EFTA Document EFTA01301114

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_001 89002 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_00 189003 EFTA01301117 Structure Recommended structure The Gates & J.P. Morgan Charitable Giving Fund Governing Board of Directors (8-10 member board) The Gates & J.P. Morgan Charitable Giving Fund (Sponsoring public organization) US (Donor Advised Fund subaccounts) US Donor A Conduit US Donor B Conduit US Donor C Conduit (Type I Supporting Organizations) ors J.P. Morgan Tax neutral jurisdiction The Gates & J.P. Morgan Charitable Giving Fund (Foreign* private charitable foundation) The Gates & J.P. Morgan Charitable Giving Fund (Domestic qualifying entity) International Donor Donor Country Country A B A B Conduit Conduit Conduit Conduit (Offshore donors) (Domestic donors) 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 • Maximizes U.S. tax deductibility • Accommodates donations from private foundations • Avoids private foundation constraints - 5% annual payout 2% excise tax - Restrictive self dealing rules Donor Advised Fund option preserves anonymity Supporting organization allows for donor board positions Note: J.P. Morgan Chase will provide broad public fundraising International entity benefits* • Structure in a tax neutral jurisdiction will provide maximum flexibility for appropriate donors • Country-specific entity options to meet donors' tax and regulatory considerations • Facilitates cross border philanthropic giving and collaborative partnerships • Charitable foundation permits donor anonymity 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_00 189005 EFTA01301119 Governance Legal and organizational structure - U.S. The Gates & J.P. Morgan Charitable Giving Fund (Sponsoring Public Organization) OveIlight and governance Strategic planning and direction Investment Committee (Board & advisory members) • Oversees investment assets • Formulates overall investment policies and guidelines • Monitors the portfolio for compliance with policies and for meeting performance objectives Governing Board of Directors (8-10 board members) • Committee oversight • Senior management hiring Strategic Program I Grant and Distribution Committee (Board & advisory members) • Review at a strategic level the charity's program initiatives to assure they support the mission • Do due diligence on and direct funds towards selected charitable recipients Donor Advised Fund DAF subaccounts 10 • Key function delegation • Minutes and recordkeaping Management and Governance Committee (Board & advisory members) • Assists Board in fulfilling oversight responsibilities and in achieving charitable purpose • Reviews governance. compensation, personnel policies Executive Director • Committee member with day-to-day oversight • Staff management • Strategic development / decision making Finance Audit Committee (board and advisory members) • Oversight responsibility regarding financial reporting, internal control, and audit process • Reviews spending policy and budget • monitors for compliance • Sets officer compensation Type I Supporting Organizations (5.O.) ($100MM+ donors) 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 J. P. Morgan •A majority of the directors of the S.O. board must be appointed or elected by the Sponsoring Public Organization 6 SDNY_GM_00078539 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001666 EFTA_00 189006 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 Management • Liquidity • Transparency • Stress testing • Drawdown • Annual potential loss J.P. Morgan 9 10 The Gates & J.P. Morgan Charitable Giving Fund (Sponsoring public organization) U.S. The Gates & J.P. Morgan Charitable Giving Fund (Foreign* private charitable foundation) The Gates & J.P. Morgan Charitable Giving Fund (Domestic qualifying entity) International V.S. Donor A Conduit (Donor Advised Fund subaccounts) * Tax neutral jurisdiction. U.S. Donor B Conduit U.S. Donor C Conduit or7.- Intl Donor A Conduit Donor B Conduit Equity (Type I Supporting Organizations) (Offshore donors) Country A Conduit Country B Conduit (Domestic donors) 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 Donor U.S. Individual a F.S. Family Assets Sl0Bn of restricted stoc Contribution Management Investments management Asset Allocation r i0v0aMteMeciof Laintedrest in a I World Class Restricted Stock rivate Equity Group Investment Specialists illamette Management uff and Phelps Customized Portfolio Construction Contribution During Liquidation 1% 6% 7% OUR APPROACH TO INVESTING Manage Risk of Concentrated Assets 10% 3% 2% 3% Gene-ate LIQL, dity 5% 3% 6% 6% 10% Fully Diversified • US Equity • Commodities J.P.Morgan ss% 4% 6% 4 • International Equity Hedge Funds • PE ■ US Fixed Income • Non-US Fixed Income Cash SE Study 3: Non-U.S. Family b400MM of illiquid commercial real estate Real Asset Group Cassie Turley Incorporate Tactrcol Sh:fts 3% Invest ,n Word Class Morey Managers 13% 63643/44...... 11% SO% 7% 3% ■ Real Estate • Restricted Stock 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 of the Gates Foundation and J.P. Morgan to forge powerful global partnerships in philanthropy Donor Assets Philanthropic Objectives Philanthropy: Case Study Ili= U.S. Individual IN $10Bn of restricted stock i ll $100MM annually for health Bill and Melinda Gates Foundation Adjust Strategy "t• Develop Strategy Measme Progress lk Make Grants The Philanthropy Centre at J.P. Morgan J.P Morgan U.S. Family 5300MM of LP interest in a priva equity fund $20MM annually for health education globally Case Study MENPt: Non-U.S. Famir $400MM of illiquid commercial real estate $30MM annually for healthcare for children in Africa $20MM $3omm $150MM imassalaseasaasaseas 540MM Purchase oral polio vaccines (OPV) in Afghanistan 840MM Purchase oral polio vaccines (OPV) in Pakistan $20MM Finance the surveillance network in Pakistan $20 MM Deliver MenAfrVac in African meningitis belt • $30MM Purchase rotovirus vaccine in Latin America for 3 years • The Gates Foundation's existing network will be augmented by J.P. Morgan's global business presence and outreach • J.P. Morgan will access broad donor support from the firm's global client relationships • Over 160 years of experience underpins J.P. Morgan's fiduciary stewardship of client assets • The philanthropy experts serving J.P. Morgan's clients reflect a 50 year tradition of supporting client's philanthropic endeavors, distributing an average of S100MM annually from a base of $2Bn of charitable trusts and foundations 9 SDNY_GM_00078542 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001669 EFTA_00I89009 EFTA01301123 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 Investments J.P. Morgan Hedge Fund Advisory Group Gavea Highbridge J.P. Morgan Private Equity Group Global Investment Strategy Portfolio Construction Manager Due Diligence Security Capital Junius Restricted Stock Specialists J.P. Morgan Global Real Asset Group The Philanthropy Centre at J.P. Morgan J.P. Morgan Endowments & Foundations Group GMAG Global Access Platform Global Investment Specialists Closely Held Asset Management Group Advice Lab J.P. Morgan 1 As of March 31, 2011 ▪ 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 ik ARTISAN IUNDS CI L AMOS dp Capital Guixlian- FIDUCIARY %UMW MENT. INC. lansaacnt Camel r C AW 6114011 it Apax PAMIRS ArOLLO :WM I i. = Calvert iIC i I The ',Four II BRIDGEWATER i •1 211 if ii i 1 .. 't e i i 1 ii : I ₹ EAGLE117,... ! I I .C!........P!..“ OGebeallinIsrilauteer. II MIZ . I it I it nr Ma ttlinsjs Asia' M, IFF CarTAL PERRY CAPITAL 040. 10004011111 • • PAIM4r112% r0.1 2.111.1041%. I I' I C N tottortinent . Advisors is< WELLINGTON CAM At t.ItOur SILVERLAKE THIRD POINT ILE MADE/MEE CifELU 10 SDNY_GM_00078543 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001670 EFTA_001 89010 EFTA01301124 Investments J.P. Morgan advises each donor as their own CIO J.P. Morgan Global Head of Investment Strategy: Michael Cembalest Fixed Income, Manager Portfolio FX and Equities: Alternatives: Commodities Kevin Alger David Frame Selection: Construction Brian Carlin Jamie Kramer Arc han Bast' The Gates & J.P. Morgan Chartable Giving Fund Donor Investor The Gates & J.P. Morgan Chartable Giving Fund Donor CIO: Tony Werley Works with The Gates & J.P. Morgan Charitable Giving Fund Board of Directors Investment Committee Committee Members Voting • Warren Buffett George Kaiser Non-voting • Ted Forstmann - Lee Cooperman • Mike Cembalest David Rubenstein - Mary Erdoes S.O. Investment Committee 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. Morgan's rich philanthropic history and resources The Philanthropy Centre • Diane Whiny, Co-head of the Centro • Jackie Elias, Co-head of the Centre • Rebecca Eastmond, Senior Philanthropic Advisor, EMEA • Erin Hogan, Senior Philanthropic Advisor, U.S. Philanthropic Services Casey Burgess, Philanthropic Advisor - Connie Brandeis, Philanthropic Advisor Jonathan Horowitz, Philanthropic Advisor Wealth Advisory • Debra Treyz, Senior Wealth Advisor • Janine Racanelli, Senior Wealth Advisor Works with Philanthropy The Gates & J.P. Morgan Charitable Giving Fund Board of Directors Strategic Program Grant and Distribution Committee Committee Memberl Melinda Gates (Chair) 5.O. Strategic Program Grant and Distribution Committee Potential Committee Members Dr. Anthony Lake Ray Chambers Indra K. Nooyi Terry Gou Susan Rice Queen Rania of Jordan Dr. Charles MacCormack Jeffery Sachs Seth Berkley 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 J.P. Morgan's global Wealth Advisory team provides global reach and deep experience in advising clients on customized giving strategies Philanthropy Donor requirements Structuring and tax concerns • Wealth to be allocated to philanthropic endeavors • Timing of donations - One-time or overtime - During life or at death • Degree of control to be maintained over invested assets and philanthropic grants • Choice of charitable legal entity • Governance options - Family - Experts - Individual or shared • Time horizon - Pay down or in perpetuity - One or multiple generations Source of funding - Cash - Public securities - Private company stock - Illiquid assets Planning across boarders for families in multi-jurisdictions Wealth Advisory resources and solutions • Average of 17 years experience as tax, trust and estate planning lawyers • Deep expertise in optimizing tax benefits for donors • Multi-jurisdictional expertise and integrated approach to multi-jurisdictional wealth planning • Provide integrated solutions for lifetime and testamentary planning • Work in partnership with network of advisors in generating and sharing wealth planning solutions • Advice Lab is dedicated to developing leading-edge, world class intellectual capital and analytical tools around the unique challenges wealthy families face, including taxes and gifting J.P. Morgan 60 Wealth Advisors worldwide covering over 50 countries 13 SDNY_GM_00078546 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-0000.1673 EFTA_00189013 EFTA01301127 Next steps 0 N N 0 N Draft & file public charity application August Initial conceptual meeting JANUARY: Public announcement Infrastructure build J. P. Morgan Q1 September Determine and finalize objectives and terns of partnership Q2 Final legal structure Determine Board of Directors Q4 Formal engagement Q3 / Q4 Formal fundraising 14 SDNY_GM_00078547 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001674 EFTA_00I890I4 EFTA01301128