NATIONAL UNDERGROUND RAILROAD FREEDOM CENTER

Significant Project / Organizational Issues for Discussion

June 5, 2007

ƒ Project funding model demonstrates that the project is not full-funded:

o $9M (from investment income) used to reach full funding was supposed to be a
temporary solution while fundraising was completed;
o Without that $9M, NURFC has a $6.9M shortfall;
o Shortfall in capital campaign partly due to $3.8M in “Federal TBD” never received
(was supposed to be received in 2005) – it is still being used in their funding model;
o The term of our base lease is 3 years shorter than the investment income projection
horizon, bringing the investment income eligible for full-funding down to $6 million if
it were allowed.

ƒ Operating revenue projections show continued decline:

o Has paying attendance peaked?
o City has recently reduced its $1M annual contribution to $800K;
o Other government support (projected at $3.7M annually) sources unknown;
o Projecting post-“Bridge to the Future” annual private support at $2.8M based on
similar institutions – unknown assumptions.

ƒ Financial statements and projections show an organization with sustainability issues:

o Small operating surplus is really a deficit after depreciation;
o We do not see an operating endowment (NURFC reference having one in a recent
phone conference, but the financial reports;
o Projections show a contracting organization – deficit as a percentage of revenue and
as a percentage of assets is increasing;
o Forecast of contraction appears to not reconcile with Rep. Yates’ assertions of
“something big” coming.

ƒ NURFC not adequately accounting for future capital expenditures:

o Based on useful life projections used by their accountant, capital
renewal/replacement/large maintenance anticipated beginning in year 3 of
operations (this year) and growing through the years – deferral is not a long-term
strategy;
o Pro forma projecting only $100K for capital improvements per year (only 2% of
depreciation expense, which is not shown on the pro forma);
o Caution: depreciation calculated on historical value, renewal/replacement likely to be
more expensive.

ƒ NURFC must meet contractual reporting obligations:

o Monthly fundraising pledge/receipts report;
o Quarterly investment account recap;
o Annual audited financial statements and updated financial projections;
o Annual tax certification, insurance certificates, etc.

M:\NURFC Request Output\NURFC Highlights for 5 June 2007 Meeting.doc

1/20/2011