Dear Friends and Supporters of Appleseed:

Annual Report 2006

Dear Friends and Supporters of Appleseed: This has been another momentous year of continued growth for Appleseed, thanks to your extraordinary support. In 2006, we greatly deepened our expertise and expanded our work in our primary policy areas, hiring three new leaders in their fields: Sue Berkowitz to lead our small business health care and work supports projects; Edwin Darden for our education work; and Milo Mumgaard for our immigrant policy endeavors. We also made great strides in our mission to advance the public interest, releasing five groundbreaking reports, each significantly contributing to their fields and winning national attention from the media and key advocacy groups. Appleseed also launched our largest project to date, a comprehensive analysis of the progress and problems facing the evacuees of Hurricane Katrina. With the help of more than 130 attorneys from seven national law firms that contributed more than $4 million worth of pro bono time, we interviewed more than 300 nonprofit agencies, national policy experts, government officials and evacuees to better understand the long-term implications of this sudden, large scale population displacement, and offer proactive constructive solutions for disaster planning. Our final report was featured in more than 100 media outlets and drew the attention of key members of Congress. Another significant initiative is Appleseed s ongoing work in aiding local law enforcement cope with changing immigration policy. Appleseed s report describes the legal landscape behind the issues that arise when state and local governments begin immigration enforcement. Although the legal status of enforcement authority remains murky, the serious implications for communities are clear. Among other implications, state and local police enforcement of immigration laws can jeopardize public safety by straining effective community policing efforts and adding another burden to already stretched police agencies. Appleseed is also deeply engaged in forming a Fair Exchange task force to improve the information and options available to immigrants who send money home to relatives, or remittances. Many major financial players regulators, banks, and money transfer companies have already joined Appleseed in this initiative to create options that are both sound for immigrants and profitable for business. Appleseed s financial growth has been matched with long strides in board involvement. This year, a new group of dynamic leaders joined Appleseed through its newly developed Isaac Newton Society. Members of the group include young lawyers who have demonstrated leadership and a genuine interest in pro bono work, each of whom work closely with Appleseed on various pro bono projects, offering fresh talent and emerging as Appleseed s next generation of leadership. This year, Washington, D.C. Mayor-elect Adrian Fenty announced his nomination of Linda Singer, executive director of Appleseed, to be the next Attorney General of the District of Columbia. Fenty cited Singer s leadership at Appleseed and her longstanding commitment to social justice issues. This is a wonderful and well deserved recognition of her professional capability, her leadership skills, and her knowledge of the District. It also reflects the huge respect with which she and Appleseed are held by the legal community. She will be deeply missed. With the successes of the past year behind us and the vision of a promising year ahead, we eagerly look to our new leaders as well as our original supporters to continue Appleseed s commitment to sowing the seeds of justice. Marc Fleischaker Co-Chair Arent Fox PLLC Leonard Kennedy Co-Chair Sprint Nextel Corporation

Financial Access Small Business Health Care In December of 2005, Appleseed released Creating a Fair Playing Field for Consumers: The Need for Transparency in the U.S.Mexico Remittance Market with Congressmen Frank, Hinojosa, and Gutierrez, and the support of the National Council of La Raza and the Mexican-American Legal Defense and Education Fund. Appleseed found that immigrants pay nearly $1 billion to send money home to Mexico alone, with one third of those fees often due to hidden mark ups in the exchange rate. Our research provides remitters and policymakers with vital information on how the remittance market actually functions and sets forth recommendations to ensure greater transparency and competition in the market. About 46 million Americans are not covered by health insurance, with more than 60 percent of the uninsured being either small business employees or dependents of small business workers. Appleseed has been working with employers, employees, government officials and community-based organizations to identify ways to leverage public benefits programs to gain greater health care coverage for small business workers and their families. The policy recommendations put forth (by Appleseed) make sense they give consumers a choice and the ability to make sound financial choices and decisions that in the end will improve their overall quality of life. Congressman Rubén Hinojosa Appleseed also released an important resource for financial institutions that wish to expand their reach to the immigrant market. Banking Immigrant Communities: A Toolkit for Banks and Credit Unions highlights areas of importance to Latino immigrants as a customer base, explains how banks can offer or improve services for Latinos and gives examples of banks and credit unions around the country that have successfully implemented the kit s recommendations and expanded their business. e Seeds of Justice Appleseed launched a mortgage lending pilot with Fannie Mae to test our belief that sending remittances on a regular basis is a creditworthy activity, and that extending credit on the basis of remittance history is one way for financial institutions to access a large market of borrowers with nontraditional credit. We also began work on our Fair Exchange initiative in which a number of high-level players in the remittance market have agreed to explore voluntary pricing and disclosure standards that would allow immigrant consumers to make better choices when sending money internationally. This summer, Appleseed released a report that offers a number of solutions that could be implemented on the state level to increase health insurance coverage, particularly among small businesses. One important step states could take would allow small business employers to buy in to a state-run insurance program, like Medicaid. This option requires recipients to pay the total expense that the state incurs to provide coverage, which taps a much larger purchasing pool and can dramatically reduce premiums. Additionally, with an estimated 10 million uninsured children in America, Appleseed has focused its advocacy on the expansion of the State Children s Health Insurance (SCHIP) program in order to bring affordable health care coverage to children.

Education Four years after passage of the federal No Child Left Behind Act, Appleseed conducted a year-long study of the law s parental involvement component and how it is being implemented across the country. At its heart, NCLB is a market accountability system with parents as the key levers of change. We believe that parents who are armed with data on their schools performance and more importantly, a clear understanding of what the data means will be better advocates and decisionmakers. Appleseed s study aims to determine whether this accountability mechanism is functioning effectively; that is, whether (and which) parents receive, understand, and act upon the information gathered under NCLB. We sought diverse perspectives from school officials, parents and other stakeholders, and prepared the first report of its kind to assess parental involvement specifically as it relates to NCLB. This year, we also began conducting a systematic, nationwide and objective study of how teacher and principal contracts impact students and schools across the country. This work will be a valuable resource for boards of education, superintendents, union officials, state and federal policymakers, and academic researchers. Following the study, Appleseed plans to work nationally with superintendents, unions and schools boards to better current practices.

Assets, Liabilities, and Net Assets Audited financial statement for the year ending June 30, 2006 Assets Cash and cash equivalents 1,295,412 Unconditional promises to give 204,844 Prepaid expenses 21,790 Total current assets $1,522,046 Fixed assets net 9,424 Investments 809,610 Total assets $2,341,080 Liabilities and Net Assets Current Liabilities Due to centers 179,311 Accounts payable and accrued expenses 67,371 Total current liabilities $246,682 Net Assets Unrestricted 489,188 Temporarily restricted 1,605,210 Total net assets $2,094,398 Total liabilities and net assets $2,341,080 Support, Revenue, and Expenses Audited financial statement for the year ending June 30, 2006 Support and Revenue Contributions temporarily restricted 1,573,785 Contributions unrestricted 1,246,956 Investment income 65,912 Donated services 5,439,890 Total support and revenue $8,326,543 Expenses and Distributions Program Distributions Grants to centers 1,054,931 Allocated program expenses 6,183,727 Management and general expenses 321,763 Fundraising 306,797 Total expenses and distributions $7,867,218 Change in net assets $59,127 Net assets beginning of period $492,719 Net assets end of period $489,188 A full audit for the fiscal year 2006 is available upon request. In-kind Supporters Arent Fox PLLC Booz Allen Hamilton Covington & Burling LLP Cravath, Swaine & Moore LLP Dechert LLP DLA Piper Dorsey & Whitney LLP Faegre & Benson LLP Holland & Knight LLP Jones Day Kilpatrick Stockton LLP King & Spalding LLP Kirkland & Ellis LLP Latham & Watkins LLP Levine, Blaszak, Block & Boothby, LLP Mayer, Brown, Rowe & Maw LLP Maynard Cooper & Gayle PC Morrison & Foerster O Melveny & Myers LLP Orrick, Herrington & Sutcliffe LLP Patton Boggs Paul, Weiss, Rifkind, Wharton & Garrison LLP Porter Wright Morris & Arthur LLP PricewaterhouseCoopers Reed Smith LLP Schulte Roth & Zabel LLP Shearman & Sterling LLP Sheppard, Mullin, Richter & Hampton LLP Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates Steptoe & Johnson LLP Walker Associates Weil, Gotshal & Manges LLP White & Case LLP Wilmer Cutler Pickering Hale

Appleseed Board of Directors Marc Fleischaker (Co-Chair) Arent Fox PLLC Leonard Kennedy (Co-Chair) Sprint Nextel Corp. Robert Mallett (Chair Elect) Pfizer Inc. Jack O Kelley, (Vice President) Katzenbach Partners LLC Malcolm Rich, (Vice President) Chicago Appleseed Center Sara J. Cavendish, (Treasurer) Marshfield Associates Stephen Gates, (Secretary) ConocoPhillips, Co. Kevin Arquit Simpson Thacher & Bartlett LLP Frank Bailey Sherin & Lodgen LLP Alicia Batts Dickstein Shapiro LLP David J. Bershad Milberg Weiss Bershad & Schulman LLP David Broderick McCarter & English, LLP Brooks Burdette Schulte Roth & Zabel LLP Ronald Cami Cravath Swaine & Moore LLP A. Stephens Clay Kilpatrick Stockton LLP Natalia Delgado Huron Consulting Group David Douglass Porter Wright Morris & Arthur LLP Gary Epstein Latham & Watkins LLP Peter Erichsen The J. Paul Getty Trust Jack Focht Foulston & Siefkin LLP Michael Freed Freed Kanner London & Millen LLC A.H. Gaede, Jr. Bradley Arant Rose & White LLP R. James George George & Brothers, LLP Gregory Glover Pharmaceutical Law Group PC Willis Goldsmith Jones Day Ralph Gonzalez Citigroup Inc. Edward Gray Morrison & Foerster LLP Stanley Grossman Pomerantz Haudek Block Grossman & Gross LLP Steve Hanlon Holland & Knight LLP Larry Harris Draft Net Eileen Hershenov Consumers Union Ted Hester King & Spalding LLP Jonathan Hiatt AFL-CIO A. Stephen Hut Wilmer Cutler Pickering Hale & Dorr LLP Patricia Irvin Ann Kappler Kelley Drye Collier Shannon Richard Ketchum New York Stock Exchange, Inc. Eric S. Koenig, Retired Microsoft Corporation Forrest N. Krutter Berkshire Hathaway Group, Inc. Robert Lavet Sallie Mae Henry Levine Levine, Blaszak, Block & Boothby LLP Timothy Mayopoulos Bank of America Carlos Ortiz Mena Grupo Peñoles Herbert E. Milstein Cohen, Milstein, Hausfeld & Toll, P.L.L.C. Peter Mundheim Stone Point Capital Cecilia Muñoz National Council of La Raza Melanie Nussdorf Steptoe & Johnson PLLC Tai Park Shearman & Sterling LLP R. Bruce Rich Weil, Gotshal & Manges LLP Matthew Richardson Wyche Burgess Freeman & Parham, P.A. James Rogers Latham & Watkins LLP Alexis Rovzar White & Case Charles F. Smith Skadden, Arps, Slate, Meagher & Flom LLP Philip Spector Intelsat Joseph Stern Dow Jones & Company, Inc Kerry Sulkowicz The Boswell Group LLC Ronald Tabak Skadden, Arps, Slate, Meagher & Flom LLP Allan Van Fleet Greenberg Traurig, LLP Arthur White Yankelovich Group Eric Zahler Loral Space & Communications Founding Directors Robert L. Bachner Phillips Nizer LLP Gail Erickson, Retired W.R. Grace & Co. Robert E. Herzstein Miller & Chevalier Mark Joelson Law Offices of Mark Joelson Edward M. Levin, Retired Department of Commerce Richard J. Medalie (Chair Emeritus) Law Offices of Richard J. Medalie Ralph Nader The Center for Study of Responsive Law Ralph I. Petersberger, Retired McDermott Will & Emery Bertrand B. Pogrebin Littler Mendelson P.C. Philip F. Zeidman DLA Piper Affiliations listed for identification only. Isaac Newton Society Cecily Baskir Susan Borschel Pillsbury Winthrop Shaw Pittman Kendall Burman Latham and Watkins Andrew Goldsmith Cravath, Swaine and Moore, LLP Karin Kincaid Pillsbury Winthrop Shaw Pittman Alexander Krulic Wilmer Cutler Hale Pickering Jennifer Lee Wilmer Cutler Hale Pickering Rebecca Malcolm Latham and Watkins Without people nothing is possible. But without institutions, nothing is lasting. This is the underlying approach that informs the Appleseed agenda to broaden the scope of justice in America. Olabisi Onisile Porter Wright Morris & Authur LLP Angie Pegram Wilmer Cutler Hale Pickering Kathy Scott White and Case Rachel Tausend Stradley Ronon Stevens & Young, LLP Vicki Walcott-Edim Jones Day Mike Zamore Office of Congressman Patrick Kennedy

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