1. Presented by: Janet Wong KPMG LLP 6 November 2007 G L O B A L G R A N T S P R O G R A M T A X Annual High Tech Tax Institute International Corporate Grantmaking

2. 1 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN BY KPMG TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN. The information contained herein is general in nature and based on authorities that are subject to change. Applicability to specific situations is to be determined through consultation with your tax adviser.

3. 2 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. International Giving Trends

4. 3 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Philanthropy on the Rise Corporate Donations Grew by 6% Source: The Chronicle of Philanthropy, August 23, 2007, growth from 2005 to 2006

5. 4 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Charitable Giving in 2006

6. 5 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Corporate Giving on the Rise Total dollar amount of cash donations rose to $3.8 billion in 2006 from $3.5 billion in 2005. Based on a survey by The Chronicle of Philanthropy, corporate giving is expected to increase in 2007. Top focus areas for corporate donations in 2006 and 2007: - environment and - environment and - improving education. - improving education.

7. 6 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Giving by Focus Area

8. 7 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Corporate Giving by Program Type – 2005 Source: Foundation Center, Key Facts on Corporate Foundations, May 2007

9. 8 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. International Giving 2002-2004

10. 9 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. International Giving 1998-2005

11. 10 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. International Giving 1998-2005 Growth in international giving was temporarily curtailed by 9/11, but has rapidly accelerated since 2003. Human catastrophes of epic scale have drawn attention to international giving opportunities. Several large foundations began major international initiatives, while a large number of organizations began to participate in international giving programs. The increasing population of U.S. immigrants has continued to provide support back to their country of origin.

12. 11 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. International Giving by Country

13. 12 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Companies that Gave More Than $1 million to Charities Outside the United States In a survey conducted by The Chronicle on Philanthropy, 39 Fortune 500 companies reported giving over $1M to charities outside the US in 2006. The range of giving was from $1.2M to $790M.

14. 13 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. 2005 Corporate International Giving Source: Committee Encouraging Corporate Philanthropy, Giving by the Numbers 2006

15. 14 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. 2006 Corporate International Giving Source: Committee Encouraging Corporate Philanthropy, Giving by the Numbers 2007

16. 15 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. 2006 Corporate International Giving Source: Committee Encouraging Corporate Philanthropy, Giving by the Numbers 2007

17. 16 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. 2006 Corporate International Giving Source: Committee Encouraging Corporate Philanthropy, Giving by the Numbers 2007

18. 17 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Challenges of International Giving and Grantmaking

19. 18 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. International Challenges Compliance with U.S. laws and regulations Differences in international business practices Logistical issues (e.g., time and distance from grant programs, unreliability of communication and electrical systems, insufficient infrastructure, etc.) Other issues (e.g., corruption, political instability and social unrest, etc.)

20. 19 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Common Issues with International Grantees Reporting Reporting Third parties (distant locations) Third parties (distant locations)Procurement Difficult tax authorities/laws/corruption Re-granting to another overseas grantee Re-granting to another overseas grantee Capacity (financial and programmatic) of grantee Capacity (financial and programmatic) of grantee

21. 20 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. International Grantmaking – Measuring Impact Programmatic effectiveness Measuring and analyzing the results Agreeing performance, in writing, in advance Helping build grantee sustainability Obtain a signed grant agreement (not an “award letter”) “Know” your type of grant – impact/coverage vs. behavior Repercussions for lack of performance Repercussions for lack of performance

22. 21 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Corporate Giving Priorities and Challenges in 2007 In a survey conducted by The Conference Board, international giving was noted as a top concern for individuals in-charge of corporate giving programs: - “The challenge of global giving was mentioned most frequently as the single biggest new challenge to be addressed in 2007.” - “The size of the business presence in a foreign market is the most important factor in determining international giving priorities.”

23. 22 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Compliance with U.S. Tax and Other Laws – What to Be Aware of When Giving Cash, Products or Services

24. 23 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Compliance with U.S. Tax and Other Laws Compliance with Anti-Terrorism Measures Executive Order 13224 The Patriot Act Treasury Department Guidelines Grants from Private Foundations Internal Revenue Code Section 4945, Taxes on Taxable Expenditures

25. 24 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Compliance with Anti-Terrorism Measures Patriot Act Signed into law by President Bush on 26 October 2001 Enhanced the authority of U.S. law enforcement for the stated purpose of fighting terrorist acts in the United States and abroad Prohibits an organization from willfully providing or collecting funds with the intention or knowledge that such funds will be used to carry out terrorism Executive Order 13224 Executed by President Bush on 23 September 2001 Blocks property and property interests in the U.S. of certain individuals and entities (“persons”) Prohibits U.S. persons and persons within the U.S. from dealing in blocked property or making or receiving contributions of funds, goods and services to or for the benefit of persons subject to the Executive Order Prohibits donations of food, clothing, medicine and other such items to persons whose property is blocked under the Executive Order, even if the donations are intended to relieve human suffering

26. 25 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Compliance with Anti-Terrorism Measures OFAC The Treasury Guidelines (2002, 2005, and 2006) Voluntary guidelines issued in 2002 Amended version and invitation for public comment issued in 2005 Upon receipt of comments, revised version issued in September 2006

27. 26 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Code Section 4945, Taxable Expenditures Taxable Expenditures include: Grants to carry on propaganda, or otherwise attempt to influence legislation, Grants to influence the outcome of any specific public election, or to carry on, directly or indirectly, any voter registration drive, Grants to an individual for travel, study, or other similar purposes by such individual (except as specifically provided) Grants to organizations which are not U.S. public charities or exempt operating foundations, unless expenditure responsibility is exercised with respect to the grant, or Grants for a purpose other than one specified in Section 170(c)(2)(B).

28. 27 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Grants to Non-Public Charities Good Faith Determination of U.S. Public Charity Equivalency: Equivalency Affidavit Opinion of Counsel Expenditure Responsibility: To exert all reasonable efforts and to establish adequate procedures to See that the grant is spent solely for the purpose for which made, Obtain full and complete reports from the Grantee on how the funds were spent, and Make full and detailed reports with respect to such expenditures to the Secretary.

29. 28 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Expenditure Responsibility- Requirements Pre-grant inquiry Written grant commitment, signed by an appropriate officer of the Grantee, containing the Grantee’s agreement to: Repay any portion of the grant not used for the purposes of the grant, Submit full and complete annual reports on the manner in which the funds are spent and progress made in accomplishing purposes of the grant, Maintain records of receipts and expenditures and make its books and records available to the Grantor, and Not use any grant funds to carry on propaganda, or otherwise attempt to influence legislation; to influence the outcome of any specific public election or to carry on directly or indirectly any voter registration drive; to make any grant which does not comply with 4945(d)(3) or (4) or to undertake any activity for any purpose other than one specified in section 170(c)(2)(B). Receipt of Grantee reports Reporting to Internal Revenue Service

30. 29 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Expenditure Responsibility- Special Considerations Grants for Endowments or Capital Expenditures Long term required reporting (shorter for capital expenditures) Program Related Investments Slight modifications to the Expenditure Responsibility requirements Earmarked Grants Look through to the status of the ultimate Grantee Grants to Foreign Governments Consider use of a Foreign Government Affidavit and other due diligence deemed prudent as good grantmaking procedures

31. 30 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Expenditure Responsibility- Violations Diversions by Grantees Are taxable expenditures of the Grantor unless Grantor takes all reasonable and appropriate steps to recover any diverted grant funds and the dedication of other grant funds held by the Grantee, withhold all future payments until funds are restored, receives Grantee’s assurances that no future diversions will occur, and requires Grantee to take extraordinary measures to prevent future diversions Grantee’s Failure to Make Reports Are taxable expenditures of the Grantor unless the Grantor has made a written grant commitment as discussed on the previous slide, complied with the IRS reporting requirements, made reasonable efforts to obtain the required reports, and withholds all future payments on the grant and all other grants to the Grantee until the report is furnished

32. 31 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Expenditure Responsibility- Violations Violations by the Grantor Fails to make a pre-grant inquiry, Fails to make a grant agreement as discussed on the previous slide, or Fails to report to the Internal Revenue Service

33. 32 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Grants to U.S. Charities Outside the United States Due Diligence and Good Grantmaking Procedures: Establish adequate procedures to foster due diligence over the use of the funds, including the requirements included under the Expenditure Responsibility rules Establish adequate procedures to foster due diligence over the use of the funds, including the requirements included under the Expenditure Responsibility rules Pre-grant inquiry Written grant commitment with limitations as to the uses of the grant funds Receipt and review of periodic program and financial reports Procedures based upon a “risk-based model”

34. 33 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Product Donations Product Donations are a growing percentage of overall corporate giving. The U.S. federal government has long encouraged philanthropy by allowing an income tax donation for charitable contributions of appreciated property or money. The issues that companies need to consider when they donate products abroad: - Regulations in Foreign Jurisdiction - VAT

35. 34 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Questions and Answers

36. 35 © 2007 KPMG LLP, a US limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Presenter’s contact details Janet S. Wong Partner (650) 404-5383 jswong@kpmg.com www.us.kpmg.com All information provided is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.