EFTA01301114.pdf

DRAFT 8/26/2011 Version 13 Wednesday, August 31, 2011 PROJECT MOLECULE — CLIENT DRAFT {investment products: Not FDIC insured • No bank guarantee • May lose value Please see important information at the end of this presentation. J.P.Morgan SDNY_GM_00078533 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001660 EFTA_00I89000 EFTA01301114  Agenda • A unique opportunity • A unique approach • How would it work - Donor case studies - Investments - Philanthropy • Next steps • Appendix J.P. Morgan SDNY_GM_00078534 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-0000i661 EFTA_00I89001 EFTA01301115  Executive Summary Opportunity • The Gates Foundation has established a leadership position in global philanthropy with over $25Bn made in commitments since its inception in 1994 • There is an opportunity for the Gates Foundation to provide transformational philanthropic leadership for unprecedented dollars committed via the Giving Pledge and by other donors • Donors globally have expressed strong interest in collaborating with the Gates Foundation to optimize philanthropic strategy and impact • J.P. Morgan can establish an institutional bridge to link donors globally with forums processes for donor engagement, collaboration, and pooled giving • J.P. Morgan can support the philanthropic missions of the Gates Foundation and collaborating donors with global reach and world class capabilities in investment management, individual wealth planning, fiduciary governance • and perpetuate the institutional framework to sustain these missions in the future J.P. Morgan 2 SDNY_GM_00078535 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001662 EFTA_00189002 EFTA01301116  Executive Summary Objectives • Enable collaboration of donors with the Gates Foundation • Leverage the Gates Foundation's philanthropic expertise and execution on behalf of broader donor pool • Leverage J.P. Morgan's global reach, infrastructure investment management and individual wealth structuring capabilities • Create a structure for governance of individual and pooled philanthropy and investing • Allow for perpetual operation and governance succession • Provide advisory committee opportunities, targeted forums, and focused engagement with the Gates Foundation for significant donors • Optimize structure, flexibility and tax benefits for global donors (as appropriate) • Accept, manage and liquidate unique and/or illiquid assets • Extend global networks, collaboration and philanthropic impact J.P. Morgan 3 SDNY_GM_00078536 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001663 EFTA_00189003 EFTA01301117  Structure Recommended structure The Gates & J.P. Morgan Charitable Giving Fund Governing Board of Directors (8-10 member board) The Gates & The Gates & The Gates & J.P. Morgan Charitable J.P. Morgan J.P. Morgan Giving Fund Charitable Charitable Giving Fund Giving Fund (Sponsoring public organization) (Foreign* private (Domestic qualifying charitable foundation) entity) US International US US US Donor Donor Donor Donor Donor Country Country A B C A B A B Conduit Conduit Conduit Conduit Conduit Conduit Conduit (Donor Advised (Type I Supporting (Offshore donors) (Domestic donors) Fund subaccounts) Organizations) ors J.P. Morgan Tax neutral jurisdiction 4 SDNY_GM_00078S37 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001664 EFTA 00189004 EFTA01301118  Structure Benefits and attributes of recommended structure • A groundbreaking structure combines positive attributes of public and private philanthropic vehicles for U.S. donors and customized solutions for international donors U.S. public charity benefits International entity benefits* • Maximizes U.S. tax deductibility • Structure in a tax neutral jurisdiction will provide maximum flexibility for appropriate donors • Accommodates donations from private foundations • Country-specific entity options to meet donors' tax and • Avoids private foundation constraints regulatory considerations - 5% annual payout • Facilitates cross border philanthropic giving and 2% excise tax collaborative partnerships - Restrictive self dealing rules • Charitable foundation permits donor anonymity Donor Advised Fund option preserves anonymity Supporting organization allows for donor board positions Note: J.P. Morgan Chase will provide broad public fundraising Structural benefits Allows for participation by broad range of donors and pledged giving • Provides framework for social impact investing • Supports donor collaboration and access to expertise • Provides professional institutionalized framework for longevity and board succession Investment benefits • Tailored investment recommendations allowing each donor to receive customized portfolio construction and to make asset allocation recommendations • Investment performance of one donor's contributions is segregated from other pools, minimizing drawdowns and preserving grant-making ability • Allows diversification requirements to be more easily met and a longer timeline for liquidations relative to private foundations J.P. Morgan • Foreign private charitable foundations and country-specific entities 5 SDNY_GM_00078538 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001665 EFTA_00189005 EFTA01301119  Governance Legal and organizational structure - U.S. The Gates & J.P. Morgan Charitable Giving Fund (Sponsoring Public Organization) Governing Board of Directors (8-10 board members) OveIlight and governance • Committee oversight • Key function delegation Strategic planning and direction • Senior management hiring • Minutes and recordkeaping Investment Committee Strategic Program I Grant and Management and Governance Finance Audit Committee (Board & advisory members) Distribution Committee Committee (board and advisory members) (Board & advisory members) (Board & advisory members) • Oversees investment assets • Oversight responsibility regarding • Formulates overall investment policies • Review at a strategic level the charity's • Assists Board in fulfilling oversight financial reporting, internal control, and guidelines program initiatives to assure they responsibilities and in achieving and audit process • Monitors the portfolio for compliance support the mission charitable purpose • Reviews spending policy and budget with policies and for meeting • Do due diligence on and direct funds • Reviews governance. compensation, • monitors for compliance performance objectives towards selected charitable recipients personnel policies • Sets officer compensation Executive Director • Committee member with day-to-day oversight • Staff management • Strategic development / decision making Donor Advised Fund Type I Supporting Organizations (5.O.) ($100MM+ donors) DAF subaccounts Slain rec charity board ion*: A Conduit's B Conduit's C Conduit's • investments board board board • distributions • other S.O. business US Donor US Donor US Donor A B C Various 5.O. committees Conduit Conduit Conduit 10 J. P. Morgan •A majority of the directors of the S.O. board must be appointed or elected by the Sponsoring Public Organization SDNY_GM_00078539 6 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001666 EFTA_00189006 EFTA01301120  Structure a Managing risk and fiduciary responsibilities for over 160 years The Gates & J.P. Morgan Charitable Giving Fund Governing Board of Directors (8-10 member board) Overall Portfolio Risk The Gates & The Gates & The Gates & J.P. Morgan Charitable Management J.P. Morgan J.P. Morgan Giving Fund Charitable Charitable • Liquidity Giving Fund Giving Fund (Sponsoring public organization) (Foreign* private (Domestic qualifying charitable foundation) entity) • Transparency U.S. International • Stress testing Country Country • Drawdown V.S. Donor U.S. Donor U.S. Donor Intl Donor Donor A Conduit B Conduit A Conduit B Conduit C Conduit A Conduit B Conduit • Annual potential or7.- Equity loss 9 10 (Donor Advised (Type I Supporting (Offshore (Domestic donors) Fund subaccounts) Organizations) donors) J.P. Morgan * Tax neutral jurisdiction. 7 SDNY_GM_00078540 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001667 EFTA_00189007 EFTA01301121  Case Study Three donors - Three pathways Case Study 1: IIIIII Case Study MIN SE Study 3: Donor U.S. Individual a F.S. Family Non-U.S. Family Assets Sl0Bn of restricted stoc r i0v0aM eciof Laintedrest in a I teM rivate Equity Group b400MM of illiquid commercial real estate Contribution World Class Restricted Stock Real Asset Group illamette Management Management Investment Specialists Cassie Turley uff and Phelps Investments OUR APPROACH TO INVESTING management Customized Manage Risk of Incorporate Invest ,n Word Class Morey Gene-ate LIQL, dity Portfolio Construction Concentrated Assets Tactrcol Sh:fts Managers Asset Allocation Contribution 5% 3% 6% 10% 6% 13% During 63643 4 / 4...... 11% Liquidation 3% 2% SO% 3% 1% 7% 3% 6% 7% 10% Fully Diversified 3% 4 ss% 4% 6% • US Equity • International Equity Hedge Funds • PE ■ Real Estate • Commodities ■ US Fixed Income • Non-US Fixed Income Cash • Restricted Stock J.P.Morgan 8 SDNY_GM_00078541 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001668 EFTA_00189008 EFTA01301122  Individual philanthropists can leverage the deep resources and experience Case Study of the Gates Foundation and J.P. Morgan to forge powerful global partnerships in philanthropy Case Study Ili= MENPt: Donor U.S. Individual U.S. Family Non-U.S. Famir Assets IN $10Bn of restricted stock 5300MM of LP interest in a priva equity fund $400MM of illiquid commercial real estate Philanthropic $20MM annually for health $30MM annually for healthcare for $100MM annually for health i ll Objectives education globally children in Africa Philanthropy: $20MM $3omm $150MM imassalaseasaasaseas Bill and Melinda Gates Foundation 540MM • The Gates Foundation's existing network Purchase oral polio vaccines will be augmented by J.P. Morgan's (OPV) in Afghanistan global business presence and outreach Develop 840MM • J.P. Morgan will access broad donor Strategy lk Purchase oral polio vaccines (OPV) in support from the firm's global client Pakistan relationships Adjust Make $20MM • Over 160 years of experience underpins Strategy Grants Finance the surveillance network in Pakistan J.P. Morgan's fiduciary stewardship of client assets $20 MM • The philanthropy experts serving J.P. Measme "t• Deliver MenAfrVac in African meningitis belt Morgan's clients reflect a 50 year Progress • tradition of supporting client's $30MM philanthropic endeavors, distributing an Purchase rotovirus vaccine in average of S100MM annually from a base The Philanthropy Centre at J.P. Morgan Latin America for 3 years of $2Bn of charitable trusts and foundations J.P Morgan 9 SDNY_GM_00078542 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001669 EFTA_00I89009 EFTA01301123  Investments Harnessing a global network of investment insight and solutions With over a century of experience serving our clients, we have built a formidable cache of global resources ▪ Worldwide network of investment professionals operating in 23 countries' ▪ Real-time access to local markets and investment opportunities ▪ Hundreds of millions invested each year in research programs globally ▪ Majority interest in Gavea Investimentos, one of Brazil's largest alternative asset managers ▪ Investing in Asia since 1972 and on the ground in Europe for more than 135 years J.P. Morgan Hedge ik IUNDSC AW6114011 Apax ARTISAN PAMIRS ArOLLO :WM Gavea Fund Advisory Group J.P. Morgan Global it Highbridge I Real Asset Group i. CI L AMOS = Calvert •1 211 if The Philanthropy iIC I The ',Four BRIDGEWATER i II i J.P. Morgan Private Centre at J.P. Equity Group Morgan .. 't e ii i 1 J.P. Morgan ii Global Investment i i1 : I Strategy Endowments & Foundations Group dp Capital Guixlian- EAGLE117,... !₹ I I !........P!..“ .C OGebeallinIsrilauteer. II MIZ . I it Portfolio I it GMAG Construction nr M, Manager Due Global Access FIDUCIARY %UMWMENT. INC. IFF PERRY CAPITAL Diligence Platform Ma ttlinsjs Asia' CarTAL 10004011111 040. lansaacnt Camel • Global Investment Security Capital r Specialists • PAIM4r112% r0.1 2.111.1041% . I I' I C Closely Held Asset Junius CAM At t.ItOur Management Group Restricted Stock Advice Lab ILE Specialists N tottortinent . Advisors is< WELLINGTON SILVERLAKE THIRD POINT CifELU MADE/MEE J.P. Morgan 1 As of March 31, 2011 10 SDNY_GM_00078543 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001670 EFTA_00189010 EFTA01301124  Investments J.P. Morgan advises each donor as their own CIO J.P. Morgan The Gates & J.P. Morgan Charitable Giving Fund Global Head of Investment Strategy: Michael Cembalest Works with Fixed Income, Manager Portfolio Board of Directors S.O. Investment FX and Equities: Alternatives: Selection: Construction Commodities Kevin Alger David Frame Jamie Kramer Arc han Bast' Investment Committee Committee Brian Carlin Committee Members The Gates & J.P. The Gates & J.P. Voting Morgan Chartable Morgan Chartable • Warren Buffett Giving Fund Donor Giving Fund Donor George Kaiser CIO: Investor Tony Werley Non-voting • Ted Forstmann - Lee Cooperman • Mike Cembalest David Rubenstein - Mary Erdoes The Gates & J.P. Morgan Chartable Giving Fund Donor J.P. Morgan 11 SDNY_GM_00078544 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001671 EFTA_00I 890 EFTA01301125  The Gates & J.P. Morgan Charitable Giving Fund will benefit from J.P. Philanthropy Morgan's rich philanthropic history and resources The Gates & J.P. Morgan Charitable Giving Fund The Philanthropy Centre Board of Directors • Diane Whiny, Co-head of the Centro Strategic Program 5.O. Strategic Program • Jackie Elias, Co-head of the Centre Grant and Grant and Distribution Works Distribution Committee • Rebecca Eastmond, Senior Philanthropic Advisor, EMEA with Committee • Erin Hogan, Senior Philanthropic Advisor, U.S. Committee Memberl Potential Committee Philanthropic Services Members Melinda Gates (Chair) Casey Burgess, Philanthropic Advisor Dr. Anthony Lake - Connie Brandeis, Philanthropic Advisor Ray Chambers Indra K. Nooyi Jonathan Horowitz, Philanthropic Advisor Terry Gou Susan Rice Queen Rania of Jordan Wealth Advisory Dr. Charles MacCormack • Debra Treyz, Senior Wealth Advisor Jeffery Sachs Seth Berkley • Janine Racanelli, Senior Wealth Advisor And will build on the successful Gates Foundation and J.P. Morgan partnership efforts in areas of global health and education 11).Morgan 12 SDNY_GM_00078545 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001672 EFTA 00189012 EFTA01301126  Philanthropy J.P. Morgan's global Wealth Advisory team provides global reach and deep experience in advising clients on customized giving strategies Donor requirements Structuring and tax concerns • Time horizon - Pay down or in perpetuity • Wealth to be allocated to philanthropic endeavors - One or multiple generations • Timing of donations Source of funding - One-time or overtime