THE MODEST NEEDS 2007 ANNUAL REPORT

Introduction

In keeping with our commitment to operational transparency, Modest Needs publishes an annual report which is freely accessible to the public at large both via our website or in hard-copy.

The purpose of this annual report is to update interested persons on our prior year's program service achievements and to report on other significant accomplishments by Modest Needs throughout 2007.

Our Mission Statement

At Modest Needs, we work:

• To prevent otherwise financially self-sufficient individuals and families from entering the cycle of poverty, when this might be avoided with a small amount of well-timed financial assistance;

• To restore the financial self-sufficiency of individuals who are willing to work but are temporarily unable to do so because they do not have the means to remit payment for a work-related expense; and

• To empower permanently disadvantaged individuals who otherwise live within their limited means to continue to live independently, despite a temporary, unexpected financial set-back.

A Year of Modest Needs Milestones

For Modest Needs, 2007 truly has been a "banner year"--a year during which the organization achieved a large number of operational goals and milestones. The most significant of these milestones include:

• The success of Modest Needs' ongoing matching grant initiative;
• The implementation of new corporate partnerships;
• The receipt of significant national recognition for our work, and
• The creation of a new system designed to give our donors direct input into the disbursement of their contributions to Modest Needs.

Modest Needs' Ongoing Matching Grant Initiative

In January 2007, Modest Needs had the pleasure of announcing that our 2006 'matching grant' initiative had been renewed for a further year, thanks in large part to the overwhelmingly positive response of Modest Needs' donors to this program.

Initially, Modest Needs' matching grant initiative was renewed in 2007 at its 2006 level of $300,000.00. Donor response to this program in 2007 was so strong that, by mid-September, Modest Needs had claimed the whole of the matching grant amount, prompting our anonymous matching donor to increase the amount of the match by $200,000.00, to half a million dollars in 2007.

By December 2007, Modest Needs' donors had increased their support to the point that the organization was able to claim the entirety of 2007's half-million dollar matching grant. In the process, our donors were able to reach more persons in need of short-term financial assistance in 2007 than had been possible in the 2004, 2005, and 2006 combined--including, in August 2007, the recipient of our milestone 5,000th grant.

Response to 2007's matching grant initiative was so strong that, in December 2007, Modest Needs' anonymous partner in this program announced that the matching grant would be renewed for a further year, thereby allowing donors to continue to have their recurring contributions matched, dollar for dollar, throughout 2008.

Corporate Partnerships

In May 2007, Jonathan Tisch, Chairman of Loews Corporation, announced a long-term partnership between Loews Hotels and Modest Needs Foundation, effectively naming Modest Needs Foundation as Loews Hotels' national charity partner.

As a result of this partnership, via their own 'Good Neighbor' program, Loews Hotels properties throughout the United States and in Canada pledged to hold fundraising events throughout the year, with 100% of the proceeds from these events being pledged to individuals and families who applied to Modest Needs for short-term financial assistance.

To oversee their efforts, each Loews Hotel property established a 'Modest Needs Council.' These Modest Needs Councils, which are comprised of persons working at every level within each hotel property, not only have primary responsibility for Loews Hotels' fundraising efforts on behalf of Modest Needs; they likewise meet on a regular basis to determine how the funds each property has raised might best be disbursed among applications for assistance, chiefly towards those applications for help originating from the community in which each hotel is located.

As a result of this partnership, the employees of Loews Hotels raised and disbursed just over $216,000.00 to individuals and families in need of short-term assistance during the final six months of 2007.

Additionally, in December 2007, Modest Needs and Starbucks partnered in a 'Days of Cheer' promotion, which was held throughout Starbucks Mid-Atlantic region. During this month-long promotion, Starbucks donated a percentage of the proceeds it earned from the sales of certain holiday-themed drinks.

By the conclusion of this partnership, Starbuck's had raised an additional $25,000.00, 100% of which was disbursed to applicants in short-term financial crisis.

National Recognition

In February 2007, in response to numerous donor inquiries from across the United States, Modest Needs Foundation voluntarily underwent an extensive evaluation of its financial position and operational methodology by the Better Business Bureau's Wise Giving Alliance.

At the conclusion of this evaluation, the BBB Wise Giving Alliance determined that Modest Needs not only met but, in nearly all cases, vastly exceeded its 20 standards for charitable efficiency and awarded Modest Needs the opportunity to display the Wise Giving Alliance seal as an indicator of its operational and financial efficiency.

In October 2007, Charity Navigator, the largest charity 'watch-dog' organization in the United States, similarly evaluated Modest Needs. At the conclusion of its evaluation of Modest Needs, Charity Navigator awarded Modest Needs its four-star (highest possible) charity rating--a rating reserved only for those charities that demonstrate exceptional transparency, efficiency, and effectiveness.

Finally, in December 2007, after an extensive vetting process, in an article entitled 'The Year of Giving Brilliantly,' Modest Needs Foundation was recognized by O: the Oprah Magazine both as one of the ten best charities operating in the United States, and as one of the two charities where a $100.00 contribution would do the most good for the longest period of time.

Needless to say, all of us at Modest Needs were extraordinarily pleased to see our work so well received by such noteworthy organizations and will continue to do everything in our power to continue to garner this type of recognition, both for our efficiency and the ongoing impact of our work.

Giving Our Donors a Voice

In November 2007, Modest Needs migrated to a new operational model--one designed to give our donors a direct, personal voice into how their contributions to Modest Needs actually are used.

To this end, Modest Needs implemented a system whereby donors to Modest Needs receive 'points' that they can use to recommend that Modest Needs fund the applications that are most meaningful to them.

Under this new system, donors who make one-time contributions to Modest Needs receive one point per dollar contributed to Modest Needs. Donors with recurring contributions (weekly, bi-weekly, or monthly pledges) to Modest Needs receive two points per dollar contributed, thanks to the aforementioned matching grant initiative.

Simultaneously, each time we prequalify an application for assistance from Modest Needs, we assign that application a 'point value' that is roughly equal to the cost to fund the application in question.

Using this system, donors simply log into their Modest Needs accounts and allocate their points to the applications that matter most to them. Applications are instantly funded by Modest Needs once the number of points allocated to that application by Modest Needs' donors is equal to the point value that has been set for that application, based on its cost.

Modest Needs' point system proved an immediate success with our donors immediately upon its launch and allowed Modest Needs to make a record-breaking number of grants in the final six weeks of 2007.

We look forward to enhancing this system in 2008 in response to feedback we've received from applicants and donors, always with an eye towards providing our donors with the most efficient and transparent way possible to help persons shoulder the burden of a short-term financial crisis, and would like to thank our donors for their steadfast support of Modest Needs throughout 2007 and beyond.

2007 Financial Information at a Glance

Income and Expense Categories	Amount
Income from Direct Public Support (Total Income)	$2,059,031.00
Program Service Expenses (92.47%)	$1,485,514.00
Management / Administrative Expenses (2.91%)	$46,724.00
Fundraising Expenses (4.62%)	$74,220.00
Total Expenses	$1,606,458.00
Revenue over Expenses for FY 2007	$453,273.00
Net Assets, Beginning of Year	$115,107.00
Net Assets, End of Year	$568,380.00

You may view a breakdown of the functional expenses listed above by accessing either our FY 2007 Form 990 or our 2007 Independent Auditor's Report. Links to both in PDF Format are below.

Supporting Financial Documents for 2007

Please note: all documents below are in PDF format and can be viewed via the free Adobe Acrobat Reader.

• View our 501 c 3 Determination Letter
• View our 2007 Form 990
• View our 2007 Independent Auditor's Report

Modest Needs Foundation - Roster of Board of Directors

Current as of 31 December 2007

• John Arenberg, Chair
• Dr. Keith P. Taylor, President and Secretary to the Board of Directors
• Elizabeth Kohen, Vice-Chair / Treasurer
• Zachary Mannheimer, Board Member
• Thierry Mellon, Board Member

Would you like a hard copy of our 2007 Annual Report?

If you do not have regular internet access but would like to receive a hard copy of the Annual Report above, along with accompanying materials, please send your request to:

Modest Needs Foundation
115 E 30th St, FL 1
New York NY 10016

Alternatively, you may request a hard copy of this report by calling us at (212) 463-7042, x15.