2015-07-10T10:47:36-05:00 2014-12-31 271728945 O'CONNOR DAVIES LLP 665 FIFTH AVENUE NEW YORK NY 10022 990 2014-01-01 142007220 PRO PUBLICA INC PROP 2125145250 155 AVE OF THE AMERICAS NO 13 FL NEW YORK NY 10013 RICHARD J TOFEL PRESIDENT 2125145250 2015-07-09 1 GARRETT M HIGGINS P00543209 2122862600 2015-07-09 2014 2016-02-25 16:41:14Z X RICHARD J TOFEL 155 AVE OF THE AMERICAS NO 13 FL NEW YORK NY 10013 10339775 0 X WWW.PROPUBLICA.ORG X 2007 DE TO EXPOSE ABUSES OF POWER AND BETRAYALS OF THE PUBLIC TRUST - SEE "SCHEDULE O" FOR CONTINUATIONBY GOVERNMENT, BUSINESS, AND OTHER INSTITUTIONS, USING THE MORAL FORCE OF INVESTIGATIVE JOURNALISM TO SPUR REFORM THROUGH THE SUSTAINED SPOTLIGHTING OF WRONGDOING. 10 9 69 9 22522 11988 13678241 10169976 0 0 103 4176 87123 150123 13765467 10324275 0 0 0 0 7807423 8589013 0 0 482362 2525386 2897439 10332809 11486452 3432658 -1162177 7938469 6865118 95446 184272 7843023 6680846 X PRO PUBLICA IS AN INDEPENDENT, NON-PROFIT, PULITZER PRIZE-WINNING NEWSROOM THAT PRODUCES INVESTIGATIVE JOURNALISM IN THE PUBLIC INTEREST. OUR WORK FOCUSES EXCLUSIVELY ON TRULY IMPORTANT STORIES. SEE "SCHEDULE O" FOR CONTINUATION.WE PRODUCE JOURNALISM THAT SHINES A LIGHT ON EXPLOITATION OF THE WEAK BY THE STRONG AND ON THE FAILURES OF THOSE WITH POWER TO VINDICATE THE TRUST PLACED IN THEM. IN THE BEST TRADITIONS OF AMERICAN JOURNALISM IN THE PUBLIC SERVICE, WE AIM TO STIMULATE POSITIVE CHANGE, UNCOVERING UNSAVORY PRACTICES AND ABUSES OF POWER IN ORDER TO PROD REFORM. WE DO THIS IN AN ENTIRELY NON-PARTISAN AND NON-IDEOLOGICAL MANNER, ADHERING TO THE STRICTEST STANDARDS OF JOURNALISTIC IMPARTIALITY.OUR STATED MISSION IS "TO EXPOSE ABUSES OF POWER AND BETRAYALS OF THE PUBLIC TRUST BY GOVERNMENT, BUSINESS, AND OTHER INSTITUTIONS, USING THE MORAL FORCE OF INVESTIGATIVE JOURNALISM TO SPUR REFORM THROUGH THE SUSTAINED SPOTLIGHTING OF WRONGDOING." 0 0 9773851 60500 INVESTIGATIVE JOURNALISM IN THE PUBLIC INTEREST - SEE SCHEDULE O FOR DETAILS 9773851 1 1 0 0 0 0 0 0 0 0 1 0 0 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 1 44 0 69 1 1 1 0 0 0 0 0 0 0 0 0 X 10 9 0 1 0 0 0 0 0 1 1 0 0 1 1 1 1 1 1 1 1 0 DC AL AK AZ AR CA CT FL GA HI IL KS KY LA ME MD MA MI MN MS MS NH NJ NM NY NC ND OH OK OR PA RI SC TN UT VA WA WV WI X X X BARBARA ZINKANT DIRECTOR OF FINANCE & OPERATIONS 2125145250 155 AVE OF THE AMERICAS NO 13 FL NEW YORK NY 10013 HERBERT M SANDLER FOUNDING CHAIRMAN 3.00 X X 0 0 0 PAUL E STEIGER EXECUTIVE CHAIRMAN 30.00 X X 201352 0 15035 MARK COLODNY DIRECTOR 1.00 X 0 0 0 HENRY LOUIS GATES JR DIRECTOR 1.00 X 0 0 0 CLAIRE HOFFMAN DIRECTOR 1.00 X 0 0 0 ROBERT CS MONKS DIRECTOR 1.00 X 0 0 0 RON OLSON DIRECTOR 1.00 X 0 0 0 PAUL SAGAN DIRECTOR 1.00 X 0 0 0 KAT TAYLOR DIRECTOR 1.00 X 0 0 0 TOM UNTERMAN DIRECTOR 1.00 X 0 0 0 RICHARD TOFEL PRESIDENT AND CO-EXECUTIVE 40.00 X 376782 0 35812 STEPHEN ENGELBERG EDITOR-IN-CHIEF & CO-EXECU 40.00 X 372391 0 56990 DEBRA GOLDBERG VICE PRESIDENT, DEVELOPMEN 40.00 X 258588 0 26815 ROBIN FIELDS MANAGING EDITOR 40.00 X 235832 0 15624 JESSE EISINGER SENIOR REPORTER 40.00 X 216368 0 42951 CHARLES ORNSTEIN SENIOR REPORTER 40.00 X 194351 0 45719 TRACY WEBER SENIOR EDITOR 40.00 X 198051 0 30362 JOSEPH SEXTON SENIOR EDITOR 40.00 X 197046 0 25027 2250761 0 294335 29 0 1 0 ADP TOTALSOURCE 5800 WINDWARD PARKWAY ALPHARETTA GA 30005 PROFESSIONAL EMPLOYER ORGANIZATION 113947 1 10169976 36667 10169976 4176 4176 104222 60500 43722 15500 15500 0 HONORARIUMS REVENUE 900099 23379 23379 ADVERTISING REVENUE 541800 22522 22522 45901 10324275 60500 22522 71277 1343765 645768 415113 282884 6000803 5490429 443731 66643 240251 223508 16743 528890 466916 49687 12287 475304 406929 50240 18135 60585 45691 1309 13585 28749 25874 2875 329715 282885 12044 34786 21787 21787 167352 133815 24466 9071 337028 307149 25087 4792 918608 826591 92017 473814 443610 68 30136 30583 22922 7022 639 170136 137436 32700 17554 15533 2021 UBIT TAX EXPENSE 3721 3721 PUBLIC REC. COP. & SUBS 200346 193462 365 6519 REPAIRS AND MAINTENANCE 62284 56090 6194 RECRUITMENT & PROF DEVE 55177 53330 1837 10 20000 20000 11486452 9773851 1230239 482362 1986592 1144084 1100153 3854329 4506444 1435405 1692 5817 105616 147817 1770462 1518223 234012 252239 21167 3960 4260 7938469 6865118 95446 184272 95446 184272 X 3593023 3442914 4250000 3237932 7843023 6680846 7938469 6865118 -1162177 0 X X 0 1 X 1 0 X 10209401 10115367 10920019 13678241 10169976 55093004 10209401 10115367 10920019 13678241 10169976 55093004 24721606 30371398 3661 16263 17146 51381 47898 136349 2401 8465 11842 12775 35483 11600 7103 2927 10100 23379 55109 55319945 60500 0.54900 0.49720 X SCHEDULE A, PART II, LINE 10, EXPLANATION OF OTHER INCOME: HONORARIUMS REVENUE - 2010 AMOUNT: $ 11,600. 2011 AMOUNT: $ 7,103. 2012 AMOUNT: $ 2,827. 2013 AMOUNT: $ 10,100. 2014 AMOUNT: $ 23,379. OTHER REVENUE - 2012 AMOUNT: $ 100. RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED 649782 542686 107096 1120680 975537 145143 252239 X 10324275 0 10324275 0 10324275 11486452 0 11486452 0 11486452 PART X, LINE 2: THE ORGANIZATION RECOGNIZES THE EFFECT OF INCOME TAX POSITIONS ONLY IF THOSE POSITIONS ARE MORE LIKELY THAN NOT OF BEING SUSTAINED. MANAGEMENT HAS DETERMINED THAT THE ORGANIZATION HAD NO UNCERTAIN TAX POSITIONS THAT WOULD REQUIRE FINANCIAL STATEMENT RECOGNITION. THE ORGANIZATION IS NO LONGER SUBJECT TO AUDITS BY THE APPLICABLE TAXING JURISDICTIONS FOR PERIODS PRIOR TO 2011. X X X X 0 0 0 0 0 0 0 0 0 PAUL E STEIGER EXECUTIVE CHAIRMAN 197644 0 0 0 3708 0 10000 0 5035 0 216387 0 0 0 RICHARD TOFEL PRESIDENT AND CO-EXECUTIVE 373170 0 0 0 3612 0 13000 0 22812 0 412594 0 0 0 STEPHEN ENGELBERG EDITOR-IN-CHIEF & CO-EXECU 368779 0 0 0 3612 0 13000 0 43990 0 429381 0 0 0 DEBRA GOLDBERG VICE PRESIDENT, DEVELOPMEN 257733 0 0 0 855 0 13000 0 13815 0 285403 0 0 0 ROBIN FIELDS MANAGING EDITOR 235072 0 0 0 760 0 5900 0 9724 0 251456 0 0 0 JESSE EISINGER SENIOR REPORTER 215884 0 0 0 484 0 10988 0 31963 0 259319 0 0 0 CHARLES ORNSTEIN SENIOR REPORTER 193920 0 0 0 431 0 9797 0 35922 0 240070 0 0 0 TRACY WEBER SENIOR EDITOR 197063 0 0 0 988 0 10200 0 20162 0 228413 0 0 0 JOSEPH SEXTON SENIOR EDITOR 195240 0 0 0 1806 0 10000 0 15027 0 222073 0 0 0 X 9 36667 FMV 0 0 0 0 PART I, COLUMN (B): THE ORGANIZATION IS REPORTING THE NUMBER OF CONTRIBUTORS IN PART 1, COLUMN (B) OF SCHEDULE M. FORM 990, PART III, LINE 4A IN 2014, PROPUBLICA STORIES PRODUCED SUCH CHANGE IN A WIDE RANGE OF IMPORTANT AREAS: -IN MARCH, JUST WEEKS AFTER WE BEGAN PUBLISHING STORIES IN PARTNERSHIP WITH NPR ON THE DYSFUNCTION OF THE PENTAGON'S EFFORTS TO FIND AND IDENTIFY THE BODIES OF MISSING SOLDIERS FROM PAST WARS, THE SECRETARY OF DEFENSE ANNOUNCED AN OVERHAUL OF THE PROGRAM. WITH AN INTERNAL REPORT CALLING FOR A "PARADIGM SHIFT," THE DEPARTMENT PLEDGED TO MAKE MORE MODERN USE OF DNA, AND TO COMBINE TWO FEUDING AGENCIES INTO ONE. IN JUNE, THE MILITARY DECIDED TO DISINTER THE LIKELY REMAINS OF ARMY PVT. BUD KELDER AND 10 OTHER MEN, WHO DIED WHILE BEING HELD AS POWS IN 1942. IN JULY, A PENTAGON INSPECTOR GENERAL'S DRAFT REPORT WE OBTAINED REPEATED MANY OF THE CRITICISMS IDENTIFIED IN THE PROPUBLICA/NPR STORIES. IN AUGUST, THE OFFICIAL WHO HAD LED THE PROGRAM WAS TOLD HE WOULD LOSE HIS JOB. -NEW RULES FINALIZED IN MAY GIVE THE DEPARTMENT OF HEALTH AND HUMAN SERVICES AUTHORITY TO EXPEL PHYSICIANS FROM MEDICARE IF THEY ENGAGE IN ABUSIVE PRESCRIBING. THE NEW RULES ALSO ALLOW THE AGENCY OVERSEEING MEDICARE TO COMPEL HEALTH PROVIDERS TO ENROLL IN THE PROGRAM BEFORE ORDERING DRUGS FOR PATIENTS COVERED BY MEDICARE PART D. BOTH RULE CHANGES FOLLOW REPORTING DONE LAST YEAR BY PROPUBLICA DOCUMENTING REPEATED FAILURES OF MEDICARE OVERSIGHT. -IN DECEMBER, SIX AND A HALF YEARS AFTER A REVELATIONS IN A PROPUBLICA STORY LED TO THE LAST-MINUTE HALTING OF A PROPOSAL TO FREELY ALLOW FRACKING OF NATURAL GAS IN NEW YORK STATE, THE STATE FINALLY CONCLUDED ITS REVIEW OF SUCH DRILLING AND GOV. ANDREW CUOMO ANNOUNCED A BAN ON FRACKING IN NEW YORK. -A NEW LAW, PASSED BY THE CALIFORNIA LEGISLATURE IN LATE AUGUST, IN PART IN RESPONSE TO A PROPUBLICA INVESTIGATION, WOULD HOLD COMPANIES LEGALLY RESPONSIBLE IF TEMP AGENCIES OR SUBCONTRACTORS CHEAT TEMPORARY WORKERS OUT OF PAY OR ENDANGER THEIR SAFETY. IN DECEMBER ILLINOIS REGULATORS MOVED TO REVOKE THE BUSINESS LICENSE OF A CHECK CASHING STORE IDENTIFIED IN OUR REPORTING. -SPARKED IN PART BY PROPUBLICA REPORTING PUBLISHED IN JUNE IN PARTNERSHIP WITH NPR, MASSACHUSETTS IN DECEMBER ISSUED NEW RULES PLACING LIMITS ON PHYSICAL RESTRAINTS OR ISOLATION OF STUDENTS. -IMMEDIATELY AFTER PUBLICATION OF AN ARTICLE ON JULY 21 NOTING THAT MANY USERS OF ONLINE SITES WERE BEING TRACKED BY AN EXTREMELY PERSISTENT TECHNIQUE KNOWN AS "CANVAS FINGERPRINTING" PRODUCED BY A FIRM CALLED ADDTHIS, USE OF THE TECHNOLOGY WAS DISCONTINUED BY THE NATIONAL SECURITY BLOG LAWFARE, THE GERMAN DIGITAL MARKETER LEGATUS AND BY YOUPORN. IN AUGUST, THE TOR BROWSER BEGAN DEFAULT BLOCKING OF THE TECHNOLOGY. -ANOTHER NEW LAW IN CALIFORNIA, ENACTED IN THE AFTERMATH OF OUR SERIES LAST YEAR ON LAX OVERSIGHT OF ASSISTED LIVING FACILITIES, PERMITS THE STATE TO HALT ADMISSIONS TO FACILITIES THAT FAIL TO CORRECT SERIOUS VIOLATIONS OR PAY FINES. -RULES GOVERNING LOANS TO SERVICE MEMBERS UNDER THE MILITARY LENDING ACT ARE BEING TIGHTENED IN RESPONSE TO REPORTING LAST YEAR BY PROPUBLICA AND PUBLIC RADIO'S MARKETPLACE. THE NEW RULES CLOSE LOOPHOLES IN THE LAW, TIGHTEN REGULATORY CAPS ON INTEREST RATES FOR WHAT AMOUNT TO PAYDAY LOANS AND NO LONGER PERMIT SERVICE MEMBERS FROM HAVING LOAN PAYMENTS FOR PERSONAL PROPERTY DEDUCTED FROM THEIR PAY. -AFTER OUR REPORTING EARLIER THIS YEAR ABOUT THE CIRCUMSTANCES BEHIND ILLEGAL DOPING BY SPRINTER TYSON GAY AND THE ROLE OF COACH JON DRUMMOND, AN ARBITRATION PANEL IN DECEMBER BANNED DRUMMOND FROM TRACK AND FIELD FOR EIGHT YEARS. -FURTHER REPORTING THIS YEAR, PUBLISHED IN PARTNERSHIP WITH THE WASHINGTON POST, AND FOCUSED ON A COMPANY CALLED USA DISCOUNTERS WHICH LENDS WIDELY TO SERVICE MEMBERS AND THEN FREQUENTLY SUES THEM, SEEMS TO HAVE PROMPTED THAT FIRM TO CHANGE ITS NAME TO USA LIVING AFTER SIX U.S. SENATORS CHALLENGED ITS PRACTICES. TWO OTHER COMPANIES MENTIONED IN THE SAME STORY, SETTLED AN ENFORCEMENT PROCEEDING IN DECEMBER WITH THE FEDERAL CONSUMER FINANCIAL PROTECTION BUREAU (CFPB), PAYING PENALTIES, AND AGREEING TO REFUNDS AND ON LIMITS TO THEIR ABILITY TO SUE THEIR CUSTOMERS. -THE CFPB IS ALSO TARGETING WORLD FINANCE, WHOSE INSTALLMENT LOANS WERE A FOCUS OF PROPUBLICA REPORTING IN 2013, IN AN INVESTIGATION OF WHETHER THE COMPANY'S LOANS AND THEIR MARKETING VIOLATE FEDERAL LAW. WORLD FINANCE DISCLOSED THE INVESTIGATION IN MARCH. -POSSIBLE UNDERPAYMENT OF NATURAL GAS ROYALTIES TO LANDOWNERS BY CHESAPEAKE ENERGY, SPOTLIGHTED IN A 2013 PROPUBLICA REPORT, IS NOW THE SUBJECT OF AN INVESTIGATION BY THE U.S. DEPARTMENT OF JUSTICE, CHESAPEAKE DISCLOSED IN NOVEMBER. -THE FDA IN FEBRUARY LAUNCHED A FORMAL REVIEW OF ITS OWN PRACTICES WITH RESPECT TO THE REGULATION OF OVER-THE-COUNTER DRUGS. THE AGENCY ANNOUNCEMENT FOLLOWED REPORTING LAST FALL BY PROPUBLICA ON THE DANGERS OF ACETAMINOPHEN, THE ACTIVE INGREDIENT IN TYLENOL, WHICH WOULD BE AMONG THE DRUGS AFFECTED BY ANY NEW RULES OR PROCEDURES. -IN RESPONSE TO PROPUBLICA REPORTING IN JANUARY AND FEBRUARY ON THE NATIONAL QUALITY FORUM, A KEY HEALTH CARE INDUSTRY GROUP, THE QUALITY FORUM STRENGTHENED ITS PROTECTIONS AGAINST CONFLICTS OF INTEREST IN RECOMMENDING PATIENT SAFETY MEASURES AND ITS CEO RESIGNED FROM TWO HEALTH CARE COMPANY BOARDS. -TEVA PHARMACEUTICALS AGREED IN MARCH TO PAY MORE THAN $27 MILLION TO SETTLE STATE AND FEDERAL ALLEGATIONS RELATED TO ITS DEALINGS WITH CHICAGO PSYCHIATRIST MICHAEL REINSTEIN, WHOSE PRESCRIBING PATTERNS WERE THE SUBJECT OF PROPUBLICA REPORTING IN 2009 AND AGAIN LAST YEAR. IN AUGUST, THE STATE OF ILLINOIS INDEFINITELY SUSPENDED DR. REINSTEIN'S MEDICAL LICENSE. -IN NOVEMBER, THE NORTH CAROLINA STATE BOARD OF EDUCATION FORCED A FOR-PROFIT CHARTER SCHOOL CHAIN WHOSE PRACTICES WE HAD REPORTED WAS PLACED ON FINANCIAL PROBATIONARY STATUS, FORCING THEM TO DISCLOSE TO REGULATORS THE SALARIES OF SCHOOL ADMINISTRATORS. ANOTHER SIGNIFICANT TEST IS RECOGNITION FROM PEERS IN JOURNALISM. PROPUBLICA WAS THE FIRST ONLINE NEWS ORGANIZATION TO WIN A PULITZER PRIZE (2010) AND THE FIRST TO WIN A PULITZER FOR STORIES NOT PUBLISHED IN PRINT (2011). OUR WORK WAS HONORED IN 2014 AS FOLLOWS: PROPUBLICA WAS DEEPLY HONORED IN FEBRUARY TO RECEIVE A MACARTHUR AWARD FOR CREATIVE AND EFFECTIVE INSTITUTIONS FROM THE JOHN D. AND CATHERINE T. MACARTHUR FOUNDATION. REPORTING ON FAULTS IN THE MEDICARE PART D PROGRAM BY REPORTERS CHARLES ORNSTEIN, TRACY WEBER AND JENNIFER LAFLEUR AND OUR PRESCRIBER CHECKUP NEWS APPLICATION BY DEVELOPERS JEFF LARSON AND LENA GROEGER GARNERED THE PHILIP MEYER AWARD FOR JOURNALISM USING SOCIAL SCIENCE RESEARCH, A SOCIETY FOR NEWS DESIGN AWARD OF EXCELLENCE, THE HEALTH DATA LIBERATORS AWARD FROM THE HEALTH DATA CONSORTIUM AND THE DEADLINE CLUB AWARD FOR DIGITAL INNOVATION. OUR COVERAGE OF THE RISKS OF TYLENOL BY REPORTERS T. CHRISTIAN MILLER AND JEFF GERTH AND DEVELOPERS AL SHAW, LENA GROEGER AND KRISTA KJELLMAN SCHMIDT RECEIVED THE AL NEUHARTH AWARD FOR INNOVATION IN INVESTIGATIVE JOURNALISM FROM THE ONLINE NEWS ASSOCIATION, A BEST IN BUSINESS AWARD FROM THE SOCIETY OF AMERICAN BUSINESS EDITORS AND WRITERS, A FIRST PLACE AND A THIRD PLACE AWARD FOR EXCELLENCE IN HEALTH CARE COVERAGE FROM THE ASSOCIATION OF HEALTH CARE JOURNALISTS, AND A SOCIETY FOR NEWS DESIGN AWARD OF EXCELLENCE. MICHAEL GRABELL'S REPORTING ON THE PLIGHT OF TEMPORARY WORKERS RECEIVED THE BARTLETT & STEELE G OLD AWARD FOR INVESTIGATIVE BUSINESS JOURNALISM, THE AMERICAN SOCIETY OF NEWS EDITORS AWARD FOR DISTINGUISHED WRITING ON DIVERSITY AND THE DEADLINE CLUB AWARD FOR MINORITY FOCUS. A RANGE OF NEWS APPLICATIONS FROM OUR TEAM ALSO RECEIVED A RAFT OF OTHER HONORS. THESE INCLUDED FIVE ONLINE JOURNALISM AWARDS, INCLUDING PROPUBLICA'S THIRD CITATION IN FIVE YEARS FOR GENERAL EXCELLENCE AND TWO AWARDS FOR OUR SEGREGATION NOW SERIES, THE DATA JOURNALISM JURORS' CHOICE AWARD AND A SOCIETY FOR NEWS DESIGN AWARD OF EXCELLENCE FOR PROPUBLICA'S ORGANIZATIONAL PORTFOLIO. WE ALSO RECEIVED A SOCIETY OF PROFESSIONAL JOURNALISTS SIGMA DELTA CHI AWARD FOR INFORMATIONAL GRAPHICS; A DEADLINE CLUB AWARD FOR LOCAL NEWS REPORTING; TWO SOCIETY FOR NEWS DESIGN AWARDS OF EXCELLENCE, A DATA JOURNALISM AWARD AND THE ASIAN AMERICAN JOURNALISTS ASSOCIATION MULTIMEDIA AWARD FOR OUR CHINA'S MEMORY HOLE NEWS APP; A SOCIETY FOR NEWS DESIGN AWARD OF EXCELLENCE FOR OUR APP ON WHERE CONGRESS STANDS ON GUNS; AND SOCIETY FOR NEWS DESIGN AWARDS OF EXCELLENCE FOR THE INDIVIDUAL PORTFOLIOS OF DEVELOPERS LENA GROEGER AND AL SHAW. OUR PROJECT ON "LIFE AND DEATH IN ASSISTED LIVING" IN PARTNERSHIP WITH FRONTLINE AND REPORTED FOR PROPUBLICA BY A.C. THOMPSON WON A BEST IN BUSINESS AWARD FROM THE SOCIETY OF AMERICAN BUSINESS EDITORS AND WRITER AND THE DEADLINE CLUB AWARD FOR BUSINESS FEATURE. JESSE EISINGER'S COLUMN, THE TRADE, PUBLISHED IN PARTNERSHIP WITH THE NEW YORK TIMES, WON A BEST IN BUSINESS AWARD FROM THE SOCIETY OF AMERICAN BUSINESS EDITORS AND WRITERS. OUR 2014 COVERAGE OF PROBLEM WITH THE MILITARY'S PROGRAM FOR IDENTIFYING THE MISSING IN ACTION WON A FRONT PAGE AWARD FOR ONLINE IN-DEPTH REPORTING. PROPUBLICA'S HEALTH CARE COVERAGE WON THE CITIZEN ADVOCACY FORM 990, PART VI, SECTION A, LINE 3 BEGINNING IN 2012, THE ORGANIZATION BEGAN USING ADP TOTALSOURCE, A PROFESSIONAL EMPLOYER ORGANIZATION ("PEO"). AS A PROFESSIONAL EMPLOYER ORGANIZATION, TOTALSOURCE PROVIDES PROFESSIONAL EMPLOYER SERVICES TO PRO PUBLICA. IN THE PEO RELATIONSHIP TOTALSOURCE AND PRO PUBLICA SHARE CERTAIN RESPONSIBILITIES AND ALLOCATE OTHER EMPLOYER RESPONSIBILITIES BETWEEN EACH OTHER. PRO PUBLICA REMAINS AN EMPLOYER OF THE WORKSITE EMPLOYEES AND TOTALSOURCE IS A CO-EMPLOYER OF PRO PUBLICA'S EMPLOYEES. PRO PUBLICA HAS: DIRECTION AND CONTROL OVER EMPLOYEES AS IS NECESSARY TO CONDUCT ITS BUSINESS, DISCHARGE AND FIDUCIARY RESPONSIBILITY IT MAY HAVE, OR COMPLY WITH ANY APPLICABLE LICENSURE, REGULATORY OR STATUTORY REQUIREMENT OF PRO PUBLICA. CONTROL OVER THE DAY TO DAY JOB DUTIES OF EMPLOYEES AND OVER THE JOB SITES AT WHICH, OR FROM WHICH EMPLOYEES PERFORM SERVICES RESPONSIBILITY OVER THE PROFESSIONAL AND LICENSED ACTIVITIES OF EMPLOYEES INCLUDING ENSURING THAT EMPLOYEES ARE SUPERVISED BY LICENSED INDIVIDUALS AS REQUIRED BY LAW AND FOR DETERMINING WHETHER AN APPLICANT OR EMPLOYEE MEETS PRO PUBLICA'S HIRING CRITERIA AND IS QUALIFIED TO SAFELY AND COMPLETELY PERFORM HIS OR HER JOB TOTALSOURCE RESERVES A RIGHT OF DIRECTION AND CONTROL OVER EMPLOYEES AS IS NECESSARY TO FULFILL ITS OBLIGATIONS AND PROVIDE ITS SERVICES UNDER AN AGREEMENT BETWEEN PRO PUBLICA, INC. AND TOTALSOURCE. TOTALSOURCE AND PRO PUBLICA, INC. HAVE A RIGHT TO HIRE, DISCIPLINE, AND TERMINATE EMPLOYEES AS TO EACH ONE'S EMPLOYMENT RELATIONSHIP WITH EMPLOYEES. FORM 990, PART VI, SECTION B, LINE 11 PRO PUBLICA HAS ITS FORM 990 PREPARED BY AN OUTSIDE ACCOUNTING FIRM AND HAS ESTABLISHED THE FOLLOWING REVIEW PROCESS TO ENSURE THAT THE INFORMATION REPORTED IS COMPLETE AND ACCURATE. WHEN THE FORM 990 HAS BEEN PREPARED, REVIEWED BY MANAGEMENT AND IS READY TO BE FILED WITH THE INTERNAL REVENUE SERVICE, IT'S SUBMITTED ELECTRONICALLY TO MEMBERS OF PRO PUBLICA'S GOVERNING BODY FOR ANY COMMENTS PRIOR TO ITS SUBMISSION. THE GOVERNING BODY IS PROVIDED WITH AT LEAST ONE WEEK TO REVIEW THE PREPARED FORM 990 AND PROVIDE THEIR COMMENTS. ANY COMMENTS ARE THEN GROUPED, SUMMARIZED AND PROVIDED TO THE AUDIT COMMITTEE FOR THEIR REVIEW. EACH ISSUE IS DOCUMENTED AND ADDRESSED UNTIL THE RETURN IS FINALIZED AND APPROVED FOR FILING. FORM 990, PART VI, SECTION B, LINE 12C PRO PUBLICA HAS A CONFLICT OF INTEREST POLICY, WHICH APPLIES TO ALL BOARD MEMBERS, OFFICERS, AND EMPLOYEES. EACH OF THE BOARD MEMBERS AND OFFICERS ARE REQUIRED SIGN TO A CONFLICT OF INTEREST POLICY ANNUALLY. AN INTERESTED PERSON MUST DISCLOSE AS SOON AS PRACTICABLE TO THE SECRETARY THE EXISTENCE OF A POTENTIAL CONFLICT OF INTEREST AND ALL MATERIAL FACTS RELATED TO THE CONFLICT. IF A BOARD MEMBER OR OFFICER IS UNCERTAIN ABOUT WHETHER A CONFLICT EXISTS, HE/SHE SHOULD REPORT THE POSSIBLE CONFLICT IN ALL CASES IN WHICH A CRITICAL EXTERNAL OBSERVER MIGHT REASONABLE PERCEIVE A CONFLICT TO EXIST. THE BOARD COMMITTEE WILL DETERMINE IF A CONFLICT OF INTEREST EXISTS. IN THE EVENT THAT A CONFLICT OF INTEREST ARISES, THE BOARD MEMBER OR OFFICER WITH WHOM THE CONFLICT PERTAINS TO IS EXCLUDED FROM VOTING ON THE ISSUE. HE/SHE WILL LEAVE THE ROOM AND THE OTHER BOARD MEMBERS VOTE ON THE ISSUE PERTAINING TO THAT SPECIFIC TRANSACTION. WITH RESPECT TO ANY BOARD COMMITTEE'S DISCUSSION, DECISION, OR ACTIONS INVOLVING TRANSACTIONS IN WHICH A BOARD MEMBER OR OFFICER HAS A CONFLICT OF INTEREST, THE MINUTES OF THE BOARD COMMITTEE MEETING WILL REFLECT THE BOARD'S DELIBERATIONS AND VOTING PROCESS. IN CASE OF AN INTEREST PARTY WHO IS NOT A BOARD MEMBER OR OFFICER, THE PRESIDENT MONITORS AND ENFORCES THE ORGANIZATION'S COMPLIANCE WITH ITS CONFLICT OF INTEREST POLICY. IF AN EMPLOYEE HAS A CONFLICT OF INTEREST, HE/SHE EMPLOYEE COULD NOT PARTICIPATE IN THE DECISION MAKING THE CONFLICTED TRANSACTION. FORM 990, PART VI, SECTION B, LINE 15 SALARIES FOR THE CEOS, OFFICERS AND KEY EMPLOYEES ARE SET BY THE BOARD. THE BOARD USES THE SERVICES OF A LAW FIRM (CAPLIN & DRYSDALE, WHO SPECIALIZE IN NOT FOR PROFIT ISSUES) FOR GUIDANCE ON ALL MATTERS OF COMPENSATION. IN 2012 CAPLIN & DRYSDALE UPDATED THE COMPENSATION STUDY FOR THREE KEY EMPLOYEES. CAPLIN & DRYSDALE STUDIED COMPENSATION OF SELECT NATIONAL NEWSPAPERS AND RELIED ON THEIR UNDERSTANDING OF PRO PUBLICA'S OPERATIONS AND STATUS IN THE FIELD OF JOURNALISM. THE BOARD ESTABLISHED COMPENSATION FOR THE CEO, OFFICERS AND KEY EMPLOYEES USING COMPARABLE DATA AND DETERMINED THAT THE SALARY IS REASONABLE. COMPARABLE DATA INCLUDES VARIETY OF INFORMATION FROM JOURNALISM OUTLETS AND OTHER NOT FOR PROFIT ORGANIZATIONS. MINUTES OF THE BOARD MEETINGS ARE KEPT IN FILE. THIS PROCESS WAS LAST COMPLETED IN 2013. FORM 990, PART VI, SECTION C, LINE 19 THE ORGANIZATION MAKES ITS FORM 990 AVAILABLE FOR PUBLIC INSPECTION AS REQUIRED UNDER SECTION 6104 OF THE INTERNAL REVENUE CODE. THE RETURN IS POSTED ON GUIDESTAR.ORG AND OTHER SIMILAR TYPES OF WEBSITES. IN ADDITION, THE FINANCIAL STATEMENTS, CONFLICT OF INTEREST POLICY, ARTICLES OF INCORPORATION, FORM 990, FORM 1023, AND BY-LAWS ARE ALSO AVAILABLE UPON WRITTEN REQUEST, AND ON THE ORGANIZATION'S WEBSITE (WWW.PROPUBLICA.ORG). FORM 990, PART XII, LINE 2C: PRO PUBLICA HAS AN AUDIT COMMITTEE THAT ASSUMES RESPONSIBILITY FOR THE OVERSIGHT OF THE AUDIT OF ITS FINANCIAL STATEMENTS AND FOR THE SELECTION OF AN INDEPENDENT ACCOUNTANT. THE PROCESS HAS NOT CHANGED FROM THE PRIOR YEAR.