Mr. James A. Schneider
255 Golden Gate Avenue
Belvedere, CA 94920
(415) 435-1099

August 20, 1999

Via Facsimile 214-767-3533
And Certified Mail/Return Receipt Requested

Internal Revenue Service
EP/EO Division - MC 4913 DAL
1100 Commerce Street
Dallas, Texas 75242 c/o Todd Cole

RE: LA Schneider/DH Schneider Mounds and
Habitat Uniting Native Tribes Foundation
(MAHUNT) EIN 39-1962426

   Dear Mr. Cole:

We are in receipt of your letter dated August 6, 1999 requesting additional information regarding the MAHUNT application for 501(c)(3) tax-exempt status. Responses to your questions follow:

1. Please provide a third-party independent appraisal of the land to be donated.

Enclosed is a copy of an appraisal dated January 25, 1998 of the initial land to be donated to MAHUNT (Exhibit A). The appraisal was undertaken following the death of Mr. Lloyd A. Schneider at which time the land was appraised at $240,000. It is the intent of the donor, Mr. James A. Schneider, and MAHUNT to have an updated appraisal done within 60 days of transfer to MAHUNT as required by the IRS.

2. Please provide a more detailed map of the area in question. Please list the owners (if known) of the land surrounding the land-to-be-donated.

Enclosed are two aerial detailed maps of the subject property and a map of the Dane County area showing the location of MAHUNT in relation to the City of Madison (Exhibit B). The major portion of land surrounding the initial property to be donated to MAHUNT is owned by the municipalities of Dane County and the Village of McFarland, Wisconsin. Both municipalities have the land designated as park or wetlands. The owners and uses of the property surrounding MAHUNT are as follows:

Southern neighboring property Dane County Park
South/East comer contacting the property Dane County Park
Eastern neighboring property Dane County Park
North/East comer contacting the property Private residential property
(not related to MAHUNT or its
Directors or Officers)
Northern neighboring property Village of McFarland Wetlands/Floodplain
North/West comer contacting the property Three private resident properties (not related to
MAHUNT or its Directors or Officers)
Western neighboring property Village of McFarland Park
South/West comer contacting the property Mud Lake

  

3. Please provide more information concerning the following activities as mentioned in
your application and indicate how these activities would fit within the definition of an IRC
501(c)(3) organization:

a. Communal Living - communal living is not an anticipated MAHUNT activity and to our knowledge it is not discussed in our 501 (c)(3) application.

b. (1) Hunting, Fishing - The Foundation's intent is to preserve and make available property(ies)/habitat to the general public without restriction of membership by providing different ways and means of experiencing the protected property(ies)/habitat all of which are aimed at making a special deep connection with nature and solitude. Legal, ethical and licensed hunting and fishing (the type to be promoted and preserved by MAHUNT are among several activities to be allowed on the property. MAHUNT will also preserve the land and provide opportunities for learning and public access not involving hunting and fishing. Both activities are intended to further the tax-exempt purposes of the organization including the advancement of education, elimination of prejudice and discrimination by preserving and providing access to isolated natural property(ies)/habitat and archeological/historic resource sites related to the Native Americans. Native American artifacts found on the original plot, educational information regarding the Indian mounds located on MAHUNT's property(ies)/habitat and examples/art depicting the wildlife/habitat and flora found over and on MAHUNT 's property(ies)/habitat and in North America, including the hunting and fishing history of Native Americans which will be preserved and used for educational purposes in the Museum proposed for the site. Hunting and fishing are just two of the many activities related to the Native American culture and the land to be preserved by MAHUNT to further its educational purposes, similar to the way that other charitable organizations such as Duck's Unlimited, Federation of North American Wild Sheep (FNAWS), Atlantic Salmon Federation, or Trout Unlimited (the 501(c)(3) entities that may be supported by MAHUNT, pursuant to Article II of its Bylaws), among others, derive benefit from such activities to preserve and conserve wildlife and habitats.

(2) Skeet Shooting. It is not MAHUNT 's intent to permit skeet shooting on its property. The requirement for the availability of skeet shooting arises only in the event that the proposed MAHUNT property cannot be used for its intended educational and conservation purposes and is designed to obtain the highest value for the property or to require that the property remain natural. Any funds received by sale or transfer of the land for the purposes of skeet shooting would be used to acquire or maintain alternative property to further MAHUNT's purposes.

C. A Double Blind Bid System. A "Blind Bid System" will be established by MAHUNT to further its desire to avoid any preference of access or use of MAHUNT properties by any group or individual. The blind cash bid system allows for application from all eligible members of the public for potential access to the MAHUNT properties to appreciate its opportunities for experiencing near pristine solitude. Individual bidders will not have knowledge of the content of other bids received from the general public. The winning bid will be awarded to the highest payment bid for a specific time period. If there are two identical bids, the first bid received will win access for that time period. Officers and Directors of the organization will have neither knowledge of the content of bids nor any involvement in the review or selection of winning bids. The winning bid fee is a donation for use by MAHUNT for management and conservation of the resources on the property(ies). MAHUNT's blind bid system accomplishes purposes similar to other charitable organizations such as Duck's Unlimited, FNAWS, Atlantic Salmon Federation and Trout Unlimited (501(c)(3) organizations that may be supported by MAHUNT as previously stated) where hunting and fishing permits are auctioned or raffled to raise funds to further the purposes of those organizations.

d. Bow Hunting. Legal, ethical and licensed bow hunting, like hunting and fishing discussed in 3.b. above, is intended to further the preservation and understanding of the land and its Native American culture.

e. Indian Casino. It is not MAHUNT 's intent to own or operate a casino on its property. The requirement for the building of such a casino arises only in the event that the proposed MAHUNT property cannot be used for its intended educational and conservation purposes and is designed to obtain the highest value for the property or to require that the property remain natural. Any funds received by sale or transfer of the land for the purpose of an Indian Casino would be used to acquire or maintain alternative property to further MAHUNT 's purposes.

4. Please indicate why the organization will be incurring such extensive fundraising expenses of $40,000, $50,000 and $60,000 in years to come.

The Board of MAHUNT intends to minimize its money raising expenses as a percent of contributions while engaging in a well-designed plan for solicitation of funds first within the areas near the property(ies)/habitat to be preserved and then spreading out to attract additional property(ies)/habitat and broader membership (see MAHUNT 's 1023 Application Part II, Item 1, found in Attachment C at page 9, last paragraph). The three original members of the Board presently anticipate contributing $3,000 in cash and/or publicly traded securities (in addition to the initial property estimated to be valued at $250,000 contributed by James A. Schneider) to the Foundation upon receipt of the 501(c)(3) designation and to match any charitable contributions to the Foundation during 1999 up to $100,000. The fundraising expenses set forth in the application present a realistic estimate of the cost involved in educating the public on a new organization, its purposes, and the availability of the original property to the general public without restriction of membership, Although MAHUNT is expected to meet the one-third support test for achieving classification as a publicly supported charity, its activities and property(ies) and their availability to the general public are consistent with facts and circumstances criteria for achieving classification as a publicly supported charity under the ten percent test. Over one-half of the estimated initial fundraising costs during the first three years of MAHUNT 's existence is projected to be used to inform the general public of its open access policy and the process for obtaining admittance on MAHUNT's property(ies). After the initial three years, it is anticipated that the organization's fundraising costs will diminish dramatically as a percentage of contributions.

5. Why is Mrs. Schneider making loans to the organization for $13,000 and $35,000? How have the proceeds of these loans been utilized by the organization?

Mrs. Schneider is currently making loans to the organization to fund its creation and legal costs of filing for charitable 501(c)(3) status and to cover initial fundraising costs of the organization prior to its recognition as a charitable tax-exempt charitable organization. See the expense table for 1999 reproduced below from Attachment H of MAHUNT 's 1023 Application:

Item 22: Other Expenses:
1999: $30,000 Legal Fees ($10,000 paid to date 8/17/99)
2,000 Soil, toxic waste testing and appraisals
3,000 Administrative costs of bid and draw
2,000 Insurance
   5,000 Recording, processing bid/draw and accounting
$42,000

It is Mrs. Schneider's intent to give generously to the organization once its 501(c)(3) status has been declared and, in fact, the initial directors will be matching all "public contributions" to MAHUNT which are made in 1999 up to $100,000 to assure that the organization is well-funded. for its set-up and initial fundraising costs and to guaranty the success of the organization's goals.

6. It is noted that all of your organization's officers/directors are related. Please note that a board of directors that includes representatives from the community, instead of a board consisting solely of family members, is an indication that the organization will serve public rather than private interests. Do you plan to expand your board to include a majority of non-family members? Provide details and timeframe. Identify and address compensation of directors and officers.

The Board of Directors of the Foundation (the "Board") shall consist of members of the Lloyd and Daphne Schneider family because of their special knowledge and expertise in the preservation and protection of wild lands and the natural use of open spaces for hunting and outdoorsmanship. All three members are retired and intend to devote a substantial amount of their time, as well as significant financial support, and to contribute knowledge and a strong desire to make the formation and future operation of MAHUNT a success, without compensation for their efforts except for reimbursement of out-of-pocket expenses. It is anticipated that MAHUNT will easily meet the one-third support test for qualification as a publicly supported charity and will not be required to justify recognition on the basis of facts and circumstances, including broadbased public representation on the Board. Should MAHUNT fail to reach the one-third test its operation will satisfy all pertinent factors (except for broad-based public Board representation) considered in combination with meeting the ten percent test for public support. Nevertheless, Section 4.11 of the organization's Bylaws anticipate the future selection of Board members from the public who have demonstrated support of the goals and purposes of MAHUNT upon the death or resignation of the original three Board members. It is important to note in this regard that Daphne H. Schneider is 79 years old and has no grandchildren and that James A. Schneider and his wife, Barbara B. Brookins-Schneider also have no heirs. The Bylaws also prohibit the Treasurer (initially Paul J. Jaeger) from being a member of or related to a member of the Board. Under the Bylaws and the organizations' Conflict of Interest Policy, it is the unrelated Treasurer who is the officer with sole power to authorize any and all contracts or transactions between MAHUNT and the members of the Board when any conflict of interest arises.

I believe the MAHUNT 1023 application and additional information and clarifications set forth above clearly support its qualification as a tax-exempt 501(c)(3) organization. If you require any additional information or have any questions regarding the application or this letter, please call. MAHUNT has been carefully organized and its financial support and operations planned for its initial years to ensure successful financial future of the organization and the accomplishment of its goals and purposes. Once 501(c)(3) status is granted, the organization and its directors intend to immediately begin implementing these plans and to start recognizing its objectives.

Sincerely,

/s/ James A. Schneider

James A. Schneider
President, MAHUNT

cc: Linda L. Lilledahl, esq.