2008 Annual Report Of The Trustees Of The Republican Leadership Trust

The 2008 Annual Report The Trustees respectfully submit this Annual Report and account as required by law, for the Beneficiaries, all national, state, county and local committees of the Republican Party and their elected members. The Trust administers Republican All in One™ Political Suite™ and its public portal, GOP onDemand™ for all national, state, county and local Republican committees and their elected members in furtherance of protecting the First Amendment rights of all Americans to participate in the Republican Party.

The Trustees of the Republican Leadership Trust Table of Contents It Didn’t Have to Be So Ugly. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 The Year in Politics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The 2008 Campaign. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Presidency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The U.S. Congress. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The State Legislatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Governors and Other Statewide Candidates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . But Had Republican All in One™ been Used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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The Challenges for 2009 and Beyond. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . GOP Congressional Challenges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . GOP Gubernatorial Challenges.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The World has Changed, the GOP Hasn’t.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Doesn’t the GOP Want to Win Elections?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . It’s Time to Do it Right. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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The Trust Finances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 The Trust’s Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 The Trust Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 The Commercial Competitors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Enlarging the Board of Trustees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Notice to Beneficiaries of Applicable Legal Rights.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Statement of Assets, Liabilities, Receipts and Disbursements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 In Appreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

It Didn’t Have to Be So Ugly 2008 was an annus horribilis for the Grand Old Party. For a second election in a row. But as in 2006, Republican losses in 2008 — for the Congress and st at e legislatures — did not have to occur. Instead, GOP losses were self-inflicted.

The Year in Politics Politico: About the Republicans’ post-election blues: “[they] want to jump out a window — but they’re afraid they’d screw that up, too.” The Washington Post: “No other major campaign this cycle put technology and the Internet at the heart of its operation at this scale” as did Obama’s campaign. McCain advisor Rob Kubasko: “The election was lost three weeks before Election Day. What an old, old election model that was completely obsolete.”

Yes, there’s voter angst over an unpopular President and the ongoing political chasms between moderate and conservatives.

MI GOP Chairman Saul Anuzis: “The open Internet is antithetical to the hierarchical, top-down model that heretofore dominated American politics. The W ashington-centered model of campaign committees and big-money fund-raisers and media buys is rapidly collapsing. And the Republican Party needs to embrace that change.”

But the Republican Party’s steadfast refusal to embrace Internet driven grassroots politics resulted in the voluntary forfeiture of nine incumbent GOP Congressmen and one GOP candidate who should have knocked off a scandal-plagued Democratic Congressman; one GOP Senator, Smith of Oregon; control in five of six state legislative chambers, plus the chance to regain one state house within GOP’s grasp. Not since the Chicago Black Sox’s 1919 World Series, has anyone pulled as many punches as the GOP in 2008.

Politico: “The crumbling.”

Republican

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McCain’s general counsel Trevor Potter: [Obama’s 30-minute infomercial was] “at that moment when our ... outside finance people and others realized they were dealing with a different league here. They [asked how we will respond]? And the answer was we weren't . . . because we didn't have it.”

The GOP’s refusal to recognize the political world is now dominated by the Internet, not TV, enabled the Democratic Presidential nominee, Barak Obama, to raise $770 million in campaign contributions or 3.6 times the funds raised by the Republican Presidential nominee, John McCain, because $500 million or 64% of donations, was raised online.

The Guardian: “Future elections must be fought online. Obama's masterful leveraging of web 2.0 platforms marks a major eruption in electoral politics – in America and elsewhere - as campaigning shifts from old-style political machines, focused on charming those at the top of organizations, towards the horizontal dynamics of online social networks.”

Obama spent $745 million in traditional media (TV, radio, newspaper, staffing) because the Internet gave him an additional “in-kind” $301.7 million advantage. Put another way, the GOP would have to spend $301.7 million in TV advertising to equal Obama’s free Internet generated advantages.

Washington Post: “2008 made one thing clear: If allowed to go unchecked, the Democrats' structural advantages, including their use of the Internet, their more than 2-to-1 advantage with young voters, their discovery of a better grassroots model -- will be as big a threat to the future of the GOP as the toxic political environment [ ] faced the last few years.”

Yes, there’s a problem with the Republican “brand.“ But the Democrats also know something else. The World has changed. The Republican Party hasn’t. _____________

The New York Times: “Maybe [Republicans] like the hole their party is standing in and want to dig it even deeper. That’s their right, but it does the country no good.”

The only way you win elections is by getting more of your supporters to the polls than your opponents.

This just in. Los Angeles Times: Obama to spend $75 million a year to keep his 2008 grassroots network in place until 2010, with full-time staff in every Congressional district. Code-named Barak Obama 2.0, everyone in the know says this is unprecedented.

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The 2008 Campaign According press accounts, FEC and IRS filings the comparing online success of Barak Obama/ Democrats to John McCain/ GOP is as follows: O Obama had 3.1 million donors who made 6.5 million online donations raising over $500 million. McCain 258,000 online contributors for $51 million. O Obama had over 13 million email addresses, McCain approximately 300,000. (Kerry’s 2004 campaign had 3 million email addresses). O Obama sent out more than 1 billion emails. O 2 million profiles created on Obama’s social network, MyBarakObama.com (MyBO), on top of 5 million supporters on independent social networks i.e., Facebook and My Space. O MyBO volunteers staged 200,000 offline events, organized 35,000 volunteer groups, wrote 400,000 blog posts, and made 3 million GOTV phone calls. According to Pew Research, McCain wasn’t fully functional until September. O Over 1 million people signed up for Obama's text-messaging, getting 20 messages per month. O On Facebook, over 3.2 million signed up as Obama supporters. Facebook's Election 2008 page, which listed an 800 number to call for voting problems, had more than 5.4 million users clicked the “I Voted” button. McCain had only 600,000 Facebook supporters. Obama had more than 112,000 Twitter supporters; McCain, 4,600 followers. O Online viewers watched 14.5 million hours of Obama’s official online videos, which would cost $47 million if purchased as TV ads. O Obama supporters uploaded over1,800 videos on BarackObama.com channel, with over 115,000 subscribers, and 97 million views, 18 million visits. McCain only 330 videos uploaded, 28,000 subscribers, 2 million visits and 25 million views. O In September, Obama raised over 65% of funds, $100 million of $150 million online, Obama’s most successful fund-raising month, attracting 632,000 new donors. Obama’s prior record: $66 million in August with 500,000 first time donors. O Obama topped Ron Paul’s online one-day $5 million record by raising $10 million in 24 hours after Palin’s Sept. 3, 2008 acceptance speech. O Obama had grassroots finance committees mirroring Democrats’ national finance committee high-dollar bundlers. In self-generated MyBO fundraising pages, 70,000 people raised $30 million. O Yet, Obama’s Internet costs were marginal, $7.97 million in online advertising, which $3.5 million was spent on Google, $467,000 for Facebook. O In the end, Obama spent approximately 2¢ to raise $1.00 in online campaign contributions; or 4% of what McCain to raise funds via direct mail. O Because of online fund-raising, Obama outspent McCain 5.5 to 1 in the final 2 ½ weeks, $146.6 million to $26.5 million.

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O Obama spent a total of $740 million, including $252 million since Oct. 1. McCain, limited to $84 million public financing, spent 39% of Obama. O Over 888,000 MoveOn volunteers accounted for over 20.8 million hours for Obama; while raising an additional $88 million in campaign contributions. O MoveOn has 4.2 million online members which raised over $120 million since 2004. 75% of MoveOn members are over age 35. On average, MoveOn email message response rate is 10%. O ActBlue raised over $45.7 million in online contributions from 420,000 donors in 2008. GOP’s counterpart, Slatecard, raised only $650,000. O GOP (RNC, NRCC and NRSC) spent $33 million (24% of its total expenditures) or 159% what DNC, DCCC and DSCC (Democrats) spent on consultants. O While GOP spent $9.8 million on list management, 5 to 1 what Democrats spent, and both equal in direct mail; Democrats outspent GOP almost 2 to 1, $51.9 million to $27.7 million on I nt er net t ec hnol ogy, grassroots and telemarketing. The GOP retained not one industryrecognized ASP (Applied Service Provider); Democrats 6. O GOP Megadonor support fell 34.8% from 2004, PAC/527s support down 43.9%. Demo megadonors, PAC/527s out-contributed GOP megadonors, PAC/527s 2 to 1. O Democrats achieved fund-raising parity with GOP in Federal contributions 50%-49%, in 2004 it was 43%-56%. O Because of the Internet, Obama press coverage was 36% positive, 35% neutral and 29% negative; while McCain was the opposite: 57% negative, 29% neutral, 14% positive.

The Presidency Obama’s Internet strategy made the difference. 2008 election results’ two critical points: (1) too many Republicans didn’t bother to vote; (2) the younger, more affluent and more educated voters went Democratic. O Obama got less votes in 2008 than Kerry received in 2004 in AL, AK, AR, LA, OH (32,130), OK and WV, and did only marginally better than Kerry in NJ (173,621 votes), NY (49,106) and WA (30,000). O But Obama out-performed Kerry in 41 states, including former Bush-won IN, IA, NV, NM, PA (8%), TX (20%), and VA (26%). O Example: In PA McCain scored an increase in Republican TLI (Turnout Loyalty Index) in 14 of 67 counties, Obama’s increase in Democratic TLI in but 10 counties gave him the 759,304 vote margin to offset McCain’s 155,143 vote margin in the remaining counties; enabling Obama to win the Keystone State’s 21 electoral votes. O 25% of Obama's increased black American votes came from 811,000 who voted GOP in 2004. O 30% of Obama’s increased Hispanic votes came from 719,000 who voted Republican in 2004. O Obama won Independents, 52%-44%, Moderates 60%,-40%, all supposedly McCain’s anticipated strength. O Obama won 69%-31% of first-time voters, 66%33% of voters under 30, 52%-46% of 30-44 age group, 50%-49% of 45-64 age group, only over 65 age group went McCain. O Obama won all age, higher-education, and higherincome groups who, per Pew Research Center data, routinely rely more on the Internet than traditional media. O McCain suffered a substantial decline in votes compared to Bush, regardless if he won or lost the state. In NY, McCain got 386,207 less votes in 2008 than Bush. In OH, McCain got 357,909 less votes than Bush. O Ironically, 2.7 million fewer veterans voted in an election with most-likely the last Vietnam veteran running for president. O There were also 4.1 million fewer regular churchgoing voters. Does anyone argue Americans aren't suddenly going to church less? O Nationwide there were 4.1 million fewer Republicans voting in 2008 than in 2004.

Bottom Line: Obama out-raised McCain 3 to 1 in cash and in-kind contributions. GOP would need $301.7 million to buy traditional media to duplicate the Obama/DNC free new media online success. Obama’s unrivaled new media fund-raising success produced so much extra cash it boosted Obama’s traditional media over McCain 5 to 1.

Bottom Line: Obama’s online strategy boosted turnout where it counted, in GOP affluent suburban strongholds as well as the inner-urban Democratic base. And it was that marginal increase that made difference up and down the ballot.

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O The situation is more threatening in the Senate, as the turnover loss as percentage was 6% in 2006 and 8% in 2008. O The combined two election Democratic gains is 14 U.S. Senate seats (6 in 2006 and 8 in 2008) representing a percentage of party turnover of 14%. O For the second election in a row, no Democratic seat was lost.

The U.S. Congress O Democrats gained 20 additional seats in the U.S. House of Representatives, winning all 12 open House seats (2 seats still undecided), and defeating 12 of 18 incumbents for re-election. O Coupled with 30 House seats they gained in 2006, Democrats now control 255 House seats to only 174 Republicans, the lowest percentage of GOP held seats since Watergate. O The combined two-election 50 House seat loss represents a turnover of 11.4% in the House. O It is the first time in over 20 years that the GOP suffered House turnover losses of greater than 6% in two successive elections. O Historically, this indicator is an ominous sign of long-term Democratic control in the Lower Chamber. O There are only five House Republicans left representing districts that Kerry carried in 2004, and three of these seats are from Southeastern PA. O By contrast, 81 House Democrats now represent districts that President Bush carried in 2004. O There are now no Republican House members in New England.

Senate Party Changeovers 2006 and 2008 O Republican to Democrat O Democrat to Republican

O Historically, any time a party suffered a turnover percentage loss greater than 13% it took 12 years to recover. In other words, the GOP will not have a statistically viable chance of recapturing the Senate until 2020. O Class 1, elected in 2006 comes up in 2012, when Obama seeks re-election O Class 3, up in 2010, still requires the GOP to defend 19 seats, most in states Obama carried, with Democrats 17, only two in GOP states. O In the upper Chamber, Democrats won 33,308,925 or 51.2% of all votes cast, while the GOP won 29,604,110 or 45.5% of all votes cast. The slim ray of hope is that the GOP vote share actually went up from 2006 to 3.1%, while the Democratic vote share declined 1.7%. O Average ActBlue contribution was $89.92 of which 85% of estimated $45.7 million went to 1,622 Democratic Congressional and state legislative candidates. ActBlue raised $1 million for Democrats in a single day, and over $67,556,456.27 since its inception in 2004. O MoveOn raised another $3,854,978.92 for Democratic Congressional races; spent another $3,073,503.30 for Elizabeth Dole’s opponent.

House Party Changeovers 2006 and 2008 O Republican to Democrat O Democrat to Republican

O Only two states, Kansas and Texas, saw a GOP gain in Congressional representation in 2008; while New York and Ohio saw Democratic gains of at least 3 net seats. Another 14 states saw a net Democratic gain of at least 1 seat. O Overall, Democratic congressional candidates won 59,713,061 or 53.04% of votes cast in electing 255 members for their 20 pickup. The GOP congressional candidates won ten million less votes, or 49,717,154 which is 44.16% of votes cast, for their 19 seat loss. O Democrats control 84 CPVI ranked Republican Congressional Districts, while GOP has only 10 CPVI ranked Democratic Congressional districts.

Bottom Line: By ignoring the Internet, the GOP’s self-inflicted losses of marginally close elections has generated such high party change-over rates that historically implies one-party Congressional dominance over multiple decades.

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The Democrats also secured veto-proof majorities in both chambers of Connecticut and all but eliminated remaining GOP opposition in Hawaii, Massachusetts and Rhode Island legislatures, and increased Democratic majorities in closely divided Iowa, Indiana, Michigan, Oregon and Pennsylvania Houses. Democrats took over the Nevada Senate by gaining two seats in the Las Vegas area and with one additional Nevada House seat, retain a two-thirds super-majority.

The State Legislatures Democrats gained control over more state governments, and now dominate both the legislature and governor’s office in 17 states, compared to just eight for Republicans.

Out of the 1,971 state senators, 1,024 are Democratic; while Republican senators are down to 888. Out of the 5,411 state representatives, 3,058 or an increase of 94 are now Democratic. GOP state representatives down to 2,331. Overall, GOP lost 7% of its state senators and 12% of its state house members since the apex of Republican elected state legislators scored in the post 9/11 2002 election. Why such losses? Case in point: for the first time in recent history, the Democratic PCI (Partisan Consistency Index) in Pennsylvania was lower than the GOP PCI, 13.4% to 14.7%. This means that more GOP voters split their ballot than Democrats. So even if Republicans did go to the polls, they didn’t vote straight ticket in 2008 as in years past.

State Legislatures by Party Control O Democratic Control O Republican Control O Split Control

Voters reversed recent trends, as there are fewer states with politically divided legislatures since 1982. Now only eight states have split legislative control. GOP retains control in only 14 states, lowest number since Clinton’s 1992 election; and in 2008 increased their majorities in only Arizona and the Pennsylvania Senate.

Governors and Other Statewide Candidates Democrats scored only a single pickup in the gubernatorial sweepstakes, winning Missouri’s open GOP seat. Indiana, North Dakota, Utah and Vermont ensure all incumbent GOP governors won reelection. But Democrats won open Democratic governor’s offices in Delaware, and North Carolina. Montana reelected its Democratic incumbent by a landslide, despite GOP’s gaining the state house. Democrats also retained New Hampshire, Washington and West Virginia. While no changes among attorney generals, Democrats won Missouri and Ohio which were trending Republican. Democrats now control 31 attorney general offices, Republicans hold 19. Democrats won most of other statewide races.

Democrats now control 27 state legislatures, and increase of four states, or 60 of the nation’s 98 chambers, up from 57 (Nebraska is officially nonpartisan). 2008 was no exception that the party that wins the White House gains legislative seats, which has occurred in 20 of past 28 elections since 1900. Partisan control of legislatures shifted in a dozen states. The GOP’s bright spots were the take overs of the Senate in Oklahoma and Montana and both Tennessee chambers. Republicans wrested back control of the Montana Senate lost in 2004. The GOP also cut into Democratic majorities in the North Carolina Senate and New Hampshire House.

Bottom Line: Unlike prior periods of Democratic state legislative domination, this cycle is occurring before the 2010 biannual redistricting, a threat which can only compound GOP losses.

However, the Democrats took over five chambers GOP controlled for over a decade: the New York Senate, Delaware House, Wisconsin Assembly, Ohio House and Nevada Senate. These gains enabled the Democrats to seize control of four legislatures: Delaware, Nevada, New York and Wisconsin. The loss of New York Senate now renders the Northeast solid blue as every chamber north of Virginia in 27 states is now Democratic — the lone Republican exception being Pennsylvania State Senate.

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But Had Republican All in One™ been Used The generally accepted metric (benchmark) for use of GOTV software like Republican All in One™ is a 7.5% increase in voter turnout. Republican All in One™ has exceeded the benchmark in three successive beta tests in Pennsylvania’s heavily Democratic Allegheny County (Pittsburgh). Applying the benchmark to votes cast would have resulted in the prevention of at least half of the Republican losses in the states below.

New York While the software would not have prevented GOP losses in New York State Senate races in the 3rd (Suffolk), 11th and 15th (Queens), it would hav e prevented the GOP losses in the 48th (Jefferson, Oswego and St. Lawrence counties) and the 58th and 59th (Erie), which would have enabled the GOP to gain a seat to increase its majority. (The 48th State Senate was lost to a Democrat earlier this year in a special election, despite the district being two to one Republican). North Carolina Republican Pat McCory would have defeated Democratic Lt. Gov. Bev Perdue in North Carolina, had Republican All in One™ with at least 2,129,327 votes, a 8,006 vote margin.

Congressional Races Had Republican All in One™ been used, GOP would have won the Idaho 1st (Rep. Bill Sali), Michigan 7th (Rep. Tim Walberg), New York 29th (Rep. John Kuhl), Ohio 1st (Rep. Steve Chabot), Pennsylvania’s 3rd (Rep. Phil English) and Virginia’s 5th (Rep. Virgil Goode), in addition to re-electing both Sen. Norm Coleman (R-MN) and Sen. Gordon Smith (R-OR). The GOP would have also retained the Alabama 2nd seat of retiring Rep. Terry Everett, Maryland 1st vacated by Rep. Wayne Gilchrist, James Saxton’s New Jersey 3rd, and Deborah Pryce’s Ohio’s 15th

Ohio Republican All in One™ would have easily prevented the losses of Republicans Collen Grady in Cuyahoga County’s 18th and in Franklin County, Brad Lewis in the 19th and State Rep. Jim McGregor in the 20th; also State Rep. Carol Ann Schindel in the 63rd House District in Lake County and Jill Thompson in the 92nd District of Athens, Meigs, Morgan Counties and part of Washington County. All of the above seats were Democratic conversions.

Delaware Republican All in One™ would have prevented the GOP losses of John S. Clatworthy in the 4th Senate district, along with Robert J. Valihura, Jr. in the 10th House, Terry R. Spence in the 18th House and Vincent A. Lafrik in the 18th House District, all in New Castle County, along with Nancy H. Wagner in the 31st House (Kent County) and Gregory A. Hastings in the 41st House (Sussex County).

Pennsylvania Had the state GOP adopted Republican All in One™ it would have retained the state house seats in the 13th (Chester County), 70t h (M ont gom ery County), 157th (Chester Co.), and taken back one seat l ost to the Democrats in the 2006 tsunam i, the 151st (Montgomery Co.), all seats being in the suburban southeastern part of the state that went heavily Democratic. This would be in addition to retaining the 3rd Congressional District and winning what the GOP thought it would win the 11th District of embattled Rep. Paul Kanjorski.

Nevada Without Republican All in One™ Sen. Joseph Heck was defeated in the 5th District along with Sen. Bob Beers in the 6th, both in Clark County. Republicans are the majority party in both districts, albeit by slight margins of 40% and 42%, independent voters representing the swing vote. Republican All in One™ would have been indispensable in identifying and assuring misaligned Independents went to the polls to vote Republican.

Wisconsin Use of Republican All in One™ would have easily prevented the loss of State Rep. Frank Lassee in the 2nd House District, and would have enabled Debit Towers to unseat Rep. Kim Hixson in the 43rd House District along with Dan Moga to have unseated Rep. Jeff Wood in the 67th District.

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The Challenges for 2009 and Beyond GOP Congressional Challenges

GOP Gubernatorial Challenges

2010 US Senate Races O Safe Democratic O Safe Republican (Shaded by Risk) O Republican Seat at Risk O Democratic Seat at Risk

2009-2010 Gubernatorial Races O Safe Democrat O Safe Republican (Shaded by Risk) O Republican Seat at Risk O Democratic Seat at Risk

In 2010, GOP must defend 19 seats, Democrats 17 (including the seats vacated by Biden and Clinton). Many of these Republican senators up for reelection face stiff races in states won by Obama, starting with George Voinovich’ seat (OH), Judd Gregg (NH), Richard Burr (NC), and Arlen Specter (PA). Add Lisa Murkowski, (AK), David Vitter (LA), Kit Bond (MO), and Jim Bunning (KY). John McCain’s seat in Arizona is no guarantee, and if Charles Grassley vacates his seat in Iowa, then both become Democratic targets. The only safe Republicans are the eight seats held by Richard Shelby (AL), Johnny Isakson (GA), Mike Crapo (ID), Tom Coburn (OK), Jim DeMint (SC), John Thune (SD), and Robert Bennett (UT) plus Sam Brownback’s vacated Kansas seat. Mel Martinez’s vacated Florida seat is also rated highly competitive.

The big prize fights however are for Governor. The GOP defend 16 states, Democrats 17. However, California, Connecticut, Hawaii, Minnesota, Nevada, Rhode Island are six GOP held seats in heavily Democratic trending states. Alaska and Arizona would nominally be a GOP seats. Only five gubernatorial offices — Florida, Georgia, Idaho, Nebraska, and North Dakota — appear safe in the Republican column. Democrats traditionally must battle for their executive mansions in six states: Arkansas, Iowa, Kansas, Oklahoma, Tennessee, and Wyoming. Obviously, incumbents’ popularity will weight heavily on retaining these states. Gubernatorial offices in heavily Democratic states of Illinois, Maine, Maryland, Massachusetts, New Mexico, New York, Oregon, West Virginia and Wisconsin means the Democrats have the edge in ten states.

On the other hand, the 15 Democrats up for reelection are hardly vulnerable: Barbara Boxer (CA), Ken Salazar (CO), Chris Dodd (CT), Daniel Inouye (HI), Barrack Obama’s old seat (IL), Evan Bayh (IN), Barbara Mikulski (MD), Harry Reid (NV), Chuck Schumer (NY), Ron Wyden (OR), Patrick Leahy (VT), Patty Murray (WA) and Russ Feingold (WI), plus the additional Democratic seats belonging to Biden and Clinton are, if 2008 results are any guide, relatively safe. Only seats held by Arkansas’ Blanche Lincoln and Bryon Dorgan in North Dakota are states that went Republican in 2008.

Pennsylvania, now Democratic, historically switches parties every eight years, due to relatively equal voter registration and an united GOP. Because of the Obama voter registration surge, such is no longer the case, as Pennsylvania Democrats now have a 1.2 million registration edge along with a revitalized party.

Democrats have already noted substantial shifts suggesting more GOP Congressmen are vulnerable i.e, in Virginia, noting McCain’s share of votes compared to Bush’s 2004 share of votes.

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hired 402 consultants, on top of up to 370 hired by RNC, NRCC and NRSC, who collectedly cost the GOP $156 million or 24% of all funds raised. (Obama hired only 266). While Democrats seek to expand their “membership” base to expand grassroots networking, Republicans think the solution is simply to raise more funds to allocate existing resources. But according to every known court ruling, GOP is suppose to be in the business helping candidates winning elections, not power brokers making money.

The World has Changed, the GOP Hasn’t Even London’s august Guardian understands that “future elections must be fought online. * * * Obama's masterful leveraging of web 2.0 platforms marks a major eruption in electoral politics — in America and elsewhere — as campaigning shifts from old-style political machines, focused on charming those at the top of organizations, towards the horizontal dynamics of online social networks.” Doesn’t the GOP Want to Win Elections? An annual report is not the most effective forum to discuss the GOP’s structural problems. For an extensive examination of the contrasting culture of the Republicans and Democrats, readers are well served to read Professor Jo Freeman’s The Political Culture of the Democratic and Republican Parties in the fall, 1983 edition of Political Science Quarterly.

Unless the Bill of Rights was repealed by the Patriotic Act, it still remains the indelible First Amendment rights of all Republicans to participate within their chosen political party. Local committee people and activists are not perfunctory pawns to do the Party’s robotic bidding by top-bottom Orwellian “good solider” conformity. The GOP that Lincoln, or TR or Reagan knew, is an open-ended political party, not a closely held corporation.

Perhaps Saul Anuzis said it best in the Politico: “The W ashington-centered model of campaign committees and big-money fundraisers and media buys is rapidly collapsing. And the Republican Party needs to embrace that change.”

It’s Time to Do it Right Obviously, as a charitable trust the Trustees cannot do everything. And they shouldn’t exceed their “pay grade.” But this is what the Trustees can do.

In other words, just as the Democrats have learned they can’t win elections from inside Tammany Hall, Republicans now must learn they can’t win elections from inside country clubs. It is now the Internet, not cocktail receptions that raise money and volunteers that translates into votes. While television advertising is still essential, it effectiveness is no longer dominant. Reiterating the Guardian, “future elections must be fought online.”

O The Trustees will enlist Republican activists to serve as District Trustees in as many of the nation’s 182,929 election precincts, to support (not usurp) the 365,858 GOP committeemen and committeewomen, to develop the House List essential for an Internet-driven GOTV Ground Gam e f or 2010 by establishing local “socnets” (social networks) in each precinct and municipality.

To make this transition, what the GOP requires is a heavy dosage of First Amendment medicine. The GOP belongs to Main Street voters, not K Street operatives. The new words in the GOP vocabulary must be Coalition and Consensus, not Command and Control. The people who represent the GOP are the elected Committee-people who work for free, not the self-anointed campaign consultants, holding hostage 25% of the Party’s funds for their windfall. The GOP has to think Facebook and Twitter, not caviar and champagne. Campaigns should be managed by community-based Republicans who pay taxes and mortgages, not “boy-men” sporting peach fuzz and white-gloved “Daddy’s little girls” interning at the Republican National Daycare Center while on Spring Break.

O The Trustees will launch the largest online fundraising campaign to-date for all GOP candidates and 2010 eventual nominee escrow accounts. Keep in mind, portions of what the Trustees raise are not campaign contributions or expenditures according to Pennsylvania authorities. O The Trustees will expand GOP onDemand™ to be the Republican Party’s primary online clearinghouse for “routing” information, fund-raising, and social networking inquiries and requests to state, county and local Republican committees.

Professor Freeman observes the Democrats act as a social movement, the GOP as if it is a corporation. Democrats have achieving their lopsided 2006 and 2008 victories by their dependence on Internet generated networks of volunteers spearheading the fundamentals of grassroots campaign, the “Ground Game.” Meanwhile, the GOP relies on paying professionals to do the same thing. In fact, McCain

O The Trustees will urge every county Republican committee not yet online to sign-up for myGOPSite™ the goal being 90% of all 3,099 county Republican committees having their own website by October, 2009. 8

The Trust Finances The Trustees reasonably concluded that mirroring the financial development of its Democratic counterpart, MoveOn, would produce satisfactory results. Such initial support required to sustain the Trust until Internet contributions took over, did not materialize per expectations. There was no GOP counterpart to the Democrat’s Linda Pritzker or George Soros. Party-wide, GOP mega-donor contributions feel 65% from 2004

The Trust Property The Trust exists to provide Republican All in One™ Political Suite™ an online, CRM (contact relationship manager) SocNet (social networking) SAAS (software as a service), and its public portal, GOP onDemand™ without prejudice and at no cost to all national, state, county and local Republican Committees and their elected members.

As a result, the Trustees’ Democratic counterparts, MoveOn had 4.2 million members, who raised over $120 million and contributed 20.8 million hours. ActBlue raised over $45.7 million in online contributions from 420,000 donors in 2008. All while the Trustees were precluded from doing anything. Nonetheless, the principal loss were suffered by the Trustees themselves, outside expenses were kept to minimum. However, under Pennsylvania law, all such deferred compensation and expenses are liens against the Trust Property.

while providing all features competitor vendors offer remains unrivaled because, through as a charitable trust, it can legally bypass McCain-Feingold to integrate all Republican candidates and 367,000 GOP committee-people from 182,000 precincts into one social network. The Trust’s Democratic counterparts cannot.

Republican All in One

™

Bottom Line: In 2007-08 cycle, RNC, NRCC and NRSC paid $156 million to at least 373 consultants, spending up to $128,954,000 or 20% of all Federal funds to duplicate via their Washington top-bottom model what a Republican All in One™ generated GOP grassroots model would have provided – at one percent the cost.

Accordingly, the Trustees have settled upon a twoprong approach relying first, on the netrooting support while assessing licensing fees to candidates to subsidize the GOP committees’ free usage of Republican All in One.™ Broken down by state, fees are still far below what commercial vendors would charge for less adequate service. A more expansive discussion ensures in the Notes to the Statement.

The Commercial Competitors The Trust was established because the existing commercial political technology vendors’ pricing strategy is designed to discourage low-end local GOP clients; because the expense to service small clientele is not profitable. Commercial vendors also provide no continuity from election to election, obtaining windfall profits by re-inventing the wheel, such software grossly overpriced to exploit the market susceptibility of candidates’ time-constraints.

The Trust’s Legal Matters Unlike any political or campaign committee, PAC or 527, the Trustees are “officers of the court.” Administering the Trust in its incipiency proved to be intellectually challenging, as a modern political trust is sui generis. The Trustees participate in ongoing procedural and practice discussions with Pennsylvania’s Attorney General and the General Counsel, the former as required by court rules

Moreover, one of the major vendors is under a cloud by virtue of a Pennsylvania grand jury, as press accounts suggest $2 million in taxpayer funds was converted by the GOP for campaign purposes. Press now reports a second commercial vendor is now a grand jury target. Of course, press reports of secret grand jury proceedings is not proof of guilt.

While matters concerning charitable solicitation law compliance was satisfied, the issues imposed by aggregate campaign contribution limits in various states, which the GOP committees’ basis interest in the Trust Property would exceed, remains unsettled. The Trustees’ decision to distribute the Trust Property to individually elected committee people in lieu of their committees is expected to be strenuously object by those states.

But why take such a risk? As a matter of law, the Trustees, unlike commercial vendors, are “officers of the court” subject to constant supervision of the Pennsylvania courts and Attorney General. The fiduciary standards imposed on the Trustees are the highest known under law. And the Trustees are not seeking windfall profits. Bottom Line: It is disingenuous to assert the GOP doesn’t have the political technology, when the Party already owns such technology. Why then, go to a commercial vendor?

Additionally, multiple Republican committees have exposed themselves relative breach of co-fiduciary duties and risk impoundment of campaign proceeds raised by the Trustees. A more expansive discussion ensures in the Notes to the Statement. 9

If the States Associations do not recommend such candidates, then the Philadelphia Orphans Court will name the co-trustees.

Enlarging the Board of Trustees The Board of Trustees has been enlarged from the three to fifteen members, based on the expert opinion on nonprofit governance admitted before the Pennsylvania Orphan’s Courts. The state associations under Rule 5 of the Rules of the Republican Party are to transmit candidates which the current Trustees must select to fill co-trustee positions in 14 circuits representing regions throughout the nation.

Enlargement of the Board of Trustees assures increased participation by persons of statute which increases accountability to all beneficiaries as well as the general public. Each co-trustee is responsible for interaction with all GOP committees and candidates within his respective circuit of states.

Co-Trustees by Circuits by RNC Caucus Co-Trustees for each circuit (in blue) are elected by the State Associations (in red) established under Rule 5(a)(2) of Rules of the Republican Party, subject to the consent of the Pennsylvania Attorney General. If any of the associations fail to pick a co-trustee, then the Philadelphia Courts make the choice.

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Notice to Beneficiaries of Applicable Legal Rights This Annual Report of the Trustees of the Republican Leadership Trust constitutes a Notice under the Pennsylvania Uniform Trust Code, 20 Pa.C.S. §§ 7701-7799 to all Beneficiaries, being any “regularly constituted” or “duly qualified national, state, county, municipal, ward, district and local committees of the Republican Party” or “any elected member therein” as established by applicable state law, who shall be informed as follows: (1) A trust has been created October, 4, 2007 in and of the City and County of Philadelphia, to which you are a Beneficiary thereto and accordingly, have certain rights and privileges under law. (2) The Settlors (the party bequeathing the trust) are the 59th Republican Ward Executive Committee, Philadelphia PA and specific individuals making donor-restricted contributions thereto. (3) The names of the Trustees are as of Dec. 31, 2008), Frederick W. Hess, III, Hon. H. Paul Senft, Jr. (until December 31, 2008), and Hon. Peter J. Wirs, at the name, address and phone number as follows: The Trustees of the Republican Leadership Trust 6145 Germantown Avenue Philadelphia, Pennsylvania 19144-2047 215-843-0500 www.RepublicanTrustees.org.

(4) All Beneficiaries of record are entitled to a copy of the trust agreement. A copy of the trust agreement is available online at www.RepublicanTrustees.org. (5) All Beneficiaries of record are entitled to receive not less than annually, a written report of the trust's assets and their market values if feasible, the trust's liabilities and the trust's receipts and disbursements since the date of the last such report. Important Notice of Legal Rights to All Beneficiaries This Annual Report constitutes an important legal notice to you. You may not challenge a transaction or assert a claim against the Trustees for a breach of trust on the basis of the transaction when you have been provided a copy of this Annual Report which has disclosed the material transaction for the year in which the transaction has occurred and for each of the four subsequent calendar years and you did not notify the Trustees within six months of receiving the fifth annual report that you object to the transaction and provide the basis in writing for that objection. 20 Pa.C.S. § 7785(a)(1). Statement of Assets, Liabilities, Receipts and Disbursements The Trustees of the Republican Leadership Trust offer this annual account as required by law, 20 Pa.C.S. § 7780.3(i) to acquaint interested parties with the transactions that have occurred during the administration of the Trust. It is important that the account be carefully examined. Requests for additional information or questions or objections can be discussed with the Trustees of the Republican Leadership Trust Assets Software .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Uncollected Pledges. . . . . . . . . . . . . . . . . . . . . . . . Receipts Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL .. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. $17,000.00 $387,672.00 . $64,225.00 $468,897.00

Liens on Advances Deferred compensation. . . . . . . . . . . . . . . . . . . . . . $262,500.00 Development & Maintenance.. . . . . . . . . . . . . . . . . . $80,000.00 Professional fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . $35,154.00 General & Administrative.. . . . . . . . . . . . . . . . . . . . . $10,018.00 Total .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $387,672.00 Disbursements General & Administrative.. . . . . . . . . . . . . . . . . . . . . $59,225.00 Development & Maintenance.. . . . . . . . . . . . . . . . . . . $5,000.00 Total .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $64,225.00 Balance on Hand (Assets). . . . . . . . . . . . . . . . . . . . . . . $17,000.00 TOTAL .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $468,897.00 T his statement is on an accrual basis representing year-end transactions. T he T rust’s filings with the Internal R evenue Service (IR S Form 8872) under 25 U .S.C . § 527 is a c as h basis up until end of the reporting period. T his statement is qualified by and shall be read in conjunction with the N otes and Management’s D iscussion of R esults appearing below.

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SCHEDULES, NOTES TO STATEMENT, & MANAGEMENT’S DISCUSSION OF RESULTS Note 1 — Summary of Significant Accounting Policies (A) Description — The Republican Leadership Trust (the “Trust”) was established by a October 4, 2007 Trust Agreement pursuant to the Pennsylvania Uniform Trust Act (“UTA”), 20 Pa.C.S. § 7701-7799 to administer the Trust Property, Republican All in One™ Political Suite™ a multi-function CRM (contact relationship management) SocNet (social networking) SAAS (software as a service) without prejudice on behalf of the designated cestui que trust (beneficiaries), being all national, state, county, municipal, ward, district and local committees of the Republican Party or any elected member therein. The Trust is administered by one full-time trustee (the Trustee Chairman) compensated by salary and fourteen part-time trustees representing regions throughout the nation (circuit trustees) compensated by commission. Notwithstanding that the intended consequences of the Trust Property is Republican electoral successes, the Trust’s purpose is to promote by prevailing technology the First Amendment right of “strategic association,” i.e., the meaningful opportunity of all voters generally and Republicans specifically to participate in the political process, while also promoting internal party accessibility, accountability and unity, all which is charitable activity Taylor v. Hoag, 278 Pa. 194, 116 A. 826 (1922); Note, Charitable Trusts for Political Purposes, 37 VIRGINIA L.REV 988 (1951) 2 RESTATEMENT THIRD, Trust, § 28, such purpose being “imbued with general social significance." In re Falcone Estate, 27 D.&C.3d 540, 544 (Northampton Co. O.C. 1983). The Trustees are prohibited by the UTA, 20 Pa.C.S. § 7773, in addition to applicable Federal and state statutes, from promoting, attacking, supporting or opposing (“PASO”) any candidate for Federal, state, municipal public or political office. The Trustees adopt Internal Operating Procedures (“IOPs”) which in addition to the UTA, court rules, and the Trust Agreement, governs Trust administration. The Trust's accounting and reporting policies are in accordance with FAS 116 (Accounting for Contributions Received and Contributions Made) as amended by other FASB statements and by the Uniform Fiduciary Accounting Principles and accompanying commentary by the Committee on National Fiduciary Accounting Standards as set forth under Pa.O.C. Rule 6.1. (B) Reporting — Cash and cash equivalencies includes cash and due from banks, interest-bearing bank balances and federal securities purchased. Securities are classified as of the date of commitment or purchase as trading or as available for sale securities. The fair value of securities is based on quoted market prices, or if quoted market prices are not available, then the fair value is estimated using quoted market prices for similar securities, pricing models or discounted cash flow analysis. Contributions and pledges are identified as assets, unless refunded or deemed uncollectible. Note 2 — Receipts of Principal and Income, Gains and Losses, Disbursements and Distribution (A) Receipt of Principal, Gains and Losses, Disbursements and Distribution — The Trust received transfer of the Trust Property, Republican All in One™ Political Suite™ a CRM, SocNet, SAAS application on October 4, 2007. All gains to the Trust Property are the result of its ongoing software development. All losses to the Trust Property are the existing liens for advances made by the Trustees for the protection of the Trust and for all expenses, losses and liabilities sustained in the administration of the trust or because of the holding or ownership of any trust assets. The Trustees maintain a lien on the trust assets as against all beneficiaries for the advances thereto made including all interest on such advances. There are no disbursements of principal, as the Trust Property is not subject to liquidation, the distribution being only its SAAS availability for usage by all beneficiaries. (B) Receipts of Income — Receipts of income are contributions, which must be in compliance with applicable campaign finance laws and not constitute prohibited self-dealing. In re Downing’s Estate, 162 Pa.Super. 354, 359, 57 A.2d 710, 712 affirmed 359 Pa. 534, 59 A.2d 903 (1948). Contributions are not tax deductible under the IRC, 26 U.S.C. § 6113(a). As the situs of Trust is Philadelphia, 20 Pa.C.S. § 7708, Pennsylvania campaign finance law governs. 2 U.S.C. § 453, 11 CFR 108.7. Contributions are not directly used for or applied to any Federal election nor to advocate the election or defeat of any candidate for public office, 2 U.S.C. §§ 431(17) and (20), 11 CFR 100.22 and 100.24; but solely for purposes pursuant to the UTA, 20 Pa.C.S. § 7731-7740, and the trust instrument, 20 Pa.C.S. § 7705, for purposes of influencing an election, 26 U.S.C. § 527(e)(2), to provide the Trust Property, Republican All in One™ for generic campaign activity, 2 U.S.C. § 431(21), 11 CFR 100.25, to all Republican Party committees, who may or may not use such to advocate election or defeat of candidates for office. Interest income is derived from Trust investments. On October 21, 2008, the Pennsylvania General Counsel opined that expenses incurred by the Trustees solely for the administration of the trust are not reportable campaign expenditures under Pennsylvania campaign finance laws. These expenses would primarily be expenses for the for the protection of the Trust and for all expenses sustained in the administration of the trust, such as trustee compensation, fees and expenses and legal and other professional advisor fees. As such, corporate contributions will be permitted under the Trustee’s Internal Operating Procedures. 12

To assure the protection of the Trust Property be undiminished and self-perpetual, the Trustees developed a three-phased financial plan initially dependent on the continued underwriting by “mega-donors” a court adopted term see e.g., SpeechNow v. FEC, 567 F. Supp. 2d 70 (D.D.C. 2008) quoting Richard Briffault, The 527 Problem . . . and the Buckley Problem, 73 GEO. W ASH. L. REV. 949, 962 (2005), to facilitate completion of the Trust Property’s development and initial development of the House List until the House List became self-sustaining. This approach was identical to how the Trust’s Democratic counterparts, e.g. MoveOn, were organized. Such expectations however did not timely materialize in 2008. Nationwide GOP megadonor contributions fell 65.2% in 2008 from 2004. The Trustees have determined such pledges are not uncollectible and are accounts receivables per FAS 116. However, the Trustees in furtherance of their legal duties to protect the Trust have significantly modified the revenue model to rely more extensively on House List generated revenue for trust administration expenses while assessing a minor license user fee to candidates to subsidize delivery of the Trust Property to state, county, and local Republican committee beneficiaries of which the candidates are dependent upon for GOTV and Election Day activities. Licensing the Trust Property to candidates was not initially pursued due to misapprehending In re Girard's Estate, 49 D&C 217 (Phila. O.C. 1944). All licensing is on a state-bystate basis, weighted toward statewide candidates (e.g., U.S. Senate, Governor). The Trustees will also extensively enlarge facilitation of conduit fund raising on behalf of candidates, see e.g. FEC advisory opinions, i.e., AO 2006-30 (ActBlue) and AO 2003-23 (WE LEAD) construing 11 CFR 300.31(f). Proceeds from conduit financing will be impounded, 20 Pa.C.S. § 7780.6(a)(2), until all liabilities arising from the uncollected pledges are satisfied. (C) Disbursements — Primary disbursements is the ongoing development and maintenance of the Trust Property and its House List on behalf of the cestui que trusts, which includes conversion, hygiene and appending data sets to base line data, state generated, HAVA voter data bases (VDBs) prior to field validation. Peripheral components and modules are provided by third party vendors under reduced pricing arrangements. The substantive expenditure for House List development is enveloping the email and online marketing with earned media. All such significant transactions for technology development, maintenance and protection of the Trust Property for 2008 are as follows: Ambiance Interactive (Monroeville, PA). . . . . . . . . . . . . . . . $80,000 There are two additional vendors whose fees are objected for failure to satisfy the reasonable value for services rendered rule imposed by Pennsylvania law. Significant transactions for 2009 are anticipated as follows: Ambiance Interactive (Monroeville, PA). . . . . . . . . . . . . $4,500,000 Political Media (Washington, DC). . . . . . . . . . . . . . . . . . . . $500,000 Eligere Strategies LLC (Tampa, FL). . . . . . . . . . . . . . . . . . $500,000 Eawareness, Inc. (Melbourne, FL). . . . . . . . . . . . . . . . . $1,500,000 AOL Platform A (Washington, DC). . . . . . . . . . . . . . . . . $5,500,000 Maelstrom Technology Solutions (Brookfield, WI). . . . . $3,000,000 National Press Club (Washington, DC). . . . . . . . . . . . . . $1,302,000 Heritage Direct (Oakhurst, NJ). . . . . . . . . . . . . . . . . . . . $2,500,000 The transactions for Ambiance Interactive includes completion and maintenance of Republican All in One™ plus delivery of MyGOPSite to beneficiaries (primarily county and local GOP committees) opting for low-level web hosting service. AOL Platform A, Eawareness, Eligere Strategies, Maelstrom, Political Media are preliminary estimates relative to online fund-raising. National Press Club estimates are for production of Republican Roundup™ weekly podcasts. Heritage Direct estimates includes multiple subcontractors. All other expenses are for maintenance and protection of Trust Property. Because of multiple variables, 2009 estimates are subject to extensive extension and revision. A significant disbursement for the administration of the Trust includes legal, accounting, investment advisory and other professional services. All such significant transactions for legal representation and other professional services for 2008 are as follows: Obermayer, Rebmann Maxwell & Hippel (Phila, PA). . . . . . . . . N/A Gibbons (Newark, NJ). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,913 Patton Boggs (Washington, DC). . . . . . . . . . . . . . . . . . . . . . . $5,894 Waite, Schneider, Bayless & Chelsey (Columbus, OH).. . . . $15,000 Hackstaff, Gessler LLC (Denver, CO).. . . . . . . . . . . . . . . . . . $2,200 St. Clair, CPAs, P.C. (Merchantville, NJ). . . . . . . . . . . . . . . $10,147 There is one additional law firm whose fees are objected for failure to satisfy the reasonable compensation for services rendered rule imposed by Pennsylvania law. Significant transactions for 2009 are anticipated as follows: Obermayer, Rebmann Maxwell & Hippel (Phila, PA). . . . . $500,000 Gibbons (Newark, NJ). . . . . . . . . . . . . . . . . . . . . . . . . . . . $150,000 13

Patton Boggs (Washington, DC). . . . . . . . . . . . . . . . . . . . . $150,000 Waite, Schneider, Bayless & Chelsey (Columbus, OH).. . . $150,000 Hackstaff, Gessler LLC (Denver, CO).. . . . . . . . . . . . . . . . $150,000 St. Clair, CPAs, P.C. (Merchantville, NJ). . . . . . . . . . . . . . $150,000 Wachovia Bank, N.A. Trust Services. . . . . . . . Transaction fees only Law firms in other states serving as local counsel.. . . . . $1,500,000 The Trustees remain under the expectation that significant legal fees will be occurred in 2009 arising out of litigation to distribute Trust Property to individual elected beneficiaries versus the beneficiary committees due to the strict impositions of campaign finance contribution caps in various states, particularly Alaska, Colorado, Kentucky, New Jersey, South Carolina and West Virginia. Additional legal fees will be spent in furtherance of civil rights litigation to protect and make whole the Trustees from illegal conduct already judicially admitted by tortfeasors, in addition to the normal occurrences relative to trust administration. Additional and substantive legal fees would arise if any beneficiary attempts to commit a breach of its fiduciary duty to the other beneficiaries, i.e., by self dealing, which is strictly prohibited by all applicable law, and to enforce the Trustee’s impoundment of beneficiary proceeds. All beneficiaries should fully inform themselves of their responsibilities. See Bogert & Bogert, BOGERT ON THE LAW OF TRUSTS AND TRUSTEES, § 191 “Duties of Beneficiaries” (rev. 2d ed 1979); 4 SCOTT & ASHER ON TRUSTS § 25.3 “Beneficiary's Duties to Other Beneficiaries;” RESTATEMENT, SECOND ON TRUSTS, § 253 Wrongful Dealing with Trust Property by One Beneficiary; Fresh Kist Producre LLC v. Choi Corp, Inc., 223 F.Supp. 1, 8, (D.D.C. 2002) amended 251 F.Supp.2d 138; Christman v. Seymour, 145 Ariz. 200, 700 P.2d 898, 900 (1985). Additional legal expenses may be required to enforce the “reasonable value for services rendered” rule raised as objections against current or future vendors. The remaining significant disbursement for the administration of the trust is trustee compensation and related general & administrative services. Until the amendment of the Trust Agreement to enlarge the Board of Trustees from three to fifteen members, each trustee was compensated $150,000, plus expenses for travel, etc. Subsequent to Trust Agreement’s amendment, only the Trustee Chairman is compensated fulltime, the remaining 14 trustees are compensated a commission of up to two percent (2%) on all end user license fees generated from statewide and Congressional candidates plus significant donations expressly raised. Additional administrative expenses includes office rent, furniture and furnishings, stationary, telephone, payroll taxes, insurance and other ongoing general administrative expenses. All significant transactions (in excess of $1,000 or utilities) for 2008 are as follows: Independence Blue Cross (Philadelphia, PA). . . . . . . . . . . . . $5,275 Deferred Compensation (all Trustees). . . . . . . . . . . . . . . . $262,500 Strassheim Graphics Design (Philadelphia, PA). . . . . . . . . . . $4,743 New Bethel AME (landlord) (Philadelphia, PA). . . . . . . . . . . . $2,550 Significant transactions for 2009 are anticipated as follows: Independence Blue Cross (Philadelphia, PA). . . . . . . . . . . . $50,000 Trustee Compensation (less commissions).. . . . . . . . . . . . $150,000 Staff compensation salaries. . . . . . . . . . . . . . . . . . . . . . . . $300,000 Office space leases.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $250,000 Strassheim Graphics Design (Philadelphia, PA). . . . . . . . . $150,000 Travel and related expenses. . . . . . . . . . . . . . . . . . . . . . . $750,000 Reserves, Sinking Fund, contingencies. . . . . . . . . . . . . $1,500,000 The Trust's cash receipts as of December 31, 2008 is solely receipt from the Trustees and two contributors in the sum of $14,225 to cover ongoing general & administrative expenses and web hosting fees charged by Ambiance Interactive. The Trust's receipts and disbursements are filed with the Internal Revenue Service as required under 26 U.S.C. § 527(j). All cash receipts are first applied to satisfy outstanding liens due to 2008 uncollected pledges and thereafter is applied under the Trustee’s Internal Operating Procedures to replenish the Endowment Funds set aside for administration of trust expenses not related to campaign expenditures. Once impoundment and replenishment obligations are satisfied, proceeds are distributed to the candidates, nominees, beneficiaries or Allied Republican Party Interests, less independent bank processing fees. No other commissions or fees are charged to or levied against the candidates, nominees, beneficiaries or Allied Republican Party Interests. All beneficiaries are instructed to refer to the Trustee’s Internal Operating Procedures for a complete discussion of the Trustee’s administration of the Trust.

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In Appreciation It goes without saying that the Trustees do not operate in a vacuum, but remain indebted in all respects to the unselfish, yeomen contribution of multiple individuals, exemplary in conduct, expertise and purpose. The contributions of various individuals are so distinguishable that recognition is always proper. The problem is the inevitable risk of missing someone who’s due such recognition. The Trustees are most appreciative of the outstanding counselors at law in the office of the Pennsylvania Attorney General and the General Counsel. Their duty-minded conscience that imposes both anonymity and modesty would compel them to vigorously discourage public recognition of their extraordinary commitment to public service and the law. Equally extraordinary is the endless hours of undying commitment to the service of the purpose of the Trust and assistance to the Trustees in attempting to discharge their fiduciary obligations; even after the megadonors’ financial support evaporated in the heat of battle. The Trustees humbly recall the remarks of Thomas Paine — the professional and technical advisors behind the Trustees are not sunshine patriots or summer soldiers. Instead, they are the true Republicans. Nothing more needs to be said.

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The Trustees of the Republican Leadership Trust are members of the NCOPO, National Conference of Public Offices and strictly adhere to and comply with all pending and adopted standards applicable thereto.

The Trustees of the Republican Leadership Trust 6145 Germantown Avenue Philadelphia, Pennsylvania 19144-2047 215-843-0500 www.RepublicanTrustees.org

© C opyright 2008, 2009 by the T rustees of the R epublican Leadership T rust. All rights reserved. R epublican All in O ne™ Political Suite,™ G O P onD emand™ are trademarks of the T rustees of the R epublican Leadership T rust. All other trademarks are property of their respective owners. C ontributions to the T rustees of the R epublic an Leadership T rust are not tax deductible. C ontributions from corporations not organized for political purpose or banks, when not made for trust administration, and contributions f rom foreign nationals, agents or anonymously made strictly prohibited. C ontributions are not used for the promotion, attacking, supporting or opposing any candidate for Federal, state or local public or political office, but solely for purposes pursuant to Pennsylvania U niform T rust Act and the trust agreement governing the T rustees.

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