Civil Air Patrol Command Council Meeting 1-2 March 2013 Arlington, VA

As of February 2011, the Investment Manager is Summit Financial Resources, Inc. As of February 2011, the Investment Manager is Summit Financial Resources, Inc. Nearly all legacy investments have been liquidated and we operate with Summit’s investment strategy Nearly all legacy investments have been liquidated and we operate with Summit’s investment strategy Performance Performance Q return after fees – 1.1% vs 1.2% for the weighted benchmark. Q return after fees – 1.1% vs 1.2% for the weighted benchmark returns after fees – 9.9% vs 10.9% for the weighted benchmark. Excluding legacy assets, the returns were 11.1% 2012 returns after fees – 9.9% vs 10.9% for the weighted benchmark. Excluding legacy assets, the returns were 11.1% Currently manages funds for California, Nevada and Oregon Wings as well. Currently manages funds for California, Nevada and Oregon Wings as well. Investments Report Overview

As of December 31, 2012 * Includes legacy investments Since inception begins 1 Mar 11

Investments Full Year 2012 Restricted Unrestricted Beginning Value171,0434,210,905 Additions0793,776 Withdrawal 1 (1,347) (373,316) Interest & Dividends 2,96480,602 Investment Fees (1,347) (33,318) Realized/Unrealized G(L) 15, ,101 Market Value 188,135 5,106,416 1 Except for $34,663 for fees, all other transfers are inter-company related

Appropriated Budget Execution Annual Distribution As of 15 Feb 2013 INITIAL DISTB. EXECUTED % O & M $ 22,231,000* $ 10,156, DDR$ 75,000 $ 55, MIPRS$ 1,971,784 $ 569, (Other AF Assigned Missions) * Original FY13 AF Funding $23.743M All figures based on current distribution Straight-line 38% Historical 40%

Aircraft Procurement FY-11 FY-12 FY-13 Budgeted 2,424,000 8,990,000 2,541,000* Expensed 2,424,000 8,665,796 Balance , % 98% Vehicle Procurement FY-11 FY-12 FY-13 Budgeted 902, , ,000* Expensed 889, ,000 Balance 12, % 100% *Proposed FY13 Funding – Funds have not been received to date. Appropriated Budget Execution As of 15 Feb 2013

INITIAL ALLOC. CURRENT DISTRB. INITIAL ALLOC. CURRENT DISTRB. $22,231,000$ 12,000,000 $22,231,000$ 12,000,000 Approximately half of our requested distribution of $23.743M Current Obligations (Encumbered) 1,060,202 Actual Expensed 9,095,912 Projected Expenses (Thru 3/31) 1,054,199 Balance Remaining (1.5 Months) 789,687 Appropriated Budget Execution Quarterly Distribution As of 15 Feb 2013

FY-12 FY13 FY-12 FY13 Corp Budget $2,476,526 $ 2,510,719 Income $ 725,131 $ 760,561* 29% 31% 29% 31% Expenses $ 811,507 $ 1,489,181 33% 41% * Includes Deferred Revenue from prior year Straight-line Execution 38% Historical Income = 32% Historical Expense = 34% Corporate Budget Execution As of 15 Feb 2013

$2,510,719 FY13 Corporate Budget - INCOME As of 15 Feb 2013

FY13 Corporate Budget - EXPENSES As of 15 Feb 2013 $2,510,719

FY13 Appropriated Budget As of 15 Feb 2013

FY13 Consolidated Budget As of 15 Feb 2013 Consolidated Budget $24,741,718

Historical Perspective – FY 12 Funding SourceAmount% Federal & Prog. Inc$40,086,92876% State & Local$3,217,6746% Dues$2,507,3145% Contributions (cash)$1,172,8982% Fundraising (Units)$1,237,574 2% Events & Activities $2,332,8245% Interest & Investment$793,926 <2% Other$1,248,946 2% Total$52,598,084100

FY12 Funding Sources

Limited Funding Sources CAP’s reliance on federal funding has presented the organization with challenges in the current national budget crisis CAP’s reliance on federal funding has presented the organization with challenges in the current national budget crisis Projected budget shortfalls will impact programs and staffing Projected budget shortfalls will impact programs and staffing For CAP to be relevant in the future, CAP will need to broaden our sources of funding, evaluate the cost of services to other agencies, look for efficiencies and expand fundraising efforts For CAP to be relevant in the future, CAP will need to broaden our sources of funding, evaluate the cost of services to other agencies, look for efficiencies and expand fundraising efforts

Changes in Appropriated Funding

Impact of Funding Reduction CAP’s FY13 AF Fin Plan is $23.743M, a reduction of $4.095M CAP’s FY13 AF Fin Plan is $23.743M, a reduction of $4.095M CAP’s current operating budget is $22.231M under the Continuing Resolution, a reduction of $5.607M CAP’s current operating budget is $22.231M under the Continuing Resolution, a reduction of $5.607M The actual effects of sequestration on the budget are unknown at this time, but reductions are anticipated The actual effects of sequestration on the budget are unknown at this time, but reductions are anticipated

Budget Challenge Civil Air Patrol will be challenged to establish budget priorities in order to position the organization for the future Civil Air Patrol will be challenged to establish budget priorities in order to position the organization for the future During the next few years CAP must become more efficient and more strategic in developing financial goals During the next few years CAP must become more efficient and more strategic in developing financial goals CAP can and will remain a strong, relevant organization to our communities and to United States Air Force CAP can and will remain a strong, relevant organization to our communities and to United States Air Force

FY12 Audit Civil Air Patrol’s FY12 audit is nearing completion Civil Air Patrol’s FY12 audit is nearing completion Earliest time in CAP’s history to complete the audit Earliest time in CAP’s history to complete the audit Wing data was included in the audit through SmartVault and QuickBooks Wing data was included in the audit through SmartVault and QuickBooks CAP anticipates another unqualified audit opinion on the organization’s financial operations CAP anticipates another unqualified audit opinion on the organization’s financial operations

Financial Initiatives CAP wings have set a standard for utilizing paperless processes CAP wings have set a standard for utilizing paperless processes Direct pay to members for missions has been embraced by many wings and is required in some wings Direct pay to members for missions has been embraced by many wings and is required in some wings Within the next 6 months we will begin researching the potential of collection of squadron dues with NC Wing Within the next 6 months we will begin researching the potential of collection of squadron dues with NC Wing

Financial and Logistics Initiative Currently Wings conduct their annual inventory from Jan through March Currently Wings conduct their annual inventory from Jan through March Wings have an additional audit requirement to verify their assets at year end for audit purposes Wings have an additional audit requirement to verify their assets at year end for audit purposes FM and LG are working to establish a single inventory and eliminate the duplication of effort FM and LG are working to establish a single inventory and eliminate the duplication of effort

Financial Performance Wings are steadily continuing to improve in financial management Wings are steadily continuing to improve in financial management Several wings have begun to use online bill pay and to accept credit cards through QuickBooks Several wings have begun to use online bill pay and to accept credit cards through QuickBooks One Wing has begun to use Sertifi for their units One Wing has begun to use Sertifi for their units

Accountability Matrix Jan 2010 –Feb 2013

Vanguard Funds Vanguard Funds have been distributed to each Region for the past two years to provide support to cadet programs