FOR MANAGEMENT'S INTERNAL USE ONLY (499,335) 5,404 (493,931) 0 (1,538,045) Freedomworks, Inc. Income Statement For the Nine Months Ended September 30, 2012 2011 Total 2012 Budget January Actual February Actual March Actual April Actual May Actual June Actual July Actual August Actual September Actual 2012 Total Budget Remaining Revenues Contributions Direct Mail Revenue $8,706,924 1,334,132 $7,885,996 1,863,737 $66,805 75,703 $113,810 356,138 $398,689 97,158 $1,109,370 175,421 $134,965 197,360 $1,126,294 96,964 $433,997 (55,304) $4,749,808 675,789 $2,624,018 594,211 $10,757,756 2,213,438 ($2,871,760) (349,701) Total Contributions 10,041,056 9,749,733 142,508 469,948 495,847 1,284,791 332,325 1,223,258 378,693 5,425,597 3,218,229 12,971,194 (3,221,461) 1,920,864 900,040 755,541 44,151 85,622 49,680 2,732,970 170,000 1,458,500 25,000 158,590 33,500 212,086 195,502 161,492 180,175 181,678 227,964 252,449 251,275 23,143 2,970 6,087 1,056 186,583 3,461 8,542 1,428 356,073 10,985 4,431 1,328 535,182 2,345 648,605 12,940 34,058 380 472,891 360 90,038 41,566 2,130 664 172,744 30,000 559,261 935 1,835,365 30,000 3,165,601 78,128 161,543 8,797 897,605 140,000 (1,707,101) (53,128) (2,953) 24,703 18,421 18,005 40,227 34,536 28,235 505,376 414,076 21,500 18,750 30,000 59,000 6,000 936,818 880,468 4,115 70 3,534 1,463 455 14,670 129 492 9,022 5,378 709 3,750 10,159 925 2,850 1,483 3,962 5,967 6,848 18,040 596,210 2,879 3,342 4,602 726 3,750 10,368 65,368 658 4,316 4,703 22,846 3,930 72,207 64,412 5,285 1,445 4,660 64,340 17,670 11,470 179,096 (17,304) 14,175 4,843 2,571 4,960 122,955 (300,642) 13,756 54,613 29,367 239,242 62,572 505,082 420,656 7,744 (35,863) 633 (180,242) (56,572) 431,736 459,812 Training & Staff Development 2,640 10,500 Professional Fees: Fundraising Professional Fees: Administration 66,454 151,000 266,568 427,600 12,636 58,044 99,824 43,280 93,556 33,360 36,459 Professional Fees: Cons. & Other Professional Fees: Legal Publication Costs Rent & Utilities Subscriptions Supplies Telecommunications Travel Meetings Depreciation Miscellaneous 768,377 302,856 99,557 228,452 16,567 48,315 305,146 470,718 157,357 127,151 37,756 1,140,400 230,750 131,250 201,000 19,750 45,125 158,500 495,250 421,750 227,500 114,519 41,721 550 600 20,902 288 212 11,402 11,305 3,548 11,784 8,266 34,174 6,043 7,132 40,611 597 3,235 19,281 54,712 13,772 16,643 423,669 189,427 896 2,687 12,150 3 6,342 18,862 56,097 15,986 18,071 (398,596) 98,642 1,060 18,448 188 2,999 20,971 31,778 5,306 15,111 (5,531) 80,477 34,719 7,157 21,717 640 3,561 35,549 65,724 5,144 22,849 1,108 87,657 37,423 (10,523) 22,806 387 3,742 20,646 49,862 7,788 20,103 5,338 Total Expenses 7,712,688 10,305,990 392,992 1,103,864 1,191,713 1,041,349 864,784 1,486,502 Operating Profit (Loss) 2,328,368 (556,257) (633,916) (695,866) 243,442 (532,459) Misc Income (Expense) 52,917 11 (96) 243,453 (532,555) Expenses Salaries and Benefits Grants and Contributions Advertising & Promotion Print Advertising Novelties Dues Equipment Rent & Maintenance Non-Capital Expenses Insurance Rentals Photography Postage Printing Net Profit (Loss) 2,381,285 (38) 19,007 2,447 2,526 104,892 4,484 3,568 210,764 250 295 (250,484) 5 (556,257) 2,098 3,076 (250,479) 6 (633,910) 239 (695,627) (4,227) 18,312 (4,841) 35,727 16,726 241,646 (395,605) 1,049 3,185 RESTRICTED FOR MANAGEMENT'S INTERNAL USE ONLY 293,825 2,926 104,197 542 1,299 9,201 40,598 53,823 97,177 44,959 45,018 467,138 (39,538) 192,799 13,398 52,470 39,644 387 3,702 24,388 33,852 583,827 11,794 7,352 104,563 8,552 33,733 570 4,117 15,812 35,434 201,815 11,463 60,074 290,668 31,987 14,197 37,485 1,927 5,260 15,559 267,917 (197,706) 18,083 61,504 1,120,128 134,626 73,720 247,494 4,986 33,171 182,470 606,682 639,480 145,900 163,183 20,272 96,124 57,530 (46,494) 14,764 11,954 (23,970) (111,432) (217,730) 81,600 (48,664) 1,571,888 1,631,682 1,194,049 10,478,822 (172,832) (1,193,195) 3,793,915 2,024,180 2,492,372 (3,048,629) 246,061 251,336 (251,336) 2,270,241 2,743,708 (3,299,965) 9,744 (263,244) 3,357 (259,887) 1,752 (1,191,443) 3,793,915 FreedomWorks Foundation Income Statement For the Nine Months Ended September 30, 2012 2011 Total 2012 Budget January Actual February Actual March Actual April Actual May Actual June Actual July Actual August Actual September Actual 2012 Total Budget Remaining Revenues Contributions Direct Mail Revenue $8,977,904 545,746 $7,885,996 1,863,737 $38,609 32,891 $1,448,843 31,134 $152,516 11,288 $950,109 43,377 $362,904 69,473 $346,695 32,667 $196,791 (24,807) $723,936 114,599 $1,734,456 78,030 $5,954,859 388,652 $1,931,137 1,475,085 Total Contributions 9,523,650 9,749,733 71,500 1,479,977 163,804 993,486 432,377 379,362 171,984 838,535 1,812,486 6,343,511 3,406,222 1,921,007 112,550 1,625,536 3,025 71,001 26,282 2,279,300 50,000 1,458,500 25,000 158,590 33,500 139,067 134,513 5,000 7,140 246 31,578 8,782 148,506 150,251 153,542 285,320 25,306 113,715 35,000 1,884 2,181 181,182 1,030 5,972 3,110 11,069 153,017 3,000 1,904 1,250 273 4,919 2,393 593 5,606 278 98 2,014 316 255,769 2,663 3,685 348 1,459,113 43,000 596,017 11,441 35,839 32,736 820,187 7,000 862,483 13,559 122,751 764 17,444 14,828 14,729 15,809 48,166 198,166 198,021 21,500 18,750 30,000 59,000 6,000 936,818 880,468 3,718 388 520 2,456 872 16,250 9,100 962 2,152 718 1,245 993 4,098 6,945 4,508 1,940 1,631 2,798 858 3,750 2,436 4,318 380 2,950 1,447 1,247 3,750 21,314 8,377 3,315 (423) 1,490 2,560 26,730 8,690 5,566 (3,446) 5,707 1,225 1,410 4,721 35,422 6,461 20,482 856 1,843 744 6,049 1,872 3,328 (6,245) 24,303 9,325 5,292 7,170 47,768 19,763 22,684 36,262 23,086 15,448 72,518 133,448 53,755 (1,184) (17,512) 6,914 43,552 (66,518) 803,370 826,713 Training & Staff Development 3,408 10,500 3,995 900 Professional Fees: Fundraising Professional Fees: Administration 44,019 151,000 228,415 227,100 9,592 46,288 79,759 42,777 41,794 50,840 23,751 652,657 26,961 1,140,400 105,750 49,092 55,292 15,000 257,847 664 47,147 695 189,667 22,749 8,364 20,118 108,173 222,617 26,078 45,857 160,086 596,733 205,288 106,453 36,227 131,250 201,000 19,750 45,125 158,500 495,250 421,750 227,500 114,519 3,600 14,747 20,646 937 9,742 23,522 3,623 8,907 (3,113) 9,433 25,474 1,402 1,533 18,162 54,691 12,481 11,568 (7,991) 6,646 7,888 474 4,092 12,509 39,375 16,251 9,977 2,219 14,158 845 2,112 10,374 38,240 6,463 12,937 14,747 6,853 12,434 903 2,207 11,843 22,713 3,300 5,199 1,652 Total Expenses 6,729,536 9,406,820 554,740 461,140 632,042 386,206 Operating Profit (Loss) 2,794,114 342,913 (468,238) 607,280 Misc Income (Expense) (477,177) Expenses Salaries and Benefits Grants and Contributions Advertising & Promotion Print Advertising Novelties Dues Equipment Rent & Maintenance Non-Capital Expenses Insurance Rentals Photography Postage Printing Professional Fees: Cons. & Other Professional Fees: Legal Professional Fees: Board of Directors Publication Costs Rent & Utilities Subscriptions Supplies Telecommunications Travel Meetings Depreciation Miscellaneous Net Profit (Loss) 2,316,937 274,635 282 (8,190) 830 1,256 1,472 (98) 473 (483,240) (483,236) 1,018,837 4 1,018,841 177 (468,061) 7 607,287 4,895 5,605 12,800 4 342,913 28,072 12,800 138,200 46,759 55,796 397,357 16,993 63,745 (5,829) 154,618 338 100,013 40,232 925,786 93,966 27,364 11,784 (7,452) 12,916 33,901 2,364 12,573 81,415 22,737 8,686 (2,660) 15,733 817 1,647 12,519 131,629 16,179 3,796 (232) 17,892 1,058 4,645 11,304 56,176 6,748 10,616 (48,446) 20,228 3,996 5,274 13,952 107,432 194,929 17,794 (59,209) 19,080 141,470 64,043 24,812 112,978 555,192 282,710 89,479 (103,034) 112,170 59,530 (44,293) 20,313 45,522 (59,942) 139,040 138,021 217,553 523,619 476,330 473,641 480,770 1,168,398 5,156,881 4,249,939 (91,242) (96,968) (301,657) 357,765 644,088 1,186,630 (843,717) 28,118 2,046 (6,312) 22,293 (22,293) (63,124) (94,922) 637,776 1,208,923 (866,010) RESTRICTED FOR MANAGEMENT'S INTERNAL USE ONLY (1,752) (303,409) 357,765 FreedomWorks PAC Income Statement For the Nine Months Ended September 30, 2012 2011 Total 2012 Budget January Actual February Actual March Actual April Actual May Actual June Actual July Actual August Actual September Actual 2012 Total Budget Remaining Revenues Contributions Total Contributions $6,229 $2,000 $50 $399 $1,429 $585 $1,205 $5,668 ($5,668) 6,229 2,000 50 399 1,429 585 1,205 5,668 (5,668) 5,000 7,500 (7,500) 712 1,082 712 1,609 (712) (1,609) (15) (1,007) (855) (1,932) Expenses Grants and Contributions Dues Postage Printing 2,500 25 395 4,116 172 83 162 110 154 210 153 274 177 2,198 (1,586) 15 1,007 855 1,932 Professional Fees: Cons. & Other Subscriptions Travel Meetings Miscellaneous 500 4,054 246 338 777 398 224 Total Expenses 9,114 756 1,482 154 525 2,774 506 2,213 5,220 13,630 (13,630) Operating Profit (Loss) (2,885) 1,244 (1,432) (154) (126) (2,774) 923 (1,628) (4,015) (7,962) 7,962 Net Profit (Loss) (2,885) 1,244 (1,432) (154) (126) (2,774) 923 (1,628) (4,015) (7,962) 7,962 15 24 219 RESTRICTED FOR MANAGEMENT'S INTERNAL USE ONLY 12 FreedomWorks for America Income Statement For the Nine Months Ended September 30, 2012 2011 Total 2012 Budget January Actual February Actual March Actual April Actual May Actual June Actual July Actual August Actual September Actual 2012 Total Budget Remaining Revenues Contributions Direct Mail Revenue $2,261,070 $3,000,000 3,500,536 $278,516 $319,453 $198,041 $190,518 $272,792 ($610,706) 875,495 $906,492 (434,606) $986,652 $796,302 2,209,404 $3,338,060 2,650,293 ($338,060) 850,243 Total Contributions 2,261,070 6,500,536 278,516 319,453 198,041 190,518 272,792 264,789 471,886 986,652 3,005,706 5,988,353 512,183 72,115 70,921 3,472 900,000 675,000 5,324 48,750 72,115 34,102 4,440 196,615 8,570 94,017 20,016 4,100 30,903 118,914 5,313 58,000 45,004 29,787 225,513 1,760 327,922 417,025 10,506 990 27,850 35,491 16,574 1,653 8,000 70,366 57,824 595 4,000 24,573 52,523 243,339 35,681 11,107 666 2,043 29,565 25,497 62,975 78,218 22,633 56,849 150 4,500 41,781 51,209 1,396 1,574 237 25,686 (20,816) 2,120 8,925 52,887 215,963 159,525 1,058,022 953,574 37,226 666 5,559 68,949 97,474 504,660 451,907 (158,022) (278,574) (37,226) (666) (5,559) (68,949) (97,474) 1,365,318 1,328,071 (153,144) 153,144 1,894 16,158 19,418 23,799 214,413 (214,413) 22,388 32,134 14,019 31,356 (267) 12,571 39,399 151,598 (151,598) 1,000 (8,100) 60,859 8,100 25,248 8,773 94,702 1,910 35,371 10,191 3,205 93,297 (6,000) 17,425 2,728 38,746 1,252 5,314 158 69,786 229 20,518 7,534 29 50,010 5,723 1,914 5,238 23 155,215 1,084 33,281 4,022 5,782 2,210,871 3,809 12,094 1,000 3,997 622 1,610 6,234 58,243 2,676,143 19,234 42,673 2,000 5,626 437,932 14,066 61,988 90,252 (2,608,943) 80,766 (42,673) (2,000) (5,626) (437,932) 385,934 (61,988) (39,670) (1,051,224) Expenses Advertising & Promotion Print Advertising Novelties Dues Non-Capital Expenses Rentals Photography Postage Printing Professional Fees: Fundraising Professional Fees: Administration Professional Fees: Cons. & Other Professional Fees: Legal Publication Costs Rent & Utilities Supplies Telecommunications Travel Meetings Miscellaneous 8,375 26,025 29,367 10,656 1,869,978 1,779,978 3,820 93,741 15,154 5,193 153,144 67,200 100,000 69,733 5,068 85,060 (4,515) 9,950 1,000 1,392 40,099 2,161 557 639 400,000 20,496 50,582 1,172 344 27 19,717 2,007 41 2,604 355,338 5,842,738 209,211 170,107 586,723 340,948 672,450 405,040 514,882 438,055 3,556,551 6,893,962 Operating Profit (Loss) 1,905,732 657,798 69,305 149,346 (388,682) (150,430) (399,658) (140,251) (42,996) 548,597 (550,845) (905,609) 1,563,407 Net Profit (Loss) 1,905,732 657,798 69,305 149,346 (388,682) (150,430) (399,658) (140,251) (42,996) 548,597 (550,845) (905,609) 1,563,407 Total Expenses 61,009 RESTRICTED FOR MANAGEMENT'S INTERNAL USE ONLY FreedomWorks, Inc Balance Sheet FreedomWorks Consolidated Balance For the Periods Ended September 30, 2012 Assets Current Assets Cash & Cash Equivalents Accounts Receivable Contributions Receivable Investments Prepaid Expenses & Other Assets Total Current Assets Sept 2011 3,294,497 107,529 8 270,299 $ Long Term Assets Property & Equipment, net Privately Held Investments, Restricted Use 3,672,333 Sept 2012 12,101,046 2,804 158,000 30,550 359,834 $ 12,652,234 Net Change Since January 1, 2012 12,586,794 104,204 2,500,012 1,060,334 $ 16,251,344 485,748 101,400 (158,000) 2,469,462 700,500 $ 3,599,110 971,831 768,768 $ 1,080,344 408,604 1,722,995 430,253 642,651 21,649 1,740,599 Total Long Term Assets Total Assets Year-End 2011 1,488,948 2,153,248 664,300 5,412,932 $ 14,141,182 $ 18,404,592 $ 4,263,410 Liabilities and Net Worth Liabilities Accounts Payable Accrued Expenses and Other Liabilities Capitol Lease Obligation Deferred Rent 1,167 74,975 53,378 248,436 611,076 245,183 53,737 341,600 1,686,285 396,355 32,833 360,494 1,075,209 151,172 (20,904) 18,894 Total Liabilities 377,956 1,251,596 2,475,967 1,224,371 6,305,258 6,584,328 12,889,585 3,039,040 6,584,327 (3,545,288) Net Worth Net Assets Net Income (Loss) Total Liabilities and Net Worth 6,305,258 (1,270,282) $ 5,412,932 $ 14,141,182 Unaudited, for internal use only $ 18,404,592 $ 4,263,410 Assets at a Glance January 1, 2012 vs. September 30, 2012 Year-End 2011 September 30, 2012 $12,000,000 $10,000,000 Dollars $8,000,000 $6,000,000 $4,000,000 $2,000,000 $Cash & Cash Equivalents Accounts Receivable Contributions Receivable Investments Prepaid Expenses & Other Assets Property & Equipment, net Privately Held Investments, Restricted Use Year-End 2011 $12,101,046 $2,804 $158,000 $30,550 $359,834 $1,080,344 $408,604 September 30, 2012 $12,586,794 $104,204 $- $2,500,012 $1,060,334 $1,722,995 $430,253 Balance Sheet Assets Year-End 2011 Cash 43% Net Assets 46% Cash Assets Liabilities Net Assets Liabilities 4% Assets 7% Balance Sheet Assets as of September 30, 2012 Cash 34% Net Assets 43% Cash Assets Liabilities Net Assets Liabilities 7% Assets 16% FreedomWorks, Inc Balance Sheet FreedomWorks Consolidated Entity For the Nine Months Ended September 30, 2012 2011 Actual Jan Actual Feb Actual Mar Actual Apr Actual May Actual Jun Actual Jul Actual Aug Actual Sep Actual $6,661,265 2,500,012 436,565 11,676 $5,212,349 2,500,012 436,565 1,012,547 $4,480,540 2,500,012 436,565 12,176 $9,237,266 2,500,012 436,565 12,120 $12,586,794 2,500,012 430,253 104,204 500,000 629,955 500,000 624,670 500,000 370,945 500,000 184,560 500,000 560,334 Assets Current Assets Cash Investments Privately Held Investments Accounts Receivable Intercompany Balances Prepaid Runaway Slave Theater Funding Prepaids and Other Assets $12,101,047 30,550 408,604 160,804 $11,188,461 12 408,604 84,783 $11,872,740 12 408,604 82,115 $10,412,513 12 408,604 19,218 (4,500) 359,834 674,063 151,384 203,662 $10,627,463 12 408,604 8,636 (4,500) 500,000 219,927 13,060,839 12,355,923 12,514,855 11,039,509 11,760,143 10,739,472 10,286,143 8,300,238 12,870,523 16,681,598 1,080,343 1,080,343 $14,141,182 1,124,652 1,124,652 $13,480,575 1,133,941 1,133,941 $13,648,796 1,107,913 1,107,913 $12,147,422 1,079,866 1,079,866 $12,840,008 1,055,243 1,055,243 $11,794,716 1,431,447 1,431,447 $11,717,590 1,577,528 1,577,528 $9,877,766 1,662,264 1,662,264 $14,532,787 1,722,995 1,722,995 $18,404,592 Current Liabilities Accounts Payable Accrued Exp and Other Liabilities Capital Lease Obligation Deferred Rent $611,076 245,184 53,737 341,600 $453,377 376,979 51,147 372,654 $76,583 360,252 48,983 403,709 $185,004 339,471 46,806 369,396 $178,715 342,430 44,165 367,767 $153,331 324,472 41,959 366,137 $588,114 310,470 39,813 364,508 $283,285 317,571 37,195 362,879 $261,253 299,198 35,021 361,832 $1,686,285 396,355 32,833 360,494 Current Liabilities 1,251,597 1,254,157 889,527 940,676 933,076 885,900 1,302,905 1,000,930 957,304 2,475,967 Net Worth Net Assets Net Income (Loss) 6,299,922 6,589,663 12,889,585 (663,167) 12,889,585 (130,316) 12,889,585 (1,682,839) 12,889,585 (982,653) 12,889,585 (1,980,769) 12,889,585 (2,474,900) 12,889,585 (4,012,749) 12,889,585 685,898 12,889,585 3,039,040 $14,141,182 $13,480,575 $13,648,796 $12,147,422 $12,840,008 $11,794,716 $11,717,590 $9,877,766 $14,532,787 $18,404,592 Current Assets Long-Term Assets Property and Equipment Total Property and Equipment Total Assets Liabilities & Net Worth Total Liabilities and Net Worth RESTRICTED FOR MANAGEMENT'S INTERNAL USE ONLY FreedomWorks, Inc Balance Sheet For the Nine Months Ended September 30, 2012 2011 Actual Jan Actual Feb Actual Mar Actual Apr Actual May Actual Jun Actual Jul Actual Aug Actual Sep Actual $4,123,668 5 80,804 1,451,635 353,084 $3,057,817 5 4,783 1,889,701 667,313 $3,354,976 5 2,115 1,219,651 143,634 $3,373,519 5 1,718 543,748 202,412 $4,325,403 5 3,636 (194,751) 219,927 $1,726,545 1,250,005 6,676 229,964 629,955 $1,843,407 1,250,005 1,007,547 (1,122,284) 623,665 $1,542,906 1,250,005 6,676 (1,160,593) 342,317 $4,897,866 1,250,005 7,120 (661,197) 125,932 $5,735,008 1,250,005 104,204 745,337 182,700 6,009,197 5,619,620 4,720,381 4,121,402 4,354,221 3,843,145 3,602,341 1,981,311 5,619,726 8,017,255 1,080,343 1,080,343 $7,089,540 1,124,652 1,124,652 $6,744,272 1,133,941 1,133,941 $5,854,322 1,107,913 1,107,913 $5,229,315 1,079,866 1,079,866 $5,434,087 1,055,243 1,055,243 $4,898,388 1,431,447 1,431,447 $5,033,787 1,577,528 1,577,528 $3,558,839 1,662,264 1,662,264 $7,281,990 1,722,995 1,722,995 $9,740,249 Current Liabilities Accounts Payable Accrued Exp and Other Liabilities Capital Lease Obligation Deferred Rent $547,424 245,184 53,737 341,600 $292,376 376,979 51,147 372,654 $24,171 360,252 48,983 403,709 $152,062 339,471 46,806 369,396 $114,691 342,430 44,165 367,767 $133,341 324,472 41,959 366,137 $546,405 310,470 39,813 364,508 $260,043 317,571 37,195 362,879 $210,876 299,198 35,021 361,832 $305,263 396,355 32,833 360,494 Current Liabilities 1,187,945 1,093,157 837,115 907,735 869,052 865,910 1,261,196 977,688 906,927 1,094,946 Net Worth Net Assets Net Income (Loss) 3,520,309 2,381,285 5,901,595 (250,479) 5,901,595 (884,387) 5,901,595 (1,580,014) 5,901,595 (1,336,561) 5,901,595 (1,869,116) 5,901,595 (2,129,003) 5,901,595 (3,320,444) 5,901,595 473,469 5,901,595 2,743,709 $7,089,540 $6,744,272 $5,854,322 $5,229,315 $5,434,087 $4,898,388 $5,033,787 $3,558,839 $7,281,990 $9,740,249 Assets Current Assets Cash Investments Accounts Receivable Intercompany Balances Prepaids and Other Assets Current Assets Long-Term Assets Property and Equipment Total Property and Equipment Total Assets Liabilities & Net Worth Total Liabilities and Net Worth RESTRICTED FOR MANAGEMENT'S INTERNAL USE ONLY FreedomWorks Foundation Balance Sheet For the Nine Months Ended September 30, 2012 2011 Actual Jan Actual Feb Actual Mar Actual Apr Actual May Actual Jun Actual Jul Actual Aug Actual Sep Actual $5,869,493 6 408,604 79,500 (1,888,936) $6,218,286 6 408,604 79,500 (1,218,885) $5,144,122 6 408,604 17,000 (550,282) $4,530,260 6 408,604 5,000 184,117 500,000 $3,591,926 1,250,007 436,565 5,000 (218,635) 500,000 $2,137,760 1,250,007 436,565 5,000 1,140,614 500,000 $1,670,243 1,250,007 436,565 5,500 1,304,219 500,000 $2,718,399 1,250,007 436,565 5,000 614,330 500,000 $4,446,288 1,250,007 430,253 Assets Current Assets Cash $5,884,064 Investments 30,545 Privately Held Investments 408,604 Accounts Receivable 79,500 Intercompany Balances (1,450,809) Prepaid Runaway Slave Theater Funding Prepaids and Other Assets 1,250 Current Assets Long-Term Assets Total Assets (467,387) 500,000 2,917 1,250 1,250 1,250 4,953,154 4,469,918 5,488,761 5,020,701 5,627,987 5,564,863 5,469,945 5,166,534 5,524,300 6,162,077 $4,953,154 $4,469,918 $5,488,761 $5,020,701 $5,627,987 $5,564,863 $5,469,945 $5,166,534 $5,524,300 $6,162,077 2,636,216 2,316,938 4,953,154 (483,236) 4,953,154 535,607 4,953,154 67,547 4,953,154 674,834 4,953,154 611,710 4,953,154 516,792 4,953,154 213,380 4,953,154 571,147 4,953,154 1,208,923 $4,953,154 $4,469,918 $5,488,761 $5,020,701 $5,627,987 $5,564,863 $5,469,945 $5,166,534 $5,524,300 $6,162,077 Liabilities & Net Worth Current Liabilities Net Worth Net Assets Net Income (Loss) Total Liabilities and Net Worth RESTRICTED FOR MANAGEMENT'S INTERNAL USE ONLY FreedomWorks PAC Balance Sheet For the Nine Months Ended September 30, 2012 2011 Actual Jan Actual Feb Actual Mar Actual Apr Actual May Actual Jun Actual Jul Actual Aug Actual Sep Actual Assets Current Assets Cash $118,717 $119,961 $118,529 $118,360 $118,234 $115,460 $116,383 $116,383 $114,770 $110,755 Current Assets 118,717 119,961 118,529 118,360 118,234 115,460 116,383 116,383 114,770 110,755 $118,717 $119,961 $118,529 $118,360 $118,234 $115,460 $116,383 $116,383 $114,770 $110,755 Current Liabilities Accounts Payable ($15) ($15) ($15) ($15) ($15) Current Liabilities (15) (15) (15) (15) (15) Long-Term Assets Total Assets Liabilities & Net Worth Net Worth Net Assets Net Income (Loss) Total Liabilities and Net Worth 121,602 (2,885) 118,717 1,244 118,717 (188) 118,717 (342) 118,717 (468) 118,717 (3,242) 118,717 (2,319) 118,717 (2,319) 118,717 (3,947) 118,717 (7,962) $118,717 $119,961 $118,529 $118,360 $118,234 $115,460 $116,383 $116,383 $114,770 $110,755 RESTRICTED FOR MANAGEMENT'S INTERNAL USE ONLY FreedomWorks for America Balance Sheet For the Nine Months Ended September 30, 2012 2011 Actual Jan Actual Feb Actual Mar Actual Apr Actual May Actual Jun Actual Jul Actual Aug Actual Sep Actual $1,963,839 500 (456) 5,500 $2,130,432 500 (396) 5,500 $2,170,191 500 (396) 6,500 $1,765,753 500 2,404 $1,642,807 $1,216,579 $1,104,045 $1,140,254 $1,495,477 $2,284,005 6,504 (10,959) (17,960) 1,005 (143,256) 28,628 47,238 58,628 (277,580) 374,718 1,969,384 2,136,037 2,176,795 1,768,658 1,649,311 1,205,620 1,087,090 1,025,626 1,601,343 2,381,144 $1,969,384 $2,136,037 $2,176,795 $1,768,658 $1,649,311 $1,205,620 $1,087,090 $1,025,626 $1,601,343 $2,381,144 Current Liabilities Accounts Payable $63,652 $161,001 $52,412 $32,956 $64,039 $20,005 $41,724 $23,257 $50,377 $1,381,021 Current Liabilities 63,652 161,001 52,412 32,956 64,039 20,005 41,724 23,257 50,377 1,381,021 Net Worth Net Assets Net Income (Loss) 1,905,731 1,905,731 69,305 1,905,731 218,652 1,905,731 (170,030) 1,905,731 (320,459) 1,905,731 (720,117) 1,905,731 (860,366) 1,905,731 (903,362) 1,905,731 (354,766) 1,905,731 (905,609) $1,969,384 $2,136,037 $2,176,795 $1,768,658 $1,649,311 $1,205,620 $1,087,090 $1,025,626 $1,601,343 $2,381,144 Assets Current Assets Cash Accounts Receivable Intercompany Balances Prepaids and Other Assets Current Assets Long-Term Assets Total Assets Liabilities & Net Worth Total Liabilities and Net Worth RESTRICTED FOR MANAGEMENT'S INTERNAL USE ONLY TO: Matt Kibbe, President FROM: David Kirby, Vice President of Development Terry Kibbe, Senior Advisor RE: Development Report DATE: December 17, 2012 All year, FreedomWorks supporters have told us that our country is headed in the wrong direction and that they believe FreedomWorks can make a difference. Because of this, our fundraising efforts have seen tremendous success again. FreedomWorks has raised $40,668,410 year-to-date, and we project to close the year at $42.3 million--double our 2011 revenue. Our extraordinary investors put their money on the table to give us the best shot of victory. And, after a disappointing Election night, they did something every bit as extraordinary and meaningful: they sent us words of thanks, encouragement, and resolve. "We wanted to thank you for your most exceptional efforts. I think that during the past few years, you have shown real judgment in selecting and supporting truly outstanding candidates. Most have won; some have lost. Certainly, yesterday Freedom lost a great battle--but not the war." "Our individual liberties have taken a real blow over the past four years- and it was keenly felt last night. Let's hope conservatives can organize effectively and rise to the challenges ahead quickly." "Are you guys ok? I'm praying for our nation this morning... The temptation is to want to be angry... [but] I commit to doubling down on my efforts to preserve, restore, and fight for freedom every step of the way. We know that freedom works. And we know that freedom works hard; that freedom fights; that freedom is costly." We've accomplished so much, but clearly, our work is not done. So we continue. FreedomWorks Fundraising Growth 2009---2012 $45,000,000 $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 FreedomWorks for America FreedomWorks Founda@on FreedomWorks, Inc. 2009 2010 2011 2012 (YTD) Fundraising Growth 2009-2012 2009 2010 2011 2012 (YTD) FreedomWorks, Inc. $3,579,269 $9,128,652 $9,991,964 $14,287,973 FreedomWorks Foundation $3,931,825 $4,485,499 $9,523,649 $7,177,187 FreedomWorks for America - - $1,361,145 $19,196,933 $7,511,094 $13,614,151 $20,876,758 $40,662,092 Total o Of the year-to-date funds raised, roughly $33 million is from major gifts and $7.6 million is a result of our membership marketing efforts (which will be addressed in the next report). o Major gift support broke down by 94% from individual solicitations, 5% from foundation proposals, and 1% from corporate appeals. This year continued our trend of relying less and less on corporate support. o FreedomWorks Foundation's revenue is down compared to last year, as donors steered election year investments towards our C4 and super PAC. Donor Growth Not only has our total revenue doubled this year, but just as importantly, our total number of donors has nearly doubled as well. In 2012, we have grown to 81,081 donors from 41,794 in 2011, with growth across all categories. Particularly encouraging is the more than twofold growth in the mid-tier $1,000-$4,999 category, a weak spot from 2011 that we focused on this year. 5 --------- $500,000 and above --------- 8 17 --------- $100,000-$499,999 --------- 22 14 --------- $50,000-$99,999 --------- 17 60 --------- $10,000-$49,999 --------- 95 88 65 ---------$5,000-$9,999 --------470 ---------$1,000-$4,999 --------- 1,073 19,157 9,274 --------- $100-$999 --------60,329 ---------$1-$99 --------31,889 2011 = 41,794 Donors 2012 YTD = 81,081 Donors Jackson Hole Investor Retreat nd Our 2 Annual "Restore Liberty" donor retreat was a tremendous success, despite the challenges that we faced with the hotel. Our attendance more than doubled, to 110 guests. As a result of the retreat, FreedomWorks received an extraordinarily generous $10 million matching challenge grant, which inspired other investors to step up as well. Special thanks to Frank and Marjorie Sands for hosting our opening dinner. We have signed a contract with the St. Regis in Aspen, Colorado, for next years' retreat to be held from th th August 8 - 11 . 2 Major Donor Stories o When told about the $10 million match, a New York donor exclaimed "what great news," and renewed his support of $1,000,000, describing his gift as "a vote of confidence." o A supporter from Stuart, Florida, increased his giving from $150,000 last year to $1,350,000 this year, including $500,000 to FWFA. o A supporter from Bellevue, Washington, quadrupled his giving to $200,000. When a reporter called to ask him why, he explained, "I believe right now more than ever in my life, and I just turned 70, that my freedoms and liberties are being threatened by a government that doesn't seem to believe the same sorts of things that I believe the Constitution says." o A supporter from New Hope, Pennsylvania, more than doubled his support to $240,000 this year. Outsider's Report This year, the development team took a page from the grassroots strategy book, aiming to be a "service center" for our investor community. Through our new publication, the Outsider's Report, we've worked to deliver better access to FreedomWorks' endorsements, research, and political strategy. The effort has paid dividends. o A supporter in Orlando, Florida, read the Outsider's Report and called to make a $5,000 gift to FreedomWorks for America. His last gift was in 1996. o A supporter in Costa Mesa, California, read the Outsider's Report and called to ask where his money "could have the greatest impact." He chose to pledge $5,000 to FreedomWorks for America. His last gift was in 2000. o Supporters are sharing the Outsider's Report widely. For instance, a businessman in Tucson, Arizona, forwarded our report on Arizona FreePAC to his personal friends, with 40 additional opens. Upgrades to the Team To keep pace with our growth, we've also upgraded our team: o Caitlyn Korb is our new investor relations director, joining us from Cato and ALEC. Caitlyn will focus on building relationships with our mid-tier donors. o Parissa Sedghi and Emilia Huneke-Bergquist received promotions this year. Parissa is now our development manager. Emilia is our special events manager. o Sarah Rosier is our new research assistant, focusing on the hundreds of new $500+ donors. o We've also hired a database consultant to help us upgrade our data management systems, reporting, and tracking. Challenges Not surprisingly, this dramatic growth has led to challenges within our small department. o We failed to meet our 2012 goal for outreach to new foundations, in part due to the time and effort invested in keeping up with our individual donors. However, we have prepared a large list of foundations and their specific interest areas, and the addition of our new staff writer should help in this critical area moving forward. 3 o Another area for improvement is keeping up with research and timely thank you calls. To give you a sense of the volume, we had over 600 new $500+ donors in the month of October, making it very hard to keep up. However, our new research and investor relations staff, and better systems, should help ease the backlog. Fortunately, we have succeeded in using the election year to build a larger, stronger, and more committed base of donors to help us meet our challenges moving forward. There is also the possibility of raising super PAC dollars in the early part of 2013, as we prepare for the 2014 midterm primaries and elections. 4 TO: Matt Kibbe, President FROM: Andrew Smith, Vice President of Member Marketing and Development RE: Community Building DATE: December 17, 2012 Building to Win By all accounts, 2012 was a watershed year for FreedomWorks and our growing community of freedom-loving activists, which now stands at nearly 2.1 million excluding our Facebook Fan base and Twitter followers which accounts for an additional 3.6 million. With few exceptions, we have met if not surpassed our lofty 2012 goals. Core Programs FreedomWorks Facebook Fan Acquisition Kibbe Facebook Fan Acquisitions Email Acquisitions Membership Fundraising 2012 Projections 3.5 million new fans YTD Results 4 million new fans 100,000 new fans 380,000+ new fans 500,000 new members 955,512 new members $6 million $7.6 million+ Given our investments in human capital and our core member marketing and development programs, we are well positioned to continue to set--and achieve--ambitious goals well into the future and currently project the following for 2013. Core Programs 2013 Projections FreedomWorks Facebook Fan Acquisition 2.5 million new fans Kibbe Facebook Fan Acquisitions 300,000 new fans Email Acquisitions 981,476 new members Membership Fundraising $8.2 million Year-to-Date Online Growth This year on FreedomWorks.org, visitors came from all over the world--15,204 cities in 203 countries and territories. Our traffic came from the following sources: 30% came directly to FreedomWorks.org 52% came from referring sites 18% came from search engines The chart below shows our web traffic on FreedomWorks.org in 2011 (orange) and 2012 (blue) from Jan 1-Oct 31: Overall, we saw an 83% increase in unique visitors to FreedomWorks.org. We also saw a 60% increase in visits and a 14% increase in pageviews. Per Month Unique Visitors Visits Pageviews 1/1-10/31 2011 159,434 223,784 518,848 1/1-10/31 2012 291,135 358,279 589,722 Our web properties go far beyond FreedomWorks.org and many time-sensitive microsites and include: FreedomConnector (Connect.FreedomWorks.org); FreedomWorks for America (FreedomWorksforAmerica.org); FreedomWorks PAC (Pac.FreedomWorks.org); Live Events (Live.FreedomWorks.org); and Congressional Scorecards (Congress.FreedomWorks.org). Traffic on these sites is substantial. The data below is from Jan 1-Oct 31 2012: Per Month Unique Visitors Visits Pageviews FreedomWorks 291,135 358,279 589,722 FreedomConnector 69,432 144,020 716,595 FWFA 44,763 56,385 110,776 FW PAC 382 426 811 Live Events 60,008 73,912 111,640 Congressional Scorecards 22,940 26,653 62,253 TOTAL 488,660 659,675 1,591,797 See attached addendum for an overview of several of these and other key properties including: FreedomConnector, Live Events, Congressional Scorecards, Legislator Profiles, FreedomWorks' Action Center, The Blaze Action Center, and FreedomWorks' Online Store. Year-to-Date Social Media Growth Even by our standards, our social media growth has been nothing short of outstanding. Xperedon, a British news outlet which tracks charities, recently reported that FreedomWorks not only dominates political space, but has become the "most popular non-profit on social media, overtaking Invisible Children." Their report continues: "FreedomWorks is picking up tens of thousands of new social media followers each day. The FreedomWorks non-profit's social media success is backed up by a loyal grass-roots following mainly across the USA, and is all about grass-roots community debate about the role of government, and encouraging healthy debate that questions the ideologies of the dominating monolithic parties...The latest surge of popularity on social media confirms the non-profit organisation as one of the most significant campaigning organisations in America today." 2 Since our last report, our Facebook page has grown by 1,670,270 fans; nearly doubling our total fans reported previously, 1.9 million. On the aggregate, FreedomWorks' Facebook Community is now 2.3 million+ larger than Americans for Prosperity, 2.1 million+ more than Tea Party Patriots, 2.9 million+ more than the Campaign for Liberty, and 2.6 million+ more than American Majority, and 1.1 million+ bigger than the Republican Party. This amazing new growth allows us to reach over 15 million people weekly and through the friends of FreedomWorks fans we can reach over 185 million Facebook users. And we have done all of this with a cost-per-fan of just $0.27. Our Twitter page has grown by 18,569 followers from our previous total of 61,208 followers, for a total follower count of 79,777. Our page is widely seen as a thought-leader in political news and opinion shaping on social media. A loyal group of bloggers, who post to FreedomWorks.org, have greatly improved both the quality and breadth of our political reporting. Year-to-Date Fundraising Growth This quarter we've had a massive surge in membership giving, driven by increased awareness surrounding the election cycle and the unprecedented performance of our Moneybomb fundraising campaign. With this success, we're pleased to report we have surpassed our initial goal of raising $6 million this year in the Membership department. The breakdown is in the graph below: Revenue Source Money Raised Number of Donors Avg. Gift Direct Mail $3,289,544.03 15,337 $147.94 Online $3,008,347.89 44,013 $52.08 3 Beck $859,099.04 18,097 $41.06 Rush $433,484.08 9,430 $44.36 Telemarketing $76,351.36 1,679 $44.55 $7,666,826.40 88,556 $68.20 TOTAL* rd * Total does not include revenue raised through 3 party ticket sales of FreePAC events. FreedomWorks for America's Fire Obama Moneybomb was the single largest factor in our fundraising increase this quarter, raising over $1.9 million from over 37,000 donors in just 12 days. This fundraising appeal was a hallmark of our in house email marketing activities as well as our embedded media programs with Glenn Beck and Rush Limbaugh and out raised any previous effort of its kind by more than a factor of two. Our success in small dollar fundraising for FreedomWorks for America recently served as an impetus for a lead article on Open Secrets. The article congratulated FreedomWorks for America for our success in this area, calling it an "anomaly among super PACs." Through September, FreedomWorks for America raised over $3 million from 39,000 personally-invested activists, with 47 percent of the contributions being less than $200. Open Secrets noted that FreedomWorks for America's small donors were "all the more impressive" when compared to the other top super PACs like American Crossroads, Romney's Restore our Future, and Obama's Priorities USA Action. FreedomWorks for America hasn't just beaten these super PACs in small dollar fundraising--we have crushed them. Through September, FreedomWorks had raised 10 times more from small donors than Obama's super PAC and 18 times more than American Crossroads. When you serve the community from the bottom-up, it seems citizens become personally invested in seeing it through. The continuing success of our High Dollar Direct Mail program as well as the successful test of telemarketing fundraising and potential Low Dollar Direct Mail agencies also made significant contributions to our bottom line. Additional rollouts of our Annual Video Appeal Mailing raised more than $500,000, bringing the total raised from the project to more than $1.6 million with an ROI of $1.72. Outside of our Annual Video Appeal Mailing, which has proven to be our best performing package in any given year, our Summer Hostile Takeover Mailing outperformed all other mailings by grossing $236,829. For context, the next best performing package was our Stop ObamaCare mailing which grossed $165,386. On the Low Dollar Direct Mail front, we successfully completed a 3-way test of HSP Direct, Eberle Associates and Response America. Each firm mailed on a theme and FreedomWorks entity of their choosing, providing us with a good range of results. At the end of the day, HSP Direct (with our account team including FreedomWorks alumnus Colin Duffy who you may recall headed our online and embedded media fundraising programs in 2011) and their Repeal ObamaCare prospect package proved the most successful with $27,863 raised for an ROI of $1.42. A further prospect roll out of the same package has grossed $40,132 for an ROI of $.92. As of this date, we are finalizing a contract with HSP Direct for our 2013 Low Dollar Direct Mail Program. We also tested several Telemarketing Fundraising Campaigns this year, with results that surpassed all expectations. Our Telemarking program had two critical objectives. The first was to re-activate lapsed donors. The second was to acquire new donors. The success of our Telemarketing Fundraising Campaigns allowed us to activate or reactivate 1,714 members and raise $76,351. As a result, we are investigating the potential for continuation of this program in 2013. 4 FreedomWorks Membership Fundraising: 2012 v. 2011 $3,500,000 Please Note this does not include 3rd Party FreePAC Ticket Sales $3,289,544 Sum o f 2 012 $3,008,348 $3,000,000 This Program was started in 2012 $2,500,000 $1,979,836 $2,000,000 Sum o f 2 011 This Program was started in 2 012 $1,500,000 $1,127,882 $1,000,000 $859,099 $726,060 $433,484 $500,000 $76,351 $0 Beck Direct M ail Online Rush Telemarketing With a Lame Duck session upcoming, the impending "fiscal cliff" battle in Congress, and our end-ofthe year FreedomWorks Foundation fundraising campaign, there are numerous opportunities for our 2012 Membership giving to increase. Our current total of $7.6 million represents 127% of our 2012 goal of $6 million, which has led to an increased end-of-year projection of $8 million raised. Year-to-Date Membership Growth From January 1 through November 1 of this year, we've grown our community by more than 972,618 members and donors--using email marketing, online ads, embedded media, and our direct mail prospecting programs--reflecting a 265% increase over our total of 266,334 members during this same reporting period for 2011. Capitalizing on the increased election awareness through FreedomWorks for America, we were incredibly successful in activating voters and recruiting new members since the last report. Our total base of members and donors--exclusive of our Facebook fan base and Twitter followers--is now nearly 2.1 million strong. 5 Our continued success in growing the freedom community can be attributed to the success of numerous online campaigns--in particular, our Fire Obama Moneybomb fundraising campaign, our Declare Independence from ObamaCare acquisition campaign, and our micro-targeted Senate race marketing campaigns. Our Moneybomb raised over $1.9 million from over 37,000 donors, while the other two campaigns acquired 100,686 new members (7,848, and 92,838 respectfully). Summary and 2013 Outlook 2012 has indeed been a break out year for FreedomWorks. By providing members and activists with opportunities to become and stay involved, we have managed to continue growing a stronger and more active community while at the same time ensuring a stable and growing funding source for the institution. The key for 2013 will be retaining and renewing our base of new and pre-existing donors and either transitioning FreedomWorks for America donors to FreedomWorks and FreedomWorks Foundation donors or otherwise getting them to renew ahead of the 2014 mid-term elections. Simultaneously, we must nurture our existing member and activist relationships and deepen their fidelity to FreedomWorks and the greater cause for Freedom. To help accomplish these tasks in 2013, our membership marketing and fundraising department will focus more intensely on personalized marketing engagements, whereby we fulfill the demonstrated needs and desires of our donors, members, and activists while simultaneously opening new channels through which they can engage with FreedomWorks' core programs and the community at large. 6 The challenges and opportunities are significant, but our commitment is even more resolute in demonstrating that this movement for freedom isn't "going away." Rather, it is just now beginning to realize its true potential as a catalyst for lower taxes, less government and more freedom. 7 TO: Matt Kibbe, President and CEO FROM: Kara Pally Director of Web and Technology RE: Online Growth and Web Development Update DATE: December 17, 2012 This year on FreedomWorks.org, visitors came from all over the world--15,204 cities in 203 countries and territories. More specifically, our traffic came from the following sources: o 30% came directly to FreedomWorks.org o 52% came from referring sites o 18% came from search engines Overall, we saw an 83 percent increase in unique visitors to FreedomWorks.org. We also saw a 60 percent increase in total visits and a 14 percent increase in pageviews. (per month) 1/1-10/31, 2011 1/1-10/31, 2012 Unique Visitors 159,434 291,135 Visits 223,784 358,279 Pageviews 518,848 589,722 But our web properties go far beyond FreedomWorks.org. In addition to many time-sensitive microsites, our core websites include: o FreedomWorks - www.FreedomWorks.org o FreedomConnector - Connect.FreedomWorks.org o FreedomWorks for America - www.FreedomWorksForAmerica.org o FreedomWorks PAC - PAC.FreedomWorks.org o Live Events - Live.FreedomWorks.org o Congressional Scorecards - Congress.FreedomWorks.org The traffic on these sites is also substantial. The chart below represents monthly data from st st January 1 through October 31 , 2012: (per month) FreedomWorks FreedomConnector FWFA FW PAC Live Events Congressional Scorecards TOTAL Unique Visitors 291,135 69,432 44,763 382 60,008 22,940 488,660 Visits 358,279 144,020 56,385 426 73,912 26,653 659,675 Pageviews 589,722 716,595 110,776 811 111,640 62,253 1,591,797 FreedomConnector continues to be the largest online network for Tea Party activists. The community is thriving with: o 214,002 total users o 18,126 events posted in 2012 o 6,825 active groups In 2012, visitors to FreedomConnector came from 12,079 cities across 171 countries and territories worldwide. Domestically, visitors came from 9,431 cities across all 50 states. The average visit duration for FreedomConnector is 7:25 minutes, which is significantly higher than our other websites. By comparison, FreedomWorks.org's average visit duration is 1:08 minutes. FreedomWorksForAmerica.org's is 1:30. This means our members are spending more time on FreedomConnector, and consuming more content. This content ranges from discussions and social connections to news and blog posts. From st st January 1 through October 31 , 2012 there were: o 17,468 Daily News stories posted o 65,372 votes in national polls o 504,037 discussions or comments posted We project FreedomConnector will continue to grow in membership by at least 5,000 users per month through the end of the year. How we compare FreedomWorks' web traffic is significantly higher than most of our competitors. Similar organizations like Americans for Prosperity have vastly fewer unique visitors to their website each month. Statistics in the charts below are pulled from www.compete.com. The most recent data available data is from January 2012 through September 2012. (per month) FreedomWorks Club for Growth Cato Institute Tea Party Patriots RNC Americans for Prosperity Reason Heritage URL core websites listed above www.clubforgrowth.org www.cato.org www.teapartypatriots.org www.gop.com www.americansforprosperity.org www.reason.com www.heritage.org 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 2 Unique Visitors 488,660 11,729 152,309 161,566 162,601 176,179 319,355 832,685 Live Events FreedomConnector's Live Events module was completed in July 2012. It enables us to hold live video events online and engage our members with real-time chat, including a "promoted" chat area where moderators can promote chats (or tweets from Twitter) and take questions from the audience. Leveraging live stream services like Ustream, the Live Events platform also features a live opinion poll where users can adjust an "opinion bar" to reflect their like or dislike of the video content. An aggregate of the full audience's mood is displayed to the left of the opinion bar. Live Events has had an incredible response. We have used it for dozens of events, from Matt Kibbe's debate with Michael Grunwald to our massive FreePAC events around the country, which garnered over 20,000 views to the Live Events page for FreePAC Dallas alone. Since its launch, the Live Events site has received 221,737 visits, 180,024 unique visitors, and 334,920 pageviews. We've also repurposed the live chat feature for FreedomConnector to create a chatroom that is always available independent of Live Events. 3 Congressional Scorecard FreedomWorks' online Congressional Scorecard was launched in September 2012. This new tool helps users hold members of Congress accountable by tracking their votes on key issues for economic freedom. Users can view key votes going back to 2005 and see a "lifetime score" for each legislator. This interactive website also gives users "at-a-glance" information about the members of Congress as well as the bills they voted on. The platform pulls data directly from GovTrack.us for accuracy. Since its launch, the Congressional Scorecard site has received 39,980 visits, 34,410 unique visitors, and 93,379 pageviews. 4 Legislator Profiles We are in the final stages of building FreedomConnector's Legislator Profiles, which are scheduled to launch early November 2012. These Legislator Profiles will integrate features of the Congressional Scorecard site into the FreedomConnector platform, and will offer members of Congress a means of communicating directly with their constituents. Profiles will be automatically created for all members of Congress and will feature that member's voting record and lifetime score (pulled from the Congressional Scorecard). Legislators will have an opportunity to take ownership of their profile to communicate directly with users by participating in discussions and posting new legislation they've proposed. Users visiting a Legislator Profile will find news and discussions related to that representative, as well as their voting record and proposed legislation. 5 Community Issues and Demand It The Community Issues module on FreedomConnector is scheduled to launch December 2012. This new feature allows users to suggest and vote on issues that are important to them. Issues are organized by popularity as well as geographically, giving a birds-eye view of issues that prevail nationwide, as well as in local communities. News, events, and other content across the site will be tagged with these issues, enabling users to find relevant information with ease. We are also repurposing this tool to build Demand It, where users can request that FreedomWorks come to their area for training or other activities. Users can vote on locations that have been requested, or request a new one, with the most popular requests rising to the top. This bottom-up approach will help FreedomWorks spend resources more effectively by visiting locations with the greatest demand. 6 FreedomWorks Online Store We are in the final stages of building the Online Store on FreedomWorks.org, scheduled to launch early November 2012. The store will feature merchandise like t-shirts, bumper magnets, coasters, and digital video downloads of our FreePAC events. Promoting brand awareness and offering edgy styles for the grassroots community has been the goal of this project. 7 FreedomConnector International The scope of FreedomConnector International has shifted since its inception. The original idea was to build several country-specific social networking websites, centered on the international freedom movement. However, after meeting with the international groups that will be using these sites at our FreePAC event in Dallas, TX in July 2012, we discovered that a better way of organizing international freedom fighters is possible. At FreePAC we met with approximately 15 members of international activist groups from Japan, Israel, Italy, and more. Our take-away was that the groups are very excited to use new technology to build their online communities and create issue awareness. As could be expected, they all have very different ideas of what the actual website functionality should look like for their country. A one-size-fits-all model is not attractive to them. We introduced the concept of issue sites--with similar functionality to what we'd proposed for country sites. Issue sites will allow users to post news articles, discussions, and events related to a particular issue set. The idea was very well received among all international groups. Issues sites solve a few key problems: o Issue sites are open to all countries, vastly expanding the online community and opening the door to anyone who has an interest. o Issue sites naturally limit the discussion to particular issue sets, avoiding off-topic posts. o There is a lower barrier of entry for issue sites. The incentive to participate is based on connecting with others on issues that people are passionate about, as opposed to connecting with others more generally on a social network. Issue sites will be deployed as the first step in the FreedomConnector International project. The plan is to build an online international community centered on issues that appeal to multiple countries. As the online community grows, we will quickly learn which countries are using the site most and would benefit from a country-specific site. At that point we will already have the technology built to launch country sites as needed. The difference between issue sites and country sites is minimal. Both support news, discussions, events, user profiles, and connections with other users. We've been developing the technology for both. The main thing that's changed is the addition of the issue sites concept and the decision to deploy those sites first. It's simply a different way to frame the same types of content. 8 International Freedom UNITED KINGDOM SHARE Ready to take Freedom into your own hands? 9 Explore the map Top Rated News Discussions Events Hungarian Euroscepticism: Brussels Budapest NEWS 10/70/2072 by Dakota 10 comments Eurosceptic Norway questions its Peace Prize choice EWS NEWS zoommenn Europa ante portas: Border residence. transnational interaction and Euroscepticism in Germany and France NEWS 70/10/2072 by Rachel Add comments Are you as free to ride the Underground as you think? It's a European Union of economic failure, of mass unemployment and of low growth. DISCUSSION 79 hours 28 ago oyAIden 12 comments If I was a Greek citizen I'd be out there trying to bring down this monstrosity that has been put upon those people. DISCUSSION 20 hows 22 ago by Dianne 9 comments TO: Matt Kibbe, President and CEO FROM: Jackie Bodnar Director of Communications RE: Communications Report DATE: December 17, 2012 Earned Media In a media year heavily dominated by the 2012 election cycle, FreedomWorks was able to cement its presence as a decentralized "Get Out The Vote" machine, while also earning consistent press coverage on broader institutional topics, ranging from minority outreach to success in online fundraising. The media was especially keen on following FreedomWorks' innovation and leadership on the creation of the 2012 Freedom Platform, efforts to fight Obama's war on coal, unprecedented online fundraising success and social media community building, international and minority outreach, FreedomWorks PAC endorsements, and Get Out The Vote (GOTV) efforts by FreedomWorks for America, the organization's super PAC. Since the start of the year, FreedomWorks brought in over 1,533 print and blog mentions in prestigious national media outlets, including The New York Times, The Wall Street Journal, Financial Times, Los Angeles Times, Washington Post, Newsweek, TIME, Real Clear Politics, US News & World Report, Red State, Roll Call, Reuters, Associated Press, The Hill, CNN, Newsmax, The Daily Caller, Fox News, and many more. This total rivals the entire amount of print and blog coverage in 2011, without even including the anticipated media coverage coming out of Election Night and the lame duck congressional battles this winter. FreedomWorks was mentioned approximately 1,156 times on television programs nationwide since last October, with 119 staff appearances on shows including the American Morning (CNN), Happening Now (FNC), Fox and Friends (FNC), On the Record with Greta Van Susteren (FNC) Hardball with Chris Matthews (MSNBC), Real News (TheBlaze), Wilkow (TheBlaze), and Squawk Box (CNBC), to name a few. FreedomWorks also carries a large presence on both national and state talk radio with an impressive 552 interviews featuring FreedomWorks staff since the beginning of the year--an average of about 55 interviews per month across the country. FreedomWorks set the tone of the media narrative in 2012, driving three major themes in several stories throughout the year. The first theme emphasized the importance of taking back the Senate, where the real legislative agenda is determined. Matt Kibbe explained this reasoning well in a three-part series for the Daily Caller in October: "If you put all your faith in one politician, you will always be disappointed. This is especially true if he or she holds a position in government with no legislative authority. The only sure path toward paying off the national debt and restoring economic confidence nationwide extends beyond simply taking back the White House. Republicans need to elect bold fiscal conservatives to the House and Senate who will drive the legislative agenda with the responsible budget solutions and pro-growth reforms necessary to get Americans back to work." The second major theme of the year contrasted the value of a strong grassroots ground game with expensive television advertising in political campaign strategy. Kibbe explains this point in another part of his featured Daily Caller series: "The decentralized, bottom-up model of the Tea Party movement is confounding the old-school opinion makers, who still measure political solvency by the 'old criteria,' such as the amounts of money raised for advertising, connections to power players inside the Beltway, and name identification. The political playing field has been flipped onto its head in recent years, and the rules for political campaigning have been rewritten. The new criteria: the set of principles a candidate believes in, how consistently he or she adheres to them, and the level of grassroots energy on the ground. Tea Party activists, and others who sympathize with their limited-government ideals, are putting principle over political party at the ballot box this year. They are educating and informing citizens, examining candidates' voting records, and demanding more than a stale career politician handpicked by party leadership." The third overarching media theme throughout the year has been the uncertain future of the Tea Party movement after the 2012 Election. FreedomWorks' strategic media objective for the remainder of the year is to transition the institution's brand away from the dated "Tea Party" identity, and towards the larger freedom movement that it represents. Matt Kibbe alludes to the eventual shift to a larger "principled action community" in a September column on TheBlaze.com titled, "Freedom Hits the Road": "If you thought the absence of a big taxpayer march on Washington this September 12th was evidence of the death of the Tea Party movement, you're going to want to think again. The Tea Party is not gathering on a national stage to commiserate like it used to. Instead, communities of like-minded individuals are gathering at the state and local levels, focusing their efforts toward a common vision that will survive far beyond the 2012 election cycle. ...FreePAC Ohio is not a political action conference; it's a principled action community. It's an opportunity for individuals in the greater Ohio area who believe in the values of freedom to get connected with each other, educate themselves, and most importantly, to share that gained knowledge with their neighbors to recruit and continue building the limited-government community." Pop culture phenomenon and trends come and go, but the ideas of freedom and individual liberty are evergreen. It's important to make sure that FreedomWorks evolves to meet the needs of its membership in a way that keeps it relevant in the news cycle as well. 2