Board of Directors
A Report on the Society's Tax Status
Last winter, a document was circulated to the Board and Members of the Society which questioned our tax-exempt status. This document was written by Lisa Steele, a tax attorney who is also a SCA participant, at the request of Mark Schuldenfrei, also a participant. This document spurred the Board to contact a well- respected California law firm (Silk, Adler & Colvin) which specializes in non-profit law. Rosemary Fei, who is their specialist in non-profit tax law, prepared the following response.
Please note that the preparation of this document was not donated to the Society, and it was not cheap. (The standard rate for attorney time is approximately $200/hour.) If you have any questions about the contents of this document, please do not contact the attorneys. Write to the Board at the Milpitas office or at firstname.lastname@example.org and we will try our best to either answer your questions or obtain answers from the appropriate parties.
Please note further that the footnotes were typed into the body of the document ((within double parentheses)) by myself. I assume all blame for any errors in transcription -- but I did double-proof them.
This document is the property of The Society for Creative Anachronism, Incorporated. and of its authors. Members of the Society for Creative Anachronism may copy and distribute this document to other members of the Society so long as proper credit is given and no changes are made in the text. The governing version of this document is the original, which is held at the SCA Corporate Office in Milpitas. If you wish a copy of the original document, please write to the office.
--- Lee Forgue, Director, for the SCA Inc.
MEMORANDUM TO: Board of Directors Society for Creative Anachronism, Incorporated FROM: Rosemary E. Fei DATE: May 8, 1996 RE: Allegations of Violations of Tax-Exempt Status Requirements Some members of Society for Creative Anachronism, Incorporated (the "Society"), have expressed concerns over the Society's operations, alleging that the Society is in danger of losing its tax-exempt status. We are a law firm exclusively engaged in representing tax-exempt and nonprofit organizations, and advise extensively on tax-exemption compliance issues. In January and February, 1996, we conducted a brief preliminary investigation ((The brevity of our review was dictated by the Board's desire to determine the seriousness of the allegations before expending potentially very substantial legal fees for an in-depth review of the numerous, complex, and widespread activities of the Society. Based on this initial review, while we recommend some areas for remediation, we do not believe a full-scale tax compliance audit is warranted at this time.)), including review of the documents listed in Exhibit A, in light of these allegations, and this memorandum presents our results and conclusions. Summary While our investigation revealed some areas of corporate and tax law compliance which may require further review and to which the Board should attend in the future, these were not serious enough to be grounds for revocation of the Society's exempt status, and we found no reason to believe the Society is materially out of compliance with its tax exemption. A more in- depth investigation could, of course, reveal a different picture, but the Board will have to balance the costs of undertaking such a process against its likely value to the Society and the charitable and educational uses to which the Society's assets might otherwise be put. The members' concerns appear to be unwarranted, arising from an overly strict reading of applicable tax statutes, regulations, and cases. Background The Society was incorporated in 1968. In 1971, the IRS determined the organization to be exempt from taxation under IRC 501(c)(3). Because regulations under Code Section 509 were at that time in the process of promulgation, the organization did not receive its public charity status under Code Section 509(a)(2) until 1972. The IRS issued a "no change" letter to the organization in 1978, and in 1989 issued a letter confirming the Society's public charity status. In 1990, the IRS conducted an audit and concluded that no change in the Society's exempt status was in order. In 1989, the Society amended its Articles of Incorporation. Its specific purposes are, according to the amended articles (Article II): a) Research and education in the field of pre-17th Century Western Culture. b) Generally, to engage in research; publish material of relevance and interest to the field of pre-17th Century Western Culture; to present activities and events which re-create the environment of said era, such as, but not limited to, tournaments, jousts, fairs, dances, classes, et cetera; to acquire authentic or reproduced replicas of chattels representative of said era; and to collect a library. According to the Bylaws (Article III), "[t]he Society shall be dedicated primarily to the promotion of research and re- creation in the field of pre-17th century Western culture . . . ." The Society operates on a multinational scale with members in the United States, Canada, Australia, several countries in Europe, and U.S. armed forces bases around the world. A Board of Directors takes responsibility for the entire organization which is divided into regions (Kingdoms), which are further divided into local units. The Society sponsors a wide variety of "events" including tournaments, feasts, and other similar gatherings where members display the results of their researches into period culture and technology in an environment which evokes the atmosphere of the Middle Ages and Renaissance, as well as conducting more traditional educational activities such as classes, seminars, workshops, and meetings. Analysis of Allegations The allegations made by concerned members can be categorized into four areas: (1) errors by the Society in filing reports and maintaining corporate records; (2) the Society's receipt of unrelated business income which is subject to tax and for which reports have not been filed nor taxes paid; (3) private inurement of Society assets to benefit insiders; and (4) the existence of a substantial nonexempt purpose in the form of social activity at Society events. Each of these allegations is addressed in turn below. Reports and record keeping. The Society is required to file Form 990, as well as employment tax filings, with the Internal Revenue Service ("IRS") annually. In addition to filings with the IRS, the Society must make similar filings with the California equivalent of the IRS, the Franchise Tax Board, or FTB, on Form 199. To maintain its corporate status in good standing, the Society must file annually a one-page statement with the Secretary of State listing its current officers. Finally, the Society must file Form CT-2 with the Registry of Charitable Trusts in the Attorney General's office, concerning its assets, which are held in charitable trust. With the exception of the Society's 1993 Form 990 and Form 990-T, we have not reviewed the Society's tax or corporate filings. We have been informed by corporate officers that each of the filings listed above has been made as required. We have not, of course, audited the content of each filing, but we presume the Society's auditors have done such due diligence in preparing these filings as they deemed required by their profession. The members allege possible filing irregularities with the IRS such as incomplete forms or unsigned forms, not reporting bylaw amendments to the IRS, and "a history of incomplete CT-2 reports with the State of California." We cannot verify or deny these allegations based on our review. More seriously, the members imply that the Society fraudulently underreported its total income as $40,000 on its 1993 Form 990. Our review showed that the Society actually reported total income of $2,503,105. Failure to adhere to filing requirements could result in penalties being imposed on the Society; in some cases, these penalties can be substantial. However, in our experience, such penalties are typically waived by regulators if the organization can demonstrate that its failure was due to reasonable causes and not the result of willful neglect. Inadvertent failures to file reports or mistakes in filings are not grounds for revocation of exempt status. The Society would have to ignore numerous notices from regulators and refuse to make required filings before revocation of tax-exempt status would become an issue. The Board is responsible for seeing that appropriate personnel, outside consultants, and procedures are in place so as to ensure that required filings are made accurately and on time. Other than the corporation's Amended Articles of Incorporation, Bylaws, and 1995 Organizational Handbook, we have not reviewed the Society's internal governance, membership, financial, contractual, or other records. If the Board deems it appropriate, we would be happy to undertake such a review; with respect to certain types of records, such an undertaking is more efficiently performed by independent CPA auditors than attorneys, should the Board feel it is needed. Unrelated business income taxes. The members allege the Society may be underreporting its unrelated business income, and therefore also failing to pay taxes due on such income. Specifically, the concern relates to advertising income received by the Society for advertisements placed in Society publications. The Code does not prohibit a charity such as the Society from engaging in, and earning income from, activities outside its exempt purposes; however, the law does impose a tax on any net income from such unrelated activities. ((Code Sections 501(b) and 511.)) To be subject to tax, the activity must (1) constitute a trade or business (meaning any activity usually carried on for profit), (2) be regularly carried on, and (3) not directly further the organization's charitable mission. Unless an activity satisfies all three of these requirements, it will not be subject to tax. Even if it does meet these requirements, the unrelated business income tax provisions include numerous exceptions, so that a great deal of unrelated business activity escapes taxation. Aside from the payment of taxes, if an exempt organization has too much unrelated activity, it may be deemed to have a substantial nonexempt purpose, and will not qualify for tax exemption at all. ((Indiana Retail Hardware Association v. United States, 366 F.2d 998 (Ct.Cl. 1966).)) The exact level of income from unrelated activities that will endanger an organization's exempt status is a matter of some debate among tax practitioners. ((Thomas A. Troyer, "Quality of Unrelated Business Consistent with Charitable Exemption -- Some Clarification, " The Exempt Organization Tax Review, Vol.6., No. 2 at 409 (August 1992).)) While advertising income is a common source of unrelated business taxable income for exempt organizations, not all advertising income is automatically subject to tax as unrelated. The U.S. Supreme Court ((U.S. v. American College of Physicians, 475 U.S. 834 (1986).)) has held that the sale of advertising should be evaluated under the general rules for distinguishing related and unrelated trades or businesses, discussed above. The sale of advertising in an exempt journal will be an unrelated trade or business unless it contributes importantly to the accomplishment of the organization's exempt purposes. This determination requires intensive analysis of the facts and circumstances of the advertising activity in question. The members allege that "advertising in TI is almost certainly unrelated business income." Based on our review of Tournaments Illuminated (Summer 1995, Issue 115) and the SCA Marketplace brochure, we disagree. To the contrary, we believe convincing arguments can be made that most of the advertising in Society publications is substantially related to the Society's educational purposes, and therefore the associated net income would be exempt from tax. For example, we found advertising for educational books and materials, musical instruments, Elizabethan costuming, pavilions, rattan fighting swords, aquitaines, feastware, and Middle Ages-style cloaks. Each of these products is directly related to the Society's exempt activities; in many cases, participants in the Society's educational activities would be unable to acquire information, tools, and materials for historically accurate props and costumes, or other items that contribute to historical re-creation, without access to the products advertised by vendors in the magazine. We did note one advertisement for greeting cards in Tournaments Illustrated that is not related to the Society's exempt purposes, in our opinion, the net income from which should be treated as taxable. A separate but related issue is raised by products sold by the Society. The Society's educational experience -- "living history" -- relies to a great extent upon individual participation in the historical reconstruction of pre-17th century Europe. Everyone who attends Society events is expected to conform to the style of dress, speech and behavior appropriate to that period. Because the costumes, objects and technologies suitable to a historically accurate reconstruction are rarely found in today's world, the "SCA Marketplace" offers a wide variety of instructional articles, patterns and how-to books. In our opinion, sales of these products directly further the Society's exempt purposes by providing Society participants with reference works as well as reproduced historical objects which are utilized in the research and re-creation of medieval history. Under these circumstances, the sales should not generate taxable income to the Society. Based on the foregoing and our review of the Society's Form 990-T (on which an exempt organization reports its taxable unrelated business income), we conclude that it is possible that the Society is in fact overreporting, rather than underreporting, its unrelated business taxable income. Unfortunately, the Society's history of treating its advertising income as taxable would probably be treated by the IRS as evidence that the activity is unrelated. Therefore, the Society would have to meet a heavier than usual burden of proof were it to change its reporting position at this point. The Board might wish to obtain an in-depth, closely-researched legal opinion before proceeding, which could be expensive, off-setting the benefits of eliminating much of the Society's taxable income, assuming that result were approved. The Society's accountant should be able to determine how much tax savings might result from a favorable legal opinion, to assist the Board in deciding how to proceed. The Board should also ensure that Society staff who accept advertising in Society publications or who develop products to be offered for sale by the Society understand the unrelated business income rules so that they can screen out inappropriate advertisements or products, or ensure that any associated net income is treated correctly as unrelated business income subject to tax. Private inurement. Section 501(c)(3) of the Code states that only organizations "no part of the net earnings of which inures to the benefit of any private shareholder or individual". Private inurement refers to an abuse by those who control the organization: one prominent treatise states that "inurement is a private benefit provided to insiders who have the institutional opportunity to direct the organization's resources to themselves, to entities in which they have an interest, or to family members." ((Frances R. Hill and Barbara L. Kirschten, FEDERAL AND STATE TAXATION OF EXEMPT ORGANIZATIONS, 2-84 (1984).)) Private inurement is absolutely prohibited for a Section 501(c)(3) organization like the Society and, if present, would be grounds for revocation of the Society's tax exemption. ((Treas. Regs. Section 1.501(c)(3)-1(c)(2).)) Private inurement must be distinguished from private benefit. As noted above, private inurement results from an insider misdirecting an organization's assets away from its proper exempt purposes. Private benefit, on the other hand, does not require any insider control; it is often evident just from the non-exempt purposes of the organization, but can occur even where the organization has proper exempt purposes, but operates in a way that appears to be directed at benefitting private, rather than public, interests. To illustrate the difference, private inurement occurs where a director causes the Board to approve excessive compensation to him- or herself; private benefit occurs where the Board approves a relationship with an unrelated consultant that pays excessive compensation to the outsider. IRS regulations permit an "insubstantial" amount of private benefit. ((See Code Section 501(c)(3) and Tres. Regs. Section 1.501(c)(3)-1(c)(1).)) Whether or not a private benefit is "insubstantial" is to be determined in light of all the facts and circumstances of that particular case. Generally, private benefit that is incidental to and a necessary side effect of achieving an exempt purpose is considered insubstantial. The members allege specific instances amounting to a pattern of private inurement. The allegations include the advertisement of a private, for-profit event in a regional newsletter as if it were a Society-sponsored event (an incident that happened ten years ago and which the members acknowledge was an oversight by responsible Society officers and fraudulent on the part of the private individuals involved), the theft of money from the Society, and the questionable use of Society funds for personal travel. An isolated incident of theft or a mistake in advertising does not amount to private inurement. While the Board has a fiduciary duty to take reasonable steps to protect the Society's assets, no organization can realistically guarantee the honesty or competence of every individual who volunteers for it, nor does the tax law require it. We presume that the Society has responded or will respond to the alleged incidents appropriately, both with respect to pursuing recovery of assets and preventing similar incidents from occurring in the future. So long as the organization has appropriate procedures to minimize the opportunities for misappropriation or misuse of its assets, and attempts reasonably and in good faith to enforce them, isolated failures of the system do not amount to private inurement and will not endanger the Society's exempt status. The members, in their allegations, also seem to have confused private inurement with private benefit. Specifically, the members allege that the Society "frequently operate[s] in a fashion which allows merchants to benefit privately. This MAY be private inurement." However, the presence of "merchants" at an exempt organization's events raises a question of private benefit, not private inurement, and whether or not the level of private benefit is so substantial as to bring into question the organization's exempt status is to be determined based on a full exposition of the facts and circumstances surrounding that particular event or transaction. ((St. Louis Science Fiction Limited v. Commissioner, 49 T.C.M. (CCH) 1126 (1985).)) While we have not attended a Society event as part of this investigation, it appears that the purpose of the Society's events is not to benefit vendors, but to provide educational experiences through historical re-creation, and the presence of the vendors, subject to a variety of requirements ensuring historical accuracy in their presentations, makes a more realistic re-enactment of historical settings possible and attracts more members of the public to attend and be educated, thus directly furthering the Society's educational purposes. Of course, the Board should always monitor merchant participation at its events to ensure that it is not only compatible with, but in fact enhances, the events' educational value. Substantial non-exempt purpose. Finally, the members allege that the Society is not operated, in the language of Section 501(c)(3), "exclusively" for its exempt purpose -- promotion of research and re-creation in the field of pre-17th century Western culture for the public's benefit -- but rather is also operated for social or recreational purposes. This allegation is the most serious of those made by the members, both because it appears at first glance to be factually true, and because the consequences to the Society would be severe. Section 501(c)(3) of the Code exempts from Federal income tax organizations "organized and operated exclusively for" exempt (i.e., charitable, educational, etc.) purposes. Section 1.501(c)(3)-1(c)(1) of the Treasury Regulations implementing the Code elaborates that an organization will be regarded as "operated exclusively" for exempt purposes only if it engages primarily in activities which accomplish one or more of the exempt purposes specified in Code Section 501(c)(3). An organization will not be exempt if more than an "insubstantial" part of its activities is in furtherance of a non-exempt purpose. Education, for purposes of tax exemption, is defined by Treas. Regs. Section 1.501(c)(3)-1(d) as either "(a) [t]he instruction or training of the individual for the purpose of improving or developing his capabilities; or (b) [t]he instruction of the public on subjects useful to the individual and beneficial to the community." While this definition encompasses traditional educational institutions like schools, universities, and the like that have a set curriculum, an identifiable faculty, and a student body, it is far broader. Museums of every type, zoos, orchestras, theaters, organizations which disseminate information (ranging from facts on environmental degradation to the reasons for international cooperation), organizations which re-create Civil War battles, garden clubs, and gem and mineral clubs, have all qualified as educational organizations. Determining whether an organization is organized and operated primarily for educational purposes requires an investigation of the specific facts and circumstances of the organization and its activities. Tension between the educational and the recreational or social is not uncommon, and has been addressed by the IRS repeatedly. For example, a gem and mineral club can be organized and operated either as an educational organization, or as a social club. ((Rev. Rul. 67-139, 1967-1 C.B. 129.)) A club formed "to advance the earth sciences by stimulating interest and encouraging study" that holds monthly lectures, sponsors field trips, issues a bulletin, assists local museums, maintains a library, and annually conducts a show for the general public at which members and nonmembers exchange lapidary techniques, display collections of gems and minerals, and compete with one another for prizes and awards, with the public invited to attend its functions and programs, will qualify for exemption under Section 501(c)(3). The IRS explicitly acknowledged the social aspects of club operation. Nevertheless, the IRS found that the club's educational methods (i.e. lectures, discussions, shows, field trips) are "educational" within the meaning of the Code and Regulations, and that "[t]hese activities are educational within the meaning of the regulations even though they serve recreational interests." In contrast, another gem and mineral club, which was "formed to disseminate knowledge of mineralogical and lapidary subjects, to promote their application so that greater pleasure may be derived from these activities, and to promote good fellowship among its members," was determined to be a social club. This club held monthly social meetings where minerals and gems were informally discussed, issued a bulletin containing news of members' social activities and their rock and mineral collections, and held an annual show. The IRS found that the club was operated primarily "to accommodate its members in their recreational pursuits. The gem and mineral show serves to stimulate the members' hobby interests and is, thus, consistent with the [club]'s recreational purposes." Where recreational, social, and educational purposes are intertwined in a single activity, the IRS looks to the content of the activity to make a judgment as to whether the non- educational purpose of the activity is substantial. This is a fact-intensive inquiry. St. Louis Science Fiction Limited v. Commissioner ((Supra, note 7.)) ((which said "St. Louis Science Fiction Limited v. Commissioner, 49 T.C.M. (CCH) 1126 (1985).")) presents a good example. The science fiction society's principal activity was its annual convention. Its purposes were "to promote and stimulate interest in speculative fiction (in print, movie and video form) and art and related activities." At the convention, science fiction authors and personalities gave readings and panel discussions. Other activities included masquerade parties, a pool party, a sing-a-long program, a 24- hour video room, a 24-hour game room, movies, an art show and auction, and a "huckster's room." The IRS found that many of these component activities (such as the pool party, the "dead dog" party, etc.) served strictly recreational or social purposes. Even the more educational activities, like the panel discussions, "contained a predominantly recreational tone." Among the films shown, the IRS acknowledged the educational value of such science fiction classics as 2001: A Space Odyssey but questioned the showing of Hardware Wars (a spoof on Star Wars) and Star Trek Bloopers. Under these circumstances, the IRS concluded that the organization had substantial non-exempt purposes, and was therefore not entitled to exemption. This case demonstrates how substantial a level of recreational and social activity must be present to bring exempt status into question. In another close case involving exempt and nonexempt purposes intertwined, the IRS's ruling against the organization was reversed by the courts. Cleveland Creative Arts Guild ((Cleveland Creative Arts Guild v. Commissioner, 50 T.C.M. (CCH) 272 (1985).)) involved an organization formed to promote the arts. Among other activities, it sponsored art festivals and craft shows featuring competitions and sales by artists and craftspeople. The IRS, focusing on the sales, ruled that the organization had a substantial commercial purpose, precluding exemption. The Tax Court reversed the IRS decision, on the grounds that the sales must be viewed in the overall context of the group's activities. The Court stated that, in determining whether an activity was engaged in for a substantial non-exempt purpose, the relevant factors included (1) the manner in which the activities are conducted, (2) the "commercial hue" of the activities, and (3) the existence and amount of profit from the activities. The Court criticized the IRS's focus on sales activities and portions of festival advertising, finding that, in context, "the sales activities in question are incidental to the exempt purpose of promoting the arts . . .". These examples show that the question of whether or not the Society is operated primarily for educational purposes as the law requires, is a complex one not given to glib or easy answers. Our review of the Society's publications and the "Rialto" on the Internet revealed an ongoing and consistent effort to accomplish the organization's stated educational purposes. Tournaments Illuminated (Summer 1995) contains six articles, all dealing with one aspect or another of pre-17th Century Western culture. The two issues we reviewed of the newsletter of the Kingdom of the West (June and November 1995) present a listing of upcoming events, classes, and tournaments. There are no purely social announcements and no events noticed other than Society events, all cast in the style of pre-17th Century Europe. If these publications and fora are representative of Society publications and events, and of the Society as a whole, the Board may rest assured that the Society is entitled to its educational tax- exempt status. The members specifically criticize some of the Society's events, such as the Pensic, as overly recreational and social. We suspect this criticism arises from a misunderstanding. Education and recreation are not mutually exclusive: in fact, they may be completely complementary. Being educational does not mean that participants are forbidden to have a good time; to the contrary, enjoyment enhances the educational value of participation, so that making educational events enjoyable furthers educational purposes. The question is whether the purpose of the activity is primarily educational. Although we do not have first-hand experience with the Society's events, unsolicited comments from the "Rialto" suggest that the Pensic in particular is highly educational. One writer discussing a Pensic said, "I met people making rope beds who never tried using a chisel before, saw people making bone needles to sew their leather lamalas together with, gentles making shoes, finishing garments of fine cloth THAT THEY WOVE [emphasis in the original]. I witnessed the shooting of a war point, folks fighting in stout steel and sturdy leather, people gathering dye stuffs and soaking samples . . . heard tales of Beowulf and Njal. I enjoyed a performance of comedia, got to play a portative organ . . ." This experience was evidently educational not only for the commentator, but also for the performers. That both observers and participants in all likelihood enjoyed themselves and each other's company while learning does not detract in the least from the educational purposes served by the activities, and will not be held against the Society by the IRS. It is understandable that some members may be uncomfortable with having to rely on an assessment of intangible factors like the "recreational tone" the IRS found troubling in the St. Louis Science Fiction case, or the "commercial hue" referred to by the Tax Court in Cleveland Creative Arts Guild. But in both instances, the overall context in which specific problematic activities occurred is key to explaining the result. The manifestly educational purposes of the Society pervade all the activities which we have been able to consider, and each activity clearly advances those purposes, in our opinion. The "Welcome to the Current Middle Ages" flyer is a prime example, as it locates the Society's activities within an educational framework and sets the "tone", or "hue", by which we can understand the Society's operations. The members also question the historical accuracy of the Society's re-creations. The very existence of the controversy is further evidence of the Society's educational purposes. Disagreements over details of culture and technology of 17th century Europe -- the appropriate language, the exact replication of clothing and weaponry -- are bound to prompt study and the mustering of evidence on either side, and the atmosphere of controversy and criticism is hardly indicative of a social club. To the contrary, such debate is inherent in any vibrant educational endeavor, particularly one concerned with reproducing an era which existed over 400 years ago. Conclusion Reports and record keeping. In a widespread and active membership organization such as the Society, with several levels of hierarchy in governance, keeping accurate and complete corporate and financial records and making complete, accurate, and timely reports to regulators is an extremely difficult, as well as critical, task. Although we did not review extensive Society records, based on our experience in performing legal audits of other large organizations run primarily by volunteers, there are always areas where improvements in procedures and compliance can be made. This is especially true of older organizations like the Society. The Board bears the responsibility for overseeing legal compliance efforts and monitoring the results, and we would be happy to assist. The Board and the organization will not, however, be held to a standard of total accuracy, exhaustiveness, and timeliness in order to retain the Society's tax-exempt status. Unrelated business income taxes. The Board should review with the Society's auditors the rules for determining what portion of its income, if any, is taxable as unrelated business income. The Board should also ensure that staff are provided with such information on unrelated business activity as they may need to operate the Society within the dictates of the law while minimizing taxes due. Should the Board wish to consider reversing its position on advertising income, a written legal opinion should be sought. Private inurement. We found no evidence of private inurement or inappropriate private benefit in the materials we reviewed. The Board may wish to systematically consider Society operations not covered by our investigation to ensure that this can be said of the Society as a whole and without exception. We would be happy to review any specific situations that raise Board or member concerns. Substantial non-exempt purpose. We believe, based on our review and assuming the limited documents we reviewed are truly representative of the Society's overall operations, that the Society is clearly entitled to its tax-exempt status as an educational organization, and that the social and recreational value of Society events enhances, rather than decreases, their educational impact. Nonetheless, the members' allegations should serve as a reminder to the Society's Board and membership of the need to test each activity of the Society against an educational yard-stick. But having passed that test, recreational and social value should not be a bar to the Society's decision to engage (or continue engaging) in a particular activity. EXHIBIT A Documents Reviewed 1. Report to the Board by Mark Schuldenfrei (Tibor) dated October 5, 1995 attaching a report entitled "Is SCA, Inc. Entitled to Tax-Exempt Status Under the Internal Revenue Code of the United States" by Lisa J. Steele, Esq. 2. Amended Articles of Incorporation dated September 15, 1989 3. Corporate Bylaws 4. 1993 Form 990 and Form 990-T 5. Organizational Handbook 1995 6. Membership Application (1/95) 7. Flyer entitled "Welcome to the Current Middle Ages" 8. Tournaments Illuminated (Issue 115, September 1995) 9. The Page (Newsletter of the Kingdom of the West) (June 1995 and November 1995) 10. SCA Marketplace Price List (9/95) 11. Random discussions between members over the Internet ("the Rialto")