InterAction: The American Council for Voluntary International Action. Financial Report December 31, 2015

Transcription

1 InterAction: The American Council for Voluntary International Action Financial Report December 31, 2015

2 Contents Independent auditorʼs report 1-2 Financial statements Balance sheets 3 Statements of activities 4-5 Statements of functional expenses 6-7 Statements of cash flows 8 Notes to financial statements 9-17

3 Independent Auditorʼs Report To the Board of Directors InterAction: The American Council for Voluntary International Action Washington, D.C. Report on the Financial Statements We have audited the accompanying balance sheets of InterAction: The American Council for Voluntary International Action (InterAction), as of December 31, 2015 and 2014, and the related statements of activities, functional expenses and cash flows for the years then ended, and the related notes to the financial statements (collectively, financial statements). Managementʼs Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditorʼs Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditorʼs judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entityʼs preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entityʼs internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of InterAction: The American Council for Voluntary International Action as of December 31, 2015 and 2014, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. 1

4 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our reports dated April 15, 2016 and June 21, 2015 on our consideration of InterActionʼs internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of these reports is to describe the scope of the testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. These reports are an integral part of an audit performed in accordance with Government Auditing Standards in considering InterActionʼs internal control over financial reporting and compliance. Washington, D.C. April 15,

5 Balance Sheets December 31, 2015 and 2014 Assets Cash and cash equivalents $ 1,957,420 $ 873,046 Investments (Notes 2 and 3) 1,150,723 1,357,537 U.S. Government grants receivable 317, ,670 Foundation grants receivable, net (Note 4) 2,307,124 2,234,639 Other receivables 46,702 43,242 Prepaid expenses 178, ,386 Security deposits 75,085 74,973 Property, equipment and leasehold improvements, net (Note 6) 74, ,638 Total assets $ 6,107,151 $ 5,176,131 Liabilities and Net Assets Liabilities: Accounts payable $ 96,504 $ 156,888 Accrued employee benefits (Note 11) 359, ,369 Deferred membership dues 8,780 75,294 Deferred publications 23,720 - Deferred registrations 173,985 4,479 Deferred advertisements 3,605 - Deferred rent and lease incentive liabilities 118, ,887 Refundable advances 30,000 30,000 Total liabilities 814, ,917 Commitments and contingency (Notes 9 and 10) Net assets: Unrestricted 1,443,234 1,859,788 Temporarily restricted (Note 8) 3,849,403 2,432,426 Total net assets 5,292,637 4,292,214 Total liabilities and net assets $ 6,107,151 $ 5,176,131 See notes to financial statements. 3

6 Statement of Activities Year Ended December 31, 2015 Temporarily Unrestricted Restricted Total Support and revenue: U.S. Government grants (Notes 5 and 10) $ 2,176,090 $ - $ 2,176,090 Foundation and other restricted grants 292,104 4,150,154 4,442,258 Membership dues 2,765,570-2,765,570 Publications and online job board 45,668-45,668 Forum, meetings and workshops 545, ,723 Interest and dividends (Note 2) 31,335-31,335 Sublease income (Note 9) 42,400-42,400 In-kind contributions (Note 7) 109, ,967 Other income 58,057-58,057 Net assets released from donor restrictions (Note 8) 2,733,177 (2,733,177) - Total support and revenue 8,800,091 1,416,977 10,217,068 Expenses: Program services: Member services 2,945,977-2,945,977 Federal and non-federal awards 3,591,881-3,591,881 Legislative activities 27,643-27,643 Total program services 6,565,501-6,565,501 Supporting services: General and administrative 2,562,801-2,562,801 Fundraising 22,504-22,504 Total supporting services 2,585,305-2,585,305 Total expenses 9,150,806-9,150,806 Change in net assets before other item (350,715) 1,416,977 1,066,262 Other item: Unrealized and realized loss on investments (Note 2) (65,839) - (65,839) Change in net assets (416,554) 1,416,977 1,000,423 Net assets at beginning of year 1,859,788 2,432,426 4,292,214 Net assets at end of year $ 1,443,234 $ 3,849,403 $ 5,292,637 See notes to financial statements. 4

7 Statement of Activities Year Ended December 31, 2014 Temporarily Unrestricted Restricted Total Support and revenue: U.S. Government grants (Notes 5 and 10) $ 2,110,603 $ - $ 2,110,603 Foundation and other restricted grants 136,720 3,433,026 3,569,746 Membership dues 2,814,763-2,814,763 Publications and online job board 49,093-49,093 Forum, meetings and workshops 651, ,763 Interest and dividends (Note 2) 94,238-94,238 Sublease income (Note 9) 5,400-5,400 In-kind contributions (Note 7) 35,949-35,949 Other income 35,868-35,868 Net assets released from donor restrictions (Note 8) 4,155,264 (4,155,264) - Total support and revenue 10,089,661 (722,238) 9,367,423 Expenses: Program services: Member services 2,917,648-2,917,648 Federal and non-federal awards 4,482,139-4,482,139 Legislative activities 49,153-49,153 Total program services 7,448,940-7,448,940 Supporting services: General and administrative 2,628,819-2,628,819 Fundraising 80,339-80,339 Total supporting services 2,709,158-2,709,158 Total expenses 10,158,098-10,158,098 Change in net assets before other item (68,437) (722,238) (790,675) Other item: Unrealized and realized gains on investments (Note 2) 13,425-13,425 Change in net assets (55,012) (722,238) (777,250) Net assets at beginning of year 1,914,800 3,154,664 5,069,464 Net assets at end of year $ 1,859,788 $ 2,432,426 $ 4,292,214 See notes to financial statements. 5

8 Statement of Functional Expenses Year Ended December 31, 2015 Federal and Member Non-Federal Legislative General and Total Services Awards Activities Administrative Fundraising Expenses Salaries $ 1,761,839 $ 2,149,861 $ 19,419 $ 968,589 $ 17,489 $ 4,917,197 Fringe benefits (Note 11) 489, ,683 5, ,994 4,917 1,375,154 Consulting and professional fees 129, ,946 1,500 64, ,536 Temporary help ,779-39,779 Telephone 24,642 23, , ,500 Office supplies 12,713 10, , ,436 Postage 1, ,119 Printing and duplication 20,240 7, ,422 Subscriptions and publications 27,761 17,361-2,363-47,485 Travel, hotels and meals 63, ,191 1, ,201 Meetings and conferences 400,262 90,009-15, ,679 Legal and audit fees - 3,188-47,182-50,370 Bank charges ,335-20,335 Other 3, ,549-19,116 Insurance 300 1,854-64,102-66,256 Occupancy (Note 9) - 57, , ,878 Depreciation and amortization ,755-82,755 Furniture and equipment 30 3,254-9,678-12,962 Repairs, maintenance and equipment rental 5,828 7,413-48,228-61,469 Education and training 5, ,119-13,190 Donated services (Note 7) , ,967 2,945,977 3,591,881 27,643 2,562,801 22,504 9,150,806 Allocation of indirect costs - 777,394 - (777,394) - - Allocation of general and administrative 330, ,967 3,640 (740,122) 3,278 - Total $ 3,276,214 $ 4,772,242 $ 31,283 $ 1,045,285 $ 25,782 $ 9,150,806 See notes to financial statements. 6

9 Statement of Functional Expenses Year Ended December 31, 2014 Federal and Member Non-Federal Legislative General and Total Services Awards Activities Administrative Fundraising Expenses Salaries $ 1,537,324 $ 2,534,371 $ 36,172 $ 881,608 $ 30,439 $ 5,019,914 Fringe benefits (Note 11) 469, ,234 11, ,930 9,521 1,536,493 Consulting and professional fees 147, ,171-35,073 40, ,570 Temporary help ,504-82,504 Computer technical support Telephone 22,252 33, , ,187 Office supplies 15,625 16, , ,889 Postage 1,866 1, ,922 Printing and duplication 25,122 33, ,637 Subscriptions and publications 38,993 10,145-3,996-53,134 Travel, hotels and meals 87, ,383 1,749 13, ,826 Meetings and conferences 546,683 83,311-12, ,857 Legal and audit fees - 38,426-56,086-94,512 Bank charges ,550-19,550 Other 4, ,295-23,776 Insurance ,997-61,997 Occupancy (Note 9) - 54, , ,822 Depreciation and amortization , ,777 Furniture and equipment 3,057 2,653-21,110-26,820 Repairs, maintenance and equipment rental 11,087 4,862-46,894-62,843 Education and training 6, ,543-8,961 Donated services (Note 7) ,949-35,949 2,917,648 4,482,139 49,153 2,628,819 80,339 10,158,098 Allocation of indirect costs - 870,462 - (870,462) - - Allocation of general and administrative 320, ,871 7,926 (906,821) 6,670 - Total $ 3,238,002 $ 5,924,472 $ 57,079 $ 851,536 $ 87,009 $ 10,158,098 See notes to financial statements. 7

10 Statements of Cash Flows Years Ended December 31, 2015 and Cash flows from operating activities: Change in net assets $ 1,000,423 $ (777,250) Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities: Depreciation and amortization 82, ,777 Realized gains on sales of investments (323,426) (10,934) Unrealized losses (gains) on investments 389,265 (2,491) Deferred rent and lease incentive (104,578) (242,673) Discount on foundation grants receivable (13,730) 13,655 Changes in assets and liabilities: (Increase) decrease in: U.S. Government grants receivable (60,516) (69,639) Foundation grants receivable (58,755) 12,388 Other receivables (3,460) (19,319) Prepaid expenses ,782 Security deposits (112) 4,088 Increase (decrease) in: Accounts payable (60,384) 29,929 Accrued employee benefits (34,758) 63,676 Deferred membership dues (66,514) 52,810 Deferred publications 23,720 (16,515) Deferred registrations 169,506 (35,154) Deferred advertisements 3,605 (925) Refundable advances - (3,705) Net cash provided by (used in) operating activities 943,399 (554,500) Cash flows from investing activities: Purchase of property and equipment - (49,707) Proceeds from sales of investments 1,462, ,369 Purchases of investments (1,321,251) (258,254) Net cash provided by (used in) investing activities 140,975 (139,592) Net increase (decrease) in cash and cash equivalents 1,084,374 (694,092) Cash and cash equivalents: Beginning 873,046 1,567,138 Ending $ 1,957,420 $ 873,046 Supplemental schedule of noncash investing and financing activities: Acquisition of leasehold improvements through landlord incentive $ - $ 465,560 See notes to financial statements. 8

11 Notes to Financial Statements Note 1. Nature of Organization and Significant Accounting Policies Nature of organization: InterAction: The American Council for Voluntary International Action (InterAction) was incorporated on August 23, 1984, under the laws of the State of New York. InterAction is the largest coalition of U.S.-based international nongovernmental organizations (NGOs) focused on the worldʼs poor and most vulnerable people. With more than 185 members operating in every developing country, InterAction works to overcome poverty, exclusion and suffering by advancing social justice and dignity for all. A summary of the InterActionʼs significant accounting policies follows: Basis of accounting: InterActionʼs financial statements have been prepared on the accrual basis of accounting, whereby unconditional support is recognized when notification of the contribution is received, revenue is recognized when earned and expenses are recognized when incurred. Basis of presentation: The accompanying financial statement presentation follows the recommendations under the Not-for-Profit Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). Cash and cash equivalents: InterAction considers all cash and other highly liquid investments with initial maturities of three months or less to be cash equivalents. Investments: Investments with readily determinable fair values are reflected at fair market value. To adjust the carrying value of these investments, the change in fair market value is charged or credited to current operations. Financial risk: InterAction maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. InterAction has not experienced any losses in such accounts and believes it is not exposed to any significant financial risk on cash. InterAction invests in a professionally managed portfolio that contains mutual funds during the year ended December 31, 2014, and exchange traded funds during the year ended December 31, 2015, which are exposed to various risks such as interest rate, market and credit risk. Due to the level of risk associated with such investments, and the level of uncertainty related to changes in the value of such investments, it is at least reasonably possible that changes in risks in the near term could materially affect investment balances and the amounts reported in the financial statements. Grants receivables: Receivables are carried at original invoice amounts less an estimate made for doubtful receivables based on a review of all outstanding amounts on an annual basis. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received. Management has determined that all receivables are collectible; thus, there was no provision for doubtful accounts at December 31, Property, equipment and leasehold improvements: All purchases of furniture and equipment in excess of $5,000 are capitalized and stated at cost. Furniture and equipment are depreciated using the straightline method of depreciation over the useful life of the assets, generally three to five years. Leasehold improvements are capitalized and amortized over the life of the lease. 9

12 Notes to Financial Statements Note 1. Nature of Organization and Significant Accounting Policies (Continued) Valuation of long-lived assets: InterAction accounts for long-lived assets in accordance with subsections of the FASB ASC Topic Property, Plant and Equipment that address Impairment or Disposal of Long-Lived Assets. The accounting standard requires that property, plant and equipment and certain identifiable intangible assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the long-lived asset is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs to sell. Deferred rent: InterAction has a lease agreement for rental space in Washington, D.C. The lease agreement provides for a period of free rent and escalated payments over the life of the lease. Rent expense is being recognized on a straight-line basis over the term of the lease. The difference between the expense and the cash payments is reported as deferred rent. The amount also includes the improvement allowances which are amortized on a straight-line basis over the life of the lease. Net assets: The financial statement presentation follows the recommendation of the Not-for-Profit Topic of the FASB ASC. Under this ASC, InterAction is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets and permanently restricted net assets. Unrestricted net assets are the net assets that are neither permanently restricted nor temporarily restricted by donor-imposed stipulations. Temporarily restricted net assets result from contributions whose use is limited by donor-imposed stipulations that either expire by passage of time or can be fulfilled and removed by actions of InterAction pursuant to these stipulations. Net assets may be temporarily restricted for various purposes, such as use in future periods or used for specified purposes. Permanently restricted net assets result from contributions whose use is limited by donor-imposed stipulations that neither expire by the passage of time nor can be fulfilled or otherwise removed by InterActionʼs actions. There were no permanently restricted net assets at December 31, 2015 and Revenue recognition: Grant revenue, under cost reimbursable federal and non-federal grants, is recognized based upon direct costs incurred plus allowable indirect costs. Revenue recognized but not yet reimbursed from the granting agency is reported as grants receivable in the accompanying balance sheets. Conversely, payments received in advance of incurring allowable direct and indirect costs are reported as a refundable advance in the accompanying balance sheets. Unconditional grants and contributions are recognized as revenue when received or promised and are reported as temporarily restricted support if they are received with donor or grantor stipulations that limit the use of donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Certain contributions of donated services are recorded at their fair values in the period received. Membership dues are billed to members annually. The dues are recognized as revenue over the membership period, which is on a calendar year basis. Dues received, which are applicable to the following fiscal year, are presented as deferred membership dues in the accompanying financial statements. Revenue from all other sources is recognized when earned. 10

13 Notes to Financial Statements Note 1. Nature of Organization and Significant Accounting Policies (Continued) Income taxes: InterAction is generally exempt from federal income taxes under the provisions of Section 501(c)(3) of the Internal Revenue Code. In addition, InterAction qualifies for charitable contribution deductions and has been classified as an organization that is not a private foundation. Income from certain activities not directly related to InterActionʼs exempt purpose, less applicable deductions, is subject to taxation as unrelated business income. For the year ended December 31, 2015, InterAction had net unrelated business income totaling $45,668. For the year ended December 31, 2014, InterAction had no net unrelated business income. Management evaluated InterActionʼs tax positions and concluded that InterAction had taken no uncertain tax positions that require adjustment to the financial statements. Generally, InterAction is no longer subject to income tax examinations by the U.S. federal, state or local tax authorities for years before Functional expenses: The costs of providing the various programs and other activities have been summarized on a functional basis. General and administrative expenses include those expenses that are not directly identifiable with any other specific function, but that provide for the overall support and direction of InterAction and are allocated using a percentage of direct expenses for each function on the Statement of Activities. Allocation of indirect costs: During 2015 and 2014, indirect costs were allocated to Federal grants based upon actual rates of percent and percent, respectively. The indirect rate is calculated using a base of salaries, benefits, temporary help and consultant expenses. Indirect costs have been allocated to non-federal grants to the extent the donors have provided for the recovery of such costs. Reclassifications: Certain items in the December 31, 2014, financial statements have been reclassified to conform to the December 31, 2015, financial statement presentation. The reclassifications had no effect on the previously reported change in net assets or net assets. Use of estimates: The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Recent accounting pronouncement: In February 2016, the FASB issued Accounting Standards Update (ASU) , Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. InterAction is currently evaluating the impact of the pending adoption of the new standard on the financial statements. Subsequent events: InterAction evaluated subsequent events through April 15, 2016, which is the date the financial statements were available to be issued. 11

14 Notes to Financial Statements Note 2. Investments Investments consisted of the following at December 31, 2015 and 2014: Mutual funds $ - $ 1,357,537 Exchange traded funds 1,150,723 - $ 1,150,723 $ 1,357,537 The cost of the exchange traded funds was $1,250,107 at December 31, The cost of the mutual funds was $1,076,226 at December 31, Investment (loss) income for the years ended December 31, 2015 and 2014, consists of the following: Realized and unrealized (loss) gain on investments, net $ (65,839) $ 13,425 Interest and dividends 31,335 94,238 Investment fees (10,474) (10,279) $ (44,978) $ 97,384 Note 3. Fair Value Measurements The Fair Value Measurement Topic of the FASB ASC defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and sets out a fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Inputs are broadly defined as assumptions market participants would use in pricing an asset or liability. The three levels of the fair value hierarchy are described below: Level 1: Quoted market prices in active markets for identical assets or liabilities Level 2: Observable market-based inputs or unobservable inputs corroborated by market data Level 3: Unobservable inputs that are not corroborated by market data In determining the appropriate levels, InterAction performs a detailed analysis of the assets and liabilities that are subject to accounting for fair value measurements. At each reporting period all assets and liabilities for which the fair value measurement is based on significant unobservable inputs are classified as Level 3. There were no Level 2 or Level 3 inputs for any assets held by InterAction at December 31, 2015 and There were no liabilities subject to these provisions at December 31, 2015 and

15 Notes to Financial Statements Note 3. Fair Value Measurements (Continued) The table below presents the balances of assets measured at fair value on a recurring basis by level within the hierarchy at December 31, 2015: Assets at fair value: Exchange traded funds: Consumer cyclical $ 86,915 Technology 143,521 Health 110,373 Financial 43,538 Large blend 266,172 Natural resources 18,273 Equity energy 56,605 Industrials 111,638 Foreign large blend 261,415 Consumer defensive $ 52,273 1,150,723 The table below presents the balances of assets measured at fair value on a recurring basis by level within the hierarchy at December 31, 2014: Assets at fair value: Mutual funds: Large value $ 555,201 Small growth 79,836 Large blend 250,802 Large growth 313,463 Foreign large blend 75,999 Foreign large value $ 82,236 1,357,537 InterActionʼs exchange traded funds and mutual funds are publicly traded on the New York Stock Exchange and are considered Level 1 items. Note 4. Foundation Grants Receivable Foundation grants receivable, due in more than one year, have been recorded at the present value of the estimated cash flows, using a discount rate of 3.25 percent. 13

16 Notes to Financial Statements Note 4. Foundation Grants Receivable (Continued) Foundation grants receivable are due as follows at December 31, 2015 and 2014: Less than one year $ 1,825,183 $ 1,514,032 One to five years 497, ,000 Total 2,322,787 2,264,032 Less allowance to discount balance to present value 15,663 29,393 Foundation grants receivable, net $ 2,307,124 $ 2,234,639 Note 5. Future Commitments From the U.S. Government InterAction receives program funding from the United States Agency for International Development (USAID) and the United States Department of State (DOS). As of December 31, 2015, InterAction has received awards from the U.S. Government totaling $7,146,396 of which $5,326,841 has been obligated and disbursed; as of December 31, 2015, InterAction has an unobligated balance of $1,819,555 (these figures reflect InterActionʼs current/open awards). The unobligated balance due under U.S. Government awards has not been included in the accompanying financial statements. Note 6. Property, Equipment and Leasehold Improvements Property, equipment and leasehold improvements and accumulated depreciation at December 31, 2015, and depreciation expense for the year ended December 31, 2015, are as follows: Estimated Accumulated Net Value Depreciation Asset Category Useful Lives Cost Depreciation 2015 Expense 2015 Leasehold improvements 10 years $ 563,412 $ 510,950 $ 52,462 $ 56,341 Furniture and fixtures 7 years 12,565 12, Equipment and computers 5 years 214, ,205 22,421 26,414 $ 790,603 $ 715,720 $ 74,883 $ 82,755 Property, equipment leasehold improvements and accumulated depreciation at December 31, 2014, and depreciation expense for the year ended December 31, 2014, are as follows: Estimated Accumulated Net Value Depreciation Asset Category Useful Lives Cost Depreciation 2014 Expense 2014 Leasehold improvements 10 years $ 563,412 $ 454,609 $ 108,803 $ 398,992 Furniture and fixtures 7 years 12,565 12, Equipment and computers 5 years 214, ,791 48,835 9,785 $ 790,603 $ 632,965 $ 157,638 $ 408,777 14

17 Notes to Financial Statements Note 7. In-Kind Contributions During the years ended December 31, 2015 and 2014, InterAction was the beneficiary of donated services which allow InterAction to provide greater resources towards various programs. To properly reflect total program expenses, donated services have been included in revenue and expenses during the years ended December 31, 2015 and 2014, and totaled to $109,967 and $35,949, respectively. Note 8. Temporarily Restricted Net Assets Temporarily restricted net assets include donor restricted funds which are only available for specific programs or general support designated for future years. Temporarily restricted net assets were released from restrictions during the years ended December 31, 2015 and 2014, due to the time restriction ending or satisfaction of purpose restrictions. Changes in temporarily restricted net assets during the year ended December 31, 2015, are as follows: Balance Balance December 31, December 31, 2014 Additions Transferred Released 2015 International Fund for Agricultural Development $ 33,403 $ 519,874 $ - $ (46,722) $ 506,555 UPS 25, (23,855) 2,068 ECHO-IRC 125, ,111 - (240,551) 21,656 Alliance for International Youth Development 44,623 80,288 - (124,911) - Global Public Policy Institute 6, ,868 Gates Foundation 1000 Days Movement 530, (530,149) - Gates Foundation General Operation Support 1,470,607 29,393 - (750,000) 750,000 Business Council - 75,000 - (75,000) - Wallace Genetic Foundation 18,576 75,000 - (75,484) 18,092 Rockefeller Foundation 36,068 75,210 - (45,029) 66,249 New Venture Fund Global Food Security 136,424 8,875 - (145,299) - Fed Ex NGO Aid Map Phase IV - 375,000 - (371,810) 3,190 Connect USA Partner Vetting System Water Aid America 2, ,538 Cost Recovery Project 1, ,600 Global Standards - 53,486 - (13,967) 39,519 Global Food Security - 234,747 - (107,803) 126,944 Gates Foundation New Narrative - 409,229 - (144,644) 264,585 Gates Foundation AG Mapping - 1,981,941 - (8,505) 1,973,436 DRG Initiative - 70,000 - (27,957) 42,043 Foundation to Promote Open Society - 25,000 - (1,491) 23,509 $ 2,432,426 $ 4,150,154 $ - $ (2,733,177) $ 3,849,403 15

18 Notes to Financial Statements Note 8. Temporarily Restricted Net Assets (Continued) Changes in temporarily restricted net assets during the year ended December 31, 2014, are as follows: Balance Balance December 31, December 31, 2013 Additions Transferred Released 2014 Gates Foundation U.S. Development Assistance that Ends Poverty and Saves Lives $ 394,800 $ - $ - $ (394,800) $ - International Fund for Agricultural Development 181, (147,796) 33,403 UPS - 35,000 - (9,077) 25,923 ECHO-IRC - 225,059 - (99,963) 125,096 Alliance for International Youth Development 64,415 95,000 - (114,792) 44,623 Global Public Policy Institute 48,858 (32,481) - (9,509) 6,868 Gates Foundation 1000 Days Movement 2,263,622 15,739 - (1,749,212) 530,149 Gates Foundation General Operation Support - 2,470,607 - (1,000,000) 1,470,607 Business Council - 50,000 - (50,000) - Wallace Genetic Foundation 50,000 75,000 - (106,424) 18,576 Rockefeller Foundation 147, (111,013) 36,068 New Venture Fund Global Food Security - 170,102 - (33,678) 136,424 Fed Ex NGO Aid Map Phase IV - 329,000 - (329,000) - Connect USA Partner Vetting System Water Aid America 2, ,538 Cost Recovery Project 1, ,600 $ 3,154,664 $ 3,433,026 $ - $ (4,155,264) $ 2,432,426 Note 9. Commitments Lease: InterAction has entered into a lease agreement for office space which is currently set to expire on November 30, The lease provides for an annual rental increase of 3 percent and straight-line monthly expense of approximately $70,000 over the life of the lease. The lease also requires InterAction to pay its proportionate share of the buildingʼs real estate taxes and operating expenses. The value of the fixed annual increases has been deferred for the difference between the pro rata expense recognized and the total amounts paid to date under the lease and is being recognized ratably over the term of the lease. A tenant improvement allowance totaling $465,560, was allotted by the landlord for the space, which is amortized on a straight-line basis over the life of the lease. Both liabilities are included in the deferred rent and lease incentive liability total on the balance sheets. InterAction also leases a portion of its office space to two unrelated organizations; the subleases are on a month-to-month basis with payments totaling $5,450, and expire November 30, Future minimum lease payments required under the non-cancelable operating lease are $840,734, during the year ending December 31, Occupancy expense for the years ended December 31, 2015 and 2014, totaled $847,878 and $698,822, respectively. Sublease income received during the years ended December 31, 2015 and 2014, totaled $42,400 and $5,400, respectively. Hotel contracts: InterAction has entered into contracts during 2015 and subsequent to year end for hotel rooms and use of facilities relating to its 2016 and 2017 conferences and meetings. In the event of cancellation, InterAction is required to pay various costs as stipulated in the contracts, the amount of which is dependent upon the date of cancellation. 16

19 Notes to Financial Statements Note 10. Contingency The funds which InterAction receives from U.S. Government grants are subject to audit under the provisions of OMB Circular A-133 and the Uniform Grant Guidance. The ultimate determination of amounts received under the U.S. Government grants is based upon the allowance of costs reported to and accepted by the U.S. Government as a result of the audits. Audits in accordance with the provisions of OMB Circular A-133 and the Uniform Grant Guidance have been completed for all required fiscal years through Until such audits have been accepted by the U.S. Government, there exists a contingency to refund any amount received in excess of allowable costs. Management is of the opinion that no material liability will result from such audits. Note 11. Retirement and Severance Plans Retirement: InterAction has a non-contributory defined contribution pension plan in accordance with Section 401(a) of the Internal Revenue Code. The plan covers all employees who meet certain age and employment requirements. Currently, InterAction contributes a percentage of each eligible employeeʼs annual compensation. All contributions vest immediately. Total retirement expense under this plan was $425,979 and $415,360 for the years ended December 31, 2015 and 2014, respectively, and is included in fringe benefits in the accompanying statements of functional expenses. InterAction also administers a 403(b) tax-deferred annuity plan on behalf of its employees. There were no employer contributions made during 2015 and Severance: Full-time employees who are terminated involuntarily, as defined in the agreement, receive one weekʼs severance per full year of employment, not to exceed 12 weeks in total. The severance liability totaled $186,053 and $177,983, respectively, at December 31, 2015 and 2014, and is included in accrued employee benefits on the balance sheet. Total severance expense under this plan was $14,293 and $91,428 for the years ended December 31, 2015 and 2014, respectively, and is included in fringe benefits in the statement of functional expenses. 17