Global Volunteers. Financial statements Together with Independent Auditors' report

Transcription

1 Global Volunteers Financial statements Together with Independent Auditors' report September 30, 2014

2 CONTENTS Page INDEPENDENT AUDITORS REPORT 1 FINANCIAL STATEMENTS: Statement of Financial Position 2 Statement of Activities 3 Statement of Functional Expenses 4-5 Statement of Cash Flows 6 Notes to Financial Statements 7-11

3 INDEPENDENT AUDITORS REPORT Board of Directors Global Volunteers Little Canada, Minnesota Report on the Financial Statements We have audited the accompanying financial statements of Global Volunteers (a nonprofit organization), which comprise the statement of financial position as of September 30, 2014 and 2013, and the related statements of activities, functional expenses, and cash flows for the years then ended and the related notes to the financial statements. Management's 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. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. 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 financial statements are free of 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 auditor's 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 entity's 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 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 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 Global Volunteers as of September 30, 2014 and 2013, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. St. Paul, Minnesota July 9,

4 STATEMENT OF FINANCIAL POSITION SEPTEMBER 30, 2014 AND 2013 ASSETS CURRENT ASSETS: Cash $ 38,927 $ 332,804 Accounts Receivable 4,779 Prepaid Expenses 36,077 25,546 Inventory 29,504 41,167 Total Current Assets 109, ,517 INVESTMENT SECURITIES 213,112 OFFICE EQUIPMENT: 715, ,969 Less Accumulated Depreciation 602, ,683 Net Office Equipment 112, ,286 TOTAL ASSETS $ 435,377 $ 501,803 LIABILITIES AND NET ASSETS CURRENT LIABILITIES: Line of Credit $ 75,000 $ Accounts Payable 57,118 11,553 Accrued Expenses 26,249 23,396 Total Current Liabilities 158,367 34,949 NET ASSETS: Unrestricted (96,768) 256,367 Temporarily Restricted 373, ,487 Total Net Assets 277, ,854 TOTAL LIABILITIES AND NET ASSETS $ 435,377 $ 501,803 The accompanying notes are an integral part of the financial statements. 2

5 STATEMENT OF ACTIVITIES YEARS ENDED SEPTEMBER 30, 2014 AND 2013 Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total SUPPORT AND REVENUES: Volunteer Contributions $ 2,186,611 $ 76,696 $ 2,263,307 $ 2,285,360 $ 82,511 $ 2,367,871 Dedicated Contributions 105, , ,612 51,403 41,192 92,595 Other Contributions 76,101 76,101 64,115 64,115 Investment Income 14,540 14, Net Assets Released from Restrictions 100,098 (100,098) 190,527 (190,527) Total Support and Revenues 2,483, ,291 2,646,560 2,591,707 (66,824) 2,524,883 EXPENSES: Program Services 2,424,556 2,424,556 2,318,603 2,318,603 Management and General 239, , , ,971 Fundraising 172, , , ,421 Total Expenses 2,836,404 2,836,404 2,629,995 2,629,995 CHANGE IN NET ASSETS (353,135) 163,291 (189,844) (38,288) (66,824) (105,112) NET ASSETS at Beginning of Year 256, , , , , ,966 NET ASSETS at End of Year $ (96,768) $ 373,778 $ 277,010 $ 256,367 $ 210,487 $ 466,854 The accompanying notes are an integral part of the financial statements. 3

6 STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED SEPTEMBER 30, Program General and Services Administrative Fundraising Total Employee Compensation $ 996,370 $ 161,387 $ 123,089 $ 1,280,846 Payroll Taxes 94,215 13,119 11, ,260 Total Personnel Costs 1,090, , ,015 1,400,106 Program Services 858, ,047 Contributions 133, ,198 Office Expense 59,930 17,324 3,929 81,183 Marketing 63, ,098 Rent 45,629 8,555 2,852 57,036 Bank and Credit Card Fees 45,766 4,053 2,408 52,227 Insurance 34,749 8, ,236 Professional Fees 17,625 18,755 2,963 39,343 Information Technology 32,702 3,847 1,924 38,473 Depreciation 22,683 2,835 2,835 28,353 Business Development 16, ,355 Fundraising 18,196 18,196 Miscellaneous 3, ,553 Total $ 2,424,556 $ 239,517 $ 172,331 $ 2,836,404 The accompanying notes are an integral part of the financial statements. 4

7 STATEMENT OF FUNCTIONAL EXPENSES (Continued) YEAR ENDED SEPTEMBER 30, Program General and Services Administrative Fundraising Total Employee Compensation $ 702,514 $ 118,606 $ 91,236 $ 912,356 Payroll Taxes 72,857 10,145 9,223 92,225 Total Personnel Costs 775, , ,459 1,004,581 Program Services 1,142,716 1,142,716 Contributions 87,701 87,701 Office Expense 42,256 11,992 2,855 57,103 Marketing 93, ,796 Rent 45,317 8,616 2,839 56,772 Bank and Credit Card Fees 45,763 4,208 2,630 52,601 Insurance 24,824 6,206 1,633 32,663 Professional Fees 8,452 9,221 1,537 19,210 Information Technology 25,537 3,004 1,502 30,043 Depreciation 21,690 2,711 2,711 27,112 Business Development 4, ,215 Fundraising 18,997 18,997 Miscellaneous Total $ 2,318,603 $ 174,971 $ 136,421 $ 2,629,995 The accompanying notes are an integral part of the financial statements. 5

8 STATEMENT OF CASH FLOWS YEARS ENDED SEPTEMBER 30, 2014 AND 2013 CASH FLOWS FROM OPERATING ACTIVITIES: Change in Net Assets $ (189,844) $ (105,112) Adjustments to Reconcile Change in Net Assets to Net Cash Used In Operating Activities: Depreciation 28,353 Unrealized Gain on Investment Securities (14,482) 27,112 Change in Current Assets and Liabilities: Accounts Receivable (4,779) Prepaid Expenses (10,531) (10,025) Inventory 11,663 4,221 Accounts Payable 45,565 11,252 Accrued Vacation (1,305) Accrued Expenses 2,853 8,692 Net Cash Used In Operating Activities (131,202) (65,165) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of Office Equipment (39,045) (33,350) Purchase of Investment Securities (198,630) Net Cash Used In Investing Activities (237,675) (33,350) CASH FLOWS FROM FINANCING ACTIVITIES: Advances on Line of Credit 75,000 Net Cash Provided by Financing Activities 75,000 NET CHANGE IN CASH (293,877) (98,515) CASH at Beginning of Year 332, ,319 CASH at End of Year $ 38,927 $ 332,804 The accompanying notes are an integral part of the financial statements. 6

9 NOTES TO FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Activities Global Volunteers is a private nonprofit, nonsectarian international development organization based in St. Paul, Minnesota. Founded in 1984, Global Volunteers strives to wage peace throughout the world by helping to establish mutual understanding between people of diverse cultures. Each year, Global Volunteers coordinates more than 150 teams of short-term volunteers (one to three weeks) who participate on long-term human and economic development projects. From all backgrounds, and of all ages, our volunteers become servant learners, working with and learning from people worldwide. Programs are offered in China, the Cook Islands, Ghana, Tanzania, Costa Rica, Cuba, St. Lucia, Ecuador, Mexico, Peru, Jamaica, India, Hungary, Poland, Romania, Italy, Greece and the United States. The work projects, which are determined by the host organizations and directed by local leaders, include teaching conversational English, math and science, caring for vulnerable children, providing health care, building, renovating and maintaining community facilities such as schools, health clinics, homes, and community centers. Volunteers generously contribute their time and skills, paying all program-related costs. Team members gain several benefits: Immersion in the local community: language, culture and traditions, Opportunity to be of genuine service, First-hand experience of local living conditions and daily activities, Insight of local hosts, consultants, community leaders and citizens, and, Fully tax-deductible program-related costs (for U.S. taxpayers): airfare, food and lodging. Global Volunteers holds consultative status with the United Nations Economic and Social Council and UNICEF. Basis of Presentation The Organization s financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles. Revenues, expenses, gains and losses, net assets are classified based on the existence or absence of donor imposed restrictions. Accordingly, net assets of the Organization and related changes are classified and reported as follows: Unrestricted - Which reflects resources over which the Board of Directors has discretionary control. Temporarily Restricted - Which reflects resources received with donor stipulations that limit the use of the donated assets. Temporarily restricted net assets consist of funds received for future service programs, less direct and indirect expenses and certain contributions dedicated to specific projects. The assets are released from restriction once the service program commences or the funds are expended. The Organization has no permanently restricted net assets. 7

10 NOTES TO FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Accounting Estimates The presentation 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Subsequent Events In preparing these financial statements, the Organization has evaluated for recognition or disclosure the events or transactions that occurred through July 9, 2015, the date the financial statements were available to be issued. Inventory Inventory consists primarily of clothing, brochures, and catalogs. determined on a first-in, first-out basis. Inventory is valued at cost, Investment Securities Investment securities are stated at fair value, which is determined by quoted market prices in active markets. Realized and unrealized gains and losses are included in the statement of activities. Realized gains and losses are determined using the specific identification method. Interest and dividend income are reported as income when earned. Property and Depreciation Office equipment is recorded at original cost. Donated property is recorded at fair market value. Additions, improvements or major renewals are capitalized. If items of property are sold, retired or otherwise disposed of, they are removed from the asset and accumulated depreciation accounts and any gain or loss thereon is reflected in the statement of activities The Organization capitalizes assets with a cost of $1,000 or greater. Depreciation is computed using the straight-line method based on estimated useful lives of three to fifteen years. Contributions Contributions are recognized when the donor makes a promise to give that is, in substance, unconditional. Unconditional contributions are reported at fair value at the date the promise is received. The contributions are reported as temporarily restricted support if they are received with donor stipulations that limit the use of the 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 as unrestricted net assets. Donor-restricted contributions whose restrictions are met within the same year as received are reflected as revenue of unrestricted net assets. In the absence of donor specification that interest and dividend income and gains on donated funds are restricted, such income and gains are reported as revenue of unrestricted net assets. 8

11 NOTES TO FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Functional Allocation of Expense The costs of providing various programs and services are summarized on a functional basis on the statement of activities. Accordingly, certain costs were allocated among the programs or services benefited based on best estimates by management. Income Taxes The Organization is exempt from Federal and State income taxes under the provisions of Internal Revenue Code Section 501(c)(3). Accordingly, no provision for income taxes has been made in these financial statements. The Organization reviews income tax positions taken or expected to be taken in income tax returns to determine if there are any income tax uncertainties. This includes positions that the entity is exempt from income taxes or not subject to income taxes on unrelated business income. The Organization recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax positions will be sustained on examination by taxing authorities, based on the technical merits of the positions. The Organization has identified no significant income tax uncertainties. The Organization files information returns as a tax-exempt organization. Should that status be challenged in the future, all years since inception are subject to review by the IRS. The Organizations federal and state returns are open to examination for tax years 2010 through Advertising Advertising costs are expensed as incurred. Total advertising expenses were $64,098 and $94,796 for 2014 and Retirement Plan The Organization maintains a 403(b) plan which covers eligible employees. The Organization does not contribute to the plan. Credit Risk Financial instruments which potentially subject the Organization to concentrations of credit risk consist principally of cash. The Organization places its cash with high credit quality financial institutions. The Organization has not experienced any losses in such accounts, and does not believe it is exposed to any significant credit risk on cash. As of September 30, 2014, the Organization had no significant concentrations of credit risk. 9

12 NOTES TO FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Fair Value Measurements Under generally accepted accounting principles, fair value is 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. The accounting standards establish a three-level fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability as follows: Level 1 - Observable inputs such as quoted prices in active markets; Level 2 - Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and, Level 3 - Unobservable inputs where there is little or no market data, which requires the reporting entity to develop its own assumptions. The Organization uses observable market data, when available, in making fair value measurements. Fair value measurements are classified according to the lowest level input that is significant to the valuation. The Organization holds certain assets that are required to be measured at fair value on a recurring basis. The fair value of the Organization s investment securities were determined based on inputs as presented in Note 2. Reclassifications Certain amounts in the 2013 financial statements have been reclassified to conform with the 2014 presentation. These reclassifications had no effect on net assets for either period. NOTE 2 - INVESTMENT SECURITIES Investments are stated at fair value at September 30, 2014 and 2013, and consisted of the following: U.S. Equities - Large Cap $ 213,112 $ The fair value of the Organization s investment securities are determined by reference to quoted market prices and other relevant information generated by market transactions. These investments are classified within Level 1 of the valuation hierarchy. In general, its investments are exposed to various risks, such as interest rate, credit and overall market volatility. Due to the level of risk associated with certain investments, it is reasonably possible that those changes in the values of the investments will occur in the near term and that such changes could be material to the amounts in the statement of financial position. Net investment income for the years ended September 30, 2014 and 2013 consisted of the following: Unrealized Gain on Investment Securities $ 14,482 $ Interest and Dividend Income Total $ 14,540 $

13 NOTES TO FINANCIAL STATEMENTS NOTE 3 - LINE OF CREDIT The Organization has a line of credit agreement with Bremer Bank which enables the Organization to borrow up to $200,000 at 4.50%. The loan is secured by substantially all assets of the Organization. The line of credit agreement contains restrictive covenants which include, among others, the maintenance of certain financial amounts and ratios. The Organization was in violation of the working capital requirement and debt service coverage ratio at September 30, The balance outstanding on this loan at September 30, 2014 and September 30, 2013 was $75,000 and $0. Subsequent to year-end the line of credit agreement was canceled. NOTE 4 - RELATED PARTY TRANSACTIONS The Organization leases space located in a building owned by its Senior Vice President. Minimum monthly payments are $4,600. The lease agreement expired November 30, 2006 and the Organization has been on a month-to-month basis since that date. Rent expense for this space was $55,200 for the years ended September 30, 2014 and NOTE 5 - TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets are available for the following purposes: Volunteer Service Programs $ 76,696 $ 82,511 Dedicated Contributions 297, ,976 Total $ 373,778 $ 210,487 Net assets were released from restriction for the following uses: Volunteer Service Programs $ 82,511 $ 155,209 Dedicated Contributions 17,587 35,318 Total $ 100,098 $ 190,527 11