STREETS MINISTRIES, INC.

Transcription

1 CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 2017

2 Table of Contents July 31, 2017 Independent Auditor s Report... 2 Consolidated Statement of Financial Position... 3 Consolidated Statement of Activities... 4 Consolidated Statement of Functional Expenses... 5 Consolidated Statement of Cash Flows... 6 Notes to the Consolidated Financial Statements... 7

3 Independent Auditor s Report Board of Directors Streets Ministries, Inc. Memphis, Tennessee We have audited the accompanying consolidated financial statements of Streets Ministries, Inc. (a not-for-profit organization), which comprise the consolidated statement of financial position as of July 31, 2017, and the related consolidated statements of activities, functional expenses, and cash flows for the year then ended, and the related notes to the consolidated financial statements. Management s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated 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 consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the consolidated 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 entity s 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 consolidated 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Streets Ministries, Inc. as of July 31, 2017, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Memphis, Tennessee January 20, 2018

4 Consolidated Statement of Financial Position July 31, 2017 ASSETS Cash and cash equivalents $ 401,050 Contributions receivable, net 268,487 Property and equipment, net 7,590,891 Total assets $ 8,260,428 LIABILITIES AND NET ASSETS Liabilities Accounts payable and accrued expenses $ 19,622 Total liabilities 19,622 Net assets Unrestricted Property and equipment 7,590,891 Other 395,815 Temporarily restricted 254,100 Total net assets 8,240,806 Total liabilities and net assets $ 8,260,428 See notes to the consolidated financial statements. 3

5 Consolidated Statement of Activities For year ended July 31, 2017 Temporarily Unrestricted Restricted Total Support and other revenues Contributions Individuals and corporations $ 571,998 $ - $ 571,998 Churches 71,526-71,526 Public and private foundations 1,077, ,100 1,331,322 Special events 94,820-94,820 Other income 28,020-28,020 Total support and other revenues 1,843, ,100 2,097,686 Expenses Program services 1,687,492-1,687,492 Supporting services 469, ,694 Total expenses 2,157,186-2,157,186 Change in net assets (313,600) 254,100 (59,500) Net assets, beginning of year 8,300,306-8,300,306 Net assets, end of year $ 7,986,706 $ 254,100 $ 8,240,806 See notes to the consolidated financial statements. 4

6 Consolidated Statement of Functional Expenses For year ended July 31, 2017 Program Services Supporting Services Ministry General and Activities Education SOUL Subtotal Administrative Fundraising Subtotal Total Salaries and related expenses Salaries $ 310,847 $ 103,616 $ 203,599 $ 618,062 $ 150,390 $ 129,812 $ 280,202 $ 898,264 Employee insurance 82,690 27,564 46, ,982 38,198 32,971 71, ,151 Payroll taxes 30,696 10,232 17,178 58,106 14,139 12,203 26,342 84,448 Retirement 1, ,905 4,201 1, ,904 6,105 Total salaries and related expenses 425, , , , , , ,617 1,216,968 Other expenses Specific program/supporting services expenditures - 137,392 16, ,655-19,498 19, ,153 Utilities 96,420 19, ,704 3,616 1,205 4, ,525 Repairs and maintenance 61,285 20, ,963 2, ,415 85,378 Rent 38,684 12,895 6,532 58,111 1, ,421 60,532 General insurance 38,794 8,016-46,810 1, ,859 48,669 Office supplies and expense 12,519 4,159 8,892 25,570 8,487 8,483 16,970 42,540 Accounting and administrative fee 13,966 4,655 1,842 20,463 9,543 4,099 13,642 34,105 Telephone and internet 6,593 2,199 3,583 12,375 4,130 4,124 8,254 20,629 Transportation services 6,460 6,461 1,381 14, ,302 Training 3,935 3, ,561 2,862 2,844 5,706 14,267 Summer camp expenditures 5, , ,706 Promotion and printing - - 4,101 4, ,974 Total other expense 284, ,423 43, ,321 34,451 43,008 77, ,780 Depreciation 252,350 50, ,820 9,463 3,155 12, ,438 Total expenses $ 962,667 $ 411,879 $ 312,946 $ 1,687,492 $ 247,663 $ 222,031 $ 469,694 $ 2,157,186 See notes to the consolidated financial statements. 5

7 Consolidated Statement of Cash Flows For the year ended July 31, 2017 Cash flows from operating activities Change in net assets $ (59,500) Adjustments to reconcile change in net assets to net cash provided by operating activities Depreciation 315,438 Change in operating assets and liabilities: Contributions receivable (43,980) Accounts payable and accrued expenses (62,739) Net cash provided by operating activities 149,219 Cash flows from investing activities Purchase of property and equipment (12,994) Net cash used in investing activities (12,994) Change in cash and cash equivalents 136,225 Cash and cash equivalents, beginning of year 264,825 Cash and cash equivalents, end of year $ 401,050 See notes to the consolidated financial statements. 6

8 Notes to the Consolidated Financial Statements July 31, 2017 Note 1 Organization and Activities Streets Ministries, Inc. was founded in 1987 and incorporated under the laws of the State of Tennessee on December 1, These statements present the consolidated financial information of Streets Ministries, Inc., its wholly-owned subsidiaries Streets Ministries Management, LLC; Streets Ministries Downtown, LLC; Streets Ministries Graham Heights, LLC, Streets Ministries Raleigh, LLC; SOUL for the City, LLC; and Streets Ministries Real Estate, LLC (collectively "the Organization"). All intercompany balances and intercompany transactions have been eliminated in consolidation. The Organization is a Christian ministry dedicated to serving the core needs of adolescents ages 8-20, who generally live in under-resourced neighborhoods in the Downtown and Graham Heights areas of Memphis, with an array of educational, athletic, and mentor-based programming. The Organization, through the love of Jesus Christ, encourages and equips young people to achieve potential by realizing their God-given purpose. The Organization conducts program and ministry activities from its facilities at 430 Vance for its inner-city ministries ( Downtown ) and at 1304 N. Graham for its Kingsbury School District ministries ( Graham Heights ). The following is a synopsis of the Organization s major programs and their emphases: Ministry Activities - The Organization seeks to introduce adolescents to the Gospel of Jesus Christ and help them grow in their knowledge and understanding of God through weekly outreach meetings, small group Bible studies, and mentoring. Education - Pathways, Ready Readers, and Streets Smart, the mentoring and tutoring programming available at the Organization, are important resources for the academic needs of the adolescents served. The Organization seeks to walk alongside students helping them to identify their natural aptitude and create and pursue a plan for their future. Sending Out Urban Leaders (SOUL) - The mission of SOUL is to recruit, train, and resource potential leaders in order to impact the youth of Memphis with the Gospel of Jesus Christ. Note 2 Summary of Significant Accounting Policies Basis of Accounting The accompanying consolidated financial statements have been prepared using the accrual basis of accounting. Under this method of accounting, support and revenue are recognized in the period earned and expenses are recognized when incurred. Consolidated Financial Statement Presentation Under accounting standards for not-for-profit organizations, the Organization is required to report information regarding its consolidated financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets based on the nature of any donor restrictions. 7

9 Notes to the Consolidated Financial Statements July 31, 2017 Note 2 Summary of Significant Accounting Policies (continued) Use of Estimates The preparation of 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 of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents For purposes of the statement of cash flows, the Organization considers all highly liquid debt instruments purchased with an initial maturity of three months or less to be cash equivalents. Contributions Receivable Contributions are recognized when the donor makes a promise to give to the Organization that is, in substance, unconditional. Unconditional promises to give due in subsequent years are recorded at the present value of their net realizable value, using discount rates applicable to the years in which the promises are received. All contributions receivable as of July 31, 2017, are expected to be collected within one year; therefore, no time value discount or allowance for doubtful contributions has been recorded as of July 31, Property, Equipment, and Depreciation Property and equipment is recorded at fair value at the date of the contribution, if contributed, or at acquisition cost, if purchased. Major renewals and betterments that extend the useful lives of assets are also recorded at cost. Expenditures for normal repairs and maintenance are expensed as they occur. Depreciation is determined using the straight-line method over estimated useful lives of five to thirty-nine years. In-Kind Contributions and Donated Services Donated materials are recorded as contributions at their estimated fair values at the date of donation. Contributions of services are recognized in the consolidated financial statements if the services enhance or create non-financial assets or require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. Donations of property and equipment are recorded as unrestricted contributions at the date of donation unless the donor has temporarily or permanently restricted the donated asset to a specific purpose. 8

10 Notes to the Consolidated Financial Statements July 31, 2017 Note 2 Summary of Significant Accounting Policies (continued) Revenue Recognition The Organization receives support and revenue from a variety of sources including private contributions. Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending upon the existence and/or nature of any donor restrictions. Restricted contributions and investment income that is limited to specific uses by donor-imposed restriction are reported as unrestricted when the restrictions are met within the same reporting period. All other donorrestricted contributions are reported as increases in temporarily or permanently restricted net assets depending on the nature of the restrictions. When a 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. Expense Allocation The costs of providing various programs and other activities have been summarized on a functional basis in the statement of activities and in the statement of functional expenses. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Income Taxes The Organization is exempt from federal income taxes under Sections 501(c)(3) of the U.S. Internal Revenue Code and has been determined to be an organization that is not a private foundation under Sections 509(a)(1) and 170(b)(1)(A)(vi). The Organization files informational tax returns in the United States federal jurisdiction. The Organization is no longer subject to examination by federal authorities for years prior to Based on the evaluation of the Organization s tax positions, management believes all positions taken would more likely than not be upheld under examination. Therefore, no provision for the effects of uncertain tax positions has been recorded for the year ended July 31, Subsequent Events Management has evaluated subsequent events though January 20, 2018, the date the consolidated financial statements were available to be issued. Note 3 Fundraising Activity For the year ended July 31, 2017, fund raising activities from special events are as follows: Description Amount Revenues 94,820 Direct expenses 19,498 Net proceeds $ 75,322 9

11 Notes to the Consolidated Financial Statements July 31, 2017 Note 4 Property and Equipment Property and equipment at July 31, 2017, consists of the following: Description Amount Downtown Land $ 4,000 Buildings 4,610,776 Furniture and equipment 253,677 Vehicles 81,628 Subtotal 4,950,081 Graham Heights Land 189,232 Buildings 4,772,877 Furniture and equipment 284,875 Subtotal 5,246,984 Total property and equipment 10,197,065 Accumulated depreciation (2,606,174) Property and equipment, net $ 7,590,891 Depreciation expense for the year $ 315,438 Note 5 Temporarily Restricted Net Assets Temporarily restricted net assets consisted of $254,100 received prior to July 31, 2017, for next fiscal year operations as stipulated by the donor. Note 6 Operating Lease The Organization has a non-cancellable operating lease to rent real property, specifically, 1.38 acres of land, for its Downtown facility. The lease term is for 99 years and provides for base monthly rent of $3,750, plus the Organization s share of insurance, taxes, and maintenance costs. Beginning in 2015, and for each 10-year period thereafter, lease payments increase by the lesser of the change in the Consumer Price Index or 20%. Effective May 1, 2015, the rent was adjusted to $4,500 per month. For the year ended July 31, 2017, rent expense incurred totaled $60,

12 Notes to the Consolidated Financial Statements July 31, 2017 Note 6 Operating Lease (continued) As of July 31, 2017, future minimum lease payments are as follows: Year ending July 31, Amount 2018 $ 54, , , , ,000 Subsequently 10,607,717 $ 10,877,717 Note 7 Retirement Plan The Organization sponsors a defined contribution retirement plan (the Plan ) covering certain eligible employees. Participating employees may elect to defer a portion of their compensation and contribute it to the Plan in an amount not to exceed the annual statutory limits of the Internal Revenue Code. For the year ended July 31, 2017, the Organization contributed to the Plan by matching dollar for dollar the first 6% of compensation that a participant deferred and contributed to the Plan. The cost to the Organization for administration of and contributions to this plan for the year ended July 31, 2017, was $6,105. Note 8 Concentration of Risk For year ended July 31, 2017, the Organization derived approximately 46% of its total revenues and support from one contributor. 11